The market experienced a broad retreat today (March 12), with the three major indices closing lower. However, the power sector surged in the afternoon session. The Power ETF (159146), which offers comprehensive exposure to the electricity industry, saw its price climb 2.55%, reaching a new high and marking a seventh consecutive day of gains.
The explosive growth in AI computing power is profoundly reshaping the structure of electricity demand. For the first time, "computing-power coordination" has been included in the government work report, elevating it to a national strategic level. The combination of emerging demand and energy transformation is becoming the new growth narrative for the power sector.
The theme of rising prices continued to play out, with the chemical sector showing active movement. The Chemical ETF (516020) saw its intraday price increase by over 1%. Soaring crude oil prices have pushed up agricultural product costs, leading the unique Agriculture, Animal Husbandry, and Fishery ETF (159275) to rise 1.53%, also setting a new record high.
As market sentiment weakened, defensive assets like banking stocks gained strength. The large-cap Bank ETF (512800) closed up 0.89%, achieving a three-day winning streak. Other ETFs, such as the Value ETF (510030) and the 300 Cash Flow ETF (562080), also closed in positive territory against the market downturn. The high-dividend yield narrative is expected to continue providing support amid prevailing risk-off sentiment.
On the downside, popular sectors like computing chips and AI applications saw corrections. The defense and commercial aerospace sectors were among the biggest decliners. The core defense asset, the Defense ETF (512810), fell 1.97%. Despite recent volatility, the defense sector is seeing frequent catalysts. The ETF has been trading at frequent premiums even during pullbacks, suggesting potential accumulation by investors on dips.
The period from after the Spring Festival through the Two Sessions, which typically exhibits a strong calendar effect, has concluded. Looking ahead, Huatai Securities believes that a sustained market breakout may require stronger fundamental confirmation from economic data and annual/first-quarter reports due in mid-to-late March. Amid external uncertainties, the market may enter a period of consolidation. However, following the recent rapid adjustment, upside potential may open for certain assets.
Focusing on the power, agriculture, and defense sectors:
**AI Fuels Power Sector Surge; Power ETF (159146) Rallies for Seventh Day** Sub-sectors including wind, solar, and thermal power collectively strengthened in the afternoon, leading to a wave of limit-up gains in the power sector. Key players like Datang Power, Green Development Power, Jinkai New Energy, GCL Energy Integration, Jiangsu Energy, Jianneng Energy, and Energy Conservation Wind Power hit the upper limit. Companies such as Guiguan Power, Wan Energy, and Jingneng Power followed with gains exceeding 5%.
The Power ETF (159146) advanced 2.55%, securing a seventh straight day of gains and hitting a new peak, indicating a clear bullish trend. The ETF traded at a premium throughout the day with active buying interest, resulting in a net subscription of 8.5 million units.
Over a longer horizon, driven by factors like token出海, computing-power coordination, and inflation expectations, the power sector has accumulated a gain of over 17% since the Spring Festival, significantly outperforming major benchmarks like the CSI 300 and CSI 500.
Huachuang Securities notes that policy support and economic viability are jointly driving the coordinated development of "power and computing." Three main drivers are identified: 1) High-level emphasis on "computing-power coordination" with ongoing supportive policies; 2) Green electricity's potential to ease data center growth constraints under energy consumption policies; 3) The cost-reduction advantage of low-priced green power for data centers.
Looking forward, as the era of power-computing integration arrives, Huachuang Securities recommends focusing on three types of assets: companies expanding from power generation into data centers; comprehensive energy management service providers with grid backgrounds; and power operators poised to benefit from direct green power connections.
To capture opportunities in "power plus computing" coordination, the Power ETF (159146) is highlighted. Its underlying index focuses on the power utilities sector, covering thermal, hydro, wind, nuclear, and solar power with high concentration in leading stocks. The sector is positioned to benefit from AI computing growth and power reform policies, offering both dividend and growth characteristics.
**Policy Support Ignites Rally; Agriculture, Animal Husbandry, and Fishery ETF (159275) Hits New High** The agriculture, animal husbandry, and fishery sector continued its ascent. The market's first Agriculture, Animal Husbandry, and Fishery ETF (159275) shook off early weakness and rose sharply, closing up 1.53% for a three-day winning streak and a new listing high.
Among constituents, stocks in agricultural processing and planting led gains. Chenguang Biotech and Hainan Rubber surged over 7%, while Yasheng Group, Zhongxing Mushroom, and Jinhe Biotechnology rose more than 5%. Companies like Tianbang Food, COFCO Tech, and Shennong Group gained over 3%.
Recent positive developments have buoyed the sector. On March 9, the Minister of Agriculture and Rural Affairs addressed measures to enhance comprehensive agricultural production capacity and quality. Furthermore, important meetings have consistently emphasized seed industry revitalization and smart agricultural machinery.
Huatai Securities expresses optimism about leading enterprises with strong R&D capabilities in grain and livestock breeding, as well as the smart agriculture segment. This year's policy meetings首次提及 post-harvest agricultural product processing, signaling a shift from yield-focused to quality-and-yield-focused production, favoring companies competitive in grain and meat processing. The report also highlighted curbing "internal卷式" competition, subtly shifting from previous support for stabilizing animal husbandry, and reiterating investment opportunities in reducing hog production capacity amid current price conditions.
Dongxing Securities is bullish on: 1) The hog breeding sector, expecting a reversal of pessimism after confirming seasonal price bottoms; 2) The post-cycle sector, anticipating profit flow-down the breeding chain as hog prices recover, potentially driving animal vaccine segments higher; 3) The planting chain, benefiting from commodity price inflation transmitted to agriculture due to geopolitical factors, with established upward trends in grain prices improving fundamentals for planting and seeds.
For comprehensive exposure to the entire agriculture, animal husbandry, and fishery industry chain, the unique Agriculture, Animal Husbandry, and Fishery ETF (159275) is recommended. Its underlying index includes leading hog breeding stocks like Muyuan Foods and Wens Foodstuff Group, and covers major sub-sectors such as feed, grain planting, and animal health.
**Defense Sector Volatility: Reasons and Outlook; Defense ETF (512810) Dips Amid Premiums** As risk appetite waned, the growth-oriented defense sector experienced consecutive adjustments. The core Defense ETF (512810) fell 1.97% for a second day of declines. Despite the drop, it traded at frequent premiums throughout the session, indicating potential bargain hunting.
Sixty-nine of the ETF's 80 constituent stocks declined, with Xuguang Electronics and Huafeng Technology dropping over 6%, and China Shipbuilding Industry Group Power and Aerospace Development falling more than 5%. AECC Aviation Power declined 4.47%. Guangwei Composites and Aerospace Electronics defied the trend, rising 7.06% and 6.14%, respectively.
Recent volatility in the defense sector is attributed to profit-taking after a previous rally driven by geopolitical events. Current valuations are at historically high levels, reducing safety margins and making the sector more sensitive to changes in market liquidity and risk appetite.
Despite the pullback, the investment logic for defense remains robust with ample future opportunities, according to institutional analysis. Guosheng Securities points to three macro drivers during the "十五五" period: defense policy, the geopolitical environment, and domestic military spending. Structurally, traditional equipment may see steady growth while new combat capability equipment experiences high growth, with military trade and civil-military integration expanding the growth potential for defense companies.
Based on recently released central and local budget drafts for 2026, China's defense expenditure is set at 1,909.561 billion yuan, a 7% year-on-year increase. China Securities (CSC) expects defense budget growth to remain stable around 7-7.5% during the 十五五 period, with potential for its GDP share to increase.
Additionally, the government work report highlighted building emerging pillar industries like integrated circuits, aerospace, biopharmaceuticals, and the low-altitude economy. CSC believes advanced military technologies spilling over into civilian use could catalyze trillion-yuan industries in commercial aerospace, low-altitude economy, future energy, deep-sea technology, and large aircraft, creating a virtuous cycle of "military technology for civilian use, feedbacking defense."
For targeted defense investment, the Defense ETF (512810) offers exposure to cutting-edge "land, sea, air, and space" military technologies and covers popular themes like commercial aerospace, large aircraft, low-altitude economy, and military AI. It is also eligible for margin trading and Stock Connect programs.
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