On December 18, China's A-share market saw mixed performance among the three major indices. The Shanghai Composite Index edged up 0.16%, while the Shenzhen Component Index and ChiNext Index fell 1.29% and 2.17%, respectively. Total trading volume in the Shanghai and Shenzhen markets exceeded 1.6 trillion yuan, down by over 150 billion yuan from the previous session.
Sector-wise, banking stocks led the gains, with the largest banking ETF (512800) rising 1.85%. The defense and military sector attracted the highest net capital inflows (95.6 billion yuan) among all industries, driving the Defense & Military ETF (512810) up over 2.1% intraday to a three-month high. Similarly, the General Aviation ETF (159231) surged 2.03%, reclaiming all key moving averages amid the commercial aerospace theme's momentum.
Meanwhile, capital is actively flowing into AI-related sectors. Driven by Moore Threads and MuXi Semiconductor, the optical module sector gained traction. The ChiNext AI ETF (159363), heavily weighted in optical module leaders, attracted 154 million yuan in inflows yesterday and saw an additional 200 million units of net subscriptions today. ByteDance’s Volcano Engine FORCE Conference (Dec 18–19) further bolstered sentiment, with the STAR AI ETF (589520), which has over 33% exposure to ByteDance’s supply chain, drawing 13.46 million yuan in inflows over three consecutive days. Today, frequent premium trades indicated strong buying interest.
Kaiyuan Securities noted that market rallies often emerge after corrections. Historical patterns suggest that after year-end adjustments, institutional investors tend to "front-run" early in the new year. The "Spring Rally" is not merely a statistical phenomenon but driven by policy timing and capital flows. Key policy windows—such as December’s Central Economic Work Conference and March’s "Two Sessions"—often amplify the rally, particularly in pivotal years like the start of a five-year plan. Despite past disruptions (e.g., rate hikes in 2010 and circuit breakers in 2016), the market rebounded during spring rallies. With no major risk events currently weighing on sentiment, this year’s rally appears promising.
Capital inflows are also supportive. Insurance funds, buoyed by strong premium inflows and relaxed equity investment rules, are increasing allocations. Industrial Securities recommends four themes: 1. **Growth Opportunities**: Focus on AI (internet and edge AI), military tech, energy storage, and solid-state batteries. 2. **High-Dividend Assets**: Banks, insurers, and energy stocks in a low-rate environment. 3. **Traditional Sector Revivals**: Leaders benefiting from global supply chain shifts and policy tailwinds. 4. **Strategic Assets**: Gold and rare earths amid global realignments.
**ETF Highlights**: 1. **Banking**: The Banking ETF (512800) rose 1.85%, reclaiming three key moving averages. With a P/B of 0.7x (up from 0.5x in 2022) and 42 banks trading below book value, the sector’s valuation recovery potential is notable. Industrial Securities and CICC project 15–20% upside in 2026, citing policy tailwinds and insurance fund demand. 2. **Defense & Military**: The Defense & Military ETF (512810) hit a three-month high, with six constituents reaching record highs. Commercial aerospace, low-altitude economy, and deep-sea tech are driving the sector’s trillion-yuan growth. 3. **AI & Optical Modules**: Despite a 1.76% dip, the ChiNext AI ETF (159363) saw 200 million units of net inflows. Analysts emphasize AI computing’s supply-demand imbalance, with 1.6T optical modules expected to dominate in 2026.
**Key Tools**: - **Banking ETF (512800)**: Tracks 42 A-share banks, with 136 billion yuan in AUM. - **Defense & Military ETF (512810)**: Covers aerospace, nuclear fusion, and AI, with融资融券 and Stock Connect eligibility. - **ChiNext AI ETF (159363)**: Over 56% exposure to optical module leaders like YOFC, Zhongji Innolight, and TFC.
*Data as of December 18, 2025. Risks include market volatility and sector-specific uncertainties. Investors should assess risk tolerance and consult fund documents before investing.*
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