This year, the market has exhibited a distinctly divergent trajectory, with the characteristics of a "technology bull run" becoming increasingly prominent. The profit-making effect has been largely concentrated within technology and innovation sectors, particularly those represented by artificial intelligence, with related thematic funds seeing substantial performance gains and nearly monopolizing the top ten spots in terms of market returns. This highlights a key feature of the current slow and steady bull market: structural divergence, while funds allocated to traditional sectors have underperformed. Overall, however, both the number and scale of public funds have grown, with assets under management reaching a new historical peak.
According to data from the Asset Management Association of China, as of the end of May, there were 165 public fund management institutions domestically, comprising 150 fund management companies and 15 asset management institutions with public fund qualifications. Together, they managed public fund assets with a net value of 39.48 trillion yuan, an increase of 122.754 billion yuan from the end of April, setting another record high. The number of public fund products also continued to rise, reaching 14,173 by the end of May, an increase of 109 from the previous month. Notably, equity-focused funds have become a key area of strategic focus, with the number of stock funds increasing by 63 and mixed funds by 29 in May.
From an industry development perspective, innovation in public fund products is progressing steadily. This not only continuously enriches investors' asset allocation choices but also opens up new avenues for the industry's long-term growth, reshaping the competitive landscape. Due to the severe market divergence this year, funds themed around semiconductors and computing power/algorithms have seen larger issuance scales and greater numbers, whereas funds investing in traditional sectors have performed poorly, with their scale continuing to shrink.
This divergence has deep underlying reasons. China's economy is currently in a transition period, with many traditional industries facing overcapacity and operational difficulties, leading to sustained declines in performance. In contrast, the direction of technological innovation is booming, attracting substantial capital inflows. Reflected in the secondary market, stocks and funds in the technology and innovation sectors have delivered outstanding performance, creating strong profit-making effects and attracting significant investor attention.
Since the beginning of the year, sales of public funds have generally recovered, with an increasing number of funds achieving initial issuance scales exceeding 5 billion yuan in the first half. This indicates that public funds have become a crucial channel for the general public to invest in the capital markets and a tool for mass wealth management. Investors should select public fund products that align with their own risk tolerance and investment outlook based on their risk preferences and favored sectors. Compared to directly opening accounts to buy stocks, investing through public funds offers a higher probability of success. As expert-led wealth management, public funds can diversify risk through diversified investments while capturing more opportunities, also serving as a key channel for transferring household savings into the capital markets.
It is believed that the number and scale of public funds will continue to rise in the future. Reforms implemented in the public fund industry in recent years—including measures to prevent style drift, modify performance benchmarks to ensure fund investments align with them, and link fund managers' compensation to fund performance—are particularly conducive to enhancing the ability of public funds to create reasonable returns for holders and improving their professional image among investors.
The most prominent market characteristic this year has been divergence. Looking at last week's sector performance, electronics and communications continued to be the focus of capital, while gains in machinery, computers, new energy, building materials, non-ferrous metals, and chemicals all benefited from AI-related logic. Subsequently, the A-share technology sector is expected to resonate with the global AI technology trend, establishing a new upward trajectory for AI technology, with the K-shaped divergence between technology and non-technology sectors persisting.
Last Friday saw a sharp rise in the U.S. stock market's chip and semiconductor sector, driving related sectors in the Shanghai and Shenzhen markets to continue their strong advance on Monday, while other sectors experienced significant adjustments. This divergence indicates that A-share AI technology stocks are highly synchronized with the global AI market trend. As July approaches and the A-share market enters the semi-annual report window, market focus will return to pricing based on fundamentals, with profit growth and earnings realization becoming key factors. This has also driven performance in areas with positive earnings outlooks, including core AI tracks like semiconductors.
Since the beginning of last year, it was proposed that six major sectors would be the key focus areas of this AI technology bull run. Currently, the first major sector, semiconductors, and the second major sector, computing power/algorithms, have performed exceptionally well, validating this earlier assessment. As AI applications are implemented and AI develops in areas like space, opportunities may rotate to sectors such as humanoid robots, commercial aerospace, solid-state batteries, and biomedicine. However, market funds are currently highly concentrated in semiconductors and computing power/algorithms, leading to widespread adjustments in other sectors.
The previously proposed view of "technology in the left hand, HALO assets in the right hand" has now been validated. In addition to the surge in technology stocks, HALO assets represented by non-ferrous metals and rare earths have also performed well. HALO assets refer to heavy-asset, low-volatility industries representing the infrastructure of the AI era, which currently exhibit high prosperity and warrant continued attention.
From the beginning of the year to date, not only have U.S. stock AI hardware sectors like semiconductors and optical communications surged, but the upstream semiconductor equipment sector has also shown a sharp upward trend. Statistics show that the nine U.S.-listed semiconductor equipment companies with market capitalizations exceeding $10 billion have all seen stock price increases of over 75% year-to-date. From an industrial logic perspective, the semiconductor equipment sector is entering what institutions refer to as a "seller's market."
This round of A-share technology stocks is still following the rise in U.S. stocks. U.S. technology stocks have been rising for over a decade, and many key players in A-share industry chains are listed in the U.S.—such as the NVIDIA (NVDA) supply chain (N-chain), Google supply chain (G-chain), Tesla Motors (TSLA) supply chain (T-chain), and Apple supply chain (A-chain). As the share prices of these key players surge, they drive related A-share supply chain stocks to follow suit, with substantial capital shifting from traditional sectors to technology stocks.
This year, a significant amount of household deposits in China are maturing, approximately around 75 trillion yuan. With current deposit interest rates having fallen below 1%, investors lack high-yield assets to invest in. The shift of household savings into the capital markets is a major trend, coinciding perfectly with this technology bull market.
From a policy perspective, the state is strongly supporting technological innovation. Previously, the Chairman of the China Securities Regulatory Commission (CSRC), Wu Qing, explicitly stated at the Lujiazui Forum that the regulator supports the development of technological innovation enterprises, including those in artificial intelligence, and those meeting conditions can list on the capital markets. However, risks associated with stocks that merely hype technological innovation concepts for speculation should be guarded against. This means that investment in technological innovation should also return to fundamental research, which is the direction for the future.
Recently, eight departments including the Ministry of Commerce issued the "Implementation Opinions on Accelerating AI+ Consumption Development," proposing 17 specific measures across five areas, including enhancing AI+ commodity consumption and expanding AI+ service consumption. The document mentions building AI+ consumption clusters, guiding international consumption center cities, pilot cities for new consumption formats and models, and national AI innovation application pilot zones to layout AI+ consumption clusters according to local conditions, establishing a number of AI experience centers to promote the demonstration and application of new AI technologies, services, and scenarios. It encourages innovation in new models for sharing and applying AI products, focusing on public scenarios such as commercial complexes, pedestrian streets, scenic spots, museums, and senior care facilities, to promote commercial application and widespread adoption.
In his keynote speech at the 2026 Lujiazui Forum, Chairman Wu Qing mentioned the need to proactively embrace the new round of technological revolution and industrial transformation, continuously enhancing the inclusivity and adaptability of the capital market system. Currently, the new technological revolution represented by artificial intelligence is integrating into production and life at an unprecedented pace, leading development transformation. Major global capital markets are accelerating reforms to better adapt to innovation needs and seize development opportunities.
As a barometer of the economy, the performance of the capital market is consistent with the economic transformation. Technological innovation has indeed become the main investment theme of this slow and steady bull market.
The June Federal Reserve interest rate meeting was consistent with prior expectations, keeping rates unchanged. However, this was the first meeting under the new Fed Chair, Wash. Some Fed officials supported a rate hike within the year, rather than the previously anticipated single rate cut, creating short-term shocks in global capital markets.
Why do some Fed officials support shifting from a rate cut to a hike? An important reason is rising U.S. inflation—the U.S. CPI rose to 4.2% in May, hitting a nearly three-year high. Since the outbreak of the Middle East war on February 28, the Strait of Hormuz has been blocked multiple times, keeping international oil prices high. Recent U.S.-Iran tensions have also been uncertain, forcing the Fed to prioritize inflation control as its primary monetary policy goal.
Although Wash did not make a clear prediction about the next direction of interest rate adjustments, his remarks leaned hawkish. However, this does not confirm that U.S. monetary policy has already shifted. Because Wash was nominated by Trump, and Trump faces a mid-term election in November—over 50% of U.S. household assets are allocated to stocks or funds, and maintaining stock market prosperity is a core demand for Trump. If interest rate hikes lead to a shift in monetary policy, it could potentially burst the AI bubble in U.S. stocks, creating immense pressure for Trump.
Therefore, Wash is likely to be verbally hawkish but practically dovish. It is expected that by the end of the year, as U.S. inflation subsides somewhat, Wash may implement rate-cutting measures. After all, the currently high federal funds rate is increasingly straining U.S. government debt pressure—U.S. government debt is approaching $40 trillion, with annual bond interest alone as high as $1.2 trillion. For U.S. Treasury bonds maturing this year that need to be "rolled over," if the benchmark interest rate is too high, the interest rate on newly issued bonds will inevitably rise accordingly, further increasing the U.S. government's debt servicing pressure. From this perspective, the likelihood of the Fed raising interest rates is not high.
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