The A-share market in 2025 displayed a significant upward trend amidst structural divergence. As 2026 begins, numerous institutions believe the foundation for this year's "spring rally" is more solid than in previous years, anticipating that the market will continue its regular rotational trends after the holiday period. HuaShang Fund Manager Ocean, employing a dual strategy of "Balanced Growth + Quantitative Enhancement," continues to adopt a steady approach during the spring rally. In the fund's fourth-quarter report, Ocean provided a clear review and outlook for the A-share market, maintaining an optimistic view that the overall macroeconomic situation will bottom out and recover as counter-cyclical economic policies are gradually implemented. He also believes that high-quality small and mid-cap stocks will demonstrate upward elasticity as risk appetite further recovers.
Ocean, a core member of HuaShang Fund's quantitative investment team, utilizes a quantitative allocation model as a fundamental framework. This approach enables systematic monitoring of risk and return across different sectors and industries. Based on an overall balanced allocation, he seeks to make tactical deviations towards industries with medium-to-long-term upward industrial cycles, focusing on finding the optimal allocation ratio between risk exposure and expected return. He excels in industry comparison and rotation, with an investment style that is balanced yet leans towards growth.
Reflecting on 2025, Ocean noted that the A-share market presented clear structural opportunities, with primary alpha concentrated in the growth and cyclical sectors. A distinct spring rally occurred in the first quarter, largely driven by thematic trends within the technology sector. Sub-sectors such as robotics, the low-altitude economy, and AI applications experienced significant valuation increases during this period. Simultaneously, the small-cap style benefited from rising risk appetite, showing strong performance. The second quarter saw increased market volatility, with major broad-based indices experiencing notable adjustments and pullbacks in early April, influenced by external tariff expectations. The third quarter featured a more pronounced valuation recovery in growth stocks, with sectors like computing power, semiconductors, and technology equities generating substantial excess returns. Benefiting from relaxed liquidity and improved fundamental expectations, cyclical sectors, particularly non-ferrous metals, also saw significant gains. The market entered a consolidation phase in the fourth quarter, with alternating rotations between different industries presenting the main trading opportunities.
Ocean stated that throughout the year, the overall investment strategy focused on high-quality industry leaders. The current portfolio allocation remains tilted towards large and mid-cap leading companies to reduce the impact of small-cap factors and other style volatilities. A balanced allocation across market sectors is maintained to mitigate excessive volatility risks from rapid industry rotations.
Looking ahead to 2026, Ocean believes valuation levels for most broad-based indices remain reasonable. Given the continued advancement of the technological innovation cycle and expectations that liquidity will stay supportive in the medium to long term, he anticipates ongoing structural opportunities in broad cyclical and technology-related areas. He remains optimistic about the macroeconomic foundation and recovery as policies are implemented, and expects high-quality small and mid-cap stocks to show upward potential with the further restoration of risk appetite.
Regarding operational strategy, Ocean indicated a continued commitment to maintaining portfolio strategy through quantitative, diversified allocation, aiming to create stable returns through product portfolio configuration.
Data Note: As of December 31, 2025, Ocean has 8.7 years of experience in the securities industry, including 6.8 years in securities research and 1.9 years in securities investment. The funds managed by Ocean include: HuaShang Quantitative Quality Selected Mixed Fund (since January 3, 2024), HuaShang CSI A500 Index Enhanced Fund (since November 1, 2024), HuaShang Shanghai STAR Market Composite Index Enhanced Fund (since May 28, 2025), HuaShang CSI 500 Index Enhanced Fund (since June 17, 2025), HuaShang CSI 800 Index Enhanced Fund (since August 5, 2025), and HuaShang Shanghai STAR Market 100 Index Enhanced Fund (since September 23, 2025). The views expressed are derived from fund periodic reports and represent the fund manager's investment philosophy. Detailed fund investment strategies and fee information can be found in the fund's prospectus and other legal documents.
Risk Warning: The fund manager is committed to managing and utilizing fund assets with honesty, integrity, diligence, and prudence, but does not guarantee fund profitability or a minimum return. Investors should carefully read the fund contract, prospectus, and other legal documents before purchasing funds. Investors are advised to choose products that match their risk tolerance and investment objectives. The above views do not constitute investment advice. Market risks exist, and fund investment requires caution.
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