Driven by multiple positive factors, the A-share market saw a strong rebound on October 18th, with over 5,000 stocks across the market rising. The total transaction volume for the Shanghai and Shenzhen stock markets reached 2.1 trillion yuan for the day. The Shanghai Composite Index rose by 2.91%, the Shenzhen Component Index by 4.71%, and the ChiNext Index surged by 7.95%, reigniting investment enthusiasm.

The net flow of large orders displayed by Tonghuashun showed that large capital had been maintaining a net outflow status from September 30th to October 16th. However, on October 18th, the trend was reversed for the first time, with a net inflow of 18.8 billion yuan. Industry insiders believe that the net flow of large orders reflects the direction of institutional capital, which may indicate a return flow of some institutions.

Since the beginning of this rebound, the net flow of large orders in both markets has been as follows:

In fact, despite the A-share market being dominated by fluctuating adjustments in October, the trading volume in the Shanghai and Shenzhen stock markets has remained high. Data from Wind shows that out of the 14 trading days since September 24th, the stock transaction volume exceeded one trillion yuan in 13 days, with an average transaction volume of 1.85 trillion yuan, surpassing the average daily transaction volume during the last bull market.

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Looking ahead, institutional investors believe that with active market transactions, A-shares are expected to initiate a second round of upward movement, with leading technology and securities sectors expected to continue to perform prominently.

Leading sectors in the technology and ChiNext markets, with standout performances from technology and securities sectors:

Under the high trading enthusiasm, which type of asset has higher elasticity? Looking at the performance since the start of this round of market movement, whether it was the general rise before the holiday or the fluctuating and differentiated market after the holiday, high-growth assets represented by the ChiNext 50 and ChiNext Index have shown more impressive performance, reflecting the market's general consensus on the future performance of growth assets.

Data shows that before the National Day holiday, the ChiNext Index and the ChiNext 50 Index led the rise with gains exceeding 35%. During the post-holiday market correction, they continued to lead and maintained positive returns. As of the close on October 18th, the ChiNext 50 Index and the ChiNext Index still had gains of 52% and 43%, respectively.

Specifically, looking at the industry, the TMT sector performed the most brightly. Electronics, computers, communications, and media not only had stronger elasticity before the holiday but also rose against the market trend after the holiday, showing the strong resilience of high-growth sectors.

In addition, benefiting from the batch implementation of capital market support policies and the continued high trading market, the non-bank financial sector represented by securities firms also performed prominently, becoming another main investment theme of this round of market movement. Since the start of this round of market movement until October 18th, the computer, electronics, and non-bank financial sectors led the rise, with gains of 44%, 42%, and 38%, respectively.Multiple positives, can tech stocks carry the main line of investment in the future market?

Why is the large technology sector leading the rise? Institutional investors believe that on the one hand, it stems from the high elasticity investment characteristics of the industry itself. As a high-growth industry, technology-themed industries including semiconductors, computers, photovoltaic lithium batteries, and innovative drugs have high offensive elasticity and often show better valuation expansion and performance elasticity in a bull market. Looking back at the historical patterns of A-shares, such high-beta, high-growth assets have also performed well in every historical bull market. From an empirical perspective, institutional investors generally have a positive outlook for the performance of the technology-heavy ChiNext, STAR Market, and dual-creation indices in the future market. On the other hand, in the process of the country's vigorous promotion of new quality productivity, the technology sector plays a more important leading role, has a more solid investment logic, and the fundamentals have recently improved significantly.

Taking semiconductors as an example, some public fund managers have pointed out that under the background of Sino-US trade frictions, the long-term logic of domestic substitution and independent control has not changed; from a medium-term industry perspective, the global semiconductor industry chain has shown signs of recovery since the fourth quarter of 2023, while the recovery of the domestic chip industry started later, and from a PB perspective, the valuation is still at a historical low; looking at the short-term financial fundamentals, more than half of the listed companies that have pre-announced their third-quarter reports in the electronics and semiconductor components have shown a state of expected profit increase, and the overall performance of the sector is relatively stable. Therefore, whether the future market evolves into a new round of a new energy bull market or a structural bull market, the chip and electronics sectors are expected to achieve eye-catching performances that exceed the overall market.

In addition, with the high-level tone of "promoting Chinese-style modernization, technology must take the lead," the technology sector will also be catalyzed by a series of favorable policies. Zhongtai Securities pointed out that after the market realizes that the policy framework has not shifted, and the fiscal strength maintains its determination, with the focus of fiscal direction still on new quality productivity-related technology sectors, it is expected that the main line of the market after the festival may still be technology stocks.

In terms of investment, both individual and institutional investors have chosen index funds as an important option in this round of the market.

The large financial sector represented by securities firms is another leading direction of this round of the market, with a cumulative increase of 38.21% since September 24, ranking third among the 31 first-level industries of Shenwan. Especially in the sharp rise on October 18, securities stocks collectively rose, with the sector as a whole increasing by 6.93%, showing strong offensive elasticity.

In fact, reviewing the bull market trends in the past, the securities sector, as the flag bearer of the bull market, has a clear high-beta characteristic: it rises faster and more fiercely than other industry sectors, and the increase often leads the overall market, which is what is meant by the "pioneer" of the bull market.

According to the non-bank financial team of CITIC Construction Investment, this round of the securities market started on September 24 with the financial policy good news and the high-level tone on economic policy, which has a significant "policy bull" characteristic, and the valuation of securities is expected to be revalued. At the same time, under the policy combination punch, investor confidence is quickly repaired, and the increase in capital entering the market also provides a larger space for the improvement of the fundamentals of securities firms.

In the view of Xia Mi Kan, an analyst at Pacific Securities, the rhythm and strength of the policy combination punch are both far beyond expectations, and all industries related to the capital market will welcome a triple resonance of sentiment, policy, and fundamentals; for the securities industry, it is expected that its profit bottom will be confirmed in the third quarter, and the subsequent high performance elasticity will be quickly demonstrated.In addition to the securities brokerage sector, banks within the broader financial sector are also favored by institutional investors. "As the effectiveness of current policies is still being verified, the banking sector has a clearer expectation of a performance inflection point and sustained operational capabilities, making them a preferred allocation for investors following policy announcements," said an institutional strategist. Investors can also pay attention to related index funds.