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<Research>Daiwa: Mkt Preference Shifts from AI to Cyclical Industries; Mkt Gradually Turns to Stimulus-Related Sectors After LNY
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Mutual funds’ interests in the Hong Kong market cooled slightly in 4Q25, with strong capital inflows into non-ferrous metals and financial sectors, Daiwa said in its China market strategy report. The broker said that equity and hybrid mutual funds diversified their holdings by the end of 2025. The proportion of their shareholding value in top-50 stocks to total stock investment decreased from 25.8% to 25.1%. Although the proportion of the top 10 stocks increased from 12.4% to 12.9%, the broker attributed this to stock price upsurge rather than funds’ stock accumulation. As a matter of fact, fund managers reduced holdings in some “most popular” names over the past three months, such as CATL (300750.SZ), ZHONGJI INNOLIGHT (300308.SZ), and LUXSHARE PRECISION (002475.SZ). In Daiwa’s past three quarterly reviews, there was an increase in funds’ interests in Hong Kong stocks, but this trend briefly reversed in recent months, Daiwa noted. The proportion of Hong Kong stocks in fund heavy-weight stocks dropped from a peak of 17.8% to 16.3%. Among the top ten heavy-weight stocks in funds, TENCENT (00700.HK) and BABA-W (09988.HK) ranked 6th and 9th respectively in 4Q25, down from 5th and 6th in 3Q25. Propelled by global metal market trends, Chinese mutual funds drastically increased their holdings in non-ferrous metal stocks in 4Q25 (up 1.7 ppts QoQ), mainly purchasing YNALCO (000807.SZ), ZANGGE MINING (000408.SZ), and SINOMINE RESOURCE (002738.SZ). As market preference shifts from AI to cyclical industries, fund managers also turned positive about banks (+0.7 ppts) and diversified financials (+0.8 ppts), with strong capital inflows into INDUSTRIAL BANK (601166.SH) and ICBC (601398.SH) during the period. For the 1Q26 outlook, as seasonal profit-taking concludes, mutual funds will become more risk-tolerant in 1Q26, Daiwa said. AI (such as application and memory) and metals remain key investment themes in the short term, but the broker considered investor interest may gradually shift to stimulus-related sectors after the Lunar New Year (LNY) holiday. AASTOCKS Financial News Website: www.aastocks.com |
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