On February 19th, the first trading day of the Dragon Year, the A-share market welcomed a strong start: the Shanghai Composite Index closed with a 1.56% increase, standing above 2900 points; the Shenzhen Component Index rose by 0.93%, the ChiNext Index increased by 1.13%, and the Northbound 50 Index surged by 3.22%. Across the entire market, 4,253 individual stocks rose, with over 270 stocks hitting the upper limit of the daily price fluctuation.

Among the first-tier industries of Shenwan, except for non-bank finance, agriculture, forestry, animal husbandry, and fishery, as well as pharmaceutical and biological sectors that declined, all others increased; among them, communications, media, and coal sectors led the gains, with respective increases of 7.01%, 6.30%, and 4.41%.

Regarding the outlook, there is still a divergence of opinions in the market. Optimists believe that under a series of policy protections, the bearish forces are limited, and the market bottom has been identified. Some institutions also indicated that due to the lack of sustainable expected improvement momentum, after the short-term market rebound from an oversold condition, the index will still be dominated by a pattern of consolidation and bottoming out.

It is worth mentioning that before the A-share market opened, Chinese assets, including Hong Kong stocks, had been on a multi-day winning streak. However, on February 19th, the Hong Kong stock market failed to continue the previous rise. By the end of the day, the Hang Seng Index fell by 1.07%, and the Hang Seng Technology Index dropped by 2.61%.

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The first trading day of the Dragon Year saw an increase.

The A-share market on February 19th continued the upward trend from before the festival.

With the news of OpenAI launching the text-to-video model Sora, the AI (Artificial Intelligence) field has achieved a new breakthrough, and the AI concept stocks have exploded across the board. Among them, Sora concept stocks led the surge, with CPO, computing power, media, and education concept stocks showing strong fluctuations. In addition, high dividend concept stocks represented by coal, oil, and natural gas continue to maintain strength, while the securities sector falls into adjustment, and the performance of liquor, pharmaceuticals, and airports is mediocre.

"The emergence of Sora means that major manufacturers will be more determined and persistent in investing in the path of stacking computing power and expanding models, which also means that the overall trend of the AI industry is basically established," said the analysis from Cinda Aoyu Fund. Benefiting from the AI industry's continuous demand for computing power and cloud computing, the TMT sector is currently in an appropriate range of odds and win rates, with promising prospects for the future market.

In terms of capital, broad-based index ETF funds have continued to see large net inflows. Looking at the capital flow, the main targets of the inflow were previously large-cap stocks such as the CSI 300 ETF and the SSE 50 ETF, and recently, the trading volume of small and medium-cap stock ETFs has significantly increased. On February 19th, the trading volume of several CSI 500 ETF funds significantly increased compared to the previous trading day.

In terms of newly launched funds, the number of new fund launches in the first week of the Dragon Year has risen sharply compared to before the festival, reaching 33, with equity funds accounting for more than 60%. In addition, it is worth mentioning that the 10 A50 ETFs approved before the festival were all launched on February 19th, with a maximum fundraising limit of 2 billion yuan for each.In fact, the auspicious start of A-shares this time was already anticipated by investors.

On one hand, the rise of overseas Chinese assets previously laid an emotional foundation for the auspicious start of A-shares. During the Spring Festival holiday, the NASDAQ Golden Dragon China Index rose by 5.75%, the Hang Seng Index increased by 2.91%, and the Hang Seng Technology Index climbed by 5.5%.

On the other hand, the new social financing and new credit in January exceeded market expectations, and the trend of economic recovery continued to be validated by data, further boosting market confidence.

On February 18th, the central bank conducted a 10.5 billion yuan 7-day reverse repo operation and a 50 billion yuan MLF (Medium-term Lending Facility) operation to maintain a reasonable and ample level of liquidity in the banking system. The operation rates for the 7-day reverse repo and MLF remained unchanged at 1.8% and 2.5%, respectively.

"Up to now, the central bank has continued to over-allocate MLF for 15 consecutive months. The increased allocation of MLF helps to increase the long-term liquidity in the banking system and continues to send a signal that policy is working to stabilize growth. The new credit and social financing data in January exceeded expectations, and the trend of continuous economic recovery continues to be validated by data. Moreover, the central bank has previously lowered the reserve requirement ratio beyond expectations, so it is unlikely that the MLF rate will be reduced in the short term," Bosera Fund analysis.

Positive factors are still accumulating.

On the eve of the Spring Festival, the regulatory authorities introduced many measures to restrict short-selling, including strengthening the strict supervision of securities lending business, suspending the addition of new securities company securities lending scale, gradually settling the existing stock, and strictly prohibiting securities companies from providing securities lending to investors who are indirectly T+0, and strictly limiting the power of securities lending short-selling. AVIC Securities believes that the policy restrictions on short-selling, coupled with the recent expansion of the ETF increase range by Central Huijin, and the continuous increase in the intensity and scale of the increase, are gradually shifting the market from a sharp divergence between bulls and bears to a stable recovery.

"After the general rise, the market has begun to show differentiation in hot spots, but overall, the rotation of sectors is healthy," said Xia Fengguang, fund manager of Rongzhi Investment Fund. The focus of policy is often in the first quarter, and the expectation of policy may have already started. Under the dual force, the market situation from February to March may be optimistic. However, whether it can form a reversal and how high the medium-term market will be depends on the trend of economic recovery. Future opportunities may still mainly be in the direction of growth stocks, including leading stocks in the STAR Market and the ChiNext Board.

Positive factors continue to accumulate.

Since 2024, the real estate market has been continuously benefited by favorable policies. At present, the four first-tier cities have joined the team to adjust the housing purchase restriction policies to further stimulate the release of potential housing demand. Bosera Fund believes that the banks are actively promoting the implementation of the urban real estate financing coordination mechanism, which will continue to provide support for real estate companies from the financing end to alleviate the drag of the real estate industry on the economy.During the Spring Festival period, travel data has also shown a significant increase compared to previous periods. According to estimates by the Data Center of the Ministry of Culture and Tourism, during the 8-day Spring Festival holiday, there were 474 million domestic tourism trips nationwide, a year-on-year increase of 34.3%, and a 19.0% increase compared to the same period in 2019 on a comparable basis; the total expenditure on domestic tourism was 632.687 billion yuan, a year-on-year increase of 47.3%, and a 7.7% increase compared to the same period in 2019 on a comparable basis. Bosera Fund believes that as the economy continues to recover, the scarring effects caused by the pandemic are gradually diminishing, which helps to further restore consumption and continue to contribute momentum to economic recovery.

Regarding the recent performance of the Hong Kong stock market, CICC (China International Capital Corporation) analysis suggests that the rebound still has certain uncertainties, and the core of the market's continuation is still a targeted and strong fiscal policy. "Firstly, the cooling of expectations for a Fed rate cut has driven U.S. Treasury yields higher, and there may still be uncertainties and disturbances; data monitored by EPFR (Emerging Portfolio Fund Research) shows that overseas active funds have not yet returned; the seemingly strong consumption recovery during the Spring Festival also has certain structural differences and a situation of increasing quantity and decreasing price."

Specifically, CICC believes that whether the MLF (Medium-term Lending Facility) and LPR (Loan Prime Rate) will be reduced in February, the policy signals of the "Two Sessions" in early March nationwide, and the minutes of the FOMC (Federal Open Market Committee) meeting on February 22 are all key windows worth paying attention to. CICC suggests that in the current market environment, investors can focus on the short-term rebound opportunities brought by the "policy bottoming expectations," but in the medium term, unless there are substantial and large-scale policy implementations in fiscal and real estate, the high dividend and "barbell" allocation strategies will still be effective.