Smart Money | Consolidating in Volatility, Awaits Breakthrough! Amid the Standoff at 3400 Points, New Cycle Opportunities in A-shares Emerge
Author | Yifan Yan
Editor | Yida Huang
As the market trend in the first half of 2025 nears its end, the market shows significant divergence: small - cap indices such as the China Securities 2000 and the China Securities 1000 have performed outstandingly, with prominent micro - cap stock characteristics. While the technology sector is under relative pressure, the growth sector has an edge. In terms of the broader market, the Shanghai Composite Index has been fluctuating around 3400 points, presenting an overall pattern of "ready to take off".
During the sector rotation, sectors with hedging properties such as precious metals and banks have an advantage. Consumer sectors such as jewelry, cultural and entertainment products, and cosmetics have seen frequent abnormal movements recently, reflecting that while funds are concerned about the recovery logic, there is a strong wait - and - see sentiment in the choice of investment directions.
Core Market Logic: Cyclical Repeats and Bottom Confirmation
The wide - range fluctuations of the A - share market in the first half of 2025 are actually a continuation of the adjustment after the "9・24" market trend from November to December 2024. The Shanghai Composite Index has repeatedly tried to break through 3400 points but was disturbed by external events. In April, the tariff war caused the index to drop to the 3100 - 3040 point range, and in June, the geopolitical conflict in the Middle East triggered another correction.
In contrast, the Hong Kong stock market has witnessed a recovery. Internet giants such as Meituan and Alibaba, as well as the innovative drug sector, have rebounded strongly. Market analysts point out that this deeply confirms the essence of "everything is cyclical". The release of momentum after the deep correction of the Hong Kong stock market is a manifestation of cyclical forces.
Looking back at the history of the A - share market, it is clear that there is a fluctuation rule of "three to five years of decline followed by two to three years of rise".
From the "5・19" market trend in 1999 to the bull market in 2007, and from the bottoming out of the ChiNext in 2012 to the "core asset" market trend from 2019 to 2021, the root cause lies in the fact that the high proportion of individual investors (60% - 70%) in the market structure amplifies emotional fluctuations. This round of adjustment started in early 2021 and ended in February 2024 when it hit the panic bottom of 2600 points. The duration of the decline cycle once again conforms to the historical experience of the A - share market. Subsequently, with the frequent introduction of policies to "activate the capital market" and the strong support of the national team's trillion - level stabilization fund, the market bottom was confirmed.
Currently, the market is in the stage of fluctuating and accumulating strength in a new upward cycle. The core function of this stage is to explore the main line of the new market trend and build consensus through sufficient trading volume. Historical experience shows that there is often a fluctuation period of more than one year before the start of each bull market.
Looking ahead, the downward space has been sealed by both policies and fundamentals. It is highly unlikely for the Shanghai Composite Index to return to 2600 points. It is a high - probability event that the market will break through in the main upward wave after the fluctuation period. Tools such as the stabilization fund demonstrate the management's determination to maintain market stability, and a rapid response mechanism has been formed in the face of tariff shocks. Despite external pressure, the "dual - circulation" policy promotes economic stability, and there have been frequent breakthroughs in the technology field. Market analysts believe that after the fluctuation below 3400 points lasts for seven or eight months, the differences will gradually narrow. Once the main line is clear and consensus is formed, trading volume will cooperate with the trend to start. Currently, it is a crucial window period for layout.
Liquidity Observation: Long - term Funds Entering the Market to Strengthen the Foundation
Regarding the market's concern about the shrinking trading volume at the 3400 - point mark, analysis shows that the shrinking volume during the fluctuation period essentially reflects the weakening of selling pressure and the narrowing of differences. If the trading volume can remain stable at around 1.1 trillion, it means that the willingness of long - term funds to hold stocks has increased. A healthy rhythm is that there is no need for excessive trading volume when breaking through 3400 points, but there should be trading volume support during the first correction after the breakthrough to strengthen the foundation.
From the perspective of the investor structure, the institutionalization process of the A - share market is accelerating. Although the current proportion of institutional holdings is about 30%, which is still far from the 60% - 70% level of international mature markets, long - term funds such as insurance funds and social security funds are flowing in significantly. By the end of 2024, the operating scale of insurance funds had reached 33 trillion yuan, and the combined proportion of stocks and funds in asset allocation was 12.7%, a year - on - year increase of 15%. This year, the upper limit of the equity investment ratio of insurance funds has been raised, and the funds are mainly invested in high - dividend assets, such as bank stocks with a dividend yield of 5% - 6%, to cover liability costs with stable dividends.
Meanwhile, the average annual return of the social security fund in the past three years has been about 7%. In the first quarter of 2025, the scale of enterprise annuities nationwide reached 3.73 trillion yuan, with a cumulative return rate of 7.46% in the past three years. The promotion of the enterprise annuity system and the deepening of the market - oriented operation of social security funds are providing continuous long - term "liquidity" for the A - share market.
This type of institutional funds focuses on long - term returns and risk hedging. After entering the market, it not only helps to improve market stability but also guides the market style to transform towards value investment by allocating high - dividend and low - volatility assets. With the relaxation of the investment ratio of insurance funds and the expansion of the enterprise annuity scale, the pricing power of institutional funds in the A - share market will gradually increase, providing strong liquidity support for future market trends.
Fundamental Analysis: Profit Inflection Point Looming, Manufacturing and Consumption Resonance
The fundamentals of A - share listed companies are approaching a profit inflection point, with policy dividends and industrial upgrading resonating.
The macroeconomic data in May shows the resilience of the economy: the industrial added value increased by more than 5% year - on - year, and the growth rate of total retail sales of consumer goods exceeded 6%. Only real estate investment still dragged down the overall performance with a decline of about 10%. The mid - stream manufacturing sector has achieved a breakthrough against the odds. Industries such as semiconductors, integrated circuits, shipbuilding, and automotive equipment still maintained growth in exports in May under continuous tariff pressure.
This is due to the long - term accumulation and sudden emergence of supply - side reform and the cultivation of new - quality productive forces under the "Made in China 2025" strategy. Products in some fields have both price and quality advantages in the global market, forming an irreplaceable competitive barrier and driving the profits of related enterprises to bottom out and rebound first. The downstream consumer sector has benefited from the continuous efforts of the national "dual - new" plan. In 2024, 150 billion yuan in special loans leveraged a market scale of hundreds of billions, and the quota was increased to 300 billion yuan in 2025, directly driving the recovery of demand for home appliances, home furnishings, and electronic consumption. Leading enterprises have seized market share with quality advantages, and their performance has improved significantly.
The recovery of service - based consumption is more intuitive. During the "May Day" holiday, the volume and price of the catering, accommodation, and tourism sectors increased simultaneously, indicating an inflection point in corporate performance. As the semi - annual report performance pre - announcements and official reports are gradually disclosed, the logic of fundamental improvement is expected to be further verified, providing core performance support for the subsequent market trend.
Outlook for Sector Opportunities: Finance Sets the Stage, Technology Takes the Lead, and Consumption Recovers
The movement of the large - finance sector is crucial for the market to break through the fluctuation range. Currently, large - finance blue - chip stocks and technology growth stocks often show a seesaw effect in the market. However, if the market achieves an effective breakthrough in the future, the two may form a resonance market trend, which may be a key signal for the market to break through effectively.
As a high - dividend stabilizer, the dividend yields of the four major state - owned banks and high - quality joint - stock banks generally remain above 5%, significantly higher than the current five - year fixed - deposit interest rate of less than 2%. It naturally has a strong appeal to long - term funds such as insurance funds and social security funds and is one of the good choices for the bottom - position portfolio.
The insurance sector has benefited from policy relaxation. The investment scope of insurance companies has been broadened, and with the market at a relatively low level, the space for allocating equity assets has expanded, and the certainty of performance growth has increased. Its long - term return requirements resonate with bank dividend assets in terms of asset allocation.
The securities sector, as the vanguard of market elasticity, is highly correlated with market activity. Once the main upward market trend starts, the leverage effect of its brokerage, investment banking, and proprietary trading businesses will quickly release performance and stock price elasticity.
The opportunity for technology stocks lies in the resonance of policy drive and industrial revolution. The Central Economic Work Conference has listed "leading the development of new - quality productive forces through scientific and technological innovation" as the primary task. For the capital market, this is equivalent to clarifying the status of technology as the main investment line. With the breakthroughs of domestic enterprises in key technology fields and the continuous implementation of capital expenditures, technology stocks are expected to resonate with the large - finance sector during the process of the market breaking through the fluctuation range and become the core driving force for a new round of market trends.
As a popular theme among technology stocks, the industrial trend of AI is shifting from technological breakthroughs to industrial implementation. Computing power and AI applications are the core areas, and the cluster - based breakthroughs in domestic computing power are accelerating the iteration. In addition to AI, other popular themes, including brain - computer interfaces, low - altitude economy, and unmanned driving, are all supported by policies. Although most of them are in the early stages of industry development, they have great potential.
From the above industrial trends, it can be seen that the investment logic of technology stocks is shifting from concepts to performance realization. Considering that the technology sector usually requires a loose monetary policy environment to support its market trend, one of the key points to watch in the future market is whether the technology sector can resonate with the large - finance sector to lead a new market trend.
Different from the "concept - driven" nature of technology stocks, the market trend of consumer stocks is more dependent on demand improvement and performance verification. The product consumption sector is directly driven by the intensified "trade - in" policy, and the demand for durable goods such as home appliances and home furnishings has recovered. The product sales of leading enterprises have rebounded rapidly.
The service consumption sector shows broad elasticity. The cultural and tourism, sports, ice - snow economy, and the "silver - haired economy" with evolving concepts all show strong resilience and incremental potential. Policies clearly support "innovating diversified consumer markets and expanding service consumption".
In the new consumer field, "self - indulgent" expenditures such as trendy toys and pets are very popular among Generation Z. However, investors should be wary of the relatively fast IP iteration risk and pay attention to the IP incubation and continuous innovation capabilities of enterprises.
Overall, the consumption recovery path is characterized by "policy support for product consumption, scenario - driven service consumption, and innovation - activated new consumption". Investment opportunities are expected to gradually spread from policy - sensitive home appliances and home furnishings to service consumption sectors with greater demand elasticity.