On the morning of August 14, the Shanghai Composite Index climbed above 3,700 points for the first time since December 2021. In terms of sector performance, AI chips, digital sentinels, and digital currency concepts led the gains. The recently popular Sci-Tech Innovation 50 ETF (159783) rose nearly 2% during the morning session. Among its holdings, Cambricon, Hygon Information, Sanhuan Group, Loongson Technology, CATL, and SMIC were among the top gainers, with Cambricon surging over 12% at one point, pushing its total market capitalization above 400 billion yuan.

On the news front, Morgan Stanley recently stated that foreign capital inflows have turned positive since June, with the trend further expanding in July, bringing the total net inflow to $2.7 billion. After summer, foreign capital may accelerate its inflow into China’s stock market due to regulatory efforts to improve shareholder returns, attractive valuations in Chinese equities, and rising expectations of U.S. interest rate cuts, which are drawing more investors.

CICC noted that the current market rally is not yet over amid optimistic sentiment, with this year’s A-share market resembling an "enhanced version of 2013." Specifically, this year’s market structure is similar to 2013, with small-cap and growth styles outperforming, but overall performance is expected to be significantly better than in 2013. Looking ahead, while index volatility may increase amid rising valuations and incremental capital inflows, the current rally—which began after last year’s "September 24"—continues, supported by loose liquidity, earnings recovery, and shifting narratives. In terms of allocation, CICC recommends focusing on high-growth sectors with solid earnings validation, such as AI/computing power, biotech, defense, and non-ferrous metals; high-earnings-momentum sectors like brokers and insurance, which benefit from retail capital inflows; and dividend sectors, which are expected to remain divergent.

Public information shows that the Sci-Tech Innovation 50 ETF (159783) tracks the CSI Sci-Tech Innovation 50 Index. This index selects 50 leading companies with the largest market capitalization and pure-play tech attributes from the ChiNext and STAR Market. It combines the strengths of both boards, featuring high-tech STAR Market constituents and high-growth, profitable ChiNext stocks.