Golden Eagle Fund: Equity Markets Still Have Significant Room for Capital Allocation, Recommends Balanced Structural Opportunities

A-shares have recently surged with increased trading volume. On August 18, the Shanghai Composite Index hit a new decade-high, while the trading volume in the Shanghai and Shenzhen markets exceeded 2 trillion yuan for multiple consecutive trading days.

Golden Eagle Fund stated that domestically, last week’s financial data, including M1 and M2 growth rates, exceeded expectations, with the phenomenon of "deposit relocations" among households becoming a hot topic in the market. In a low-interest-rate environment, equity markets still have substantial room to absorb capital, potentially boosting market risk appetite amid profit effects. Internationally, the fund believes a September Fed rate cut is likely the baseline scenario. Moving forward, as Trump influences market expectations and the new Fed Chair reinforces rate-cut expectations, there may still be room for rate-cut trades in 2026.

Regarding sector allocation, Golden Eagle Fund recommends a balanced approach to cope with rapid sector rotation. Specifically, in the tech sector, previously high-growth areas such as overseas AI supply chains and innovative pharmaceuticals have seen concentrated capital allocation, leading to crowded trades. New inflows may exhibit "fear of heights" and shift toward undervalued segments. The fund suggests focusing on AI-related sub-sectors with more attractive valuations, such as AI applications and advanced semiconductor processes.

In the value sector, as the market strengthens, non-banking financial sectors like brokerages, insurance, and financial IT may see improvements in both valuations and performance. Additionally, expectations of Fed rate cuts and the establishment of a "dual-easing" monetary and fiscal policy overseas in 2026 could benefit export-oriented industries, making sectors like non-ferrous metals and home appliances—tied to external demand—worth considering.

Furthermore, amid ongoing efforts to "counter involution," the fund recommends paying attention to industries such as photovoltaics, glass, and steel, as well as sectors prioritized by recent policy guidance.