ETF Daily: March Market May Gradually Shift from "Policy Expectations" to "Earnings Realization"

On March 16, the A-share market showed a mixed trend throughout the day, with the two major indices initially falling and then rising. The ChiNext Index performed strongly, closing up 1.41%, while the Shenzhen Component Index edged up 0.19%, closing at 14,307.58 points. The Shanghai Composite Index was weighed down by heavyweights and fell 0.26%, closing at 4,084.79 points. Both markets maintained high trading volumes, reaching 2.34 trillion yuan for the day, slightly lower than the previous trading day.

In terms of sectors, semiconductors and storage chips surged across the board. Shipping and oil transportation stocks soared due to geopolitical tensions in the Strait of Hormuz. Large consumer sectors like liquor also remained active, reflecting positive market feedback on the economic data for January and February. Conversely, steel, precious metals, and electricity sectors led the decline.

Short-term external geopolitical risks still exist, but with domestic consumption recovering and new funds entering the market, the medium-term trend remains positive. The March market may gradually shift from “policy expectations” to “performance realization,” and investors are advised to respond rationally to market fluctuations.

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Today, Hong Kong stocks in the tech sector demonstrated strong resilience, with the Hang Seng Tech Index soaring 2.69%. The Hong Kong Tech ETF (513020) also rose against the trend, closing up over 3%. Recent capital flows have sent positive signals, with southbound funds hitting a record single-day net purchase of over HKD 37.2 billion on March 9. The total net inflow into Hong Kong tech ETFs this year has exceeded HKD 50 billion. From a macro perspective, the Hong Kong tech sector now offers significant valuation appeal.

In terms of liquidity, the global macro liquidity trend remains easing, but Hong Kong, as an offshore market, tends to be more flexible during capital inflow phases. Valuation-wise, data shows that the P/E ratio of the Hong Kong tech index has fallen to around 21 times, below the historical average minus one standard deviation, making it an attractive valuation zone and a key reason for institutional accumulation.

Besides valuation and liquidity factors, the revenue growth expectations of domestic tech giants also drive the upward momentum of Hong Kong stocks. As AI commercialization accelerates and the domestic economy recovers modestly, tech companies’ profits are expected to accelerate, making the sector’s recovery more certain.

Overall, the Hong Kong tech sector currently offers high long-term allocation value. Investors may consider positioning in tech ETFs and should invest rationally based on their risk tolerance.

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In the afternoon, the semiconductor sector gained momentum, with the Chip ETF (512760) closing up 1.95%, with a daily trading volume of 447 million yuan. This strong performance was mainly driven by Nvidia’s GTC 2026 conference and a new wave of industry-wide price hikes. Recently, several international chip design giants and mature process wafer foundries announced price increases starting from April, with some hikes exceeding 10%. Major analog and memory chip leaders also announced price adjustments, fueling market expectations of simultaneous volume and price growth.

According to the latest data from the Semiconductor Industry Association, global semiconductor sales in January 2026 increased by 46.1% year-over-year. Meanwhile, the World Semiconductor Trade Statistics organization forecasts that the global semiconductor market will continue to grow strongly in 2026, with an expected year-over-year increase of 26.3% to $975 billion. The explosive growth of AI computing infrastructure has not only created massive incremental demand but also caused structural capacity constraints in traditional production, leading to a tight supply-demand balance. Major manufacturers (Samsung, SK Hynix, Micron) are prioritizing high-margin HBM (High Bandwidth Memory) capacity, severely squeezing the capacity for consumer-grade and server D5 memory. Institutions predict that the “super cycle” in the memory industry may extend into 2027. (The stocks mentioned are for illustrative purposes only and do not constitute investment advice.)

Meanwhile, China’s semiconductor industry is accelerating its breakthrough. At the March 14, 2026 Shanghai Global Investment Promotion Conference, industry insiders pointed out that under the combined effects of domestic substitution and AI-driven growth, the industry is entering a new cycle of mergers and acquisitions, with leading companies’ scale effects expected to further emerge. With the impact of export controls abroad, the push for self-reliance in the semiconductor supply chain is strengthening, as domestic equipment, materials, and component companies are speeding up validation and deployment in downstream wafer fabs. Domestic substitution has become a strong endogenous growth engine for the industry.

Looking ahead, driven by the ongoing upward cycle of global semiconductors and the acceleration of localization, the profitability of leading domestic semiconductor companies is expected to further recover, making the sector highly attractive for medium- and long-term allocation. Investors may consider long-term positions in chip ETFs to share in China’s semiconductor industry’s leapfrog development, but should remain rational and cautious of short-term market volatility.

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Today, the livestock sector continued its recent strength, with the Livestock ETF (159865) rising 1.06%. The core logic behind this rebound is the accelerated reduction of pig production capacity, coupled with intensified policy regulation.

Regarding capacity reduction, pig prices have quickly fallen back to around 10 yuan/kg, and profit margins for self-breeding and raising pigs have turned sharply negative again. Many pig farming companies are experiencing cash flow losses, and the number of breeding sows has continued its decline since Q4 last year. The pace of restocking sows has slowed overall. Industry-driven capacity reduction pressures are accumulating, creating a self-reinforcing capacity reduction cycle.

On the policy front, the Ministry of Agriculture and Rural Affairs recently held a special meeting, reiterating the goal of lowering breeding sow numbers, with increased policy efforts likely to accelerate capacity reduction. Additionally, regulators have clarified that capacity control will be maintained, restricting profitable groups from expanding against the cycle at the bottom, which helps stabilize the cycle and supports a rebound. The dual forces of “market-driven losses” and “administrative capacity regulation” make the capacity inflection point increasingly clear.

In terms of valuation, the sector’s safety margin remains ample, making it attractive for investment. Currently, the PE_TTM of the livestock sector is 19.65, near the 36th percentile historically, similar to the pig price and stock bottom in October 2021. Cost advantages of leading companies and increased industry concentration further enhance the sector’s investment appeal.

Looking ahead, in the short term, pig prices may remain low from March to April. From a long-term perspective, the industry’s cyclical upturn is becoming more likely. As the reduction in breeding sows gradually impacts pig supply, combined with seasonal consumption recovery in the second half of the year, supply-demand fundamentals are expected to improve substantially. Investors are advised to be patient, consider buying on dips, avoid chasing highs, and continue monitoring the Livestock ETF (159865).

Risk warning: Investors should fully understand the differences between regular fixed investments and savings methods like lump-sum deposits. Regular investment is a simple way to guide long-term, averaged-cost investing but does not eliminate inherent investment risks or guarantee returns. It is not a substitute for savings or equivalent financial management. All stock ETFs/LOFs/structured funds are high-risk, high-return securities, with expected returns and risks exceeding those of hybrid, bond, and money market funds. Investing in stocks on the STAR Market or ChiNext involves specific risks related to market structure and trading rules. The short-term performance of sectors/funds shown is for analytical reference only and does not guarantee future performance. Mentioned stocks’ short-term performance is for reference only and does not constitute stock recommendations or performance forecasts. These opinions are for reference only and do not constitute investment advice or promises. Investors should review relevant suitability regulations, conduct risk assessments beforehand, and choose funds matching their risk profile. All investments carry risks; please invest cautiously.

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