Shenwan Hongyuan's Weekly Strategy Review and Outlook: Conditions for a Positive Cycle of Incremental Funds are Now in Place
1. The relative revenue and profit growth rates of small-cap stocks compared to the overall market continue to improve, and the growth speed of small enterprises continues to rise. This is an important fundamental trend verified in the Q1 2026 reports. The short-term diffusion rally in technology and growth stocks has some fundamental support.
After the Q1 reporting period, the small-cap growth style has recovered as expected. We note that, besides the support from the end of the earnings season and the stalemate in overseas conflicts leading to a recovery in risk appetite, the fundamental clues for small-cap outperformance are also clear. The revenue and profit growth rates of small-cap stocks relative to the overall A-share market (excluding the financial sector) in Q1 2026 have continued their upward trend. Simultaneously, the growth speed of small enterprises (the marginal change in revenue share of companies ranking in the bottom 40% by revenue within each industry) continues to rise. This is the most direct fundamental synchronous indicator for small-cap outperformance. This is related to the continued deepening of new economic industry trends and the expanding coverage of AI-driven inflation. It also aligns with the trend since 2025 where venture capital and primary market financing have bottomed out and rebounded, and new economic hotspots have kept increasing. The short-term diffusion rally in technology and growth stocks has a solid fundamental foundation, and the probability of success in the short-term market performance is not low.
2. The accumulation of赚钱效应 in A-shares is undergoing a qualitative change, and the conditions for initiating a subsequent positive cycle of incremental funds are improving. After the short-term指数上台阶, there may still be a phase of sideways consolidation, which might only represent the lower bound of the market trend. The upper bound of the trend is the opening of upside potential through incremental fund inflows; the second phase of the上涨行情 may be starting right now.
During an upward cycle, we categorize incremental funds into "early money" and "later money." The early money differs each cycle, related to capital market reforms and the development stage of the asset management industry. In this cycle, the early money primarily consists of ETFs, allocation-oriented funds, fixed-income plus strategies, and量化 funds. The later money mainly enters based on the accumulation of赚钱效应, initiating a positive cycle of incremental fund inflows. Based on historical patterns constructed from products during the previous peak of公募 fund issuance, it typically takes until the net asset value of公募 products from the previous issuance peak rises to between 1.1 and 1.2 for a new round of规模扩张 to begin. When the公募 net value exceeds 1.2,规模扩张 may accelerate. After this week's structural market performance, the公募 net value has already surpassed 1.3, indicating that the accumulation of赚钱效应 has undergone a qualitative change.
Even considering the learning effect within the公募 channel, subsequent investment opportunities are increasingly likely to evolve into a positive cycle of incremental funds.
This is manifested by行业 ETFs regaining strong momentum, active products in technology sectors taking the lead in规模扩张, and opening up upside potential.
For market trends based on the verification of new economic景气, the演绎模式 under a baseline assumption should be that after股价上台阶, there is a new phase of high-level震荡. However, incorporating discussions on medium-term资金供需, we believe this might only be the lower bound of the market trend. The upper bound is the opening of upside potential through incremental fund inflows; the second phase of the上涨行情 is starting right now. For the short-term trend, we do not recommend偏左侧的止盈.
Potential downside risks to monitor in Q2: The US-Iran conflict remains in a stalemate. The通航 capacity of the Strait of Hormuz may experience long-term反复. More impactful than high crude oil prices is insufficient crude oil supply. Overseas economic shocks may集中显现 in Q2 2026, and the effects of cost冲击 may also begin to emerge. Additionally, guard against the possibility of inventory falling below safe levels, triggering significant fluctuations in commodity and capital markets. While endogenous market forces are strengthening, external risks are not fully排除. At this stage, appropriately抑制资本市场过热 has its rationale.
3. Structural choices remain unchanged; continue seeking investment opportunities along the main thematic directions. Optical communication, energy storage, memory, and gas turbines continue to lead the charge aggressively. Conditions are favorable for the演绎 of扩散行情; focus on investment opportunities in commercial aerospace and humanoid robots. For subsequent new景气 directions, monitor new energy, new energy vehicles, and export/出海 Alpha.
Risk提示: Overseas economic recession exceeding expectations; domestic economic复苏 falling short of expectations.