As September arrives and the interim earnings season draws to a close, signs of slowing capital expenditures from overseas hyperscale cloud providers, coupled with hawkish signals from Federal Reserve Chair Warsh at the global central bank symposium, have left investors wondering about the trajectory of the technology sector following its oversold rebound. Let's turn to the latest insights from You Guoliang, fund manager of Great Wall's "Tech+" strategy fund.
You noted that August's market performance was characterized by a recovery and repair rally, lacking a clear sector leader and exhibiting more rotational trading across sectors. However, small-cap stocks demonstrated notably stronger rebound momentum in terms of style. Looking ahead to September, he expects the rebound rally could persist, with continued bullishness on military and defense-related sectors.
Regarding the commercial space segment, You believes the successful recovery of the Zhuque-3 rocket could accelerate industry development. However, the subsequent sector decline appears significantly detached from fundamental improvements. He anticipates the sector may transition from thematic trading driven by technical events toward more fundamentally oriented trends based on industrial momentum.
On the traditional military sector, You highlighted that valuations are at low levels with favorable share structures. Year-to-date, demand for military trade orders has been robust, yet the sector's first-half performance was constrained by domestic demand factors, preventing share prices from reflecting these positive developments. Following the interim results, the worst phase of industry fundamentals is likely behind us, with positive catalysts gradually increasing. Given the current environment of sector rotation and the absence of a clear market leader, military trade is expected to emerge as one of the more sustainable investment directions.
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