On March 25, A-shares continued their upward trajectory, with the Shanghai Composite Index rising over 1% to reclaim the 3,900-point level and the ChiNext Index advancing more than 2%. By market close, the Shanghai Composite gained 1.3%, the Shenzhen Component Index climbed 1.95%, and the ChiNext Index increased by 2.01%. Total trading volume across Shanghai and Shenzhen exchanges reached 2.18 trillion yuan, expanding by 97 billion yuan from the previous session. Market dynamics showed a clear pattern of technology strength and resource weakness. Analysis of public market data reveals four major positive factors converging, driving capital rotation from traditional energy sectors toward the AI computing power industrial chain.

First, geopolitical risk premiums have receded, leading to a recovery in risk appetite. Overnight developments indicated potential U.S.-Iran negotiations, suggesting easing tensions in the Middle East. As international oil prices declined, funds previously allocated to safe-haven sectors like oil and gas and gold took profits, shifting toward more flexible technology growth stocks.

Second, token data has ignited demand expectations. The National Data Bureau disclosed that China's average daily token calls have exceeded 140 trillion, representing a thousand-fold increase over two years. This data confirms the explosive growth in AI inference demand, directly fueling infrastructure sectors like computing power leasing and optical communication.

Third, technological breakthroughs and policy catalysts emerged. China Information Technology Group achieved a breakthrough in 2.5Pb/s ultra-large-capacity optical transmission technology, while Shenzhen issued an AI server industry chain action plan promoting optical module upgrades to 1.6T/3.2T. The policy proposal of "computing-power coordination" linking computing power with green electricity has enhanced the certainty of technology infrastructure development.

Fourth, earnings validation and price increase expectations materialized. Leading memory chip manufacturer BIWIN Storage signed orders exceeding 10 billion yuan, with institutions predicting triple-digit percentage price increases for memory chips in the first half. Optical module leader Lumentum reported sold-out capacity, providing micro-level confirmation of industrial chain prosperity.

As market styles shift again, which directions are gaining institutional favor? Guosen Securities believes that during short-term fluctuations, market styles may rebalance, with some undervalued "old economy assets" potentially gaining temporary advantage. However, from a medium-term perspective, sectors representing economic transformation and security directions, such as artificial intelligence (AI) and advanced manufacturing, remain core allocation targets. These areas benefit from genuine industrial policies and fundamental support, making them more likely to lead market recoveries after adjustments.

Among other sectors, the power sector remained strong throughout the session, with green power concepts leading gains. Over ten stocks including Zhongmin Energy, Guangdong Electric Power, and Huadian Liaoneng hit limit-up. The tourism and hotel sector fluctuated upward, with Guilin Tourism reaching limit-up. The defense sector rose in afternoon trading, with Hunan Tianyan hitting limit-up. The lithium battery sector advanced with Shengyang Co., Ltd. and Veken Technology reaching limit-up. Conversely, the oil and gas sector weakened, with Keli Co., Ltd. and Tongyuan Petroleum falling over 7%, while Shouhua Gas and Intercontinental Oil & Gas declined more than 5%. Photovoltaic equipment concepts retreated, with Yubang New Materials dropping over 7%.

Looking ahead, HSBC Private Banking and Wealth Management China Chief Investment Officer Kuang Zheng released the HSBC Q2 Global Investment Outlook Report on March 25. The report indicates that Asian markets, with their vigorous growth momentum, strong domestic demand, technological innovation policies, and valuation advantages, have become preferred targets for investor diversification in the second quarter. Kuang Zheng expressed optimism about Chinese stocks, focusing on innovative leaders and high-quality dividend stocks through a "barbell strategy." This approach aims to capture China's structural growth opportunities while providing portfolio support through stable dividend income.

Hot sectors included: 1. Token concept fermentation drove computing power stocks higher, with computing leasing concepts mostly strengthening. 263 Network and Zhongjia Bochuang hit limit-up. The National Data Bureau reported that China's average daily token calls reached 100 billion in early 2024, surged to 100 trillion by end-2025, and exceeded 140 trillion in March, representing a thousand-fold growth over two years.

2. The power sector erupted, with green power concepts leading. Over ten constituent stocks hit limit-up, including Huadian Liaoneng with eight consecutive limit-ups, Shaoneng Co., Ltd. with five limit-ups in six days, and Guangdong Electric Power achieving four limit-ups in six days. CITIC Securities noted that "green fuel" and "computing-power coordination" entered the government work report, corresponding to China's energy independence strategy and AI competition strategy. Driven by dual rigid high-growth demands for green fuel production and data center green power supply, these demands are expected to generate nearly 465GW of wind turbine demand by 2030, driving super cycle prosperity in the wind power sector.

3. CPO concepts remained active, with MNC Optoelectronics, Allred, and Kechuan Technology hitting limit-up. U.S. optical communication concepts led gains, with Lumentum rising 10% to record intraday highs and Coherent advancing 6.78%. China刷新ed optical communication transmission records, achieving 2.5Pb/s real-time bidirectional transmission capacity on 10.3km 24-core single-mode fiber for the first time.

4. Semiconductor equipment concepts strengthened, with Guofeng New Materials and Bochuang Holdings hitting limit-up. SK Hynix announced plans to raise approximately $10 billion through a U.S. listing, intending to use potential proceeds for AI infrastructure construction, including building semiconductor clusters in Yongin, South Korea, and expanding memory product capacity.

Institutional perspectives: CICC stated that current levels may represent medium-term relative lows for A-shares, with deep corrections creating布局 opportunities. Although short-term trends remain somewhat uncertain, market risks have further dissipated after adjustments, with valuations reaching relatively reasonable levels. Medium-term macro conditions remain fundamentally unchanged, supporting A-shares' "steady advance" logic, with risk releases and declines providing favorable allocation opportunities.

Guosen Securities believes short-term fluctuations may lead to market style rebalancing, with some undervalued "old economy assets" potentially gaining temporary advantage. Medium-term core allocation directions remain sectors representing economic transformation and security, such as AI and advanced manufacturing, which possess genuine industrial policy and fundamental support.

Guotai Haitong noted that influenced by midterm elections, stock market and inflation risks will significantly impact Trump, potentially prompting U.S. compromise or withdrawal—dubbed Taco 2.0. As most Asian economies are oil importers similar to U.S. markets, emerging market equities would become primary beneficiaries if Iran conflict sees turning points.