The ability for anyone to direct, generating a film in 60 seconds: ByteDance's Seedance2.0 explosive features have once again ignited interest in AI applications. On February 10th, the AI film concept remained hot, with the media sector leading gains throughout the trading day. Film ETFs, Gaming ETFs, and Media ETFs topped the market performance charts, with two film ETFs surging over 9%. Concurrently, the rise of AI applications has reawakened investors' "muscle memory" from early 2025, leading to active performance in AI-related thematic directions, humanoid robotics, and Hong Kong-listed innovative pharmaceuticals.
With only three trading days remaining before the Lunar New Year holiday, market hotspots continue to emerge. Amid expectations of a positive market opening post-holiday, a significant number of investors are choosing to hold stocks and funds over the break. However, consensus on what to buy is lacking. Following a sharp market rise in January and subsequent regulatory measures to moderate the pace, the A-share and Hong Kong markets showed poor profitability effects in the first week of February. Beyond profit-taking, a degree of style rotation from high to low valuations occurred, with dividend-focused sectors and micro-cap stocks—products of the barbell strategy—seeing sustained capital inflows. Yet, the emergence of Seedance on February 7th and its rapid breakout disrupted this trend, with the media sector leading the market for two consecutive days. Sharing the "DS" abbreviation, can Seedance replicate the frenzy seen with DeepSeek in early 2025?
Is Seedance's widespread usage a repeat of the "DS Moment"?
On February 7th, ByteDance's Jimeng AI launched its new-generation video generation model, Seedance2.0. Supporting multi-modal input including images, video, and audio, it generates 4-15 second videos. The model demonstrates excellence in core metrics such as movie-grade multi-shot scenes, character consistency, action rhythm, and synchronized audio, described by the industry as "propelling multi-modal technology into the industrial content production phase." Subsequently, leaders in the gaming and video sectors offered high praise. Game Science CEO Feng Ji stated that the AI's ability to understand and integrate multi-modal information represents a leap forward, which is astonishing. Video creators view it as an "AI that will change the video industry." Some brokerage AI teams quickly utilized Seedance to produce short dramas and clips in various styles—cyberpunk, xianxia fantasy, documentaries, Ultraman versus Nailong—effortlessly handling diverse genres and themes. Guosheng Securities' computer research report even labeled it a "game-over" level product.
Seedance2.0 took merely two days to transition from the film industry to the investment sphere. This wave of AI application ignited first in the media sector. On February 9th, the AI application end collectively gained strength; on the 10th, the media sector experienced a full-scale breakout. Looking at the top gainers over the past five days, Film ETFs have risen over 16%, with AI application-related Gaming ETFs and Innovative Pharma ETFs also ranking high.
From an institutional perspective, Seedance2.0's capability leap directly addresses pain points in animation and drama production. For high-quality animation companies focused on coherent storylines and visual quality, this suggests a potential further compression of production cycles, alongside an upgrade in visual quality from "PPT-like dynamic comics" to "near-film-grade animation." Enterprises possessing quality content and mature AI workflows will leverage advanced tools to build higher content barriers. Simultaneously, AI tools are expected to shift from "optional" to "standard" industry equipment, with companies capable of externally deploying Agent technology unlocking greater potential. Furthermore, the market holds high expectations for subsequent iterations of the Doubao large model and its anticipated appearance during the 2026 Spring Festival Gala. As a national-level traffic gateway, the Gala could act as a catalyst for AI applications to break into the mainstream.
Can the Market Switch to a "Dividend + Micro-Cap" Strategy? Sheng Fengyan States: The Inflection Point Has Arrived.
However, prior to Seedance's emergence, a noticeable style rotation from high to low valuations was underway. Based on market fund flows from February 2nd to 6th, capital was not only moving into sectors like satellites and batteries but also consistently flowing into products such as Huatai-PineBridge Dividend Low-Volatility ETF, Huabao Free Cash Flow ETF, Huabao Bank ETF, and E Fund Dividend ETF.
Seedance disrupted this rhythm. Some market views suggest Seedance might drive the entire AI sector to become the primary fund focus again. However, personnel from fund companies caution that observation is still needed. Using Film ETFs as an example, a near 18% gain over two trading days is considered too rapid, making further chasing of highs inadvisable. From a quantitative perspective, some fund managers believe the current market may be entering a major cycle for barbell factors. Western-Lide Fund Manager Sheng Fengyan explicitly stated that January 29, 2026, could be the inflection point for this major cycle. The so-called barbell structure simply combines dividends and micro-caps. Both the dividend and micro-cap strategy indices inherently possess "reversal attributes," continuously rebalancing by selling high and buying low. The former operates inversely based on dividend yield, while the latter does so based on total market capitalization. On January 29th, regulators corrected the model of promoting hot themes via online sales and penalized illegal activities by speculative funds. This combination of measures had an immediate suppressive effect on the short-term momentum of thematic stocks. Over the two trading days of January 29th and 30th, the barbell strategy's excess returns rebounded significantly, by 3.3%. Observing the dividend and micro-cap ends using the Dividend Low-Volatility and Wind Micro-Cap indices as core benchmarks, historical data since 2010 shows this barbell strategy experienced three major drawdowns relative to the CSI 500 Index, ending around June 15, 2015, September 10, 2021, and late August 2024, with maximum excess drawdowns each exceeding 35%. A review indicates a common driver for these three drawdowns: the momentum-driven rise of a particularly strong sector. The profitability effect from these rises rapidly attracted incremental capital, concentrating market enthusiasm highly within core themes and leading to swift expansion in the scale of related thematic investments. Specifically, the 2015 theme was "Internet+", the 2021 themes were the "Maotai Index and Ningde Index", and the current cycle involves themes like commercial aerospace, AI applications, and non-ferrous metals. Consequently, Sheng Fengyan points out that trend strategies concentrate profitability effects in the short term but lack long-term sustainability as gains rely heavily on valuation increases in a small subset of stocks. In contrast, reversal strategies, through constant portfolio adjustments, exhibit more balanced characteristics and act as a market damper. The barbell strategy is a typical reversal strategy, exhibiting lower overall volatility compared to trend strategies and currently holds significant allocation value.