Guojin Securities says the A-share market oscillated at highs this week; previously lagging coal, power and consumer sectors staged a clear rebound. In the current AI capex-driven rally, changes on the numerator side—sector and company profit dynamics—are the key drivers of market rotation rather than denominator-side liquidity. Example: the electronics sector saw last quarter turnover concentration at historical highs and its profit share of All-A returned to peak levels; its marginal contribut

Guojin Securities says the A-share market oscillated at highs this week; previously lagging coal, power and consumer sectors staged a clear rebound. In the current AI capex-driven rally, changes on the numerator side—sector and company profit dynamics—are the key drivers of market rotation rather than denominator-side liquidity. Example: the electronics sector saw last quarter turnover concentration at historical highs and its profit share of All-A returned to peak levels; its marginal contribution to 2026Q1 All-A profit growth reached about 15%, making concentrated trading a rational response to marginal signals. Looking ahead, with global financial asset expansion possibly already turning, market rotation will be driven by numerator changes not denominator changes. Implications: 1) tech subsectors lacking cyclical profit-growth support are unlikely rotation targets; 2) for traditional sectors, improving profit expectations remain the basis for a bottoming and recovery.