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.
