Market Strategy Weekly: Oscillating Rebound; Stay Core, Seize the Unconventional

China's A-share market fell early in the week before rebounding, with small- and mid-cap growth dramatically outperforming large caps: the CSI 1000 led with an 8.54% gain while the SSE 50 rose just 1.28%. Electronics, building materials, non-ferrous metals, communications and machinery each climbed more than 10%, whereas transportation, non-bank financials and banks closed lower. Volume kept expanding, with weekly turnover holding above RMB 2 trillion and electronics alone accounting for RMB 3.48 trillion. The Eastmoney All-A trailing P/E reached 18.52x, lifting its historical percentile to 92%, with several core indexes above the 90th percentile. Super-large orders logged a net inflow of RMB 89.41 billion, though TMT flows diverged, with electronics and communications attracting money while media and computers saw outflows. Shanxi Securities frames the market's core question as whether the tech rally is an established trend or an oversold rebound, and leans toward continued style rotation into next week. It advises a three-tier allocation: core holdings tied to the CSI 1000 and ChiNext, including electronics, communications and non-ferrous leaders; opportunistic positions in oversold computer and media names, with machinery and biopharma as transitions; and defensive anchors in banks or food-and-beverage leaders paying stable dividends, which could act as ballast if tech corrects.