Zhongyin Securities: The conditions for the shift of hard technology stocks in the A-shares from a recovery of overselling to a trending market are accelerating to maturity.

Bank of China Securities released a research report stating that the hard technology sector, represented by the Sci-Tech Innovation 50 Index, is transitioning from a phase of severe undervaluation recovery to a trend market. Throughout the cycle from June to mid-August, the trend of hard technology can be observed in two layers. The first layer is at the index level. The representative index of hard technology, the Sci-Tech Innovation 50, reached a peak closing point of 2207.86 on June 30 before experiencing a sharp decline, falling approximately 25.9% during July, with a closing low on August 3 at 1552.89. Subsequently, a rebound began, with a closing price of 1717.68 on August 14, slightly below the 20-day moving average but reflecting a 10.6% rebound from the low point. The index has emerged from the extreme sell-off zone, with clear low point repairs and an upward shift in the rebound center. The second layer is at the industry level. In July, Shenwan Electronics and Communication sectors fell approximately 34.7% and 31.9%, respectively, becoming the hardest hit areas in the previous round of polarized valuation digestion and overseas narrative disturbances. By August, as of August 14, the accumulated growth rates for the month were approximately 13.2% and 15.3%, with both sectors closing back above their 20-day moving averages. The quick rebound in these two benchmark industries has led to the establishment of a short-term pattern repair. In terms of trading volume, the Sci-Tech Innovation 50 index first broke the 100 billion mark on August 14. If the hard technology market is merely a weak recovery driven by leverage and speculative funds, it would be difficult for the market to coexist with a shrinking volume background. Therefore, we judge that after the panic sell-off, trend funds and industrial funds are gradually gaining dominance, with capital behavior moving closer to a consolidation phase of eliminating the false and retaining the true. Overall, the strong earnings reports from major cloud companies in this round have further solidified the logical chain from AI orders to capital expenditure to revenue conversion. The narrative around AI infrastructure is maturing quickly, shifting from a rebound theme trading to a focus on the upward trend in capital expenditures.