The Blackrock Debt Strategies Fund Inc stated that the domestic A1 model DeepSeek-R1 being open-sourced has sparked market enthusiasm, marking a "China Moment" in the Global Capital Markets — the Hang Seng TECH Index rose nearly 18% in February, reaching a new high since October 2024, with southbound capital frenzy buying over 150 billion HKD. This week, as the "Two Sessions" released Bullish Signals, market sentiment shifted from "policy expectations" to a new phase of "performance verification". Can this new round of spring offensive continue? What fields hide opportunities? What risk signals should be monitored?

Blackrock's Chief Equity Investment Officer, Shen Yufei, stated that looking back at February, after experiencing the "late spring cold" in January, the market exploded into a vigorous spring offensive due to breakthroughs in humanoid robots and the DeepSeek large model. The Hang Seng Technology index rose 17.88% in February; the Sci-Tech Innovation index and Wind's full A also increased by 11.96% and 4.74%, respectively. By industry, technology-oriented sectors like Computers, Machinery, Steel, Autos, and Media led the market.

In 2025, the policy framework set by the "Two Sessions" continues to exert strength, providing a solid foundational impetus for the development of China's economy and capital markets amid global geopolitical competition. The article "The Economic Work Must Coordinate Several Important Relationships Well," published in "Seeking Truth," provides clear direction for China's economic development.

Shen Yufei noted that looking forward to March, the investment sentiment triggered by China's technological breakthroughs is expected to continue. The Hong Kong stock market, as a bridgehead for Chinese technology, will still be the focus this month, hence the emphasis will be on: (1) Investment opportunities that are promising and competitive within the China Industry Chain; (2) Investment opportunities in cyclical industries after economic activities enter peak season; (3) Investment opportunities in quality consumption after effective stimulation of internal demand from the "Two New and Two Heavy" policies; (4) Investment opportunities in high-quality listed companies that exceed expectations.

Risk reminder: Risks that the economy stabilizing may lead to initial-stage listed company performance falling short of expectations.

Manager Bi Kai of the Blackrock Excellent Voyage Mixed Fund stated that in February 2025, with widespread use of AI models like DeepSeek-R1 and the successive release of many robotic products, investors' enthusiasm for technology sectors has rapidly increased, with significant stock price rises in AI, Robotics, and Low-altitude Economy sectors, and a notable increase in turnover ratio. In contrast, individual stocks in cyclical and high-dividend sectors have shown relatively bland performance. With the "Two Sessions" clarifying the economic development goals for 2025, market confidence in fiscal and monetary policies is expected to be strengthened. Currently, the main risk the market faces comes from the impact of reshaping the Global geopolitical landscape. Attention will actively focus on opportunities and risks arising from changing geopolitical relations for different listed companies.

In terms of allocation direction, there are still four main investment opportunity lines that are favored:

(1) The improvement of domestic demand stimulated by policies mainly includes industries such as home appliances, food and beverages, textiles and clothing, Internet, light industry manufacturing, real estate, and machinery. The directions with a higher win rate include self-consumption and investment opportunities related to national consumer subsidies; those with a higher payout include the end of the real estate price decline cycle and investment opportunities related to the reversal of downward price pressure.

(2) National security and the direction of a strong technology nation mainly include industries such as electronics, communications, media, semiconductors, and machinery, among which the industry opportunities are more active in directions such as innovative products in AI applications and the emergence of AI Consumer Electronics, as well as the product innovation of the Apple supply chain in 2025.

(3) The direction of easing supply expansion and supply-demand rebalancing primarily includes Industries such as agriculture, forestry, animal husbandry, fishery, pharmaceuticals and biotechnology, and Building Materials. Attention is focused on the ongoing losses in the supply side and the confirmation of the inflection point, which may not occur until the second half of 2025.

(4) Robust dividend direction, mainly including communications, public utilities, and petroleum and petrochemical industries. Under low interest rate levels, high-yield assets with reasonable valuations and stable profits have allocation value, with the core being the grasp of reasonable valuations and future profit stability.

At the current position, Bi Kai believes that the market has completed a pressure test of short-term fluctuations in early March, and technological innovation and domestic demand recovery are still likely to be the main focus of investors. There is a strong outlook for investment opportunities in technology innovation with significant long-term growth potential and investment opportunities in domestic demand expected to see obvious recovery growth in performance in 2025. The goal is to comprehensively balance the win rate and payout of investment opportunities to strive for ideal annual investment returns.

The manager of Blackrock Advanced Manufacturing One-Year Holding Mixed Fund, Zou Jiangyu, stated that in February 2025, the enthusiasm of the Chinese stock market has rebounded, and the advanced manufacturing sector is showing significant differentiation, with robotics, domestic computing power, Internet, and autos performing well, while the global computing power and new energy sectors are under phase pressure.

In the current market environment, related opportunities around the AI industrial revolution, green energy revolution, and upgrading of China's manufacturing industry will continue to be researched and laid out, with a continued bullish outlook on:

(1) The application of AI technology in fields such as embodied intelligence, and smart driving in consumer electronic terminals.

(2) Opportunities arising from demand surges benefiting infrastructures, semiconductor Hardware, and Cloud Computing segments that empower AI applications.

(3) Domestic high-end equipment, chip manufacturing, and other opportunities benefiting from the demand for controllable autonomy.

(4) Opportunities in the Industry Chain brought by the Green Energy Revolution and the Rise of the Electric Vehicle Industry.

Yang Dong, manager of the Blackrock Hong Kong Stock Connect Outlook Mixed Fund, stated that in February 2025, the Hong Kong stock market experienced a strong rebound with the Hang Seng Index rising 13.43% in a single month and the Hang Seng TECH Index increasing by 17.88%, reaching a new high since October 2024. The open-source of the domestic AI model DeepSeek-R1 has propelled the valuation recovery in the Technology Sector, becoming the core driving force behind the market's rise. Southbound funds have been a key driver, with a net purchase of HKD 152.8 billion in a single month, refreshing a nearly four-year record.

Currently, the national "Two Sessions" have intensively released economic stimulus signals, shifting the market focus to the verification of policy implementation effects, and attention needs to be paid to the impact of policies on the demand side. In the current market environment, the following investment opportunities are particularly promising:

(1) Logic of Recovery from a Low Base: Some industries and individual stocks have undergone adjustments over the past few years, and valuations are now at historical lows. Attention should be paid to signs of fundamental improvement, such as in the Real Estate Industry Chain and certain segments of Consumer.

(2) Directions Supported by Policies: Policy support for technological innovation and high-end manufacturing remains a mid- to long-term main line. It is recommended to select leading enterprises with core competitiveness.

(3) Assets with Stable Returns: In the context of increased market volatility, high-dividend assets and defensive sectors have a good allocation value, providing stable returns for the portfolio.

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