Merrill Lynch Securities: 25Q4 media industry heavy positions decreased to underweight, gaming sector highly favored

Wanlian Securities released a research report stating that as of Q4 2025, the fund's heavy allocation and valuation level of the SW media industry index have seen a slight decline, with trading volume activity falling, but still at a high level. The industry fund's allocation has shifted from over-allocated to under-allocated, with institutional focus on top companies in the gaming sector. It is recommended to pay attention to gaming companies with rich game version reserves and AI applications. Key points from Wanlian Securities: The heavy allocation in the media industry has shifted to under-allocated, with the gaming sector remaining a focus for the market. In Q4 2025, the SW media industry's fit ratio was 1.63%, the fund's heavy allocation ratio was 1.22%, and the under-allocation ratio was 0.41%. Compared to the heavy allocation in the SW media industry, the gaming sector remains over-allocated, with an increase of 3.59pct to 40.26%, while the rest of the sub-sectors continue to be under-allocated. The gaming sector dominates the top ten heavily allocated stocks, with high market attention. In terms of stock market value, the top ten heavily allocated stocks in the SW media industry in Q4 2025 were Giant Network Group, Zhejiang Century Huatong Group, Kingnet Network, Focus Media Information Technology, 37 Interactive Entertainment Network Technology Group, Perfect World, G-bits Network Technology, Beijing Ultrapower Software, Beijing Enlight Media, and Kunlun Tech, with the gaming industry occupying 8 seats. Looking at the performance of the top ten heavily allocated stocks, the stock price of 37 Interactive Entertainment Network Technology Group rose in the fourth quarter of 2025, while G-bits Network Technology and Kingnet Network saw significant declines, with decreases of 24.58% and 22.12% respectively. The concentration of fund's heavy allocation has declined, but the top allocation remains at a high level. In Q4 2025, the market value of the top 5, top 10, and top 20 heavily allocated stocks in the SW media industry accounted for 68.74%, 85.72%, and 97.33% of the total market value of the industry fund's heavy allocation, respectively. This represents a decrease of 8.47pct, 5.46pct, and 0.95pct compared to Q3 2025, reflecting that the industry's heavy allocation funds are still highly concentrated in the top targets. Risk factors: The risks include macroeconomic recovery falling short of expectations, industry policy risks, and technology development falling short of expectations.