Bank of China Securities: Rebalancing operations are being conducted between crowded tracks with high liquidity and low certainty sectors.

According to the research report from China Citic Securities, the market continued to fluctuate at high levels this week. Structurally, the previously strong sectors in the technology industry continued to face pressure to cash out this week, with funds rebalancing between crowded high-flying sectors and low-certainty sectors. On the driving factors: On one hand, oil prices continue to run at high levels, expectations of overseas liquidity tightening have recently risen significantly, coupled with the new chairman of the Federal Reserve, Powell, officially taking office, market expectations for the US monetary policy have turned more hawkish. Currently, market expectations for the Federal Reserve to raise interest rates within 2026 have started to noticeably rise. The double squeeze of high oil prices and high interest rates has significantly compressed the looseness of the global liquidity environment. At the industry level, the expectation of a peak electricity demand in the summer catalyzes the power sector, while coal supply contraction continues to push prices higher. In a window period of market volatility intensification and weak fundamental signals, funds have given higher pricing weight to stocks with certainty of dividend returns and relatively low margins of safety.