Why is the Sci-Tech Innovation 50 considered a "highly resilient" preferred choice amid easing geopolitical conflicts?

Can AI Help? How Can High-Elasticity Attributes Benefit from the Semiconductor Upturn?

Recently, as certain marginal easing in geopolitical risks has emerged, the risk appetite in the A-share and Hong Kong stock markets has also shown some signs of stabilizing and repairing. If, going forward, geopolitical developments become clearer, how should we position ourselves for the rebound that the A-share market may be able to deliver? Let’s take a look at which indices have suffered the most downside pressure and oversold due to external factors. Since the Middle East geopolitical conflict, the Sci-Tech Innovation 50 Index has fallen by more than 15%, the largest decline among mainstream broad-based indices and with the greatest impact. Against the backdrop of marginal improvement in the core factors weighing on the market, its high-elasticity attributes are fully displayed, and it may become a top-choice target for the current market trade of a rebound. Behind “high elasticity” is not only “the most declines,” but more importantly, the performance certainty behind the Sci-Tech Innovation 50 has not changed with short-term fluctuations. The short-term oversold rebound and the medium-to-long-term high prosperity value form a resonance—well worth investors’ close attention.

1. Why Did the Sci-Tech Innovation 50 Pull Back the Most?

First, we need to review the market’s prior reasons for the correction: driven by the unexpectedly strong burst of domestic large-scale models and China’s AI domestic substitution narratives, the Sci-Tech Innovation 50 Index once performed strongly. However, that rapid rise driven by expectations caused many stocks to surge sharply in the short term, sending valuations into high-level ranges and building up substantial profit-taking positions. In March, geopolitical conflict became the core variable disrupting global risk appetite. Tensions in the Middle East led international oil prices to remain volatile at high levels; since the beginning of the year, Brent crude has risen by more than 70%. This not only pushed up global inflation expectations, but also disrupted the Fed’s rate-cutting rhythm. Under this macro backdrop, global capital’s risk appetite fell significantly. Technology stocks, due to their high valuations and long-duration characteristics, were hit first and faced capital outflows. Not only did China’s A-share Sci-Tech Innovation 50 hit new stage lows, but globally, U.S. “Big Tech Seven,” as well as Korean memory-related targets, also briefly fell into correction ranges.

And now the market is seeing a key change: rising expectations for easing geopolitical conflict have pressured international oil prices down from high levels. With a marginal easing in global inflation expectations, the external core factors that previously suppressed the market have improved positively. Global risk appetite has begun to repair. The capital that previously left the market may gradually return to high-elasticity technology sectors, and the rebound window for the Sci-Tech Innovation 50 is also expected to officially open.

2. What Confidence Is Behind “High Elasticity”?

1. Fundamental Prosperity

In addition to signals of easing geopolitical conflict, the performance prosperity of the Sci-Tech Innovation 50 also provides the fundamental basis for its rebound. Let’s look at the A-share market as a whole. After experiencing an adjustment where dust and sand were both swept away, the market shows clear differentiation: on the one hand, sectors with no performance support and that previously relied on concept-driven speculation saw huge declines; on the other hand, stocks whose annual reports or first-quarter report expectations were positive and whose industry prosperity has been validated have shown stronger downside resistance. This sends a clear message to the market: as the first-quarter report window approaches, the market’s dominant logic is shifting from being “driven by expectations” to being “supported by reality,” and the Sci-Tech Innovation 50—featuring performance certainty—will gain more solid fundamental support during the rebound.

Chart: Since March, the index of strong performers has outperformed in a highly volatile market

Source: WIND, as of 2026/03/23

Chart: Analysts’ forecast shows Sci-Tech Innovation 50 profit growth is leading among broad indices

Source: WIND, as of 2026/03/23

The short-term rebound of the Sci-Tech Innovation 50 is not rootless; the industry’s underlying fundamentals have not reversed. Solid earnings form the core support for the rebound and also determine its long-term high-prosperity value. In the Sci-Tech Innovation 50’s weightings, semiconductor companies account for nearly 70%, and the fundamentals of the semiconductor industry continue to improve. In January–February 2026, China’s domestic integrated circuit production rose by 12.4% year over year, with the growth rate even higher than in all of 2025. At the same time, the DXI index (DRAM output value) increased by 2.8%, and the memory chip price index has also maintained an upward trend. The global semiconductor cycle is still in an uptrend channel.

As the “shovel vendor” for AI industry development, the semiconductor and computing power industry chain is a core link in technological innovation. Its earnings release comes with relatively high certainty. As the first-quarter report window approaches, once the performance of the hard-tech technology leaders within the Sci-Tech Innovation 50 constituents is realized, it can effectively digest the current valuations and become solid support for a rebound in stock prices. Over the medium to long term, industry logics such as domestic substitution and AI computing power upgrades remain clear, and the growth dividend of the Sci-Tech Innovation 50 continues to be steadily released.

Chart: The Sci-Tech Innovation 50 Index’s structure is dominated by industries with high prosperity

Source: WIND, as of 2026/03/23

2. Valuation Reverting to a Reasonable Range

From a valuation and cost-effectiveness perspective, the risk-reward ratio of the Sci-Tech Innovation 50 continues to improve. Although the absolute valuation percentile of the Sci-Tech Innovation 50 is relatively high, given the high growth profile of its constituent stocks, the PEG ratio (price-to-earnings relative to earnings growth) is a more reasonable valuation reference. The forecasted PEG for 2026 is 1.11, which does not place it at a valuation disadvantage compared with broad indices such as the CSI 300. As first-quarter earnings verification comes in, if the index’s leading companies can maintain net profit growth of 30% or more, the current valuation will be quickly digested. With external risk factors easing and the “earnings shoe” gradually landing, the Sci-Tech Innovation 50 may see a repair-style rally driven by both a rebound from oversold conditions and high earnings growth. Short-term rebound opportunities and medium-to-long-term allocation value may resonate together.

Chart: The forecasted 2026 PEG for the Sci-Tech Innovation 50 is not high compared with other broad indices

Source: WIND, as of 2026/03/23

3. Historically, It Has Been a Rebound Pioneer

It is worth noting that after major adjustments in the A-share market in recent years, the Sci-Tech Innovation 50 often shows greater elasticity. Its rebound elasticity is significantly higher than other core indices, with a clear “oversold high-elasticity” characteristic. This time, with the addition of clear external positive catalysts, the strength and sustainability of its rebound are even more worth expecting.

Chart: In recent years, after declines, the Sci-Tech Innovation 50 has performed better over the next five trading days

Source: WIND

At this point in time, the Sci-Tech Innovation 50, supported by three advantages—geopolitical catalysts, oversold levels having been reached, and earnings support—has become a high-elasticity target for short-term rebound trading. Meanwhile, the underlying medium-to-long-term high-prosperity value remains solid. Investors need not be overly worried about the Sci-Tech Innovation 50’s recent consecutive declines. Under the key catalyst of geopolitical conflict easing, the oversold rebound window of the Sci-Tech Innovation 50 is expected to open, and its high-elasticity attribute will make it the core target of this round of repair rally. Short-term market volatility is like the sea washing away sand—after separating the real from the fake, the Sci-Tech Innovation 50 with genuine earnings growth will not only lead the short-term rebound, but can also enjoy the medium-to-long-term growth dividends from technological innovation. The “bottom” of the Sci-Tech Innovation 50 is being gradually built under multiple factors including geopolitical catalysts, oversold repairs, and earnings verification. It is a high-quality choice for both short-term trading rebounds and medium-to-long-term allocation to the Sci-Tech industry.

For investors, because technology-related assets naturally have high volatility, investing via index tracking or using a phased allocation strategy can help smooth short-term volatility and precisely capture the Sci-Tech Innovation 50’s short-term rebound opportunities and medium-to-long-term industry growth dividends. Overall, as of March 23, 2026, the E Fund Sci-Tech Innovation 50 ETF (588080) has a latest size of 38.05 billion yuan. With relatively small tracking error and ample liquidity, it can efficiently connect to the investment value of the Sci-Tech Innovation 50, making it a high-quality option for participating in the Sci-Tech sector rebound rally in the near term and for medium-to-long-term allocation. Market sentiment will always fluctuate, but genuine value growth driven by innovation will ultimately be reflected in prices.