Public Funds Assess "HALO" Investment: Over 70% of Institutions Predict Market Will Fluctuate and Differentiate

Source: Securities Daily Author: Chang Xiaoyu

Since March, the A-share market has shown a clear structural trend. Driven by the global revaluation of physical assets and domestic policies to “counteract involution” in industries, sectors such as oil and gas, precious metals, and chemicals—collectively known as “HALO” (heavy assets, low淘汰)—continue to strengthen.

The latest survey results from the Public Fund Ranking Network show that 63.16% of public fund institutions believe the current popularity of the “HALO” sector is reasonable and still in a rational allocation stage; 31.58% think there are signs of overheating, with trading becoming crowded; another 5.26% believe the heat is relatively low, and some structural opportunities still need to be explored.

A person from Golden Eagle Fund told Securities Daily that, against the backdrop of nearly “a single branch” of AI (artificial intelligence) in 2025, there is a need for diversified allocation of funds in 2026. The market’s prosperity and marginal improvement in liquidity are tilting toward cyclical manufacturing assets with low valuations. Therefore, current “HALO” investments have a medium- to long-term narrative logic.

However, some institutions also warn of short-term overheating risks. Tao Diwei, fund manager of Jihe Fund’s equity investment department, believes that when A-shares follow the hype of “HALO,” it often indicates that the valuations of related assets are no longer cheap, and overheating risks should be cautious of.

Regarding the future six-month trend of the “HALO” sector, the consensus among public fund institutions is clearer. The survey shows that 75% believe the “HALO” market will enter a phase of oscillation and differentiation, with good opportunities in high-quality targets; 12.50% expect the market to continue strengthening; and 6.25% each predict the market will return to calm or face a correction.

A person from Red Soil Innovation Fund believes that in the next six months, “HALO” investments will enter a phase of oscillation and differentiation, with performance verification becoming a key dividing line. Assets with the following characteristics are expected to continue outperforming: high order visibility (e.g., some transformer companies’ overseas orders already scheduled until 2028), strong profitability improvement certainty (e.g., some copper mining companies benefiting from expanded supply-demand gaps, with continuous gross margin increases), stable cash flow (e.g., some utility companies with dividend safety margins), and solid industry logic (e.g., increased electricity demand driven by AI computing power).

Where will opportunities in the differentiated market focus? The survey shows that the most favored direction among public fund institutions is related to computing and electricity synergy, such as AI data center energy solutions and power grid equipment, favored by 39.13% of institutions; energy security (oil and gas, green electricity, etc.) and resource commodities (copper, silver, and other industrial metals) tie for second place, each supported by 26.09%; some institutions also favor high-end industrial equipment and utilities.

A person from Red Soil Innovation Fund believes that computing and electricity synergy is the most direct reflection of the “HALO” logic in A-shares, possessing both “rigid demand” and “supply bottleneck” attributes. On the demand side, AI development drives a surge in electricity demand; on the supply side, global power grid equipment (such as large transformers) faces multi-year delivery cycles and supply gaps. China’s technological advantages in ultra-high voltage and smart grids, along with the massive grid investment plans during the 14th Five-Year Plan, give A-shares related sectors significant advantages.

(Edited by: Wen Jing)

Keywords: Fund