As the dust settles post-Spring Festival, a vibrant wave known as the "tech bull" market has captured the attention of investors in China's A-share landscapeThis surge is witnessing significant capital inflows, particularly into sectors like robotics and artificial intelligence (AI). By the close of trading on February 20, an impressive 26 stocks boasted the potential for doubling their value by 2025, highlighting the bullish sentiment within the market.

The ongoing tech rally has shown resilience over the past few daysResearch reports indicate that the "Zhu Chuang" index, which gauges innovation and entrepreneurship in the Chinese stock market, is witnessing trading congestion hitting near historic highsWhile the long-term industrial trends remain robust, there exists a tangible concern regarding the short-term emotional pullback that could lead to significant market fragmentation.

Among the prime discussion points regarding this tech bull market is the Science and Technology Innovation Board, commonly referred to as the STAR MarketThe STAR composite index (000680.SH) accounts for over 97% of the total number of stocks and market capitalization listed on this boardIt effectively fills the gaps left by the STAR 50, 100, and 200 indices, which do not cover smaller-cap stocksRecently, 13 public mutual funds, including major players such as Penghua, E Fund, and Huaxia, launched ETFs based on the STAR composite index, stirring debate on how this influx of over 10 billion RMB in new capital will shape the landscape for smaller-cap stocks within the current tech rally.

This surge in tech stocks has reached a historic apex in terms of trade congestionOn February 20, the AI narrative shifted toward day-to-day applications with a surge in the shares of AI glasses manufacturersCompanies such as Xinxing Technology (300256.SZ) and Doctor Glasses (300622.SZ) saw their stocks skyrocket, reflecting an over-month enthusiasm for these conceptsAdditionally, humanoid robotics stocks like Sanfeng Intelligent (300276.SZ) and Hangzhou Gear Works (601177.SH) experienced successive trading halts, indicating robust market participation and investor interest.

As China strides into 2025, the AI and robotics sectors are marked by rapid technological advancements and notable events in the domestic economy

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Investors are rewarding tech-focused strategies, with overarching stock indices benefiting from this uptrendIn particular, segments associated with cloud computing, AI computing power, and applications have witnessed impressive performance, prompting funds to explore profitable niches within humanoid robotics and related industries.

By the end of trading on February 20, both the STAR 200 and STAR 100 indices showed substantial year-to-date increases of 14.61% and 12.37%, respectively, positioning them among the top performers in the A-share indicesConceptual sectors such as robotics and AI have dominated the high-growth charts, with the DeepSeek index soaring by 68.43% thus far this year; demonstrating that robots and AI-related sectors comprise the bulk of the top-gaining stocks.

Examining the broader time frame since the "924" market rally, it is evident that tech stocks continue to outperform other sectorsThe STAR 200 index has achieved a remarkable cumulative rise of 73.04%, with a maximum drawdown of approximately 21%, showcasing resilience and elastically compared to the Shanghai Composite and Shenzhen Component indices.

However, this ongoing enthusiasm has also raised concerns regarding trading congestion levels within the tech sectorReports from Zhongtai Securities indicate that the trading congestion in Chinese A-share tech stocks has reached historically high levels, with the "Zhu Chuang" index accounting for 37% of trading volume—closing in on the historical apex of 41% reached in Q4 2024. Contrastingly, these figures still remain significantly lower compared to those observed on the Nasdaq (63%) and the Hang Seng Tech index (51%). Furthermore, the price-to-earnings (P/E) ratio for the STAR 50 index stands at an astonishing 87 times, placing it in the 98th percentile historically, while the Growth Enterprise Market index shows a P/E of 35 times, reflecting a more tempered evaluation.

Analysts note that the current bullish trend post-Spring Festival exhibits more characteristics of self-generated market dynamics compared to the broader gains experienced in late September last year. "This enthusiasm is closely intertwined with China's advancements in artificial intelligence, which are resonating globally," a senior investment manager at a private equity firm noted. “If you compare the performance between A-shares and Hong Kong stocks post-January 13, it is clear that without the substantial contributions of the Hang Seng Tech Index, Hong Kong stocks have only seen a modest rise of less than 5%, with the major gains being driven by the tech leaders.”

For A-share tech stocks, the situation is evolving into relatively high valuation territory

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A comprehensive market perspective indicates that while tech stocks could continue generating returns, their future trajectory will largely depend on the scale of new capital inflows and the consensus reached within the market regarding these valuations.

The re-evaluation of the value of technology assets hinges critically on the influx of new capitalA-share tech opportunities tend to prosper alongside heightened market risk appetites, underpinning discussions among numerous sellers about whether the current tech rally could elevate the valuation of Chinese assets to new heights.

The arrival of the inaugural batch of 13 STAR composite index ETFs has caught the market's attention, each with a fundraising cap of 2 billion RMB, already surpassing 10 billion RMB in total fundraisingThese developments signify a growing interest in the liquidity being funneled into the STAR Market.

Contrary to the more narrowly focused STAR 50, STAR 100, and STAR 200 indices, the STAR composite index provides a broader perspective on the performance of all listed companies, including dividends, while capturing nearly all mid- and small-cap stocksThis mirrors the current market trends favoring smaller companies, positioning potential newcomers for increased investor attention as new capital flows in.

Recent reports by Guotai Junan suggest that the evolution of the tech sector is solidifying a prominent focus on artificial intelligence, akin to the previous "Internet Plus" movementAs breakthroughs continue to manifest across AI domains, a new wave of capital expenditures in various industries is anticipated to orbit AI advancements, highlighting the need to appreciate tech private enterprises that exhibit both capital spending willingness and capability.

"Enterprises like Yushu Robotics and DeepSeek have bolstered global investor confidence in the revaluation of Chinese tech assets," the private equity firm manager elaborated. "In the realm of macroeconomic shifts, industrial trends, funding environments, and variations in market styles, it is essential to recognize that when heightened emotions cause valuations to surge, the market’s focus will eventually tether back to the fundamentals—such as performance realization, competitive landscapes, and industry cyclicality

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