The recent surge in the Chinese stock market has captured the attention of investors and analysts alike, particularly as numerous active equity funds report significant gains in their third quarter performances for 2024. These funds, often referred to as "rebound pioneers," reveal a concentration in their holdings towards emerging sectors, particularly in the Beijing Stock Exchange and the Sci-Tech Innovation BoardAs the financial landscape shifts, the performances of these funds provide insights into investor sentiment and market dynamics.

Amid the concerns surrounding the Chinese economy, many fund managers have pointed to a prevailing atmosphere of pessimism among investors prior to the recent recoveryTheir latest reports reflect a renewed confidence in macroeconomic policies aimed at stabilizing the economyIf the government implements these policies effectively, the current market uptick could translate into a more sustained rally, providing a beacon of hope for struggling investors.

During the period from September 24 to October 23, the A-shares market saw a powerful resurgence

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The Shanghai Composite Index rose over 20%, while the Wind Hybrid Equity Fund Index skyrocketed by more than 21%. This rebound has been particularly beneficial for over 70% of active equity funds, which encompass various categories such as standard equity, hybrid equity, balanced, and flexible allocation funds—marking a significant shift towards positive returns this year.

Among the standout performers is the Tongtai Kaitai A Fund, which boasted an incredible yield exceeding 85%. Other notable funds from prominent managers, such as E Fund, Invesco Great Wall, and Huatai PineBridge, have also reported returns exceeding 60% in their BSE-themed investment fundsSuch remarkable performances illustrate the financial acumen of managers in navigating turbulent market conditions.

On October 24, the Tongtai Kaitai A Fund released its third quarter report, highlighting a strategic focus on advanced manufacturing, information transmission, software, and the IT service sectors

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Notably, the fund's concentration on BSE's "specialized, refined, and new" high-quality companies further cemented their strong performance, maintaining a robust portfolio that is predominantly equity-based.

As of the end of the third quarter, the top ten holdings of Tongtai Kaitai A Fund were exclusively BSE stocksHigh-flyers that emerged during this rebound, such as Liancheng CNC, Shuguang Zhichuang, and Haitai New Energy, have exhibited remarkable growthThis pivot towards BSE stocks began earlier this year, reflecting a strategic shift that corresponded with the broader market recoveryAfter a period of underperformance, the fund has recently returned to positive territory.

The fund manager at Taikang's BSE Select two-year fund pointed out that the rapid upswing in BSE stocks during the last week of September was primarily driven by the influx of new capital, with market capitalization dynamics indicating stronger drivers than fundamental values.

Turning to technology investments, the semiconductor sector has emerged as a key player in this market upswing, with several tech-themed funds reporting impressive recoveries

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Between September 24 and October 23, funds like Debang Xinxing Value A, Wanjia Self-Innovation A, and Yinhe Innovation Growth A have seen returns around 60%, signifying a renewed interest in high-tech investments.

Fund managers have expressed optimism about the hard tech sector, specifically through strategic investments in the semiconductor supply chainNotably, Wanjia Self-Innovation A has shifted its portfolio to reduce exposure to robotics while increasing stakes in cost-effective chip and software companiesThe previous quarter showcased a robust line-up of top holdings that featured prominent players in the semiconductor industry, capitalizing on the surge in stock prices amid the overall market rebalance.

Leading names such as Cambrian and SMIC have seen stock prices rise by 112.55% and 97.07%, respectivelyThis growth has led to historic highs in their valuations, reflecting the broader market recovery and investor enthusiasm for tech stocks

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Moreover, the fund Debang Xinxing Value A also reported significant gains in securities like Robot, Taichuanguang, and Yuanjie Technology, all of which doubled their stock prices during this rally.

In addition to semiconductor-specific funds, broader digital economy-focused investments such as Morgan Stanley Digital Economy A and Dongcai Digital Economy Optimal A are also riding the wave of technology-driven growth, boasting yields exceeding 70% this yearTheir third-quarter reports indicated a substantial increase in holdings within leading tech firms, enhancing their exposure and positioning in a rapidly evolving market.

As these active equity fund managers reflect on the recent market dynamics, they have shared insights and perspectives on future trends and industry potentialsMany recognize that a series of government policies have rapidly restored investor confidence, invigorating market activity

Yellow Xingliang, a noted fund manager, suggests that sustained improvement in market sentiment and risk appetite could lead to favorable outcomes for growth-oriented investment strategies.

Additionally, Lei Tao from Debang Fund remains cautiously optimistic about the semiconductor industry's recovery, particularly noticing that the burgeoning market revival is expected to dramatically benefit tech sectors, particularly semiconductorsHe anticipates that this could generate a dual impetus for growth in both earnings and valuations, as technological innovations continue to drive market interest.

With the global semiconductor market experiencing an upswing and innovation proliferating in the tech sphere, there is a prevailing optimism among analysts and fund managers about the industry's trajectoryZheng Weishan, manager of the Galaxy Innovation Growth A fund, expressed confidence in the future, highlighting an optimistic outlook rooted in the fundamental demand for technology and the resilience of the marketplace.