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

Recently, with the emergence of some marginal easing in geopolitical risks, the risk appetite in the A-share and Hong Kong stock markets has also shown signs of stabilization and recovery. If future developments in geopolitical situations become clearer, how should we position ourselves for the potential rebound in the A-share market? Let’s take a look at which indices have been most oversold due to external pressures. Since the Middle East geopolitical conflict, the Sci-Tech Innovation 50 Index has fallen over 15%, the largest decline among mainstream broad-based indices, with the greatest impact. Against the backdrop of marginal improvement in core restrictive factors, its highly elastic nature is fully demonstrated, making it a preferred target for market rebounds. The “high elasticity” behind this not only reflects significant 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 resonates with the high-growth value in the medium to long term, which investors should pay close attention to.

1. Why did the Sci-Tech Innovation 50 rebound the deepest?

First, we need to review the previous reasons for market corrections: driven by the unexpected surge of domestic large models, China’s AI domestic substitution, and other industry narratives, the Sci-Tech Innovation 50 Index once performed strongly. However, this rapid rise based on expectations led many stocks to surge in the short term, with valuations entering high levels, accumulating substantial profit-taking. In March, geopolitical conflicts became the core variable disturbing global risk appetite. Tensions in the Middle East caused international oil prices to fluctuate at high levels, with Brent crude oil rising over 70% since the beginning of the year. This not only raised global inflation expectations but also disrupted the Federal Reserve’s rate-cutting pace. Under this macro backdrop, global risk appetite sharply declined, with technology stocks bearing the brunt due to their high valuations and long durations, experiencing capital outflows. Not only did the A-share Sci-Tech Innovation 50 hit new lows in the correction phase, but globally, U.S. tech giants and Korean storage stocks also entered correction zones.

Now, a key change has occurred: expectations of easing geopolitical tensions have risen, driving international oil prices down from high levels. Marginal easing of global inflation expectations has positively improved the external environment that previously suppressed the market. Global risk appetite is beginning to recover, and funds that previously flowed out may gradually return to high-elasticity tech sectors. The rebound window for the Sci-Tech Innovation 50 is also expected to officially open.

2. What is the basis for “high elasticity”?

3. Fundamental prosperity

Besides signals of easing geopolitical conflicts, the performance prosperity of the Sci-Tech Innovation 50 also lays a solid foundation for its rebound. Let’s look at the overall A-share market: after a turbulent correction, the market shows clear differentiation. On one hand, concept stocks lacking performance support and relying on hype have fallen sharply; on the other hand, stocks with positive expectations for annual or first-quarter reports and industry validation have shown stronger resilience. This sends a clear signal: as the first-quarter report window approaches, the market’s main logic is shifting from “expectation-driven” to “reality-supported.” The performance certainty of the Sci-Tech Innovation 50 will provide more solid fundamental support during the rebound.

Chart: Outperformance of quality stocks since March in a volatile market

Data source: WIND, as of 2026/03/23

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

Data source: WIND, as of 2026/03/23

The short-term rebound of the Sci-Tech Innovation 50 is not without basis; the industry’s fundamental prosperity has not reversed, and solid earnings form the core support for the rebound, also determining its high-growth long-term value. Nearly 70% of the index’s weight is in semiconductor companies, and the semiconductor industry’s fundamentals continue to improve: in January-February 2026, domestic integrated circuit output increased by 12.4% year-on-year, faster than the full-year 2025 growth; meanwhile, the DXI index (DRAM output value) rose 2.8%, and the storage chip price index maintained an upward trend. The global semiconductor cycle remains upward.

As the “driving force” of AI industry development, the semiconductor and computing power supply chains are core links of technological innovation, with high earnings visibility. As the first-quarter report approaches, once the performance of leading tech stocks in the Sci-Tech Innovation 50 is confirmed, it will effectively digest current valuations and serve as a solid support for stock price rebounds. In the medium to long term, industry logic such as domestic substitution and AI computing power upgrades remains clear, and the growth dividends of the Sci-Tech Innovation 50 continue to be released.

Chart: The structure of the Sci-Tech Innovation 50 index is dominated by high-growth industries

Data source: WIND, as of 2026/03/23

2. Valuation returning to a reasonable range

From a valuation and cost-effectiveness perspective, the risk-return profile of the Sci-Tech Innovation 50 is continuously improving. Although its absolute valuation percentile is relatively high, considering the high growth of its constituent stocks, the PEG ratio (price-to-earnings relative to earnings growth) is a more reasonable valuation metric. The forecast PEG for 2026 is 1.11, which is not at a valuation disadvantage compared to broad indices like the CSI 300. As the first-quarter results are verified, if leading companies in the index maintain over 30% net profit growth, current valuations will be quickly absorbed. With external risks easing and earnings “kicking in,” the Sci-Tech Innovation 50 may see a rebound driven by both oversold conditions and high earnings growth, resonating with both short-term rebound opportunities and long-term strategic value.

Chart: The forecast PEG for 2026 shows Sci-Tech Innovation 50’s valuation is not high compared to other broad indices

Data source: WIND, as of 2026/03/23

3. Historically a rebound pioneer

It’s worth noting that in recent years, after major corrections in the A-share market, the Sci-Tech Innovation 50 has often shown greater elasticity, with rebound strength significantly higher than other core indices, exhibiting a clear “oversold high elasticity” feature. With the current external positive catalysts, its rebound strength and sustainability are even more promising.

Chart: In recent years, the Sci-Tech Innovation 50 performed well in the five trading days following declines

Data source: WIND

At this moment, the Sci-Tech Innovation 50, with its triple advantages of geopolitical catalysts, oversold conditions, and performance support, has become a high-elasticity target for short-term rebounds. Its long-term high-growth value remains solid. Investors need not be overly worried about the recent continuous decline of the Sci-Tech Innovation 50. Under the key catalyst of easing geopolitical conflicts, the oversold rebound window is likely to open. Its high elasticity will make it a core target for this round of recovery. Short-term market fluctuations are like a sieve, and after filtering out false signals, stocks with genuine performance growth in the Sci-Tech Innovation 50 will not only lead short-term rebounds but also enjoy the growth dividends of technological innovation in the medium to long term. The “bottom” of the Sci-Tech Innovation 50 is gradually forming under the combined effects of geopolitical catalysts, oversold recovery, and earnings verification, making it an excellent choice for short-term rebound trading and long-term strategic positioning in the tech industry.

For investors, given the inherently high volatility of tech-related assets, index-based investment or phased deployment strategies can help smooth short-term fluctuations and accurately capture the rebound opportunities and long-term growth of the Sci-Tech Innovation 50. As of March 23, 2026, the E Fund Sci-Tech Innovation 50 ETF (588080) has a recent scale of 38.05 billion yuan, with low tracking error and ample liquidity, efficiently aligning with the investment value of the Sci-Tech Innovation 50. It is a top choice for participating in the current rebound and long-term allocation in the tech sector. Market sentiment will always fluctuate, but true value growth driven by innovation will ultimately be reflected in prices.