CICC released a research report stating that in the first quarter of 2026, the A-share market experienced a rise followed by a decline. Trading activity was relatively active at the beginning of the year, with the Shanghai Composite Index breaking through 4100 points to achieve a 10-year high. However, in March, factors such as fluctuations in global asset prices due to the repeated conflicts between the US and Iran disrupted the market, causing investors' risk appetite to rapidly decrease. The concentration of holdings in the top 100 companies held by actively managed equity funds decreased from 58.8% to 55.4%, while the concentration in the top 50 companies decreased from 46.7% to 42.8%. In terms of positions, there was an increase in positions in the communication, chemical, and power equipment industries, while positions in the electronics and non-ferrous metals industries were reduced. Key points from CICC: Changes in public fund positions in the first quarter: Overall stock positions slightly decreased, with A-share positions rising and Hong Kong stock positions decreasing the most. The A-share market in the first quarter of 2026 experienced a rise followed by a decline. The Shanghai Composite Index fell by 1.9% in the first quarter; mid-cap stocks outperformed, with the CSI 1000 and CSI 2000 indices rising by 0.3% and 1.2% respectively; large-cap blue chips were under pressure, with the SSE 50 and CSI 300 indices falling by 6.8% and 3.9% respectively; the STAR 50 index also fell by over 6%, while the ChiNext index fell slightly by 0.6%; dividend stocks performed well, with the dividend index rising by 6.7%. Against this backdrop, the median return of actively managed equity funds in a single quarter was -1.2%, which was a slight improvement compared to the previous quarter. The assets under management of public funds slightly decreased, with equity assets decreasing and bond assets increasing. The total assets under management of public funds ended the continuous expansion of the past three quarters, with the total assets in the first quarter slightly decreasing from 39.5 trillion yuan in the previous quarter to 39.3 trillion yuan. The equity assets decreased by around 1 trillion yuan to approximately 8.1 trillion yuan, with the proportion of equity assets in the total assets decreasing by 2.4 percentage points to 20.5% compared to the previous quarter; the proportion of bond assets increased by 0.3 percentage points to 53.7% compared to the previous quarter; the proportion of cash assets continued to increase by 1.7 percentage points, rising for the fifth consecutive quarter. The size of actively managed equity funds decreased, but the A-share positions continued to rise; the scale of new funds increased, while the net redemptions of existing funds decreased. In terms of actively managed equity funds, the total asset value fell slightly to below 3 trillion yuan from the previous quarter; the equity asset size decreased slightly to around 2.6 trillion yuan, with positions decreasing by 0.9 percentage points to 86.1%; A-share positions continued to rise from 72.3% in the previous quarter to 73.9%, but remained at relatively low levels for nearly 10 years. In terms of fund inflows, estimated through fund share and interval net asset value data, the net redemption scale of actively managed equity funds in the first quarter decreased by 54.5 billion yuan from the previous quarter. As for newly established funds, the issuance of new actively managed equity funds increased by 11.63 billion shares, a substantial increase of 102.8% from the previous quarter and expanding for the fourth consecutive quarter; the issuance of stock ETF funds increased by 25.86 billion shares, a 27.1% increase from the previous quarter. As for Hong Kong stocks, the Hang Seng Index and the Hang Seng Technology Index fell by 3.3% and 15.7% respectively in the first quarter, with the allocation of actively managed equity funds investing in Hong Kong stocks decreasing by 4.8 percentage points to 19.6%. Characteristics of heavy stock allocations: Concentration of holdings in leading companies decreased; positions in communication, chemical, and power equipment industries increased, while positions in electronics and non-ferrous metals decreased 1) The concentration of holdings in leading companies decreased. The proportion of concentrated market value in the top 100 companies held by actively managed equity funds decreased from 58.8% to 55.4%, and the proportion in the top 50 companies decreased from 46.7% to 42.8%. In terms of changes in heavily held stocks in the first quarter, there were significant increases in the holdings of Hansome Optical and Zhongtian Technology, while the holdings of HeptaChip and Zijin Mining decreased significantly; in Hong Kong stocks, the holdings of Changfei Fiber Optic Cable and CNOOC increased significantly, while the holdings of Tencent and Alibaba decreased significantly. 2) Positions in the ChiNext and STAR Market increased, while positions in the main board decreased. The proportion of positions in the main board decreased from 58.2% in the previous quarter to 57.7%, a decrease of approximately 12.2 percentage points from the optimal allocation. The allocation of growth style increased, with positions in the ChiNext and STAR Market increasing by 0.4 and 0.2 percentage points to 25.2% and 16.9%, respectively, over-allocating by approximately 5.5 and 7.1 percentage points; positions in the Beijing Stock Exchange decreased by 0.1 percentage points compared to the previous quarter. 3) Increased positions in the communication, chemical, and power equipment industries, decreased positions in electronics and non-ferrous metals. In terms of increased positions, the communication industry, particularly the hardware end of the AI industry chain, saw the highest increase in positions, with a 2.1 percentage point increase in positions, with the communication equipment industry seeing the most significant increase; benefiting from geopolitics, the chemical industry, power equipment, petroleum and petrochemicals, and coal all saw increases of 1.1, 1, 0.6, and 0.3 percentage points, respectively, due to rising energy prices, supply substitutions, and increasing domestic export share; the biopharmaceutical sector, which had sufficient adjustments earlier and had been catalyzed more recently, saw a 0.5 percentage point increase in positions this quarter; other sectors such as transportation, banks, construction materials, and utilities also saw increases of 0.3, 0.3, 0.2, and 0.1 percentage points, respectively. As for decreased positions, the electronics and non-ferrous metals sectors, which had seen significant increases earlier, decreased by 1.8 and 1.3 percentage points, respectively this quarter; positions in the media and computer sectors, which were expected to have weaker performance, continued to decrease by 0.3 and 0.2 percentage points; positions in traditional consumer sectors continued to decline, with household appliances and food and beverage decreasing by 0.7 and 0.2 percentage points, respectively; positions in the mid-range manufacturing sector, such as automotive and non-banking financial sectors, decreased by 1 and 0.9 percentage points. 4) In terms of industries, there was a significant increase in positions in communication equipment; positions in consumer electronics decreased significantly. Within the racing sectors analyzed by CICC, which included approximately 400 listed companies across various sectors such as semiconductors, consumer electronics, communication equipment, robots, innovative drugs, batteries, defense, and spirits, the proportion of major holdings by public funds decreased slightly compared to the previous quarter. Among them, positions in the communication equipment, innovative drugs, and new energy vehicle industry chains increased by 1.4, 0.4, and 0.4 percentage points respectively; positions in consumer electronics, photovoltaic wind power, defense, robots, spirits, and semiconductors decreased by 3.8, 0.4, 0.2, 0.2, 0.2, and 0.1 percentage points respectively. Public fund ETFs: Assets under management have slightly decreased, with the total assets under management of stock ETFs at 2.9 trillion yuan.The total assets of publicly offered ETFs decreased from 7.1 trillion yuan in the previous quarter to 6.1 trillion yuan, with the proportion of stock assets decreasing from 65% to 59.3%. The total assets of stock ETFs were 2.9 trillion yuan, a decrease of 0.9 trillion yuan from the previous quarter, narrowing the gap with actively managed equity funds. Among them, the total assets of broad-based index ETFs were 1.4 trillion yuan, a decrease of 1.2 trillion yuan from the previous quarter; the scale of theme index ETFs increased to nearly 1 trillion yuan, with significant inflows of funds into themes such as chemicals, power grid equipment, and semiconductor materials equipment. Next-stage operational recommendations: Looking at the holdings of publicly offered funds, the proportion of stock holdings continues to decline, but A-share positions are rising; the proportion of bond holdings has been rising for the fifth consecutive quarter. In terms of structure, the communication industry with high self-propelled prosperity, as well as industries benefiting from the rise in energy prices such as chemicals, power equipment, petroleum and petrochemicals, and coal have seen significant increases in positions; the positions of electronic and non-ferrous metal industries that had high gains in the previous quarter have declined significantly, while positions in traditional consumer sectors continue to fall. In terms of asset allocation, it is recommended to focus on several themes in the near future: 1) Prosperous Growth: AI is currently at a crucial stage of new technological iteration and application, with industrial trends continuously supporting demand growth. Focus on the optical communication sector directly benefiting from AI technology deployment, as well as battery and energy storage sectors that benefit from both energy security and supply chain security. 2) Cyclical Resources: Considering the position of the production cycle, focus on sub-sectors with supply-demand patterns supporting price increases and performance certainty, such as power grids and chemicals. 3) High Dividend: In a stage where market risk appetite has not fully recovered, high dividend stocks have a relative return advantage, but performance may be episodic and structural throughout the year, with a focus on cash flow stability and dividend yield matching.