A standout performer, the ChiNext—“China’s Nasdaq”—now has its top 7 holdings accounting for 48% of the index, comparable to the MAG 7.

A standout performer, the ChiNext—“China’s Nasdaq”—now has its top 7 holdings accounting for 48% of the index, comparable to the MAG 7.

Concentration of weight rivals MAG7, valuation and profitability both lead the way—the ChiNext Index is accelerating its transformation into the “Chinese version of the Nasdaq.” With continued prosperity in computing power and energy storage, and the increasing group effect of leading tech companies going global, the ChiNext Index's characteristics are becoming highly similar to the Nasdaq, further strengthening the logic for its medium-term relative outperformance.

This week, the ChiNext Index surged 6.65%, closing at 3678 points, far ahead of all broad-based A-share indices and approaching the historical high of 3982 points in June 2015. The latest research report from Guotou Securities’ strategy team led by Lin Rongxiong points out that the top seven weight companies in the ChiNext Index—CATL, Zhongji Xuchuang, New Yisheng, East Money, Sungrow Power Supply, Victory Macro Technology, and Tianfu Communication—have seen their combined index weight soar from about 10% in 2019 to around 47% to 48% currently, closely mirroring the trend of MAG7’s weight in the Nasdaq.

The spike in concentration is viewed by many institutions as a structural signal that the ChiNext Index has entered a healthy operating mode. Shenwan Hongyuan’s strategy team led by Fu Jingtao categorizes this round of the ChiNext market as a "typical prosperity trend investment," believing that the power and energy storage sectors' performance has exceeded expectations, coupled with US tech stocks’ renewed dominance reflected in A-shares, jointly forming the basis for the ChiNext's independent market performance, with the superior trend “likely to continue for some time”.

From the perspectives of valuation and profitability, the ChiNext Index’s current PE is about 43 times, below the historical 40th percentile, leaving about 15% upside compared to the historical median valuation; combined with forecasted earnings growth of 20% to 30% from 2026 to 2027, the predicted PEG is only 0.88, less than 1, which is low among all broad-based indices, and profitability has entered a healthy channel of digesting valuations.

Concentration of Weight: The “MAG7-ization” Process from 10% to Nearly 48%

Guotou Securities' strategy team systematically compares the historical evolution of ChiNext Index concentration with MAG7.

Data shows that MAG7’s market cap weight in the Nasdaq rose from about 20% before 2012, steadily climbing to nearly 50% in 2024, now slightly retreating to about 45%. Mirroring this, the combined weight of the top seven companies in the ChiNext Index has surged from about 10% in 2019 to 47% to 48% currently; both trends are highly similar in direction and eventual weighting.

Guotou Securities believes that the structural evolution behind this is “all trends are groupings.” Led by CATL, Zhongji Xuchuang, New Yisheng and other high-growth tech and overseas leaders, continuous prosperity has made them the core targets for concentrated market pricing, accelerating the ChiNext’s convergence toward becoming the “Chinese Nasdaq.”

Valuation and Profitability: PEG below 1, Growth Leads All Broad-Based Indexes

Benchmarking with the Nasdaq further supports the above positioning.

Guotou Securities reports show that the current PE of the ChiNext Index is about 42-43 times, Nasdaq about 43-44 times, with similar valuation levels. In terms of profitability growth, the ChiNext Index's forecasted growth for 2026-2027 is 20%-30%, significantly higher than Nasdaq’s 10%-20% in the same period. Overall, the predicted PEG for the ChiNext Index is about 0.88, not only lower than Nasdaq, but also below the average level of all broad-based A-share indices, thus having a relative advantage in the current comparison.

Notably, in the third quarter of last year, ChiNext Index’s PE once surpassed 50 times, touching more than the 75th percentile in history; currently PE has returned to around 43 times, below the 40th percentile and the historical median. Guotou Securities thus judges that ChiNext Index has entered a “healthy model of continuously digesting valuation through profit growth,” easing valuation pressure in the short term.

Independent Market: Dual Drivers of Prosperity Validation and US Stock Mapping

Shenwan Hongyuan’s strategy team further explains the ChiNext Index's standout status from a structural perspective.

Their report points out that during "two-stage rallies," volatility rests tend to reduce sector linkage, and it’s normal for a few sectors to perform independently. This round of ChiNext’s independent rally is driven by two aspects:

First, performance in computing power and energy storage sectors have exceeded expectations, supporting typical prosperity trend investments;

Second, US tech stocks’ renewed strength and Nasdaq setting new highs are being mapped into A-shares, pushing the ChiNext index to new stage highs as well.

Shenwan Hongyuan further describes the typical path for structural market performance: industry prosperity verification→stock price rise, valuation lift→short-term cost-performance decrease, medium-term valuation constraint emerges→sluggish trend, awaiting new catalysts. Based on this framework, they judge that the short-term rise in leading tech stocks with performance exceeding expectations matches the extent of valuation digestion; “short-term cost-performance has room, medium-term cost-performance unchanged,” so the ChiNext's superior rally may still have some duration.

Market Outlook: The “Xin Ning Combination” Anchors Dual Tracks of Tech and Overseas

Guotou Securities places the current ChiNext market in a longer-term structural narrative, defining “AI supply-demand gap (price hikes) + overseas new energy (including power equipment)” as the “Xin Ning Combination,” likening it to the “Ning Combination” centered on broad new energy which dominated A-shares in 2021, and believing that the historical transition “from Mao Index to Ning Combination” corresponds to the current structural rebalancing.

They believe that ChiNext's medium-term core logic is that “tech + overseas” can increase its contribution to A-share profitability from the current 30% range, with historical evidence showing that breaching 50% triggers a new upward cycle for A-shares. Against this backdrop, “even if there is volatility ahead, it is hard to shake the sustained optimism for ChiNext based on the Xin Ning Combination.”

Shenwan Hongyuan maintains previous structural recommendations, focusing on strong technological “heavy reality” fields such as optical communication, gas turbines, and energy storage, which were strong prior to recent conflicts, and emphasizing that prosperity verification in new energy, new energy vehicles, and export chains will continue to spread, stressing that “buying prosperity is likely to be significantly better than buying hedges.”

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