Historical bull market sector rotation rankings! Finance rises first, technology leads the charge, cyclical sectors catch up... Which stage are we at now?
Presumably, everyone has some understanding of technical analysis in the stock market. Studying technical analysis ultimately comes down to studying economic cycles and human psychology. The driving forces of each economic cycle are different, but the stages are the same. The factors that dominate and fuel people's psychology also vary, but the psychology itself is the same.
In the market, most of the time it is a slow bull market. When everyone knows a bull market is coming, it is not far from the end. Can you vaguely sense the breath of the big bull recently? Today, I will share some historical records of sector rotation during bull markets. I hope this will help you catch the current or future big bull.
1. Early stage of a bull market: Financial sector leads (liquidity-driven)
· A-shares, Hong Kong stocks: Brokers and banks lead the rally, with increased trading activity directly benefiting brokers.
o Data: In the early stages of the 2014 bull market, CITIC Securities rose by over 200%; in the early stages of the 2007 bull market, the brokerage sector rose by over 150%.
· U.S. stocks: Banks and insurance companies see valuation recovery during rate-cutting cycles.
o Data: From 2009 to 2020 (post-financial crisis bull market), S&P 500 financial stocks rose by an average of 250%; from 2003 to 2007 (early stages of the last U.S. bull market), the financial sector rose by over 100%.
2. Main rising phase of a bull market: Technology and consumption lead (economic recovery)
· A-shares:
o Technology: Semiconductors and new energy surge (from 2019 to 2021, the semiconductor sector rose by over 200%, and CATL rose by over 400%).
o Consumption: Baijiu and home appliances benefit from consumption upgrades (from 2020 to 2021, Kweichow Moutai rose by over 150%, and Midea Group rose by over 200%).
· Hong Kong stocks:
o Technology: From 2015 to 2018 (rising cycle of Hong Kong tech stocks), Tencent Holdings rose by over 200%; from 2016 to 2017, the internet sector (where Meituan was listed early) was active overall.
o Consumption: From 2017 to 2018, the Hong Kong consumption sector (e.g., food and beverages, home appliances) benefited from mainland consumption upgrades, with some leading stocks rising by over 50%.
· U.S. stocks:
o Technology: AI and cloud computing drive tech stock gains (from 2010 to 2020, during the long bull cycle of U.S. tech stocks, the Nasdaq 100 tech stocks rose by an average of over 300% from 2016 to 2020); from 2009 to 2015, tech giants like Apple and Google saw significant stock price increases.
o Consumption: High-end consumption (luxury goods, sports brands) recovers (from 2010 to 2015, S&P 500 consumer leaders like Nike rose by over 100%).
3. Mid-to-late stages of a bull market: Cyclical and defensive sectors catch up (economic overheating)
· A-shares:
o Cyclical: Non-ferrous metals and coal benefit from inflation (in the mid-to-late stages of the 2007 bull market, the non-ferrous metals sector rose by over 600%, and the coal sector rose by over 500%).
o Defensive: Pharmaceuticals and utilities attract funds (in the late stages of the 2015 bull market, the pharmaceutical sector, e.g., Hengrui Pharmaceuticals, rose by over 100%).
· Hong Kong stocks:
o Cyclical: From 2007 to 2008 (mid-to-late stages of the Hong Kong bull market), infrastructure and machinery stocks benefited from economic expansion, with some individual stocks rising by over 100%.
o Defensive: From 2007 to 2008, Hong Kong utilities and financial (high-dividend) sectors performed relatively stably amid market volatility.
· U.S. stocks:
o Cyclical: Industrial manufacturing and energy benefit from supply chain recovery (from 2009 to 2011, S&P 500 industrial stocks rose by an average of over 150%, and energy stocks like ExxonMobil rose by over 100%).
o Defensive: Utilities and consumer staples provide stable returns (from 2009 to 2015, S&P 500 utilities rose by over 50%, and consumer staples like Procter & Gamble rose by over 30%).
Judging the economy and cycles still depends on your own analysis. The above is for reference only and does not constitute investment advice.
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