Cathay Automotive ETF (516110) rises by more than 1.2%, focusing on opportunities in the internal combustion engine industry chain driven by AI power shortages

On April 1st, the auto ETF Guotai (516110) rose over 1.2%, focusing on opportunities in the internal combustion engine industry chain driven by AI power shortages.

Everbright Securities pointed out that some vehicle stocks rebounded in March, with the focus on the sustainability of order recovery and the realization of financial report performance. In the domestic market, taking a 150k yuan model as an example, the increase in costs since the beginning of the year may lead to a 3-5 percentage point decline in gross profit margin across the entire industry chain, which automakers may counter with technological upgrades and price hikes. In overseas markets, fluctuations in oil prices may further boost demand for new energy vehicles going abroad, with shipping capacity expected to become a major constraint on sales growth. Additionally, AI computing and electricity collaboration significantly boost power generation demand. Due to mismatches between supply and demand and infrastructure upgrades, there are opportunities for volume growth in gas turbines and internal combustion engines; among them, internal combustion engines are characterized by sufficient capacity and quick delivery. We are optimistic about opportunities in the internal combustion engine industry chain driven by AI power shortages and focus on the release of orders for exhaust emission products. The auto sector underperformed the market in the first quarter, with passenger cars outperforming parts.

The Guotai Auto ETF (516110) tracks the 800 Auto Index (H30015), which selects securities of listed companies related to the automotive industry from China’s A-share market as index samples, covering passenger vehicles, commercial vehicles, and parts manufacturing, to reflect the overall performance of China’s automotive industry and related supply chains. Its industry allocation is concentrated in vehicle manufacturing, balancing growth and value styles.

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