Extended Bull Market Cycle Enters Third Phase: Strategic Shift from Infrastructure to Applications

The ongoing bull market that commenced in late September 2024 is entering a critical transition phase, according to analysis from Guosen Securities’ chief economist. Drawing parallels to the market dynamics of May 1999, this bull market cycle remains within both its temporal and spatial boundaries, with policy support mechanisms expected to persist through 2026. The current market environment mirrors the deflationary backdrop of that historical period, where accommodative policy frameworks sustained market recovery. With household savings flowing into equity markets at accelerating pace, the bull market is now transitioning from its second phase into the third and final stage of this cycle.

Policy Support Remains Consistent Through 2026

The accommodative stance adopted by policymakers shows no signs of reversal in 2026, creating a stable foundation for the bull market’s continuation. Unlike previous cycles where policy shifts triggered market corrections, this round maintains consistent support mechanisms. The persistence of deflationary pressures paradoxically reinforces the need for policy accommodation, ensuring that the economic recovery environment remains favorable. This policy consistency eliminates one of the primary headwinds that typically derail bull market cycles prematurely.

Fundamentals Recovery Broadens Beyond Tech Sector

A pivotal shift is occurring as economic improvements spread from concentrated pockets to the broader market landscape. Where the initial recovery phase saw narrow participation concentrated in high-growth sectors, the expanding bull market now welcomes participation from traditional industries. This broadening of fundamental improvements is catalyzed by sustained household fund inflows, which signal renewed retail confidence. The diffusion of positive economic momentum from isolated data points to widespread sectoral recovery represents the market’s transition into its third phase—a phase historically characterized by broader participation and valuation expansion.

Technology Rally Shifts: From Infrastructure Development to Application Expansion

The technology sector is undergoing a critical phase transition within this bull market cycle. The initial emphasis on computing power infrastructure—including semiconductor manufacturing, data center construction, and processing capability expansion—is gradually yielding to application-layer opportunities. As infrastructure buildout matures and deployment reaches saturation in key markets, investor focus naturally gravitates toward the software and service innovations built atop this computational foundation. This evolution from hardware-centric to application-driven investment represents the natural maturation of the technology rally within the larger bull market framework.

Traditional Sectors Emerge as Revaluation Candidates

Beyond technology, conventional sectors including consumer staples (liquor and beverages), real estate, and other legacy industries face meaningful revaluation opportunities. These sectors, previously overlooked during the infrastructure-focused bull market rally, now attract renewed institutional interest as portfolio diversification strategies become relevant. The broadening bull market creates space for multiple narrative threads to coexist: some portfolios capitalize on application-layer tech expansion, while others capture the cyclical rebound in traditional asset values.

The bull market’s progression through its three phases demonstrates the classic pattern where policy accommodation, expanding participation, and evolving opportunity sets sustain momentum across different market cycles and investor cohorts.