Can grid equipment still be traced?

If you ask which sector has been the most eye-catching since the beginning of the year, many people’s answer would likely lean toward power grid equipment! Taking power grid equipment ETFs as an example, they have increased by over 90% in the past year (note: fluctuations in the secondary market do not represent the fund’s net asset value and do not constitute investment advice).

The question is, with such a rise, how much room is there for growth in power grid equipment in the future?

Image source: Red Rocket Mini Program

Data source: iFinD

Price changes in the ETF secondary market do not equal the net asset value of the ETF product

01

Current background—“Epic expansion” in external markets

Let’s start with a recent major event. Over the past few months, power grid operators in Texas, the Mid-Atlantic, and the Midwest regions of the U.S. have successively received approval for $75 billion in transmission expansion projects. The core is the construction of a batch of 765 kV ultra-high voltage lines—currently the highest operating voltage level, with transmission capacity up to six times that of traditional lines, making it one of the largest and most powerful power transmission lines in history. (Note: According to The Information, source: Caixin)

What does this mean? For 10,000 miles of transmission lines in the U.S., more than a thousand 765 kV transformers are needed, over 300 GIS intelligent substations, and hundreds of thousands of high-voltage switches, cables, and protective devices. However, the reality on the supply side is harsh. Currently, there are very few companies in the U.S. capable of producing 765 kV transformers domestically, and delivery times are critical. The delivery cycle for U.S. transformers has extended from 50 weeks to over 120 weeks, with some models taking 128 to 144 weeks—close to three years. In contrast, similar equipment in China can be delivered in just 10 to 12 months. (Sources: General Administration of Customs, Great Wall Securities) The time gap presents an opportunity.

02

Why has it risen?—The “perfect storm” formed by three major logical factors

Looking at capacity layout. In high-end fields like ultra-high voltage transformers and converter transformers, only a few Chinese companies such as Xidian, Tebian Electric, and Baowen Electric have the capacity for mass production. Regarding upstream core materials, the silicon steel sheets used in transformers are mostly produced in China, accounting for over 70% of global capacity. The integrity of the industry chain determines who can truly handle this wave of massive orders. Data confirms this: in 2025, China’s transformer exports will total over $9 billion, a nearly 35% increase year-on-year, setting a new record. From 2023 to 2025, export growth rates increased from 19.9% to 35%, with a clear trend of rising both in volume and price.

Sources: General Administration of Customs, Great Wall Securities

Those Silicon Valley giants have long demonstrated their stance through actions. Elon Musk has repeatedly emphasized: “Chips will soon be oversupplied, but electricity is still not enough.” When external giants worry about power shortages, China’s power equipment solutions are becoming a “timely rain” for global AI infrastructure.

Furthermore, our domestic State Grid Corporation has explicitly stated that during the 14th Five-Year Plan, it plans to invest over 4 trillion yuan, a 40% increase compared to the 13th Five-Year Plan. Therefore, this round of power grid equipment rally is no longer just a speculative topic but a “perfect storm” formed by domestic policies, global power grid renewal cycles, and AI computing power explosions.

Having the logic is not enough—have these favorable factors translated into real profits?

The answer is yes. For example, the performance reports of constituent companies in the power grid equipment ETF index show that Siyuan Electric will achieve a total operating revenue of over 21 billion yuan in 2025, a 37% increase year-on-year; Far East Holding will turn profitable in 2025 (note: individual stocks do not constitute investment advice).

03

Can I still buy?—Are stock prices overestimating future growth?

We need to distinguish two concepts: rising a lot does not mean you can’t buy; falling a lot does not mean you can buy. Investing is about the future. The key question is: are current stock prices overestimating future growth?

Policy space: the 4 trillion yuan investment is just the beginning. The promotion of a unified national electricity market will push energy storage toward “market-based profitability.” From an overseas cycle perspective: export growth is only the start of a replenishment trend. The long-term transformation of European and American power grids spans decades, combined with high-margin AI data center demands. Some institutions expect supply and demand mismatches to continue until 2030, with leading export companies continuing to fulfill high-premium orders. (Source: Guojin Securities)

This round of power grid equipment market is essentially the starting point of the long-term trend of energy new infrastructure, not a short-term spike. The future growth space remains broad. Of course, any sector that rises too much will experience volatility—that’s market law. For investors who haven’t entered yet, it is not recommended to chase the high all at once. Instead, they can adopt a “pyramid” averaging method, dividing funds into multiple parts and gradually building positions during pullbacks.

The index underlying the power grid equipment ETF is the CSI Power Grid Equipment Theme Index. Over the past five full fiscal years, its gains and losses are: 57.29% (2021), -18.82% (2022), -2.77% (2023), 11.13% (2024), 32.52% (2025). Data source: iFinD. Past performance does not predict future results.

Investors can trade these on-exchange ETFs just like stocks. The main costs are broker transaction fees and fund operation expenses, which include management fees (0.5% per year) and custody fees (0.1% per year), deducted from fund assets. On-exchange ETFs do not charge subscription, redemption, or sales service fees. Subscription and redemption agents may charge commissions up to 0.5%, covering fees from stock exchanges, registration, and settlement institutions. The Huaxia CSI Power Grid Equipment Thematic ETF Launch-Linked Class C has no subscription fee but charges a sales service fee of 0.3% annually; redemption fees are 1.5% if held less than 7 days, and 0% if held 7 days or more. Management fee is 0.5% annually, and custody fee is 0.1% annually, both deducted from fund assets.

Class A funds charge a one-time subscription fee with no sales service fee; Class C funds have no subscription fee but do charge a sales service fee. Due to differences in fee structure and establishment time, long-term performance may vary significantly. Please refer to the product’s periodic reports for details.

Risk reminder: This material is for informational purposes only and does not constitute stock recommendations or substantive investment advice or commitments, nor is it a legal document. 1. The risk level of the Power Grid Equipment ETF and its associated funds is R4 (medium-high risk), mainly investing in constituent stocks of the target index and alternative stocks. Its expected risk and return are higher than hybrid funds, bond funds, and money market funds. The specific risk rating results are subject to the ratings provided by the fund manager and sales institutions. 2. ETF risks include deviations between the index return and the stock market average, index volatility, and divergence between the fund’s portfolio return and the index. The associated funds face tracking deviation risks and performance gap risks, and past market or product performance does not guarantee future results. 3. Before investing, investors should carefully read the fund’s “Fund Contract,” “Prospectus,” and “Product Summary” to understand the risk-return profile and characteristics. They should consider their own investment objectives, time horizon, experience, and asset situation to assess their risk tolerance. Make informed and cautious investment decisions based on understanding the product and sales suitability. 4. The fund manager does not guarantee profits or minimum returns. Past performance and net asset value do not predict future performance, and the performance of other funds managed by the same manager does not guarantee the fund’s future results. 5. Investors are responsible for the “buyer beware” principle in fund investments. After making an investment decision, the risks associated with fund operation, trading prices, and net asset value fluctuations are borne by the investor. 6. The China Securities Regulatory Commission’s registration of a fund does not imply any substantive judgment or guarantee of its investment value, market prospects, or returns, nor does it mean that investing in the fund is risk-free. 7. The product is issued and managed by Huaxia Fund; distributors do not bear responsibility for investment, redemption, or risk management. 8. Markets carry risks; investment should be cautious.