The long-awaited arrival of AI-powered long-form dramas has ignited a sharp rally in the previously dormant film and television exchange-traded funds, with trading volumes surging alongside prices. This raises a critical question for investors: is this resurgence a fleeting phenomenon, or does it signal the dawn of a new growth phase?
On the final trading day of August, A-shares staged a comeback after a sluggish start, with the cultural media sector—which had retreated earlier in the year—showing remarkable strength. The Seedance video large model index soared 7.49%, while hot concept indices such as short drama games and Kimi both climbed over 5%. After a prolonged period of decline, film and television-themed ETFs led all ETFs in gains, with AI-related industry ETFs like sci-tech chips, media, and artificial intelligence also ranking among the top performers.
Where the Rally Is Coming From
The AI investment frenzy has once again rippled into the film and television industry. News that the first satellite-broadcast AIGC long-form drama Journey to the West: The Sequel was set to premiere on August 31 sent short drama game concept stocks soaring, with multiple stocks hitting their daily limits or posting substantial gains. On the market surface, the cultural media sector led all sectors. According to Wind data, among the hottest concept indices, the Seedance video large model index jumped 7.49%, the short drama game index surged 6.97%, and the Kimi index climbed 6.47%. AI-related concept indices also delivered impressive performances. Buoyed by these sector movements and external catalysts, the two film and television-themed ETFs saw a significant spike in trading volume, rising 7.07% and 6.33% respectively, capturing the top two spots among all ETFs for daily gains—a long-overdue surge. Data shows that after hitting a local peak on February 10 this year, these film and television-themed ETFs have been on a steady downtrend, with a maximum drawdown exceeding 45% as of August 31. Additionally, several sci-tech chip ETFs, media ETFs, and sci-tech AI ETFs also performed strongly, with many products gaining over 3%.
What to Watch: Commercial Deployment Progress
After this year's rise-and-fall pattern, does the strong rebound in film and television-themed ETFs present a timely entry point? Zhang Pengyuan, a researcher at PaiPaiwang Wealth, told financial media that the primary driver behind the sharp rise in film, television, and media ETFs is the official premiere of the AIGC long-form drama Journey to the West: The Sequel. Secondly, the summer box office total for 2026 exceeded 12.4 billion yuan, marking the best three-year performance and signaling sustained improvement in industry fundamentals. Additionally, the price-to-earnings ratio of the CSI Film and Television Theme Index is currently at a historical low in the 20th percentile of the past year, enhancing the appeal of valuations and boosting capital allocation interest in the sector. However, Zhang cautions that despite the medium-to-long-term logic supporting the cultural media sector, this rally is still largely driven by thematic sentiment. The AI short drama industry remains in its early stages, and meaningful earnings delivery is still a long way off. Furthermore, in a market characterized by zero-sum competition, the media sector has accumulated substantial short-term speculative profits following this rebound, raising the risk of chasing highs.
Han Wei, managing director at Taishi Investment, views the explosion in AI applications not as a simple sector rotation but as "AI industry chain value transmission entering its next phase." Han explains the three-tier logic behind this trend. First, infrastructure must ultimately be monetized through applications, and content generation and IP operation scenarios in cultural media are the easiest to materialize. Second, it is a combination of valuation divergence and capital migration: the hardware end has already been fully priced in, while the application end has lower expectations and cleaner positioning, providing inherent momentum for capital to flow from crowded areas to undervalued ones. Third, recent industry catalysts are converging, and the application layer has shifted from "storytelling" to "data-driven" reality, where substantive commercialization supports stock prices better than mere concepts. Nevertheless, Han offers two cautionary notes. Rotation does not equate to earnings realization; many targets are still in the thematic fermentation phase, and indiscriminate chasing of the entire sector should be avoided. When sentiment fades, drawdowns will be steeper, and the application end carries both high elasticity and high volatility, so investors should prioritize certainty over pure elasticity. He endorses the long-term trend of AI spreading to applications and suggests that in practice, investors should abandon short-term trend-chasing, select quality targets with genuine benefits and verified earnings, and participate in the rally based on a logic of certainty.