Recent market activity shows the Shanghai Composite Index fluctuating around the 4,000-point mark, with sector rotations accelerating.
Data reveals that since late October, brokerages have conducted a wave of rating adjustments on A-shares, upgrading 23 stocks while downgrading 40. The electronics sector saw the highest number of upgrades, while consumer and pharmaceutical stocks exhibited significant divergence.
As year-end approaches, major brokerages’ 2026 investment strategies express optimism about A-shares. CITIC Securities noted China’s capital markets are maturing, predicting a transition to low-volatility "slow bull" conditions during the 15th Five-Year Plan period.
**23 Upgrades: Electronics Lead** According to Choice data, the 23 upgraded stocks span electronics, pharmaceuticals, food & beverages, power equipment, and auto parts. These firms typically feature robust earnings growth, high technical barriers, or improving industry conditions. Many posted strong Q3 2025 results, buoyed by new products, order surges, or policy tailwinds.
Electronics dominated upgrades, with names like **Giantec Semiconductor**, **AMEC**, **YJ Tech**, and **UGREEN Group** reflecting semiconductor, chip design, and consumer electronics strength. For instance, China Post Securities upgraded Giantec to "buy" on November 11, citing AI-driven chip demand and its EDA software leadership. Similarly, Bocom International raised **AMEC**’s target price to ¥325 (from ¥280), maintaining a "buy" rating due to outperforming growth forecasts.
Pharmaceutical upgrades included **Deyuan Pharma**, **Senxuan Pharma**, and **Yiling Pharmaceutical**, driven by innovative R&D and capacity expansion. Food & beverage picks like **Xima Food**, **Qianwei Central Kitchen**, and **Tsingtao Brewery** also gained traction, alongside power equipment firms **Sungrow** and **Aiko Solar**.
**40 Downgrades: Consumer & Pharma Pressured** Approximately 40 stocks faced rating or target price cuts, primarily in pharmaceuticals, F&B, electronics, and beauty care. Challenges included weak short-term earnings, margin compression, or reduced upside after rallies.
Pharmaceutical downgrades featured **EpiMed**, **MicroPort EP**, **Novogene**, **Mindray**, and **Humanwell Healthcare**. For example, Haitong International downgraded **EpiMed** to "cautious add" amid competitive pressures in intraocular lenses.
F&B saw **Luzhou Laojiao**, **Kweichow Moutai**, **Three Squirrels**, and **New Hope Dairy** downgraded. Pacific Securities cut **Moutai** to "add," citing series liquor pressures, while Nomura downgraded **Luzhou Laojiao** to "neutral" (target: ¥153.97) on margin concerns.
Beauty care names like **Proya**, **Bloomage Bio**, and **Runben** were adjusted due to earnings headwinds. Tech downgrades included **GigaDevice**, **Zhitron Tech**, **XTC New Energy**, and **Sinexcel**, with some trimmed for valuation after strong runs.
**Outlook: Slow Bull Ahead** Top brokerages like CITIC Securities, CICC, and China Securities Co. project sustained A-share strength in 2026. CITIC highlighted Chinese firms’ global integration, expecting low-volatility growth underpinned by pricing power gains.
CICC emphasized 2026 as a year for "riding trends," citing AI adoption and innovation-driven earnings. It advised balancing growth (tech, exports, cyclical recovery) amid valuation adjustments. China Securities Co. maintained bullishness on policy and liquidity but warned of mid-cycle risks, advocating selective exposure to AI, renewables, and resources.
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