According to a research report from China Merchants Securities (CMSC), looking ahead to January, A-shares are likely to continue their upward trend, with a high probability of the spring rally persisting. Fundamentally, marginal improvements are emerging, driven by an acceleration in special bond issuance and a recovery in government investment; against a low base, the year-on-year growth rate of listed companies' annual report pre-disclosures is expected to rebound significantly; liquidity is relatively ample, benefiting from increased probability of domestic capital increasing positions and foreign capital returning following RMB appreciation. Consequently, A-shares are expected to continue a volatile upward trajectory in January, with a further increased probability of surpassing previous highs. In January, speculative sentiment surrounding earnings disclosures is set to intensify significantly. Sectors with earnings exceeding expectations or those where uncertainty is resolved post-disclosure deserve close attention. Overall, focus remains on investment-driven pro-cyclical price increase sectors, service consumption, and areas of indigenous control represented by domestic computing power. The main views of CMSC are as follows:
The outlook on market trends and core logic suggest that, looking ahead to January, A-shares are likely to continue their upward trend, with a high probability of the spring rally persisting. Fundamentally, after the start of the year, the issuance of local government special bonds is expected to accelerate, central budget investments and dual-key projects are likely to speed up, and government spending and investment data are anticipated to recover. The fundamental landscape is expected to show marginal improvement. January is the window for listed companies' performance pre-disclosures; due to the low base effect from the same period last year in Q4 2025, the year-on-year growth rate in annual report pre-disclosures is expected to rebound noticeably. Regarding liquidity, due to accumulated profitable effects, the probability of various domestic funds further increasing their A-share positions after the new year is high. Recent significant RMB appreciation, coupled with warming economic expectations, has also markedly increased the likelihood of foreign capital flowing back into A-shares. Therefore, A-shares are expected to continue a volatile upward trajectory in January, with a further increased probability of reaching new highs. Speculative sentiment around earnings disclosures will heat up considerably in January. Sectors with earnings surprises or those where uncertainty clears post-disclosure warrant focused attention. Overall, technology represented by commercial aerospace, AI applications, AI computing power, and semiconductor equipment, along with resource sectors represented by industrial metals, remain the main battlegrounds for January. Additionally, service consumption and non-bank financials are still key directions worthy of attention.
Regarding style and sector allocation strategy, in terms of style selection, entering January, considering the December PMI's return to expansion and strong market expectations for front-loaded policy support at the year's start, market risk appetite is boosted, aiding the continuation of the spring rally. For January, large-cap growth is more recommended; the recommended index portfolio includes the CSI 300, STAR 50, 300 Quality, 300 Information, and Hong Kong Stock Connect Technology, among others. At the sector selection level, considering the perspective of the next one to two months and integrating factors such as prior performance, valuation, trading activity,景气 changes, and policy/event catalysts, it is suggested that sector allocation primarily revolves around布局 for the spring躁动 and clues from the annual report outlook. The focus is recommended on pro-cyclical + technology sectors, typical industries including power equipment, mechanical equipment, non-bank finance, electronics, non-ferrous metals, and basic chemicals, etc. In terms of thematic selection, the bank believes the main theme of technology + cyclical bull market will remain unchanged. In January, focus is recommended on five themes with marginal improvements: AI hardware, robotics, AI applications, non-ferrous metals, and domestic computing power.
Concerning liquidity and capital supply/demand, incremental funds in January are expected to maintain a steady net inflow overall, with foreign capital and insurance funds likely becoming the main sources of incremental capital. In terms of macro liquidity, addressing seasonal factors like tax periods and year-end, the central bank restarted 14-day reverse repo operations around the mid-month tax period and on December 18th, directly covering funding needs during the New Year holiday. Although funding costs tightened somewhat towards year-end, the volatility this year was relatively mild compared to previous years. After the year-end, funding costs in January are expected to return to easier conditions. Regarding external liquidity, the US Fed remains in an interest rate cutting cycle in 2026, coupled with expectations for policy easing due to the change in Fed Chairmanship, which is generally favorable for market risk appetite in the first half of next year. However, as the pace of rate cuts is more data-dependent, market expectations may face repeated adjustments. In terms of stock market capital supply and demand, trackable capital in the stock market turned to a net inflow in December, with ETFs and margin financing becoming the main sources of incremental funds. On the supply side, the scale of new equity-focused fund issuance declined, while substantial net subscriptions to A500 ETFs drove an expansion in ETF net subscription scale; margin financing saw a recovery in risk appetite leading to net inflows. On the demand side, net减持 by major shareholders expanded; IPO issuance scale declined but refinancing scale rebounded, leading to an overall expansion in capital demand. Looking ahead to January, incremental funds are expected to maintain a steady net inflow overall. With continued RMB appreciation and the 'good start' period for insurance funds, foreign capital and insurance funds are expected to become the main incremental capital sources.
Regarding mid-cycle景气 and sector recommendations, focus is on areas with high annual report growth or improvement. On the profitability front, as economic data like exports, production, and investment weakened, the profit growth of industrial enterprises from January to November narrowed to 0.1%, with the single-month November year-on-year decline expanding to -13.1%. The divergence between old and new growth drivers intensified, and short-term profit recovery remains under pressure. Among细分 sectors, the mining industry saw significant losses, the consumer sector's profitability was relatively weak, while high-tech manufacturing showed notable profit growth. High-tech manufacturing and equipment manufacturing maintained steady profit growth, with electronic equipment and new energy-related industries performing prominently. Based on a synthesis of industrial enterprise profits and mid-cycle indicators, areas预计 to have high or improving annual report growth rates are预计 to be主要集中在部分涨价 categories, sectors with export advantages, and the persistently high-景气 TMT sector. In terms of景气, sectors with high景气 in December were主要集中在部分 resource products, midstream manufacturing, and information technology. Within resource products, prices for most industrial metals rose; in midstream manufacturing, prices across most of the new energy industry chain continued to rise, engineering machinery sales improved; in the consumer services板块, movie ticket prices increased, while the year-on-year decline in retail sales of the four major home appliances widened; in financials and property, commercial housing sales remained sluggish; in utilities, natural gas prices declined. Integrating profitability, industry景气, and trading dimensions, sector allocation for January is suggested to primarily revolve around布局 for the spring躁动 and annual report outlook clues. Key recommendations focus on pro-cyclical + technology sectors, typical industries such as power equipment, mechanical equipment, non-bank finance, electronics, non-ferrous metals, and basic chemicals, etc.
For thematic and industrial trend investment, the Zhuque-3 and Long March-12A made successful maiden flights, and new listing rules for commercial aerospace were issued. On December 3rd, the Zhuque-3 Yao-1 carrier rocket launched from the Dongfeng Commercial Aerospace Innovation Test Zone, successfully completing its flight mission with the rocket's second stage entering the预定 orbit. The mission also involved a verification test for first-stage recovery, but an abnormal combustion occurred during the process, preventing a soft landing on the recovery field; the recovery test failed. On December 23, 2025, the Long March-12A Yao-1 carrier rocket successfully launched from the Jiuquan Satellite Launch Center's Dongfeng Commercial Aerospace Innovation Test Zone, successfully placing its payload into the预定 orbit, achieving 'orbit insertion success'. Although the launch mission was overall successful, the first-stage rocket recovery did not achieve the预定 soft landing target. On December 26, 2025, the Shanghai Stock Exchange officially released and implemented the 'Guidance for the Application of Listing Review Rules No. 9 – Application of the Sci-Tech Innovation Board's Fifth Set of Listing Standards for Commercial Rocket Enterprises', clarifying for the first time that commercial rocket enterprises can use the STAR Market's fifth set of listing standards for IPO applications. According to this guidance, relevant enterprises are no longer required to meet既定 profit or revenue scale thresholds; the core review focus shifts to technological maturity and commercial feasibility. The most critical technical indicator is that the enterprise must have achieved at least one successful payload orbit insertion using a medium-to-large reusable launch vehicle technology before applying.
Risk warnings include economic data falling short of expectations, incomplete understanding of policies, and overseas policies tightening beyond expectations.
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