This week, the three major indices saw gains, with the Shanghai Composite Index rising 1.33%, the Shenzhen Component Index up 0.49%, and the ChiNext Index climbing 1.52%. What insights do leading institutions offer for the future market direction?
Shanghai Shenwan Hongyuan Securities Strategy: Slowing the Pace, Awaiting a New Consensus
During the market's consolidation period, focus on investment opportunities from non-tech rotations. Pay attention to sectors like brokerages, industrial metals, pharmaceuticals, and biotech, as well as the potential for a rebound in dividend factor excess returns. The market's nature remains tilted towards a rebound in weak-performing styles after a positive cycle of style divergence. A reversal strategy is more effective than a momentum strategy. While the broader trend continues, tech will likely lead, but the market will naturally become more diversified. This means greater variety within the tech sector itself, including domestic AI chains, and overall market diversification where tech leads, but other non-tech sectors with improving景气 conditions can also generate absolute returns.
CITIC Securities Strategy: W-Shaped Bottoming, A-Share Market in a "Consolidation Rebalance"
The rapid withdrawal of margin trading funds in July was initially stabilized by regulatory support, providing a buffer for incremental capital. External factors, such as oil price hikes from Middle East tensions, rising US bond yields, and renewed expectations of Fed rate hikes, are suppressing global risk appetite. The long-term logic for the AI industry remains solid. Kimi K3 is reshaping the "performance/cost" narrative, expanding workflow coverage and accelerating vertical penetration. Google's upward revision of capital expenditure confirms the supply-demand mismatch in computing power. The market is likely to maintain a W-shaped bottoming pattern, with AI as a long-term theme. In the short term, it's prudent to wait for external uncertainties to clear while simultaneously pursuing structural rebalancing. This involves targeting undervalued sectors with strong fundamentals and significant potential for valuation recovery. Key sectors to watch include AI (upstream materials, equipment, domestic computing power), midstream manufacturing export chains (new energy, machinery, ships), upstream resources, and dividend-yielding defensive plays.
China Galaxy Securities: The Medium-to-Long-term Tech Growth Trend Remains Unbroken, But the Rally Will Shift from Broad Gains to Earnings-Driven Structural Opportunities
Opportunity 1: The tech boom and industrial trends remain unchanged. The upcoming earnings reports of US tech giants next week, particularly their profitability and capital expenditure guidance, will be crucial signals. Focus on the semiconductor sector and its supply chain (memory chips, semiconductor equipment and materials, advanced packaging), components, communication equipment, energy storage/power support, humanoid robots, and commercial aerospace. Opportunity 2: Value the role of defensive core holdings. Sectors like coal, coal chemicals, finance, public utilities, and new energy are worth considering. Opportunity 3: Cyclical and resource sectors like non-ferrous metals, basic chemicals, construction materials, and steel may see a recovery.
Soochow Securities: How Much Longer Will the AI Downturn Last?
After the correction, the first to rebound might still be AI hardware. However, the next wave of true valuation uplift could shift towards application companies that are first to prove commercial revenue. This AI correction will not end with all stocks bottoming simultaneously. The real end will be when the market stops pricing the entire AI industry with the same valuation. Capital will move away from companies relying solely on scarcity and narratives, towards areas where earnings growth is still accelerating and has not been fully priced in. One exception exists, independent of overseas capital expenditure cycles. If the US tightens export controls on semiconductor equipment and advanced chips, the concept of "self-reliance and control" could become a pricing logic for some domestic supply chain segments, independent of the global cycle. This support comes from the necessity of import substitution, not earnings growth itself, so it can cushion declines but cannot replace a genuine acceleration in profits. After the adjustment, the market will seek new accelerators of profit growth, not the previous winners.
Industrial Securities Strategy: The Fund's Q2 Holdings, Though Seemingly Extreme, Are Not a Reason for Strategic Bearishness
The "sentiment bottom" rebound we highlighted last week materialized on schedule, driven by market stabilization funds and tech stocks. However, the sustainability has been limited, with the market still hovering in a bottoming area, hesitant, and lacking a clear structure. This is due to renewed geopolitical tensions in the Middle East and, despite better-than-expected earnings from Google and Intel, the market chose to trade on the "capital expenditure erodes cash flow, sustainability is questionable" logic. The market still needs more time to digest earnings reports and gather sufficient information for a verdict. For "wealth effect diffusion" opportunities, focus on two dimensions: funds actively adding positions in Q2, and sectors where Q2 allocation fell but景气 expectations are improving. Tech growth areas include the domestic AIDC chain (servers, computer hardware) showing the most significant景气 change, alongside new energy (lithium batteries, energy storage, grid), optical components, gaming, and export-related auto parts & motorcycles. For resources, non-ferrous metals and chemicals (both AI-related small metals, energy metals, new materials, and traditional industrial metals/chemicals) have seen sufficient corrections. Geopolitically linked resources (refining, coal) remain dependent on situational changes. In consumption, opportunities lie in growth industry trends (innovative drugs) and sub-sector alpha from improving domestic demand (beer, dairy beverages). In finance and real estate, low-valuation non-bank financials (brokerages, insurance) could benefit from inflows of market stabilization funds.
Huajin Securities: Short-term Consolidation, Balanced Allocation Recommended
For sector allocation, maintain a balanced approach focusing on high-quality tech, some cyclical sectors, and low-valuation dividend stocks. In the short term, tech and some blue-chip sectors may be relatively dominant. Historical analysis of bull markets shows that high-景气 and policy-driven sectors tend to outperform within three months of a short-term correction. Currently, sectors like electronics, communications, pharmaceuticals, electric new energy, and consumption (tech and blue-chips) may be relatively strong. This is because AI hardware, semiconductors (electronics, communications) are experiencing rising short-term景气, along with innovative drugs and AI power. Policies supporting tech innovation and domestic consumption also benefit these areas. Among the already published mid-year reports, petrochemicals, retail, environmental protection, power equipment, and computers show high YoY profit growth. Growth sectors like electric new energy, media, and defense have low PEG ratios and sentiment. The recommended balanced allocation includes: 1) Policy and industry trend-up sectors: electronics (semiconductors, AI hardware), communications (AI hardware), computers (AI applications), media (AI applications, gaming), electric new energy (AI power, lithium batteries), non-ferrous metals, innovative drugs, defense (commercial aerospace). 2) Potential catch-up blue-chips like brokerages, consumption, and power.
Guosen Securities: Regarding the Impact of Historic Concentration on the Tech Rally
The bull market structure remains intact, and the current period is a window for rebalancing. The A-share market's correction since July, mainly due to increased external disturbances, is a normal adjustment in the mid-to-late stages of a bull market. The bull market is expected to continue, driven by multiple factors. Structurally, emphasize the diffusion within growth sectors and focus on undervalued areas like pharmaceuticals, real estate, and dividend-yielding resource sectors. First, the tech rally may not be over, but it could spread to lower-priced areas within the sector. Second, pay attention to pharmaceuticals and brokerages with strong fundamentals, as well as real estate and baijiu, where policy support could drive a fundamental recovery. Third, focus on cyclical resource sectors with improving supply-demand dynamics and high earnings certainty, particularly those with dividend attributes.
Zheshang Securities: Limited Downside in the Short Term, Adopt a More Positive Stance
With significant capital inflows into mainstream ETFs, the market has clearly bottomed and rebounded, suggesting a short-term bottom is forming. Based on the judgment of "capital-driven bottom and rebound, with an increasingly optimistic short-term outlook," we recommend: for timing, maintain mid-line positions for further rebound and consider adding to short-term positions when the market dips. For sectors, those showing signs of a breakout include securities, innovative drugs, and Hang Seng Tech, which can be added on dips as rebalancing options outside of tech. Meanwhile, we can participate in the short-term rebound of the ChiNext and STAR boards from a short-term oversold rebound perspective.
Kaiyuan Securities: This A-share Market Correction is a Repricing of High-Crowding, Not the End of the Bull Market
Investment advice: Participate in short-term rebalancing, but the medium-term focus remains on the "second ignition." In the short term, high-crowding tech trades are still being digested, and the market will continue to seek directions with limited previous gains, low institutional holdings, and earnings support. Rebalancing opportunities focus on two types: 1) Style restoration leading to allocation repair, focusing on stable and financial sectors like banks, public utilities, and power. 2) Low-position sectors showing signs of profit improvement, such as resources (non-ferrous metals, coal), basic chemicals, agriculture, pharmaceuticals, non-bank finance, and some consumption sectors. Whether these rebounds can turn into trends depends on subsequent financial reports and high-frequency data confirming ΔG (change in growth). In the medium term, tech remains the highest coupled area with G (growth), ΔG (change in growth), and industrial narratives. The main theme is not over, but investment difficulty has increased. The next phase's returns will come more from re-screening within tech rather than an overall valuation uplift. Focus on the intersection of "second ignition + narrative power": 1) Domestic computing power, semiconductors, PCB, and other AI hardware chain segments with real orders and profit realization. 2) New景气 directions from tech spillover, such as power equipment, utilities, energy metals, and liquid cooling. 3) New directions with industrial trends and narrative expansion capabilities, such as commercial aerospace, defense, and robotics.
Bohai Securities: Multiple Measures to Stabilize the Market, Confirming a "Policy Bottom"
Strategically, the capital market is in a phase of consolidation and bottoming. After the sharp decline and oversold rebound, market confidence is in a rebuilding process. The management's policy deployment to "stabilize and enhance capital market confidence," proactive regulatory actions, and the significant increase in willingness of state-owned institutions to increase holdings during downturns have all helped control the downside risk for the A-share market. With the upcoming earnings season, the market will undergo a new round of allocation based on changes in mid-year report performance. For sectors, consider: 1) The medium-to-long-term allocation opportunity in the computing power sector (after its structural consolidation), given the sustained global AI boom and the gradual increase in domestic computing power chain penetration, despite short-term risk aversion impacting fund flows. 2) The defensive appeal of dividend-yielding stocks, driven by rising global market volatility, heightened risk aversion, and the expectation of long-term capital inflows. 3) Recovery opportunities in the non-bank financial sector, supported by mid-year earnings, expectations of a stabilizing and enhancing capital market.
Comments