This week, the A-share market continued to adjust, with the Shanghai Composite Index showing only a slight rebound on Friday.
From a technical perspective, however, the market has repeatedly signaled a potential reversal, suggesting promising performance next week. The latest key policy meetings have also released positive signals.
In terms of opportunities, industry experts point to the guidance from these meetings, highlighting AI, consumer sectors, and new energy as the three major themes.
**Signs of Rebound Emerge** Recent trading sessions have shown multiple signs of a rebound in A-shares. For instance, the Shanghai Composite Index has formed three long lower shadows in the past three trading days.
In candlestick charts, a lower shadow—formed when buying pressure outweighs selling pressure—often signals a potential trend reversal. The longer the lower shadow, the stronger the reversal signal. Conversely, upper shadows, formed when prices retreat after an intraday high, can indicate different market phases. A long upper shadow at a low point may suggest a bottom reversal, while one at a high point could signal a market top, as seen on November 14.
Beyond technicals, the A-share market has also benefited from favorable liquidity conditions. The Central Economic Work Conference, held from December 10 to 11 in Beijing, outlined key economic policies for 2026, emphasizing proactive fiscal and moderately loose monetary policies. The focus on stabilizing employment, businesses, and market expectations is expected to further consolidate market fundamentals, providing a supportive backdrop for equities.
Additionally, despite recent adjustments, leveraged funds—a gauge of risk appetite—have remained elevated, even hitting a record high of 2.51 trillion yuan.
**Three Key Themes** The Central Economic Work Conference outlined eight key tasks for 2026, with "expanding domestic demand" topping the list. Measures include boosting household income, unleashing service consumption, and stabilizing investment. This signals a long-term strategic shift toward domestic demand, positioning consumer sectors—currently at a cyclical low—as a potential market leader.
The second priority is "innovation-driven growth," with a focus on AI integration and industrial upgrades. This suggests deeper AI applications in the real economy, making AI-related stocks another key theme.
The third task is "reform and anti-fragmentation," targeting unified market regulations and curbing excessive competition. Sectors plagued by overcapacity may see a rebound, forming the third major theme.
Beyond these, the conference also touched on other industries, such as the Hainan Free Trade Port, marine economy, and new energy, though these were not elaborated in detail.
**Stocks with Upside Potential** Stocks recently rated "Buy" by brokerages are largely concentrated in the three themes above. For example, Donghua Energy, a leader in alkyl resources, received a "Buy" rating from CITIC Securities with a target price of 14 yuan per share—an 83.5% upside from its current price of 7.63 yuan.
Other stocks with significant upside potential include AI-concept player Kingsoft Office.
(Stocks mentioned are for illustrative purposes only and not investment recommendations.)
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