The market experienced a consecutive pullback after major broad-based indices hit new highs and the significant event of "Trump's visit to China" concluded, showing characteristics similar to the market performance following the "93 Military Parade" in 2025. At that time, the market also saw a decline in volatility after the earnings season ended, indices reached new highs, and a major event concluded. Meanwhile, the external environment witnessed rapid increases in macro interest rates among major global economies, triggering periodic turbulence in risk assets. The differences lie in: on one hand, the current volatility level of the A-share market is significantly lower than that period, suggesting limited room for further volatility decline and correction; on the other hand, whether it's geopolitical conflicts like the US-Iran tensions or inflationary pressures from high oil prices and potential monetary policy changes due to the Federal Reserve leadership transition, the current macroeconomic uncertainties far exceed those of the past. Looking ahead, as the earnings season passes, the support for market trends from narratives of micro-level earnings exceeding expectations will weaken, and macroeconomic contradictions may return to investors' focus. Referring to the experience after the "93 Military Parade," the main market trends also underwent structural diffusion and rotation. In this cycle, the new and old energy chains, being the common focal point of macroeconomic narratives and industrial cycle developments, deserve close attention.
The seemingly contradictory combination of rising US stock prices and US Treasury yields has underlying rationality but requires close monitoring of two major changes. Recently, the market has priced in inflationary pressures, leading to a rapid rise in US Treasury yields. However, US stocks only experienced some volatility this past Friday, showing relatively stable overall performance. This is partly due to the significant support from corporate earnings (the numerator) amid the development of the AI industry and partly because investors expect inflationary pressures from a one-time oil price shock to be unsustainable. Looking forward, whether this pattern can persist long-term depends on two core markers: First, historically, in scenarios combining a "soft landing and rate-cutting cycle," simultaneous increases in US Treasury yields and US stock prices are not uncommon. The difference is that, in absolute terms, the current rise in US Treasury yields is occurring from a relatively high base level, implying market expectations that the AI industry wave will lead to a comprehensive improvement in future economic growth rates (requiring simultaneous increases in potential growth and the neutral interest rate). Currently, we can observe that AI investment is spreading outward, and efficiency improvements are beginning to emerge, though primarily seen as cost reduction. Whether new downstream revenue growth can emerge to support a sustained rise in the growth center remains to be seen, meaning high interest rates could still be a long-term concern. Second, the ceasefire in the US-Iran conflict has not led to the reopening of straits for navigation. Global crude oil inventories are still rapidly depleting, and the oil price shock is gradually transforming into broader cost pressures. CPI and PPI readings continue to exceed expectations and rise, and inflation expectations are slowly increasing. After Walsh takes office, whether he will be forced to prioritize inflation control or even actively tighten policies to reverse the current rate-cutting cycle is also a potential risk. If the rise in interest rates stems mainly from active tightening rather than an increase in the growth center, it will also exert downward pressure on stocks.
Mapping to domestic tech assets: Positioning current asset stock prices from a "volume-price" perspective. For growth stocks in the broad manufacturing sector, rallies driven by volume increases are often relatively stable due to better predictability, while price increases may suppress downstream demand, making trends harder to grasp. Reviewing the relationship between performance and volume-price dynamics in the new energy and semiconductor industry cycles from 2020 to 2022, growth stocks in broad manufacturing can be roughly categorized into three types: The first type includes core raw materials (e.g., lithium carbonate in 2021), which belong to upstream "bottleneck" segments. During rapid upward industry cycles, both volume and price rise, offering significant rally elasticity, but sustainability is relatively short, with stock prices peaking ahead of "volume-price" peaks. The second type includes cost-sensitive assets (e.g., lithium batteries in 2021), belonging to midstream manufacturing segments. They can achieve simultaneous increases in volume and price in the early stages of an industry cycle upturn. However, as upstream raw material cost pressures intensify, the phenomenon of increased revenue without increased profit often marks a turning point for stock prices. The third type includes cost-insensitive assets (e.g., semiconductors in 2021). Such industries often follow a volume increase logic first, with stock prices rising steadily. As sustained supply-demand imbalances continue, the sector begins to raise prices, leading to a trend-like improvement in gross margins, short-term accelerated stock price increases, and subsequently amplified volatility. This reflects that price increases confirm accelerated prosperity while high gross margins begin to deteriorate the industrial supply structure, and concerns about suppressing downstream demand also constrain the stability of sector performance. Currently, the core beneficiary segments of the AI industry wave are mostly growth stocks in broad manufacturing. Categorizing them and combining them with the latest volume-price performance: Among upstream core raw materials, lithium, copper, and optical chips are all in a stage of simultaneous volume and price increases, requiring close attention to downstream acceptance after price hikes. Among cost-sensitive assets, liquid cooling has seen both volume and price declines, warranting attention to whether supply and demand will reverse subsequently. For cost-insensitive assets, optical modules and storage are experiencing simultaneous increases in volume and price. In the short term, supply-demand mismatches persist, but historical experience suggests that this stage is not the best trading interval for manufacturing growth stocks. In contrast, the stock price increases of domestic computing power-related CPUs/GPUs are still driven by volume growth, with future focus on the sustainability of downstream orders.
The time to focus on macroeconomics has returned. As trading based on micro-level industry earnings and orders exceeding expectations gradually concludes, the future market is expected to return to macroeconomic themes, with market trends undergoing rotation and diffusion. Sectors with quietly improving fundamentals across a broader range will also return to focus. Recommendations include: First, new and old energy sectors benefiting from the certain upward shift in energy price centers (oil, oil shipping, coal, lithium batteries, wind, solar) and the chemical industry, which has obvious energy cost and production capacity advantages globally. Second, sectors where the capacity cycle has bottomed out and will see high elasticity with the subsequent recovery in global industrial demand, such as commercial vehicles, power grid equipment, textile manufacturing, and electronic chemicals. Additionally, with supply constraints and demand resilience still present, industrial metals (aluminum, copper) still have room for recovery after future US dollar pressure subsides. Third, consumption sub-sectors where the inventory cycle has bottomed out and will gradually enter a phase of rising profits as external demand shifts to internal demand prosperity—household appliances, personal care products, entertainment products, food, and internet e-commerce.
Risk warnings: Domestic economic recovery falls short of expectations; overseas economies experience a significant downturn.
Comments