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Zhang Yidong from Haitong International has released his latest outlook, suggesting the AI bull market is set to hit a major peak in 2027 and that conditions resemble the onset of autumn-third-quarter turbulence should be seen as a prime buying opportunity. He emphasizes that the current market volatility is a phase of consolidation that will pave the way for fresh investment avenues.
Where to take action - September's pullbacks are an ideal time to accumulate positions. First, US Treasury yields remain the primary near-term disruptor for the autumn market, yet the maneuvering ahead of the September FOMC meeting is unlikely to cause lasting damage, making dips a favorable entry point. The forecast for third-quarter long-end US yields to rise before falling remains unchanged, with the 10-year Treasury yield potentially peaking near 5% in September before retreating to around 4.3% in the fourth quarter.
Looking further out, whether the Fed raises rates in September is a viable choice either way. The hike itself is not the critical factor; rather, the shift in underlying policy logic carries far greater weight. In the first scenario, a rate hike would aim to suppress long-end yields-an approach reminiscent of Paul Volcker's reforms in the late 1970s. While it would tighten inflation constraints and pressure markets in the short term, it would bolster the Fed's credibility and authority over time, stabilizing the dollar and Treasury market, and ultimately driving long-term yields lower.
In the second scenario, a pause would signal no change in Fed policy, continuing the Bernanke-era doctrine and Modern Monetary Theory guidance that have dominated since the 2008 crisis. In such a case, Warsh's hawkish comments at Jackson Hole could be dismissed as bluster, and long-end yields might keep climbing ahead of the September meeting-or even spike significantly past 5% on the 10-year Treasury afterward. Bond bears could force the Fed's hand through a simultaneous selloff in stocks and bonds, echoing the Silicon Valley Bank episode, as the central bank may prematurely capitulate to sustain the AI-driven economic growth and stabilize equity and bond markets, potentially collaborating with the Treasury to jointly cap long-end yields.
Why the AI bull market endures - The trend is expected to continue but has entered its "autumn" phase, with short-term consolidation validating a new investment paradigm. From an investing standpoint, being approximately right on the big picture beats being precisely wrong on the details. The latter often stems from overreacting to short-term data, missing the forest for the trees. Anchored in the long-term view, one should trust the Juglar cycle and recognize this AI technology wave as a historic revolution. Since this AI-driven Juglar cycle should last until at least early 2028, the bull market should persist into next year.
Investment strategy - Use autumn's fluctuations to position aggressively, targeting the "divergence" in technology and the "spread" into non-tech sectors. The autumn market will mark the expansion of the AI bull run, embracing the shift toward application-led AI logic and focusing on two structural trends. The first centers on TMT, where the emphasis is on divergence, with AI hardware narrowing to a select group that prioritizes domestic substitution and supply chain resilience, while AI applications broaden into areas like government, enterprise, and defense, alongside embodied intelligence and energy technology. The second trend involves the "AI+" theme spreading into non-tech fields, where hardcore assets in these industries see a renaissance-especially through AI-labeled initiatives that are actually driven by mergers, acquisitions, and asset injections for external growth.
For detailed logic, analysis, and risk warnings, refer to the "Plant in Autumn-Haitong International Autumn Strategy Report" and the companion series. Institutional clients can reach out to Guotai Haitong or Haitong International sales representatives for the full reports.
This content is republished from a Sina partner source and is provided solely for informational purposes, without implying endorsement of its views or accuracy. The articles are for reference only and do not constitute investment advice. Investors act at their own risk.
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