Major indices showed mixed performance this week, with the Shanghai Composite Index rising 0.70%, the Shenzhen Component Index gaining 0.37%, and the ChiNext Index falling 0.29%. How will the market develop from here? Here's what institutions are saying.
CITIC Securities suggests avoiding both crowded trades and direct opposition to them. Recent A-share market concentration is high, with clear opposition and mutual exclusion between the optical communication and consumer sectors. However, historical experience shows that the sector most opposed to hot industries is often not the best performer after group peaks dissolve. The focus should be on the return of fundamental capital pricing power and rising energy and chemical commodities after commodity volatility declines. When the market truly begins pricing the economic impact of shipping disruptions, sustained price increases and unexpected profits driven by supply-demand gaps will become core clues. The fundamental allocation logic remains the revaluation of pricing power in China's advantaged manufacturing sectors, with new energy, chemicals, non-ferrous metals, and power equipment being the most representative. Close attention should be paid to progress in domestic AI. The explosion of the "volume" logic on the hardware side may currently present the largest expectation gap in the AI chain. Although the launch of DeepSeek V4 generated less enthusiasm than the V3 and R1 versions, domestic models have progressed from "usable" to "usable and effective." With domestic hardware volume increasing in the second half of the year (as explicitly indicated in official documents regarding Ascend super nodes), they are gradually moving towards "usable, effective, and affordable," with an open-source ecosystem gradually forming. The gap between domestic and top international models is no longer the core issue; "usability and effectiveness" along with volume and price are the factors worth observing by Q2 2026. Additionally, it is advised to continue increasing allocation to some low-valuation sectors, focusing on securities and insurance. For cyclical sectors experiencing price increases, short-term performance may be affected by crude oil futures volatility, but shipping lane obstructions, accumulation of spot shortages, and the spread of supply chain disruption effects are real occurrences. Market desensitization is a temporary phenomenon; over the longer term, facts will be priced in, and this requires continued close monitoring.
CICC's weekly strategy thoughts indicate that external risks are controllable, suggesting a focus on three high-growth themes. US-Iran negotiations are currently in a stalemate of repeated back-and-forth, with oil price volatility intensifying, pushing prices back above $105. While this constitutes a persistent market disturbance factor, the tail risk of the situation spiraling out of control and severely deteriorating is relatively limited. Furthermore, A-shares have shown some desensitization to geopolitical panic. AI computing power sector earnings have faced some disruptions, but compared horizontally, it remains a scarce high-growth direction. The market performance following earnings reports reflects the sector's transition from a "thematic concept" to an "earnings realization" phase. In an environment of scarce high growth, market capital is concentrating towards high-growth sectors. Overall, the market is currently in a critical window for growth verification, with focus on three logical themes: the AI computing power sector, the energy security sector (like coal and coal chemicals), and midstream manufacturing, especially new energy. Key industries to watch include AI computing power (semiconductors, optical communication, etc.), oil and gas production, coal, coal chemicals, power equipment, and machinery.
Huajin Securities questions whether a rotation from high-flying to lagging tech growth stocks will occur after the earnings season. Currently, a short-term rotation within tech growth seems possible after the earnings period, with sectors like pharmaceuticals, media, computer, and new energy potentially playing catch-up. Firstly, tech growth may see a short-term high-to-low rotation. In terms of price changes since April, communications, electronics, and defense have seen significant gains, while pharmaceuticals, media, and computers have risen relatively less. Regarding earnings, among announced 2025 annual reports, tech growth sectors with leading year-on-year profit growth are electronics, computers, media, and defense. The gains in communications, electronics, and defense may have already largely reflected this strong earnings growth. Secondly, sectors like pharmaceuticals, media, computers, and new energy might experience catch-up rallies. From an industry trend perspective, short-term trends or sentiment for AI, new energy, and innovative drugs may be improving. Policy-wise, supportive policies for integrated circuits, innovative drugs, and green electricity are continuously being implemented.
Guohai Securities discusses the "preemptive" calendar effect and potential style changes in May. Attention can be paid to a potential phased return of small and mid-cap thematic styles from late April to May. Calendar effects suggest that the correlation between stock prices and earnings weakens phase in May, the market enters a phase of thematic rotation, and high-growth directions may again present good risk-reward profiles. Considering the characteristic of effects shifting earlier, attention can be started from late April on the return of small and mid-cap thematic plays. After Q1 reports are released, the earnings factor weakens phase in May, potentially offering better risk-reward in high-growth directions. For high-turnover investors interested in themes, May could be a time to phase focus on themes with potential catalysts and lower crowding, such as defense/commercial aerospace, robotics, innovative drugs, and domestic computing power. However, swift action is advised, as June-October is typically when market leaders emerge and sector rotation slows down again. Looking at H2 industry growth themes, continued focus is recommended on previously highlighted directions like optical modules, energy storage, battery materials, and memory. These areas are in periods of accelerating high growth or confirmed profit recovery, and have seen significant upward revisions in profit forecasts year-to-date, reflecting high market expectations for subsequent fundamental improvement.
Shenwan Hongyuan's weekly strategy review and outlook asks what to focus on in Q2. A short-term oversold rebound is expected, followed by a phase of volatile consolidation, with a potential new round of record-breaking行情 possibly in H2 2026. The current market bottom also represents a style bottom (for small-cap growth). The adjustment in small-cap growth has undergone a switch in offensive structure towards pro-cyclicals, HALO trading, and a sell-off in high-risk appetite assets triggered by US-Iran tensions, making the adjustment relatively sufficient in both time and magnitude. The return of the growth style is seeing resonance between China and the US, with the Nasdaq hitting new highs and the ChiNext Index also reaching new highs. This supports the likelihood of a medium-term upward trend for A-shares. For sectors temporarily lacking new catalysts, absolute and relative return lows have likely appeared, but the recovery may be slow, with a quarterly timeframe for new highs. Post-earnings season, what to watch in Q2? Firstly, there are few key macro validation points in Q2. A potential visit by Trump to China in May constitutes a key validation period for geopolitical direction. Around the Fed Chair transition in May, monetary policy expectations may become clearer. Secondly, structural economic bright spots still favor external demand over internal demand. Even if domestic demand improvement continues, concerns about sustainability persist, making it difficult to generate high-elasticity investment opportunities. The transformation of China's supply chain security and energy security into export-oriented景气 alpha, validating product price increases and passing on cost pressures overseas, could become an important new source of high growth. During phases favorable for manufacturing, the combination of foreign capital returning and Middle Eastern capital inflows could create resonance, enhancing market elasticity. Thirdly, recent significant gains are concentrated in tech leaders, with limited diffusion of赚钱 effects. With the Q1 report validation period concluding and an earnings vacuum period beginning, a window conducive to thematic plays emerges. A phase of active themes and扩散 of赚钱 effects may follow.
Bohai Securities notes policy部署 focusing on expanding and improving the service industry, with short-term earnings factors currently dominant. Strategy-wise, although external factors continue to disturb A-share market development, short-term earnings factors are currently dominant. Driven by earnings, the market shows certain structural characteristics. Considering the earnings密集 disclosure period is entering its final stage, with risk factors awaiting release, investor wait-and-see sentiment may rise. Allocation decisions might be postponed until after earnings factors become clearer. Industry-wise, regarding earnings, as of April 23, the disclosure rate for listed companies' Q1 2026 reports was only 13.9%. Among them, high-growth fields like electronics and power equipment showed YoY net profit growth rates higher than the overall average. Combining expectations for future industry-side incremental catalysts, key focuses for sector allocation include: (1) Investment opportunities in the computing power sector, driven by AI inflation, the construction of ultra-large-scale intelligent computing clusters, and the potential deep adaptation of DeepSeek V4 to domestic computing power. (2) Investment opportunities in the power equipment industry, driven by domestic policy部署 for computing-electricity coordination and rising export expectations fueled by overseas energy transition. (3) Investment opportunities in non-ferrous metals, due to supply rigidity for some varieties and a weakening US dollar credit system. Additionally, against the backdrop of lingering geopolitical risks and a low-interest-rate environment promoting long-term capital inflow, high-dividend sectors (coal, banks) also warrant attention for allocation opportunities.
Zheshang Strategy observes the market exhibiting extreme differentiation, advising against chasing highs short-term and waiting for a right-foot formation medium-term. Looking ahead, as optical module leaders peak and pull back, the market bellwether ChiNext Index fell below its 5-day moving average for the first time since April 8, indicating its main upward wave has likely paused temporarily, potentially entering a phase of two-way volatility short-term. However, the ChiNext's 20-day MA remains strong support, and after adjustment, it still has potential to rally again. On the other hand, as other major broad-based indices (especially the STAR 50) have been "pulled" by the ChiNext Index recently, once the ChiNext begins consolidating, the entire market could enter a volatile correction phase. If these "non-ChiNext indices" begin adjusting, the Shanghai Composite may gradually form a "right foot" relative to its March 23 low, which would present a good allocation opportunity. It's important to note that market trajectory slope is often determined by "events." Recent global capital markets have largely become desensitized to the Middle East situation, but the region's局势 remains unpredictable, warranting attention. Furthermore, the recent market上演 "extreme style," with the trading volume of the top 5% of stocks reaching 46% on a daily basis and over 43% monthly, necessitates vigilance against volatility induced by such分化.
Regarding allocation, based on the judgment of "market differentiation, optical modules pausing, ChiNext volatility, others following," the advice is: For the ChiNext Index (and closely correlated STAR 50), treat it as a short-term correction—avoid chasing highs and wait for sufficient consolidation before re-entering. For other stocks, use the Shanghai Composite as an "anchor," view them as range-bound, and consider allocation when the market pulls back to form a "golden right foot." Considering that ChiNext volatility triggers market consolidation and Middle East局势 remains uncertain, with global markets underpricing rising oil prices, appropriate allocation to dividend-yielding sectors (especially energy-related) is suggested. Additionally, considering Hong Kong Tech, securities, and some sufficiently corrected innovative drug stocks as "alternatives" for buying on dips can serve as a hedge against upside risks and a means to replenish positions.
Everbright Securities believes the market may continue its volatile upward trend short-term. On one hand, although Middle East geopolitical tensions persist and related uncertainties remain, after previous adjustments, the market has gradually become desensitized to marginal changes in the Middle East situation, with short-term disturbances from避险 sentiment持续边际 weakening. On the other hand, the potential Politburo meeting in April is expected to fuel rising policy expectations, thereby helping to修复 market risk appetite. Coupled with the window for listed companies' Q1 reports entering the disclosure period, the earnings resilience of quality companies could provide solid fundamental support for the market trend, guiding onshore funds to continue gathering towards fundamentally sound quality stocks. Overall, under the resonance of multiple favorable factors, the A-share market may continue its volatile upward trajectory short-term.
Regarding style, the market is expected to fluctuate between scenarios of "weak reality, strong sentiment" and "weak reality, weak sentiment," corresponding to rotations between growth and defensive styles. Economically, a mild recovery with relatively stable expectations is anticipated. Market sentiment-wise, Middle East conflicts may be the dominant factor affecting sentiment. With反复拉扯 between "negotiations" and "conflict," market sentiment could experience significant swings. Overall, market style is expected to rotate between growth and defense.
Guosen Securities asks how to objectively assess AI sector crowding after the rally. The short-term volatile upward trend remains unchanged, but sector allocation should be appropriately balanced. Looking ahead, although the market may experience short-term volatility due to反复 geopolitical conflicts and the earnings disclosure period, the overall volatile upward trend remains intact driven by positive domestic and international factors. Externally, the environment is generally easing, and the potential mid-May meeting between Chinese and US leaders could strengthen consensus in some core areas, potentially boosting risk appetite. Domestically, Q1 fiscal expenditure is front-loaded, and稳增长 policies are driving fundamental improvement. Structurally, with risk appetite修复, high-growth themes like tech with upward industry trends offer greater elasticity. Also, strategic resources under security considerations, as well as sectors like baijiu and property, deserve attention.
Soochow Securities discusses how to view the current分化 in market trading structure. It emphasizes balancing "trading structure repair" with "continuation of the growth theme." Current market structure分化 is quite extreme, suggesting a potential need for repair. After a phased pullback in high-flying sectors, other growing sectors may experience rotational gains. Combined with the ongoing密集 earnings report period, allocation should balance "trading structure repair" and "continuation of the growth theme."
Firstly, oil prices face upward pressure; focus on broad energy品种. After Trump's TACO on April 7, the spread between spot and futures crude oil prices widened. Spot prices primarily reflect supply-demand logic, while futures prices also include a sentiment premium. The widening spread本质上 reflects the market's optimistic pricing of the geopolitical situation. As ceasefire expectations are gradually digested, the sentiment premium will理性回归, and oil pricing logic will revert to supply-demand fundamentals. Damage to Middle East oil and gas facilities from war takes about half a year to fully restore, leaving a significant supply gap. Thus, the oil price center still faces upward pressure, and futures prices will likely converge quickly towards spot prices. In this context, attention is advised on broad energy品种: firstly, new energy directions like lithium batteries, energy storage, wind power; secondly, the chemical sector within cyclicals.
Secondly, continued optimism exists for AI hardware earnings realization. While the AI hardware sector's trading structure is crowded, posing short-term resistance to further strength, the sector's upward growth trend remains unchanged, and core companies' ability to deliver earnings remains strong. Focus is recommended on leaders in optical modules, semiconductors, PCBs, etc., where earnings and valuation匹配度 is high, separating the wheat from the chaff.
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