Major indices posted gains this week, with the Shanghai Composite Index rising 1.64%, the Shenzhen Component Index advancing 4.03%, and the ChiNext Index surging 6.65%. How will the market develop from here? Here’s what institutional analysts are saying.
CITIC Securities suggests maintaining a long-term perspective while focusing on China's dominant manufacturing sector. The market has shown clear signs of moving past geopolitical tensions, with three key questions frequently raised: How far along is the position replenishment process? What new trends are emerging from Q1 earnings reports? What historical characteristics mark inflection points in industry trends? Data indicates that position replenishment is ongoing, though the reversal factor's strength is weaker than in past cycles, with sector focus narrowing. Q1 reports reveal that profit elasticity significantly exceeds revenue elasticity, with margin improvement being a common theme. The technology and cyclical sectors show particularly strong momentum, with "China's dominant manufacturing, AI infrastructure, and non-bank financials" being the three main drivers of Q1 growth. Regarding industry trend trajectories, historical analysis of five industry cycles suggests that inflection points typically coincide with price turning points in the tightest supply-demand segments. For the current North American AI hardware cycle, key variables to watch include DRAM, indium phosphide, fiberglass, and gas turbines. Portfolio construction should fundamentally revolve around the revaluation of pricing power in China's advantaged manufacturing sectors.
CSC Financial Strategy notes that after the ChiNext Index hit new highs, questions about its further upside potential have emerged. However, from industrial structure and valuation perspectives, the index at 3600 points appears significantly undervalued. The computing power sector benefits from sustained investment by AI giants, whose power demands also indirectly boost the new energy sector. Valuation-wise, the ChiNext Index's ten-year price-to-earnings ratio percentile stands around 50%, compared to over 95% for the Shanghai and Shenzhen indices, indicating higher attractiveness. The ChiNext Index remains the most cost-effective direction in the A-share market. Sector-wise, Q1 results show high景气 and profitability in TMT and cyclical sectors, warranting attention. Computing power continues to be a key theme, expanding from core hardware like optical modules and PCBs to cooling solutions, computing leasing, and power supply. The lithium battery industry benefits from explosive growth in energy storage demand for AI computing centers, with strong Q1 performance extending across the产业链. The innovation drug sector's景气 is confirmed by both earnings and trading activity, with BD cooperation becoming routine and overseas expansion accelerating. The global semiconductor industry is in a strong upcycle driven by AI, with a steepening growth trajectory. Key sectors to watch include new energy, energy storage, lithium battery materials, AI computing, innovative drugs, semiconductors, and consumption.
Changjiang Securities maintains a bullish outlook on the A-share market, anticipating that indices may突破 year-to-date highs in the second quarter. After a March dip to around 3800 points due to geopolitical tensions, opportunities were highlighted. While macro conditions and market sentiment are hard to predict, structurally, the impact on overall A-share profits is limited. Some sectors may be negatively affected, but upstream resources, security-related industries, and export chains could benefit, with full-year profits potentially remaining unchanged. Geopolitical tensions accelerate global supply chain restructuring, enhancing China's irreplaceability as the "world factory," which may grant premium valuations to related export and manufacturing leaders. Additionally, capacity supported by five-year plans for "security" will be revalued. As the Strait of Hormuz gradually reopens and oil prices retreat from peaks, the secondary impact of conflicts has inflection, and risk appetite improvement could push indices above previous highs in Q2. Allocation should focus on two main themes: the unstoppable AI trend and the urgency of energy revolution accelerated by conflicts, alongside sectors with bottoming profits poised for improvement.
Oriental Securities advises caution regarding potential geopolitical fluctuations and emphasizes the safety theme. While Middle East tensions have eased, market pricing already reflects this. Oil prices have fallen, Treasury yields have declined, and equity markets have rebounded. However, geopolitical risks could resurface, and high oil prices remain a concern. As economic data is released in early May, market expectations may be adjusted. Instead of频繁 switching strategies based on geopolitical swings, focus on the more certain safety theme, particularly manufacturing related to energy security.
Everbright Securities notes that multiple positive catalysts could lead to a震荡上行 market. Middle East tensions are easing, with the Strait of Hormuz reopening, causing oil prices to fall. Domestically, the economy is stable, with Q1 GDP growth exceeding expectations. Earnings season has brought positive surprises from leading companies, boosting sentiment. Overall, the market may experience震荡上行. Short-term风格 may lean towards growth, but negotiations may not be smooth, leading to rotation between growth and defensive styles in April. Geopolitical tensions will be a key factor affecting market sentiment.
Guosen Securities observes that the recent rebound is partial, with half of the sectors still below levels corresponding to the 4000-point index. The turning point may come in April, with the market moving upward震荡ly, and technology growth sectors showing greater elasticity. Strategic resources and sectors like property and liquor should be重视. The Middle East situation is easing, reducing its impact on risk appetite. The market remains in a bull atmosphere, with supportive factors accumulating. Technology growth offers more elasticity.
Shenwan Hongyuan believes the ChiNext's outperformance may have some sustainability. Geopolitical scenarios are converging, with the worst likely behind us. The market is in a震荡休整 phase after the first stage of gains. The ChiNext's独立行情 is supported by strong景气 verification in computing and energy storage, plus positive映射 from U.S. tech. This trend may persist. Recommendations include focusing on sectors like optical communication, gas turbines, and energy storage.
Zhongtai Securities points out that indices like the ChiNext and Beijing Stock Exchange 50 have seen significant short-term gains, increasing profit-taking pressure. While market sentiment is warm and policies are supportive, caution is warranted. The AI tech sector remains the main theme, with semiconductors and new energy worth monitoring. A balanced strategy of growth offense and high-dividend defense is advised.
Zheshang Securities highlights that future U.S. stock volatility could become an external risk. The market has a "binary structure," with the ChiNext forming one segment influenced by overseas counterparts and institutional trading, while other indices follow the Shanghai Composite in a range-bound pattern. U.S. stocks have rallied despite higher oil prices, creating a divergence that warrants attention.配置 should differentiate between ChiNext-related assets and others, with opportunities in oversold sectors upon pullbacks.
Founder Strategy discusses distinguishing between adjustments in a bull market and bear market turning points. Historical bull-bear transitions occurred during economic景气 decline and ROE downtrends. Current valuations are supported by a low-interest-rate environment and improving profit cycles, suggesting a repair process in Q2. Recovery themes may include oversold sectors like HALO-related resources and persistently strong sectors like computing hardware and energy.
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