This week, the A-share market rebounded from its lows, with the Shanghai Composite Index approaching the 3,900-point mark.
Market observers note that the traditional "Spring Rally" season is approaching for A-shares, with some analysts suggesting this year’s rally could start as early as late December.
**Spring Rally Window Opens** Recent market trends show signs of a rebound, particularly in the Shanghai Composite Index, which has recorded three consecutive positive trading days since December 16.
Technically, the index has signaled a reversal, aligning with our previous analysis highlighting three key themes: consumer sectors, AI-related industries, and "anti-involution" policies. Beyond technical factors, the current period is an optimal window for positioning ahead of the Spring Rally.
The Spring Rally refers to a seasonal uptrend in A-shares typically occurring around the Lunar New Year and extending through the annual legislative meetings. This pattern is driven by factors such as year-end liquidity easing, institutional rebalancing, and policy announcements that set the tone for economic and industrial support.
Historical data shows that January to April tends to be the most favorable period for gains. For instance, since 1991, February has seen 26 positive months versus 9 declines, while December has been more mixed.
This year, expectations of Fed rate cuts could further catalyze an early start to the rally, making the current phase a strategic entry point.
**Three Key Themes to Watch** Investors should adopt a top-down approach, focusing on high-growth sectors and selecting companies with strong earnings potential.
1. **Technology & Growth**: AI and advanced manufacturing (e.g., commercial aerospace) remain top picks, supported by policy tailwinds and improving fundamentals. 2. **Consumer Sectors**: After prolonged adjustments, valuations in food & beverage and tourism are attractive, with policy stimulus likely to drive demand. 3. **Cyclicals (e.g., Nonferrous Metals, Chemicals)**: Benefiting from global demand recovery and supply-side reforms, these industries offer clear profit recovery potential.
These themes align with the recent Central Economic Work Conference’s 2026 guidance. Research firms like Caitong Securities and Huatai Securities endorse similar strategies, emphasizing AI, high-end manufacturing, and export-oriented sectors.
**7 Stocks with Explosive Earnings Growth** Several companies have already locked in significant full-year profit growth, with Q1–Q3 net income far exceeding 2023 levels. Seven stocks stand out with over 10x earnings growth, all tied to the above themes:
- **Guangdong Mingzhu**: Iron ore and sand producer, up 4,141.9% YoY due to expanded mining output. - **AVIC Chengfei**: Aerospace/defense leader, up 1,831.4%, driven by military and commercial drone demand. - Others like **Nanfang Precision** and **Huasiong Tiancheng** also posted triple-digit growth.
*(Mentioned stocks are for illustrative purposes only; not investment advice.)*
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