Following the May Day holiday, the A-share market kicked off with a strong start, with the Shanghai Composite Index nearing its early-March high of 4197.23 points. The ChiNext Index hit a new decade-high, driven by the AI technology narrative. As indices reach these highs, questions arise: Will the market consolidate sideways? Will short-term speculative trading intensify? Beyond AI computing power, what other sectors warrant attention? Here are institutional insights for this week.
CITIC Securities suggests late May could mark a peak in market sentiment and risk appetite for the year. Since April 9, broad-based ETFs in China have seen continuous net redemptions, totaling approximately 262.5 billion yuan over 18 trading days as of May 7. Notably, redemptions have accelerated since the Shanghai Composite Index stabilized above 4100 points. Given the current macro environment near a significant event window and the accumulated positive returns since late March, CITIC believes this profit-taking behavior in ETFs likely reflects substantial institutional rebalancing. While investors may choose to ignore short-term speculative noise, they should prepare for increased volatility around key events. The presence of quantitative and trend-following strategies could amplify price swings. For existing capital, actively reducing portfolio volatility may be prudent.
Guosen Securities anticipates short-term market fluctuations but maintains the overall uptrend remains intact. Since March 23, the Wind All-A Index has gained 15.0%, the CSI 300 Index 11.6%, and the Shanghai Composite Index 10.2%, with the latter approaching its March peak. Given the extended rally and high crowding in sectors like AI hardware, a temporary pullback is possible. Historically, a market reversal requires signs of overheating or a deteriorating macro environment, neither of which are currently evident. Domestically, policy remains supportive, and fundamentals are improving, with Q1 2026 A-share net profit growth rebounding to 6.8% from 2.0% in Q4 2025. Internationally, while Middle East tensions persist, their impact on A-shares is diminishing.
China Galaxy Securities notes the market may face a phase of consolidation and increased differentiation. This week, A-shares continued their upward momentum with rising activity. Short-term Middle East conflicts remain a disturbance, but market sensitivity is waning. Upcoming events like the Federal Reserve chair transition will be external focal points. Domestic fundamentals show structural strengths, supporting further gains. As the Shanghai Composite nears 4200 points, short-term consolidation and divergence may occur, but the overall uptrend persists. Investors are advised to focus on main themes and structural opportunities.
Founder Securities suggests the market may be favorable until mid-May. Post-holiday strength stems from three factors: strong performance of overseas tech stocks boosting A-share AI sectors; significant return of margin financing improving liquidity; and easing Middle East tensions. With Q1 earnings showing clear improvement, the period before mid-May presents a relatively certain window for bullish positioning. Market focus is on structure: as overseas computing power peaks, domestic computing power is a natural successor. Sectors like new energy and HALO assets, with solid growth and relatively low valuations, are attractive. Additionally, May enters an earnings lull, potentially benefiting thematic stocks, particularly in areas like computing-power synergy, commercial aerospace, and robotics, where policy and news align.
Soochow Securities expects a structural, not systemic, shift from high to low valuations. With Q1 earnings reports from U.S. and Chinese markets concluded, the risk-reward for computing power themes has narrowed. While maintaining core computing power positions, investors can explore other sectors with improving or potential upward revisions in fundamentals, such as AI power infrastructure, machine tools/general automation, analog chips, and software sectors impacted by "HALO" trading. Lightly held tech sectors with near-term catalysts, like commercial aerospace and humanoid robots, are also noteworthy. Furthermore, a clear inflection in Middle East tensions could benefit certain resilient basic materials sectors impacted by oil prices and liquidity since March.
Shenwan Hongyuan Securities notes conditions for incremental capital inflows are improving. The short-term diffusion within tech growth sectors has fundamental support. Accumulated positive returns in A-shares are reaching a tipping point, enhancing prospects for sustained capital inflows. After recent gains, the market may enter a consolidation phase, but this could represent a floor, with a second wave of growth beginning. In terms of allocation, continue seeking opportunities in main themes like optical communication, energy storage, memory, and gas turbines. As tech growth diffuses, commercial aerospace and humanoid robotics offer potential. New energy, new energy vehicles, and corporate export/overseas expansion may emerge as new growth drivers.
BOC International Securities suggests the ChiNext Index may set new highs. Historical data indicates strong profit trends driven by AI are less affected by short-term macro conditions. While sector valuations may face pressure during risk-off periods, core segments with solid earnings growth (e.g., optical modules/CPO, computing infrastructure, innovative drug exports) continue to outperform. BOC International believes the ChiNext Index has potential to reach new highs in this cycle.
China Securities (Golden) advises looking beyond AI for opportunities. Currently, as overall tech sector valuations remain below peaks seen last August-September, the market is in a phase of "sector focus, stock dispersion." Looking ahead, as new market space from technological iteration and order transactions materialize, "energy bottlenecks" will regain attention. Beyond AI, other forces are emerging: the shift of PPI to positive territory signals important supply-demand changes, with midstream capacity cycles and downstream inventory cycles bottoming, awaiting demand-side impetus. Recommended sectors include traditional and new energy benefiting from rising energy prices (oil, oil shipping, coal, lithium batteries, wind/solar, energy storage), and chemical industries with global cost and capacity advantages. Additionally, as global industrial demand recovers, sectors like commercial vehicles, power grid equipment, textile manufacturing, and electronic chemicals may see strong rebounds. Industrial metals (aluminum, copper) still have room for recovery, while consumer segments like home appliances, personal care, entertainment products, food, and e-commerce are entering a profit growth phase.
Zhongtai Securities states tech remains the most volatile sector short-term but may see internal rotation. Market risk appetite improved notably this week. Given the ongoing "policy expectations + easing external environment" trading window, risk appetite may further rise before late May. Next week, A-share and Hong Kong market sentiment could peak, with robotics, commercial aerospace, AI applications, and brokerages likely remaining focal points. While tech offers the highest short-term volatility, internal rotation is expected. Funds are gradually shifting from upstream hardware and computing power to AI applications and internet platforms. This week, media and robotics outperformed, and the Hang Seng Tech Index strengthened, indicating early positioning in internet platforms. Concurrently, news of AI product price increases reflects gradual validation of AI application commercialization, forming a "user growth - increased payments - profit realization" cycle. This suggests AI applications may soon be driven by fundamentals rather than just themes and valuations.
China Merchants Securities identifies domestic computing power as having the strongest short-term momentum. Recently, overseas computing power, domestic computing power, and lithium battery themes have shown high industry momentum. For investment, domestic computing power offers the strongest short-term elasticity, overseas computing infrastructure has mid-term certainty, and lithium batteries are in a recovery phase. Q1 earnings reports confirm A-share profits are on an upward trend, with initial supply expansion and clearer inventory rebuilding and capital expenditure trends. A-shares are transitioning from liquidity-driven thematic investing to an earnings verification phase. High-growth areas in annual and Q1 reports are concentrated in high-demand AI sectors, export-oriented manufacturing, and resource products with price increases.
Risk warnings include intensified international trade frictions, unexpected tightening of overseas liquidity, deeper-than-expected overseas economic downturns, and heightened geopolitical conflicts. The above views are derived from publicly available securities research reports and do not represent the platform's stance. Investors are advised to be mindful of investment risks.
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