China Merchants Securities released a research report stating that looking ahead to February, the market is expected to be primarily volatile in the near term, with indices likely performing stronger after the Spring Festival holiday than before. Following the conclusion of the earnings pre-announcement period, the market is anticipated to trade thematically around areas such as commercial aerospace, AI computing power, and its applications. Concurrently, due to the spread of price increases, the market will also engage in phased trading within sectors experiencing inflation, including petroleum & petrochemicals, building materials, steel, chemicals, and baijiu. However, in an environment lacking net incremental catalysts, rotation may accelerate, further increasing the difficulty of trading. Overall market styles are also expected to be relatively balanced, with style rotation potentially speeding up. The main views of China Merchants Securities are as follows:
Outlook on Market Trends and Core Logic: Looking towards February, following earlier regulatory signals to cool the market and substantial outflows from ETFs, the market is expected to remain predominantly volatile in the coming period. February includes the long Spring Festival holiday. Before the holiday, due to the extended break and a lack of clear catalysts, market activity is anticipated to decline further. After the holiday, as the "Two Sessions" approach, policy catalysts are expected to emerge more rapidly, potentially leading to better index performance post-holiday. From a fundamental perspective, January-February is a data vacuum period. Currently, the trend of earnings improvement driven by marginal changes at the industrial level remains a key focus for the market. Pro-cyclical sectors experiencing price increases and the AI supply chain, represented by semiconductors and optical modules, continue to exhibit strong momentum. On the policy front, as 2026 marks the first year of the new five-year plan, which coincides with a significant policy implementation cycle, trading opportunities related to policy rollout are expected to emerge frequently. Regarding liquidity, although household incremental funds show a tendency for accelerated inflows, substantial减持 by major ETF investors has offset these inflows. Furthermore, margin debt balances typically decrease ahead of the Spring Festival, making a significant improvement in funding conditions before the holiday unlikely. The rebound in the US dollar index following Trump's new nomination for Fed Chair has also suppressed capital flows into emerging markets. However, as funds are expected to return after the holiday, liquidity conditions are anticipated to improve more significantly. Overall, the market is likely to be volatile in February, with indices performing better after the holiday than before. In terms of key directions, price increase themes are expanding from earlier sectors to petroleum & petrochemicals and food & beverage. Both AI and semiconductors continue to have sustained catalysts, while construction and building materials benefit from major projects under the 15th Five-Year Plan. Accelerated rotation may be the most prominent feature of February.
Style and Sector Allocation Strategy: Regarding market styles, entering February and considering the market is still in the "Spring Festival rally" phase, a continued emphasis on growth styles is recommended. The performance gap between large-cap and small-cap stocks is expected to narrow, with large-caps potentially leading initially followed by small-caps. Recommended index combinations include the CSI 1000, ChiNext 50, CSI 300 Quality, and CSI 800 Information, among others. At the sector level, the focus should primarily be on allocations centered around pro-cyclical and technology fields. Additionally, with the approach of the Spring Festival and ongoing policy support, increased attention should be paid to some discretionary consumption sectors. Representative industries include Electronics (semiconductors), Media (advertising & marketing, gaming, film & TV), Machinery & Equipment (automation equipment, construction machinery), Power Equipment (batteries, grid equipment, photovoltaic equipment), Basic Chemicals, and Social Services, among others.
Liquidity and Capital Supply/Demand: Incremental funds may continue their net inflow into the market in February. Foreign capital is expected to maintain net inflows before the holiday, while margin trading funds are likely to return after the holiday. Regarding macro liquidity, the concentrated issuance and payment for government bonds in January created a certain draining effect on liquidity. The central bank implemented precise and effective countermeasures, using medium-term liquidity tools to fill the funding gap. Liquidity conditions in February are expected to remain stable and ample. On the external liquidity front, judging from the policy stance of Kevin Warsh, Trump's new nominee for Fed Chair, Warsh is more likely to adopt a gentle and gradual interest rate cut strategy. He tends to prefer coordinating rate cuts with balance sheet reduction (QT) to offset the easing effects and avoid an inflation rebound. Market expectations for 2026 rate cuts have recently been adjusted upwards from 1 cut to 2 cuts. Concerning stock market capital supply and demand, trackable market funds turned to a net outflow in January, with margin trading becoming the main source of incremental funds, while ETFs experienced significant net redemptions. On the supply side, the scale of newly issued equity-oriented funds recovered somewhat, but ETFs tracking major indices like the CSI 300 saw substantial net outflows. Meanwhile, margin trading funds showed a rebound in risk appetite, resulting in net inflows. On the demand side, net减持 by major shareholders increased in scale, while the scale of IPOs and secondary offerings declined, keeping the overall capital demand stable. Looking ahead to February, incremental funds are expected to continue net inflows, with foreign capital likely to remain net positive before the holiday and margin trading funds anticipated to return after the holiday.
Mid-cycle Dynamics and Sector Recommendations: With over half of the annual report pre-announcements disclosed, attention should focus on sectors with higher growth rates. Regarding profitability, on one hand, the year-on-year growth rate of industrial enterprise profits turned positive in December, but the divergence between old and new growth drivers persists, leading to a slow profit recovery. On the other hand, currently over half of the 2025 annual report pre-announcements have been released. Sectors showing relatively high earnings growth or improvement are mainly concentrated in: some resource products experiencing price increases (industrial metals, metal new materials, energy metals, precious metals, chemical products, etc.), the TMT sector boosted by AI景气催化 (semiconductors, communication equipment, computer equipment, software development, etc.), mid-to-high-end manufacturing with prominent export advantages (grid equipment, automation equipment, general equipment, auto parts, etc.), and non-bank financials, among others. In terms of景气, sectors with high景气 in January were mainly concentrated in some resource products, utilities, and information technology. Within resource products, prices rose for most industrial metals and chemical products. In the midstream manufacturing sector, the photovoltaic price index increased, while automobile production and sales slowed. In the consumer services sector, profitability in hog farming improved, and the year-on-year decline in retail sales of the four major home appliances narrowed. Within the financial and property sector, commercial housing sales remained sluggish, while gas prices rose in the utilities sector. For February, the bank recommends that sector allocation primarily focus on the pro-cyclical + technology fields, while also increasing attention to some discretionary consumption sectors. Representative industries include Electronics (semiconductors), Media (advertising & marketing, gaming, film & TV), Machinery & Equipment (automation equipment, construction machinery), Power Equipment (batteries, grid equipment, photovoltaic equipment), Basic Chemicals, and Social Services, among others.
Theme and Industrial Trend Investment: OpenClaw Shakes the Open-Source Ecosystem, Pushing the OS Agent Era to the Forefront. In early 2026, the tech world experienced a silent yet significant tremor. Peter Steinberger, a renowned former developer within the Apple ecosystem, released the open-source project Clawdbot (later renamed OpenClaw). The project's core vision is simple yet highly disruptive: if Claude is currently the smartest 'brain,' then OpenClaw aims to be its 'hands' for operating computers. OpenClaw is not merely another traditional desktop GUI client; it innovatively repurposes instant messaging apps like WhatsApp and Telegram as the user's "Remote Terminal." A user can simply send a natural language command from their phone – such as "check the server logs, and restart if Nginx reports an error" – and their home Mac will automatically wake up, execute the task, and provide feedback. This "digital employee" experience propelled the project to surpass 110,000 GitHub stars within weeks, making it an annual phenomenon in the open-source community. This data reflects the developer community's strong desire for high-permission AI Agents.
Risk Warning: Economic data may fall short of expectations; policy interpretations might be incomplete; overseas policies could tighten beyond expectations.
Comments