Recent persistent swings in A-shares have left many investors wondering how to read the current market turbulence. Six chief analysts from major securities firms have offered their latest assessments, concluding that while short-term fluctuations remain structural in nature, the medium- to long-term upward trajectory has not changed.
Industrial innovation, manufacturing upgrades, and recovering corporate earnings continue to serve as the core logic underpinning the long-term value of Chinese assets.
Short-Term Swings Reflect Structural Divergence
Regarding the reasons behind the correction since July, Wang Sheng, chief strategy analyst at Shenwan Hongyuan, attributed it to a combination of internal trading structure adjustments and external macroeconomic disturbances. The July market turmoil was mainly triggered by some funds pricing in optimistic expectations for the technology sector ahead of schedule, which led to overcrowded trades and subsequent corrections. In August, while the market was digesting these crowding issues, it also faced headwinds from a weakening overseas asset allocation environment and diverging fundamental outlooks within the AI industrial chain.
Looking at the current situation, Wang noted that the short-term correction is more of a structural divergence. Within the technology sector, upstream hardware and mid-to-downstream applications are performing differently. Non-technology sectors also show structural bright spots in real estate and certain upstream cyclical industries. In his view, A-shares are closer to a consolidation phase within a larger upward wave, and the long-term upward trend remains intact. On the valuation front, Wang believes that after the adjustments since July and the digestion of interim earnings, the static price-to-earnings ratios of the electronics and telecommunications sectors have returned to around their historical medians, and the earlier trading congestion in technology stocks is gradually easing. As market stabilization mechanisms continue to function, market operations are expected to gradually stabilize.
Improving Earnings Quality, New Economy Contributing Incrementally
From the industrial perspective, technological innovation is forming new growth pillars. He Ning, chief macro analyst at Everbright Securities, stated that technological innovation is becoming a key driver of China's economic transformation and upgrading. Data shows that in the first three quarters, value-added output of high-tech manufacturing and equipment manufacturing grew by 14.3% and 10.2% year-on-year respectively, outpacing the overall industrial growth of 5.3% above designated size. Production of 3D printing equipment, lithium-ion batteries, and industrial robots increased by 62.5%, 39.5%, and 29.1% respectively. During the same period, profits in the computer, communications, and other electronic equipment manufacturing sector surged 103.8% year-on-year.
Structural changes on the earnings side are even more critical. Yao Pei, chief strategy analyst at Huachuang Securities Research Institute, noted that the stock market is a voting machine in the short term and a weighing machine in the long term, with corporate profitability determining long-term investment returns. Historical experience shows that A-share market performance is significantly correlated with the ROE trajectory of listed companies, and changes in ROE structure have a major impact on that trend. Currently, overall earnings quality in A-shares is steadily improving, with growth momentum shifting structurally from the traditional economy represented by finance and real estate toward the new economy dominated by technology and manufacturing.
Yao pointed out that the return on equity for all A-shares ended a 19-quarter downward cycle and has been rebounding since the end of 2024. The all-A ROE-TTM rose from 7.7% at the end of 2024 to 8.1% in the second quarter of 2025. Structurally, the new economy represented by technology and high-end manufacturing continues to contribute incremental growth, with profitability in electronics and telecommunications steadily rising, and the resource sector also showing significant earnings improvement. From the fourth quarter of 2024 to the second quarter of 2025, the technology sector's ROE rose from 6.9% to 8.1%, while cyclical resources' ROE climbed from 8.6% to 10.3%. Among them, the electronics industry's ROE increased from 7.0% to 9.5%, and the non-ferrous metals industry from 14.7% to 19.2%, becoming important sources of earnings improvement.
In Yao's view, the shift in earnings contribution structure indicates that A-shares' growth engine is transitioning from credit-driven to industry-driven, grounded in companies' own technological barriers, competitive landscape, and pricing discipline, making it more endogenous and sustainable than before. This transformation in profit models provides conditions for a systematic elevation of the market's valuation center. As corporate return on capital rises and earnings quality improves, A-shares are poised to enter a virtuous cycle where earnings and valuations support each other, with medium- to long-term allocation value gradually emerging.
Policy and Stabilization Mechanisms Strengthen Market Support
From the external environment perspective, Sun Binbin, chief economist at Caitong Securities, stated that overseas political polarization, fragmentation, high interest rates, and geopolitical tensions continue to disrupt global capital markets. However, what determines the medium- to long-term value of Chinese assets remains China's economic fundamentals, reform direction, and institutional advantages. Responding to external uncertainties with its own certainty is the core logic for being bullish on Chinese assets.
In Sun's view, this certainty first comes from continuously released policy dividends. From the July Politburo meeting's deployment to plan incremental policies in due course and deepen comprehensive investment and financing reform in capital markets, to the implementation of the "15th Five-Year Plan" for building a financial powerhouse, and a series of incremental policy rollouts, the policy focus is on enhancing market functions, asset quality, and long-term returns. The entry of medium- to long-term capital and the improvement of dividend and buyback mechanisms are translating institutional advantages into capital and asset advantages.
Sun believes another pillar of support comes from the continuously improving market stabilization mechanisms. On November 3, the People's Bank of China conducted swap facility operations for securities, fund, and insurance companies. Starting November 4, the relending rate for stock buybacks and increased holdings was lowered from 1.25% to 1%, and the arrangement was upgraded from a temporary measure to a long-term institutional one. Central Huijin, state-owned capital operating platforms, medium- to long-term funds, and listed company buybacks and increased holdings together form a multi-layered stabilizing force.
Beyond capital market tools, pro-growth policies are also providing support from the real economy side. Zhang Deli, chief macro analyst at Zhongtai Securities Research Institute, noted that pro-growth policies have been further intensified since late September. On October 9, the Ministry of Finance arranged to use 550 billion yuan of local government debt carryover quotas, of which 300 billion yuan was allocated to enhance grassroots fiscal capacity, and 250 billion yuan to support expanded effective investment. Meanwhile, science and technology innovation policies have maintained continuity, with the "Opinions on Developing New Quality Productive Forces" issued in October proposing 19 key measures, explicitly supporting breakthroughs in critical core technologies and the development of emerging and future industries.
Economic Resilience Validates A-Shares' Independent Logic
Beyond policy support, fundamental data is also providing validation. Sun noted that in the first three quarters, GDP grew 4.6% year-on-year, and industrial enterprise profits above designated size rose 15.5%. Net profits of listed companies on the Shanghai and Shenzhen exchanges reached 5.1 trillion yuan, up 8.5% year-on-year. The October PMI pullback indicates that domestic demand recovery still needs more support, which also means that subsequent coordination among fiscal, monetary, industrial, and capital market policies may become more targeted.
Third-quarter earnings data also shows that profit improvement is spreading to more industries. Dai Qing, chief strategy analyst at Changjiang Securities, stated that the Q3 reports further verified the endogenous momentum of A-share earnings recovery. In the third quarter, combined revenue for all A-share non-financial, non-petroleum and petrochemical companies grew 5.62% year-on-year, with profits up 3.02%. ChiNext and STAR Market companies saw single-quarter revenue growth of 24.15% and 12.11% respectively, with STAR Market profit growth exceeding 65%. Profitability improved in sectors such as transportation, while the decline in profits in areas like food and beverages narrowed.
Dai believes that A-shares' "independent行情" does not mean complete decoupling from overseas volatility, but rather that domestic fundamentals, industrial competitiveness, and corporate earnings cycles are forming their own pricing logic. As policies take effect, the technology boom continues, and domestic demand recovery broadens, market attention is expected to shift toward the earnings growth potential of Chinese assets.
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