Top 10 Brokerages' Outlook: A-Share Market Shows Greater Resilience, Focus on Rebalancing in Short Term

<p>With only two trading days left, A-shares are about to enter the second-half trading period. Where will the market head next?</p><p>The Paper has gathered views from 10 brokerages, most of which believe that A-shares show greater resilience compared to the volatile overseas markets. After short-term fluctuations, A-shares may stage a rebound during the Q2 earnings season, with indices expected to trend moderately upward in the second half.</p><p>CITIC Securities stated that A-shares demonstrate greater resilience relative to volatile overseas markets. Some non-AI sectors are already showing signs of capital positioning from the left side, with a few low-valuation sectors having the foundation for recovery, merely awaiting a catalyst.</p><p>"The pattern of not fearing to wait for the big upward wave remains unchanged. After short-term volatility, A-shares may restart during the Q2 reporting season. There are still medium-term opportunities — the large upward wave isn't over, nor is the tech-led rally," noted Shenwan Hongyuan Securities.</p><p>China Merchants Securities further pointed out that the market has entered the third phase of its upward trajectory, with the market driver shifting from incremental liquidity to earnings fundamentals. In the second half, indices are expected to rise moderately, propelled by the tech sector.</p><p>On portfolio allocation, multiple brokerages reminded investors to pay attention to rebalancing. Huatai Securities noted focusing on rebalancing in the short term, using dividend stocks as a safety cushion, while keeping an eye on semiconductor equipment, memory, and MLCC within tech, as well as brokerages with potential earnings recovery.</p><p>"In the short term, A-shares face structural congestion with valuation dispersion at historical highs. This may stem from excessively pessimistic market expectations for the carbon-based economy or traditional industries. Marginal improvement is expected in Q3, so gradual structural rebalancing can be considered," East Money Securities further noted.</p><p>However, Zheshang Securities believes that while recent volatility in overseas markets has increased two-way fluctuations in the ChiNext and STAR 50 indices, these dual-innovation indices remain the absolute focal point of the A-share market. The limited number of investment opportunities are also largely found in dual-innovation and AI-related sectors.</p><p><strong>CITIC Securities: A-Share Market Shows Greater Resilience</strong></p><p>The strengthening of the US dollar and rising rate hike expectations in early May corresponded precisely to the acceleration of K-shaped divergence in global markets, with the core issue being the damage to non-AI sector demand from tightening expectations.</p><p>At this point, K-shaped divergence has reached a periodic extreme, with overseas tech sectors even shrinking internally. The pricing of equities, bonds, commodities, and currencies has begun to show early signs of recession trading. If tightening materializes, it could further damage demand in the carbon-based economy; conversely, K-shaped divergence may narrow periodically.</p><p>Relative to volatile overseas markets, A-shares show greater resilience, with some non-AI sectors already seeing left-side capital positioning, and a few low-valuation sectors having recovery foundations waiting for a catalyst.</p><p><strong>Guotai Haitong Securities: Focus on Domestic Supply Chains and New Technologies/Materials</strong></p><p>Trading activity in hot themes has surged significantly, with AI price-increase materials and new technologies leading the rally, while domestic semiconductors maintain strength. Last week, the average daily turnover of hot themes reached 1.6 billion yuan, hitting multi-year highs, with an average daily turnover rate of 4.15%.</p><p>The market has diverged around tech interim report expectations and strong-US-dollar concerns. Diamond, indium phosphide, target materials, and other upstream materials and new technology themes led the rally. Domestic semiconductors maintained strength, while non-ferrous resources and AI applications adjusted. Thematic capital concentrated on the semiconductor supply chain, with margin-trading activity increasing.</p><p>Within the tech sector, rotation continued constructively, with domestic semiconductors, glass substrate new technologies, and price-increase new materials resonating higher. A strong dollar suppressed non-ferrous resources. Focus on domestic semiconductors, new packaging technologies, and price-increase new materials.</p><p><strong>Huatai Securities: Focus on Short-Term Rebalancing</strong></p><p>Last week, A-share tech volatility notably expanded, with three lines of evidence cross-verifying that the market may be in a phase of consolidation. First, externally, Korean stocks may be entering a phase of reduced ammunition for adding positions and rising forced liquidations, with tail risks accumulating.</p><p>Second, on industry trends, Apple's price increases have raised concerns about profit distribution, but high-frequency indicators such as Anthropic's ARR show AI demand remains elevated. Given that Apple's price increases impact the more marginal consumer electronics demand downstream of the memory sector, excessive concern is unnecessary.</p><p>Third, short-term US PCE increases and end-of-quarter fund style rotation may bring disturbances, but falling oil prices have marginally eased external pressure. Focus on the Q2 earnings season direction.</p><p>On allocation, focus on rebalancing in the short term, using dividends as a safety cushion. Within tech, watch semiconductor equipment, memory, and MLCC. Also pay attention to brokerages with potential earnings recovery.</p><p><strong>CITIC Construction Investment Securities: Be Cautious About Chasing AI Computing</strong></p><p>Three factors will determine the Q3 market trend: On fundamentals, AI computing power maintains high prosperity. Interim reports and overseas earnings deserve attention. Meanwhile, given the macroeconomic pressure since April, the July Politburo meeting's economic stimulus measures will be important.</p><p>On liquidity, external disturbances are increasing while the domestic environment remains neutral. On risk appetite, geopolitical events and major IPO listings will cause short-term market volatility. Given the global tech stock linkage effect, major overseas computing markets in Japan, South Korea, and the US also need continuous tracking.</p><p>On sector allocation, although AI computing's fundamentals remain unchanged, volatility has increased. Recommend being cautious about chasing highs and positioning on pullbacks. Lithium batteries may enter peak season, energy storage demand continues to recover, and new energy has valuation recovery opportunities. Dividend stocks may rebound from oversold levels with good cost-performance.</p><p>Key sectors to watch: banking, coal, utilities, AI, optical modules, memory, chips, industrial metals, lithium battery materials (VC), etc.</p><p><strong>Shenwan Hongyuan Securities: June-July Adjustment</strong></p><p>The basis for the notable divergence in May-June: fundamental divergence exists objectively, but capital divergence is even more significant. Microstructure is unstable, and capital divergence tends to cause the second derivative to turn negative.</p><p>June-July adjustment phase: In the short term, global AI computing chain adjustments resonate. The subsequent listing of domestic memory leaders may create a suction effect. The inertia of retail investors trading in tech-themed funds may be disrupted periodically. Watch for potential short-term oversold conditions.</p><p>The pattern of not fearing to wait for large upward waves remains unchanged. After short-term volatility, A-shares may restart during the Q2 reporting season. Medium-term opportunities persist — the large upward wave isn't over, nor is the tech-led rally. If short-term market inertia is broken, the next rally wave will bring a more diversified market, and the tech rally will go further.</p><p>After the notable divergence adjustment phase ends, a more diversified upward wave may follow. The AI industry trend remains the main battlefield of this large upward wave. Computing inflation sub-sectors with dual earnings-valuation boosts are the main source of high-elasticity investment opportunities. For diversified directions, prioritize brokerages, and also watch export/overseas expansion chain Alpha, new consumption, and strategic resources.</p><p><strong>China Merchants Securities: Market Driver Shifts to Earnings Fundamentals</strong></p><p>The market has entered the third phase of its upward trajectory, with the market driver shifting from incremental liquidity to earnings fundamentals, while the global economy shows K-shaped divergence.</p><p>Domestic economic momentum is transitioning, with tech and high-end manufacturing leading. Traditional sectors like real estate and consumption continue to face pressure. External demand is improving while domestic demand remains weak. Tech has replaced brokerages as the core upward market theme, with AI computing serving as the market bellwether.</p><p>In the second half, indices are expected to rise moderately driven by the tech sector. Q4 may mark a turning point for growth-value style rotation. Focus on three themes: the AI supply chain, export prosperity, and resources/energy security.</p><p><strong>Guosen Securities: Structural Market Conditions Will Prevail</strong></p><p>From a medium-to-long-term perspective, behind the AI hardware style is the global AI industry trend driving force, with global tech stocks rallying in resonance. Before overseas tech giants' capital expenditure growth peaks, it remains difficult to declare the end of the AI hardware style. However, in the short term, excessive crowding has increased market instability factors, especially at special time points like quarter-end, where style correction is possible.</p>