Multiple major financial institutions have released their outlooks on the market, suggesting that China's capital market has already undergone a repricing towards a more substantive economy. They advise against anxiety over short-term fluctuations and recommend maintaining positions over the holiday period.
The debate between holding stocks or cash during the holiday revolves around key investment themes. Strategies from ten major securities firms are now available.
CITIC Securities states there is no need to worry about short-term market volatility. Recent significant shifts in overseas risk appetite and liquidity have occurred. Looking beyond short-term performance, two underlying trends are evident: First, the urgency for the US and Europe to shift from a virtual to a real economy is intensifying, with critical minerals and supply chain security becoming priorities. The policy stance of the newly nominated Fed Chair also reflects a pressing need to prevent capital idling and lower real economy financing costs. Second, disruptive innovation from AI is breaking down traditional monopolies and high-return sectors, recently impacting the software industry first and significantly increasing sector anxiety. Both strategic security investments and emerging infrastructure and technology investments representing the future indicate that Europe and the US will face fiercer competition while balancing short-term shareholder interests against the strategic value of long-term infrastructure investment, a contradiction likely to repeatedly surface in capital markets.
For investors accustomed to easy returns, global financial market uncertainty will persist. Risk assets heavily reliant on distant cash flow projections or capital rotation expectations are more prone to sustained valuation corrections. In contrast, China's capital market has already repriced towards a more substantive economy in recent years and is now in a phase of verifying and pricing "quality and efficiency improvement," making anxiety over short-term volatility unnecessary. For allocation, it is still recommended to anchor the portfolio with "resources + traditional manufacturing," selectively buy non-bank financials on dips, and increase exposure to the consumer and property chains.
GF Securities suggests A-shares might enter a new upward cycle with favorable timing, conditions, and consensus over the next one to two months. Historically, February and the period around the Spring Festival exhibit the strongest "Spring躁动" (Spring躁动) calendar effect, characterized by high market success rates and outperformance of small-cap stocks. Top-down analysis shows that among the annual report forecasts disclosed by the end of January, the proportion of companies with low expectations, losses, or negative growth hit new highs compared to 2024. As these negative financial report factors are digested, the market can start February with a lighter load, moving past the peak of negative fundamental shocks. Currently, considering the Wind All-A Index recently fell sharply below its 20-day moving average, if one believes the bull trend remains intact, historical analysis of 99 similar cases suggests the recent week presented a good buying opportunity.
Therefore, despite recent market corrections causing concern, the current level around 4000 points is seen as a juncture to rebuild confidence, regroup, and prepare for the first upward cycle of the new year.
GTJA and Haitong Securities express firm confidence in China's market prospects, advising investors to hold stocks during the holiday. Firstly, while global markets are quickly pricing in potential hawkish Fed policy, the nominated chair's stance on rate cuts appears more dovish and certain. Concurrently, clarifications from the US Treasury regarding strong dollar policy have led to marginal improvements in overseas financial tightening expectations. Secondly, the Chinese government's policy focus is shifting towards domestic demand as a primary driver, potentially boosting China's economic outlook and asset returns. Additionally, recent emphases from the CSRC on stabilizing the capital market and a wave of buybacks from A-share listed companies contribute to a view that Chinese stocks will gradually stabilize and initiate a spring rally, making the present a good time to increase holdings.
While emerging technology is a main theme, value sectors are also expected to see a revival. For domestic demand value, recommendations include consumer services, food & beverage, aviation, chemicals, real estate, and building materials. For emerging tech, suggestions are Hong Kong internet, media, computers, robotics, electronics, defense, and export-oriented manufacturing like energy storage and power grid equipment. For large financials, securities, insurance, and banks are recommended.
Industrial Securities argues that holding stocks during the holiday offers both a high probability of success and favorable risk-reward. The recent synchronized global asset adjustment is seen as more about narrative-driven sentiment digestion than fundamental or policy path changes. As previous adjustments have released some risk, the peak impact of recent global narrative shifts on sentiment may be passing. Subsequent event catalysts and the "Spring Festival effect" are expected to create a favorable environment for market recovery. Allocation strategies can gradually move away from defensive thinking towards focusing on the Spring Festival rally.
In terms of relative probability, technology manufacturing, resources, and infrastructure chains tend to outperform after the holiday. Based on previous performance and景气度 (prosperity), three key areas are highlighted: TMT, benefiting from the rebound in US tech stocks, especially AI hardware affected by overseas trends; high-end manufacturing like new energy and innovative drugs; and the price increase chain, focusing on domestically-driven sectors like chemicals, building materials, and steel.
Upcoming密集 (dense) industry catalysts, combined with a fundamental quiet period and post-holiday risk appetite improvement, are conducive to thematic plays. Recent cooling in various themes' trading volume ratios suggests room for recovery. AI applications (computers, media, humanoid robots), with密集 (dense) upcoming catalysts and reasonable crowding, warrant increased attention.
China Merchants Securities expects post-holiday indices to potentially perform stronger than pre-holiday. Recent declines in global tech stocks are attributed to liquidity shocks from certain trades and a lack of near-term AI catalysts, compounded by concerns about traditional software business model disruption. They believe the hardest-hit Hong Kong market, especially the Hang Seng Tech Index, now holds配置 (allocation) value and could see catch-up gains once specific trade impacts subside or new AI narratives emerge.
Overall, the market is expected to oscillate in February, with post-holiday performance likely stronger. Key directions include the diffusion of price increase themes to oil & petrochemicals and food & beverage, and building materials benefiting from major projects under the new Five-Year Plan. Accelerated sector rotation is anticipated as a key February characteristic.
Sinolink Securities suggests the revaluation path for Chinese assets is poised to begin. Amid密集 (dense) risk event impacts, global assets entered a 'Risk-off' mode. The shift from high to low-beta assets in equity markets reflects the tail end of the global 'front-running' phase in the AI industry cycle. Similarly, A-shares' rotation is not based on a domestic vs. external demand对立 (opposition), and协同 (synergistic) recovery is anticipated. While identifying winners in tech is complex, simpler opportunities are emerging: the trend of overseas manufacturing repair is strengthening, the core矛盾 (contradiction) in AI investment is shifting to energy infrastructure, a quiet revaluation of global real assets unaffected by AI has begun, and with export capital回流 (repatriation), domestic and external demand are共振 (resonating), paving the way for Chinese asset revaluation.
Specific allocation advice includes: 1) Real asset revaluation logic shifting to industrial low inventory and demand stabilization: crude oil & tankers, copper, aluminum, tin, lithium, rare earths. 2) Chinese equipment export chains with global comparative advantage and confirmed cycle bottoms - power grid equipment, energy storage, engineering machinery, wafer manufacturing - and domestic manufacturing recovery plays - petrochemicals, dyeing, coal chemicals, pesticides, polyurethane, titanium dioxide. 3) Beneficiaries of capital回流 (repatriation) + reduced balance sheet pressure + inbound traveler trends for consumption recovery - airlines, duty-free, hotels, food & beverage. 4) Non-bank financials benefiting from capital market expansion and bottoming long-term asset returns.
CSC Financial believes external shocks have limited impact and recommends focusing on景气度 (prosperity) for allocation. The recent pause in the A-share spring rally is attributed mainly to internal factors catalyzed by external events. Internal factors include主动 (active) cooling and broad-based ETF selling; external factors include political actions, Fed leadership change, geopolitical tensions, and global tech stock declines due to new AI tools. Current external disturbances haven't substantially impacted China's industrial fundamentals, and集中 (concentrated) cooling operations have ended. With sentiment充分 (fully) released and adjustments deemed adequate, the spring rally is expected to resume post-holiday, advising holding stocks.
For sector配置 (allocation), focus on景气度 (prosperity) in AI computing, chemicals, power equipment, and energy storage. Thematically, leverage local 'Two Sessions' policy signals to position for potential catalysts ahead of the National 'Two Sessions'.
Huaxi Securities recommends steadily preparing for the post-holiday 'red envelope'行情 (market trend), suggesting three main allocation lines. Recent overseas AI-related expectation disturbances pressured Chinese and US tech sectors short-term, but with US tech stocks stabilizing, domestic related sectors are poised for repair. Historically, pre-holiday trading often contracts due to overseas uncertainty and cash needs, with financing balances declining; post-holiday typically sees capital回流 (inflow) and显著 (significant) risk appetite recovery.
Current advice is to steadily prepare for the Spring Festival 'red envelope'行情 (trend). Pre-holiday style may involve rapid rotation, while tech sectors, represented by TMT, often show better elasticity post-holiday.
China Galaxy Securities suggests the market may maintain range-bound oscillation. Recent trends align with typical pre-holiday style切换 (switching) patterns, showing characteristics of 'pre-holiday risk aversion' with缩量 (contracted) volume reflecting观望 (wait-and-see) sentiment. Funds rotated out of high-valuation tech and cyclical sectors into value and consumption themes. Defensive sectors like banks and food & beverage outperformed, while previously strong themes like computing hardware and non-ferrous metals corrected.
As the 'Spring躁动' (Spring躁动) started early, fulfilling growth style performance in January, the 'pre-holiday躁动' remains to be observed. Concurrently,反复 (repeated) external uncertainties have increased global equity market volatility. The consensus expects a continuation of the 'stability-seeking' style pre-holiday, with a potential style shift post-holiday (around the 'Two Sessions').
Pre-holiday,热点 (hot spot) rotation is expected, with low-volatility, high-dividend sectors like红利 (dividend stocks), banks, and consumption likely to attract funds, suggesting the market will oscillate within a range, advocating balanced allocation. Post-holiday, with policy windows opening and risk appetite recovering, focus may return to growth sectors with industrial catalysts and earnings certainty, like AI applications, high-end manufacturing, and new energy, albeit in a more moderate, steadier慢牛 (slow bull) manner.
SDIC Securities looks towards科技成长 (tech growth) post-holiday. The pre-holiday market is expected to maintain high-level oscillation. Different from the first wave of New Year行情 (trend) driven by sentiment and capital, a potential second wave would need to be logic-based and is more likely after the holiday. Regarding a potential style shift around the holiday, they see insufficient logic for value styles to overwhelmingly dominate growth post-holiday. With the marginal impact of certain trades weakening and overseas markets stabilizing, concerns regarding precious metals price impacts on non-ferrous metals and overseas AI giant earnings have eased pre-holiday. They lean towards科技成长 (tech growth) styles potentially resurging post-holiday, with the 'Four Pillars' (non-ferrous metals, chemicals, AI applications & power grid equipment, engineering machinery) remaining core to allocation strategies.
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