Following a week of significant volatility in the A-share market, with the Shanghai Composite Index falling below the 4000-point mark, the question on investors' minds is what comes next for Chinese equities.

A survey of perspectives from ten major securities firms reveals a consensus that excessive concern over the index decline is unwarranted. Most analysts believe the current corrective phase is nearing its conclusion, with momentum for a new upswing quietly building amid the fluctuations.

CICC (China International Capital Corporation) expresses that there is no need for undue alarm regarding the index drop. Considering that A-share corporate profits remain in an upward cycle, domestic liquidity is still accommodative, and the U.S. Federal Reserve has not yet raised interest rates, market risk appetite in the third quarter is expected to stay elevated. The firm judges that the market lacks the foundation for a bull-to-bear reversal and anticipates the short-term trend will remain robust.

"The corrective wave is entering its final stage: non-tech sectors adjusted first from May to June, followed by tech sectors from June to July. This adjustment structure is becoming complete, with the contraction in profit-making and momentum effects being sufficient, indicating conditions are ripe for the correction to end," Shenwan Hongyuan Securities assesses.

Industrial Securities further points out that from the current vantage point, significant fluctuations are accompanied by the accumulation of positive signals. As the two core factors that previously drove the market adjustment—overseas liquidity and sentiment drag, and the global AI industry narrative—have recently witnessed key changes and validation of positive signals, the kinetic energy for a new round of gains is being stored and brewed within the volatility.

Focus on Sector Rebalancing

Regarding portfolio allocation, several brokerages advise investors to pay attention to a partial rebalancing of market styles.

CITIC Securities notes that, overall, the K-shaped divergence in the domestic market is mixed with excessive short-term narratives and fund influences. As the intensity of capital games cools, attention should be paid to the recovery of some non-AI sectors.

"With the consecutive adjustments in the dual-core AI sectors of communications and electronics, and the rotational catch-up rallies in dividend-paying and several low-positioned sectors, the investment style centered on AI from April to June this year has shown some degree of loosening. Following brokerage and innovative drug stocks, more sectors are joining the rally, and this partial rebalancing is expected to continue," states Zheshang Securities.

In terms of trading strategy, Zheshang Securities suggests investors continue to closely monitor the already-strengthened brokerage and innovative drug sectors, considering buying on dips when they pull back to their previous 'breakout' levels. Simultaneously, investors can adopt a quick-in, quick-out approach, using short-term positions to appropriately focus on low-positioned sectors with catch-up potential, such as computers, media, state-owned enterprises (referred to as '中字头'), and Hang Seng Tech.

CITIC Securities: Focus on Recovery in Non-AI Sectors

Three narrative logics correspond to three layers of K-shaped divergence. Some of this divergence is reasonable, stemming from differences in business cycle prosperity and is quite common in global markets. However, there are also additional influences caused by sentiment and fund flows.

The independent strength of domestic AI stocks since June, decoupling from overseas trends, represents the most pronounced K-shape. This involves both industry narratives and potential impacts from quantitative strategy rebalancing. The core issue is that some quantitative stock-picking and index-enhanced strategies, under pressure from underperformance and fund outflows, have a need to adjust holdings. They may increase exposure to factors like the 'ChiNext and STAR Market factor' to alleviate negative alpha.

Active mutual funds have significantly stronger allocation ratios and pricing power over core ChiNext stocks compared to core STAR Market stocks, which are dominated by ETFs. This difference in holder structure means that as quantitative strategies increase their 'ChiNext and STAR Market factor' exposure, the push effect on the STAR Market is noticeably greater.

Observations since June show an increasing number of public fund index-enhanced products shifting from a state of persistent negative alpha to accumulating positive alpha, proving that this rebalancing is gradually progressing.

Overall, the K-shaped divergence in the domestic market is mixed with too many short-term narratives and fund influences. As capital games cool, attention should be paid to the recovery of some non-AI sectors.

Guotai Junan Securities: Bullish on the Sustainability of the Commercial Aerospace Theme

Last week, the average daily trading volume for hot themes was 14 billion yuan, with an average daily turnover rate of 3.73%, both showing slight declines. Tech themes experienced sharp volatility, with trading enthusiasm around long-term earnings and capacity expansion expectations weakening. Structurally, the server sector, which reported better-than-expected earnings, led gains, followed by semiconductor/computing power/AI application themes. The commercial aerospace theme launched last Friday, while previously active themes like price-increase materials and new energy saw pullbacks. Theme funds saw net inflows into semiconductors and application directions.

Looking ahead, rotation and volatility within the tech sector are expected to increase. Recent focus should be on upward revisions to expectations for large model vendors' Annual Recurring Revenue (ARR) and cloud vendor investments. The sustainability of the commercial aerospace theme rally is viewed favorably.

Regarding commercial aerospace, three directions are recommended: First, successful recovery missions are expected to accelerate low-earth orbit satellite constellation deployment, favoring satellite payloads/communication components/satellite assembly. Second, increased launch demand will drive investment needs in infrastructure like launch sites and special propellants/gases. Third, new technologies in reusable and heavy-lift liquid rockets.

CICC: Volatile Pattern to Persist

The market's volatile pattern is expected to continue, and there is no need for excessive worry during index declines. Last week, the market rebounded from lows after prior declines, with major broad-based indices finding strong support at key moving averages below. Considering current A-share corporate profits are still rising, domestic liquidity remains loose, and the Fed has not hiked rates, Q3 market risk appetite is judged to be high. The market is seen as lacking the basis for a bull-bear switch.

For the current market, the core contradiction lies in insufficient incremental funds. The存量 game on the capital side prevents a comprehensive, broad-based rally, leading to significant structural divergence and a pronounced 'seesaw' effect between sectors. Elevated valuation levels and marginally tightening global monetary policy are key reasons for the slowdown in incremental fund inflows.

The market is expected to remain strong in the short term. The upcoming listing of Changxin Technology could drive continued short-term strength and medium-term expectation fluctuations in the semiconductor sector.

However, a potential peak in the Producer Price Index (PPI) year-on-year growth may lead to a slowdown in corporate profit growth expectations. If market structure fails to improve, long-term market vulnerability could rise.

For sector allocation, the core focus should be on the tech主线 and轮动 in oversold sectors. Key industries to watch include AI (semiconductors, optical communication), brokerages, humanoid robots, commercial aerospace, biotech, dividend assets, and Hong Kong-listed internet stocks.

Shenwan Hongyuan Securities: Correction Nearing Its End

Looking forward, the corrective wave is entering its final stage: non-tech sectors adjusted first from May-June, tech sectors followed from June-July. The adjustment structure is becoming完备, with sufficient contraction in赚钱效应 and momentum效应,具备 conditions for the correction to end. In this closing stage, attention should be paid to the potential impact of the domestic memory leader's上市可能带来资金分化.

Pace will slow; a new上涨还需徐徐图之. The computing power inflation wave that began in mid-November 2025 has seen行情演绎的宽度和深度趋于充分.

In the short term, it is highly likely that the惯性 in capital supply and demand will be broken, which could be a节点 for segmenting the wave行情 within the tech赛道. The pace of the tech赛道 rally will slow, entering a stage等待新的产业重大催化. When the rally restarts, it will likely be a new行情阶段, not a simple continuation of the previous phase's线索.

The medium-term structural推演 remains unchanged: the AI industry trend is still the main battlefield for大波段行情. For a大波段行情 to become complete, the tech赛道 should continue to lead gains while the上涨的结构 becomes more百花齐放. For the百花齐放 direction, brokerages are the首选.同时, among strategic resources, industrial metals and basic chemicals are看好 over precious metals.关注 export/出海链 alpha and new consumption.

China Merchants Securities: Focus on Domestic Computing Power Opportunities

Recent increased volatility in A-shares is partly a reflection of high海外 tech volatility onto the A-share market, with leverage in the South Korean market and statements from U.S.'s Meta causing剧烈波动.

First, July marks the start of the interim earnings预告 disclosure period for listed companies, putting high-valuation tech growth sectors under业绩验证 pressure. Second,海外 markets are amplifying A-share波动; Meta's move to lease computing power raised concerns about AI算力过剩, while the South Korean stock market暴跌 triggered circuit breakers,升温避险情绪 in Asian markets. Third, regarding拥挤度, the成交额占比 of the TMT (Technology, Media, Telecom) sector has hit a historical high; excessive拥挤度 leads to放大波动.

At the industry level, it is建议 to关注 the latest catalysts for domestic computing power, primarily the upcoming Artificial Intelligence Conference.

Guosen Securities: Upward Trend Awaits Its Moment, Unchanged

The interim report disclosure period has begun. Whether this round of业绩定价 will follow the pattern seen in the later stages of the 2021 bull market仍需结合当下市场环境进一步讨论. Structural divergence in A-shares intensified in the first half of this year, and轮换 from large to small caps within热门板块 may have already unfolded. In Q1 2026, a shift from large-cap to small-cap companies within the optical communication sector emerged.

Furthermore, market rebalancing is gradually playing out recently, with some low-positioned sectors already showing performance. Since late June, the AI hardware chain has seen significant adjustments. Meanwhile, within tech growth,扩散 to low positions has begun. The computer sector, relatively滞涨 this year, has gained up to 9.7% since July. On the other hand, sectors with modest prior gains and持续回暖的业绩 have also performed, such as pharmaceuticals and coal.

Overall, short-term A-shares are undergoing阶段性再平衡, but the possibility of a风格逆转 is low. Looking ahead, the伺机向上 trend for A-shares remains unchanged, with July being an important observation window. Structurally, within tech growth,扩散 to low positions is expected;关注 pharmaceuticals, finance, and resource products.

Industrial Securities: No Need for Excessive Concern About the Subsequent Market

Last week saw significant market volatility. At the start of the week, the market探底受拖累 by U.S.-Japan-South Korea 'deleveraging'. By Thursday, sentiment recovered somewhat following global AI industry progress, but Friday saw another大幅回调 in the AI hardware主线, with the Shanghai Composite falling below 4000, causing considerable concern among some investors about the subsequent market, especially tech sector performance.

However, from the current time and position,结合近期变化, behind the大波动 lie accumulating positive signals. The adjustment triggered by liquidity and industry narratives may be nearing its end, with key changes凝聚新一轮共识正在酝酿.

On one hand, tracked拥挤度指标 have once again signaled a短期情绪底部. On the other hand, regarding the core AI industry narrative that triggered this adjustment, recent industry progress and业绩验证 by leading companies have, to some extent,纠偏 and扭转了此前的担忧.

Therefore, as the two core factors that previously affected the market adjustment—overseas liquidity and sentiment drag, and the global AI industry narrative—have both recently seen关键变化 and validation of积极信号, there is no need for excessive concern about the subsequent market. The kinetic energy for a new上涨 is being积蓄、酝酿 within the波动.

Zheshang Securities: Partial Rebalancing Expected to Continue

Overall, the market currently暂时 lacks opportunities for a系统性上攻. Sector轮动 and低位补涨 have become the main opportunities.

Looking ahead, the ChiNext Index, after连续跌破 the 20-day and 60-day moving averages, has yet to show stabilization signals and may continue震荡, with its大格局 similar to February-March 2021. Although the STAR 50 Index rose overall this week, it experienced significant双向波动 from last Thursday to Friday;后续需紧盯 the上升趋势线 and the得失 of the 20-day line.

With the连续调整 in the dual-core AI sectors of communications and electronics, and the轮番补涨 of dividend-paying and multiple low-positioned sectors, the AI-centric investment style from April to June this year has shown some松动. Following brokerages and innovative drugs, more sectors are joining the上涨行列, and the previously mentioned局部再平衡 is expected to持续下去.

For配置, based on the judgment that "市场震荡仍未结束,适当关注补涨机会", it is建议 that absolute return positions and短线仓 in dual-board (ChiNext/STAR) stocks注意逢高控制弹性, while remaining相对收益仓位 and中线仓 can continue holding. When the Shanghai Composite Index回踩 the annual line, forming a 'golden右脚',可以考虑适当增配.

For sectors, continue盯紧 the already-strengthened brokerage and innovative drug sectors, buying on dips when they回踩前期 '启动阳线'.同时,可以快进快出, using短线仓位 to适当关注 sectors with补涨 needs like computers, media, state-owned enterprises ('中字头'), and Hang Seng Tech.

Everbright Securities: Range-Bound Volatility

Looking ahead, the market may震荡整固. The Q2 PPI中枢 was significantly higher than in Q1, and上市公司盈利有望迎来进一步上行, providing fundamental support for the market.

However, domestic demand修复力度 remains偏弱, with traditional sectors like consumption and property持续承压. The aggregate level尚不具备全面普涨的条件. Additionally, tech sectors that saw significant gains earlier are entering a检验窗口 for业绩兑现, and stock price波动 may随之放大.

综合来看, under the并存格局 of盈利支撑 and结构性压力, the short-term market大概率维持区间震荡.

For配置方向,关注 three景气主线 represented by hard tech. From a medium-to-long-term perspective, high景气方向仍是配置核心, but not limited to tech. Besides tech, sectors like the export chain and resource products are expected to see持续改善 in fundamentals and may deserve重点关注 in the future.

For hard tech,关注 industries like electronics, communications, and defense军工. For the export chain,关注 industries like电力设备 and机械设备. For upstream resource products,关注 industries like有色金属, coal,石油石化, and基础化工.

Huaxi Securities: Limited Downside Space Remains

Geopolitical形势再现反复, but the market has gradually脱敏 to this. U.S. June inflation data is即将发布, with上行压力 expected to continue easing.同时, the即将到来 of interim earnings预告 is值得期待.

Recent rapid market adjustments have释放到位 the前期畏高情绪, leaving limited继续下行空间. A反弹可期.

For配置, recent市场估值扩散和高切低轮动 are merely避险反应 during the主线调整期, not a持久之计. As the反弹 arrives, opportunities will重回产业主线. The当下正是布局时机, with communications offering更具性价比.重视 sectors like光模块,液冷,光纤, and AIDC.