CITIC Securities: A-Share Range-Bound, Q3 Earnings Window Last Offensive Chance in 2024
CITIC Securities reiterated its forecast that China's A-share market will remain range-bound for the remainder of 2024, identifying the period around third-quarter earnings reports as the final offensive window. The brokerage argues the probability of an index recovery is much higher than new lows, citing upward profit trends and explicit macro risks. It recommends a strategy centered on AI and energy/chemical sectors, led by tech leaders, resource cyclicals, and financial heavyweights.
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CITIC Securities: Pre-Q3 Earnings Window Is Last Attack Opportunity for A-Shares This Year
A research report from CITIC Securities argues that U.S. stocks hitting new highs, driven by new application diffusion and hardware repair, means external markets should no longer be considered a factor affecting A-shares. Despite current low sentiment, the firm maintains its view that A-shares will trade in a range this year. It identifies the period around the third-quarter earnings reports as the last offensive window of the year, stating that the probability of the index recovering within the year is much higher than it hitting new lows. The report advises investors to remain optimistic and patient for this final attack. Within the tech sector, it recommends rotating into core assets with rising volume and prices, such as optical communications, PCBs, MLCCs, gas turbines, and wafer fabrication. For non-tech sectors, the focus is on innovative drugs, energy chemicals, high-dividend stocks (coal, banks), and leading brokerages with overseas expansion potential.
Read sourceCITIC Securities Maintains A-Share Volatile Market View, Sees Q3 Report Window as Last Offensive Opportunity
A research report from CITIC Securities, published on September 27 via Blue Whale News, analyzes the outlook for China's A-share market. The report states that U.S. stocks have hit new highs driven by new application diffusion and hardware repair, and suggests that external markets should no longer be considered a factor affecting A-shares. Despite current low sentiment, CITIC Securities maintains its judgment that the A-share market will remain volatile within the year. It identifies the period around the third-quarter earnings reports as the last offensive window for the year, asserting that the probability of the index recovering within the year is much higher than it hitting new lows. The report argues that with an upward profit trend, explicit macro risks, and already low sentiment, the likelihood of a significant index decline is small. It also notes that conditions for the Shanghai Composite Index to recover are not as stringent as imagined, having tested five possible recovery paths. Given limited short-term incremental funds, a rally structure led by tech leaders, resource/chemical stocks, and financial heavyweights best balances fundamentals and liquidity. The report advises maintaining optimism during the market's hesitation and recommends a strategy of 'AI + energy/chemicals'.
Read sourceCITIC Securities Maintains A-Share Range-Bound View, Sees Q3 Earnings as Last Attack Window
CITIC Securities, in a research report published on September 27, maintains its forecast that China's A-share market will remain range-bound for the remainder of the year. The brokerage argues that external markets, such as the U.S. stock market hitting new highs, should no longer be considered a factor influencing A-shares. Despite current low sentiment, CITIC expects the period around the third-quarter earnings reports to be the last offensive window of the year, stating that the probability of an index recovery within the year is much higher than that of hitting new lows. The report asserts that with profit trends moving upward, macro risks becoming explicit, and sentiment already depressed, the likelihood of a significant index decline is very small. CITIC tested five possible paths for the Shanghai Composite Index's recovery, concluding that a rally led by tech leaders, resource cyclicals, and financial heavyweights best balances fundamentals and liquidity given limited short-term incremental funds. The brokerage advises maintaining optimism during the market's hesitation and recommends positioning with AI and energy/chemical sectors.
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CITIC Securities Maintains A-Share Range-Bound View, Sees Q3 Earnings as Last Attack Window
CITIC Securities has reiterated its forecast that China's A-share market will remain range-bound for the remainder of the year, identifying the period around third-quarter earnings reports as the final offensive window in 2024. The brokerage argues that the probability of the index recovering within the year is much higher than it hitting new lows. It states that with earnings trends pointing upward, macro risks becoming explicit, and market sentiment already depressed, the likelihood of a significant index decline is very small. CITIC Securities tested five possible paths for the Shanghai Composite Index to recover within the year, concluding that a rally led by tech leaders, resource and energy/chemical stocks, and financial heavyweights best balances fundamentals and liquidity, given limited short-term incremental funds. The firm advises maintaining optimism during the current market hesitation and recommends a strategy centered on AI and energy/chemical sectors.
Read sourceA-Share Rally Continues; Analysts Advise Focus on High-Growth Sectors
On September 21, A-share indices closed higher, with the Shanghai Composite up 0.97% and over 4,500 stocks rising. The pharmaceutical and real estate sectors led gains. Analysts attribute the rally to easing external pressures as oil prices and long-term US Treasury yields decline, creating conditions for capital to return to high-growth sectors. CITIC Securities strategist Xia Fanjie recommends a balanced allocation, prioritizing supply-constrained segments of the computing power supply chain (e.g., optical chips, PCB, CCL, server assembly) and industrial metals like copper, aluminum, and tin. He also suggests holding dividend-yielding assets as a defensive base and selectively investing in domestic demand sectors. CITIC's Qiu Xiang notes that market sentiment has cooled sufficiently, providing a window for active capital to target AI-related new technologies. China Galaxy Securities' Yang Chao warns of continued volatility due to holiday risk premiums and quarter-end institutional constraints, while awaiting domestic policy catalysts. The next key event is the late-October Fed meeting.
Read sourceA-Share Market Rally Continues; Analysts Advise Focus on High-Growth Sectors
On September 21, China's A-share market saw broad gains, with the Shanghai Composite Index rising 0.97% and over 4,500 stocks advancing. Trading volume fell slightly to 2.05 trillion yuan. The healthcare sector led gains, with medical services up over 5%. Analysts from major brokerages offered varied outlooks. Xia Fanjie of CSC Financial attributed the rally to easing external pressures from falling oil prices and long-term US bond yields, which creates conditions for capital to return to high-growth sectors. He recommends focusing on supply-constrained segments of the computing power supply chain, such as optical chips and PCB copper-aluminum industrial metals, while maintaining defensive positions in dividend-yielding assets. Qiu Xiang of CITIC Securities suggests focusing on optical communication technology, PCB, and advanced packaging. Yang Chao of China Galaxy Securities expects further policy support and recommends attention to power grids, energy storage, and engineering machinery. The analysts caution that the sustainability of the rally depends on continued declines in overseas interest rates and oil prices, with the October FOMC meeting as a key observation point.
Read sourceA-Share Rally Continues; Analysts Advise Focus on High-Growth Sectors
On September 21, China's A-share market extended its recovery, with the Shanghai Composite Index rising 0.97% and over 4,500 stocks gaining. Trading volume fell slightly to 2.05 trillion yuan. The healthcare sector led gains, with several sub-sectors rising over 5%. Analysts from CITIC and China Galaxy provided outlooks. Xia Fanjie of CITIC Construction Investment attributed the rally to easing external pressures from falling oil prices and US Treasury yields, allowing capital to return to high-growth sectors. He recommended a balanced approach, favoring supply-constrained segments of the computing power chain (e.g., optical chips, PCB) and industrial metals, while also suggesting defensive dividend assets and domestic demand sectors like agriculture. Qiu Xiang of CITIC Securities advised focusing on optical communication, PCB, and advanced packaging. Yang Chao of China Galaxy expects further policy support, highlighting power grids, energy storage, and engineering machinery. The analysts noted that the rally's sustainability depends on continued declines in overseas interest rates and oil prices, with the October FOMC meeting as a key observation point.
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