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CICC: A-shr Valuation Remains in Reasonable Range; Significance of Fundamentals Rising; Focus on 3 Themes
Recommend 14 Positive 25 Negative 2 |
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CICC’s report forecast that the uptrend of mainland A-shares since 2024's “9.24” is likely to persist. After experiencing certain valuation revitalization, the significance of fundamentals further enhanced. Looking ahead to 2026, as Sino-US relations enter a new phase, the logic of reconstructing the international monetary order is further strengthened; the AI revolution enters a critical application period; and China's innovative industries achieve performance realization. The broker believed these trends will continue to support the performance of Chinese assets. The significance of A-share fundamentals will continue to increase in 2026, whereas the movements of global and domestic resident funds are also factors that cannot be overlooked. The broker suggested focusing on three main themes: (1) prosperous growth, (2) breakthrough in external demand, and (3) cyclical reversal. Chinese stocks fared excellently in the global market in 2025, with the Shanghai Composite Index setting a ten-year high, the broker said. Previously, the broker had expressed its view that the bottom period was over; risk/ appetite was stronger than that in 2024; and prosperous investment returned to focus in terms of allocation. This year's market trends, styles, and rhythms are relatively in line with CICC's previous judgments. There have been no substantial changes in global and domestic economic trends YTD, with unexpected aspects in narrative reversal, macro-level global monetary order reconstruction, and breakthroughs in AI technology revolution and Chinese innovation. The overall valuation of A-shares is still in a reasonable range, and the capital side is expected to remain active. Currently, global funds are still under-allocated to China, focusing on the power of international fund allocation rebalancing. Domestic resident fund allocation demand has been activated by the profit effect. This, coupled with various medium and long-term funds entering the market, the capital side of the stock market in 2026 is expected to remain active. In terms of pace, the market may rise first and stabilize later in 2026, preventing "volatility". From the end of this year to the first half of next year, the resonance of the Sino-foreign liquidity easing cycle and the high prosperity of growth industries are anticipated to bolster market upswing. Against the backdrop of active capital and rising valuations, attention needs to be paid to the possible increase in volatility and the matching rhythm with fundamentals. AASTOCKS Financial News Website: www.aastocks.com |
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