Summary of the latest strategic viewpoints from the top ten brokerages + an overview of favored sectors.
The latest strategic views from the top ten brokerages were released on August 31, according to Cai Lian She (Editor: Xuan Lin):
Tianfeng Securities: Where is the main line of the bull market positioned?
The current rise is not solely a systemic broad-based increase in valuations; structural characteristics are relatively evident, with TMT leading the charge. At present, the TMT sector enjoys a valuation premium under industrial trends, and its contribution to the overall A-share increase has not yet reached an extreme state. From a short-term contribution perspective, AI has not yet entered a state of extreme overheating. Seeking out leaders and considering a longer time frame, with Kweichow Moutai and CATL as anchors, the contribution of Cambricon in this market segment may still have certain room for growth.
Guangfa Securities: Should we stick to the industrial main line or seek low-position rotation?
By conducting a detailed review of the historical process of valuation differentiation in A-shares/U.S. stocks from drastic divergence to convergence, the following conclusions can be drawn: (1) In a bull market environment, there does not necessarily occur a "high-low switch"—historically, A-shares have exhibited both "high-low switch" (2 occurrences in 5 bull markets) and "no switch" (3 occurrences in 5 bull markets). (2) A low position is not a reason for a rebound; historically, when a bull market has seen a "high-low switch," it has either been due to improved fundamentals in low-position sectors (e.g., the comprehensive overheating of the economy in 2006) or grand narratives (such as state-owned enterprise reform, the Belt and Road Initiative) combined with ample capital inflow (2014-2015). (3) High-position industries are often supported by high prosperity expectations; if we assume a bull market environment, the necessity for high-low switching from a medium-term perspective is not strong—if there is no low-position rebound, the main industrial line continues to outperform; if there is a low-position rebound, although valuation differentiation converges (often achieved through boosting valuations in low-position sectors), if we calculate the increase and decrease from the start of the low-position rebound, the high-position main line, with its high EPS, does not lag behind the low-position rebound sectors. (4) The timing of "high-low switching" is retrospective; the A-share valuation differentiation index does not have a stable upper boundary, thus requiring hindsight to determine the timing of high-low switches; for participants in the bull market process, switching too early or incorrectly may instead result in lost time costs or missing the main uptrend of core varieties.
For investors who have already held the technology main line in this bull market, given the current level of valuation differentiation is not particularly high, the necessity to participate in "high-low switching" is not strong, and it is recommended to continue to hold onto the technology industrial main line: on one hand, overseas computing power chains and innovative pharmaceuticals are still progressing in the bull market industrial main line; on the other hand, domestic computing power, domestic AI infrastructure, and AI edge applications are also seeing a recovery in industrial expectations, with previously highlighted recommendations for innovative chips, though delayed, are now arriving.
Dongwu Securities: Bull Market Phase II: Focus on AI application-based probability trading.
From June to August, the market's main theme revolves around artificial intelligence (AI). Currently, the focus is primarily on upstream infrastructure hardware, with overseas optical modules and PCBs, which have the highest certainty of prosperity, starting to rally in June. By mid-August, domestic computing power, centered around Cambricon, officially began to rebound. Given the ample market volume and the absence of significant flaws in industry logic, I do not believe the computing power rally is about to conclude. However, for off-market cash holders, the strong profit-making effect of upstream hardware is causing restlessness, and the continuous accumulation of profit-taking positions objectively brings certain profit-taking pressure. Subjectively, the ongoing increase in gains inevitably makes risk-averse funds anxious. How should 'high-fearing' funds choose? Based on the certainty of industry trends and probabilistic thinking, opening another table on the downstream application side is also a good approach.
In the current AI market cycle, the core reason for the stagnation in downstream applications is insufficient short-term certainty—no blockbuster products with breakout effects or smooth business models have emerged, which corresponds to insufficient performance visibility at the listed company level, making them not the first choice for funding in this cycle. However, from the perspective of the evolution of technological waves, the ultimate realization of AI empowering all things will certainly be achieved through the application end, meaning that the outbreak of applications has medium-term certainty and a broader scope than upstream hardware. This has already been validated in the 'Internet Plus' wave ten years ago and the corresponding stock market trends, indicating that the launch of the AI application market is merely a matter of time.
In the current market environment with ample volume, the main focus is again on technology centered around AI. Should there be a loosening of chips on the upstream hardware side (for example, a core target experiencing an adjustment of around 20%), then it would only require some marginal events that are sufficient to attract market attention (such as H20 security issues and the DS model's FP8 leading to a shift from obscurity to prominence for domestic computing power) for the lower branches of AI to demonstrate strong elasticity. However, entering on the right side at that time would result in losing part of the odds, facing the same choice dilemma as now regarding whether to chase the computing power rally. Therefore, it is recommended to actively position on the left side based on the certainty of mid-term industry logic, treating downstream applications in AI + innovative pharmaceuticals, AI + military industry, AIGC, edge AI, humanoid robots, and intelligent driving as a form of 'bullish options'.
CITIC Securities: The equipment display brought by the military parade may enhance expectations for China's military trade exports.
Key analysis of significant events and configuration clues to watch in September. First, the potential interest rate cuts by the Federal Reserve are expected to reinforce a weak dollar environment, which will catalyze a new round of activity for resource commodities that are already strong, particularly precious metals and copper, possibly accelerating the non-ferrous sector's rally again. Second, with Apple and META holding their respective September launch events, Apple's edge AI and META's AR glasses may bring about a new trend of more sustainable edge devices and edge AI ecosystems, continuing the current hype surrounding cloud testing AI, making the consumer electronics sector, especially the Apple supply chain, worthy of attention.
Third, the anti-involution trend will gradually reveal three clues: first, industries that have shown high capital expenditure intensity in the past two years but exhibit signs of marginal reduction; second, industries where self-discipline or policy implementation signs have already emerged; and third, industries that rely on quotas to continuously improve profit margins while facing internal anti-involution in supply and external profit-seeking in demand. Fourth, the equipment display brought by the military parade may strengthen expectations for China's military trade exports. The military industry sector appears event-driven in the short term, but in reality, the progress of foreign military trade after the parade is the key to opening up market expectation space. Fifth, September is expected to see a significant increase in innovation drug catalytic events, while the recent tech switch has cleared out short-term funds that were previously hoarding in the sector pursuing trends, with innovative drugs likely to continue rising after this round of adjustments.
In terms of allocation, it is recommended to continue focusing on resources, innovative pharmaceuticals, consumer electronics, chemicals, gaming, and military industries in September.
Guotai Junan Securities: A major switch is imminent.
The current operational conditions of domestic manufacturing enterprises are improving, as evidenced by both industrial enterprise operational data and semi-annual reports. The upward pressure of overseas inflation is easing, and the future interest rate cuts by the Federal Reserve will boost the recovery of global manufacturing. There are already signs of a shift in overseas equipment investment from AI to traditional manufacturing.
From a global supply and demand perspective: the previous expansion of Chinese commodity production coupled with the contraction of overseas commodity demand is transitioning to a situation where Chinese production is reversing involution and overseas investment is driving the expansion of commodity demand. In terms of monetary policy and Chinese production, the combination of global monetary tightening and the expansion of Chinese production is shifting to a combination of global monetary expansion and a slowdown in Chinese production, with a risk of re-inflation in China. In this regard, we recommend: First, tangible assets that benefit from the improvement in domestic operational conditions brought by reversing involution, the recovery of overseas manufacturing activities, and accelerated investment: industrial metals (copper, aluminum, steel), raw materials (fiberglass, basic chemicals, steel), and capital goods (engineering machinery, specialized machinery, mechanical parts, heavy trucks); Second, the long-term asset side of insurance will benefit from a rebound in capital returns; and lastly, after profit recovery, opportunities will also arise in domestic demand-related sectors, with market dispersion unfolding, as the repair of A-share heavyweight stocks is just beginning. Attention should be paid to: food and beverages, power equipment.
China Galaxy: The upward trend of A-shares remains unchanged, and market hotspots will still be in a rotation state.
As August concludes, the A-share market shows an upward trend, with significant increases in trading volume throughout the month. Looking ahead to the next phase, the market is expected to operate around a high center in the short term. After the previous upward trend, the market may exhibit characteristics of consolidation and fluctuation. However, current market transactions remain active, and the continuous drive of funds combined with rising policy expectations provide support for market conditions. Meanwhile, the external environment is relatively stable, with a high expectation of interest rate cuts by the Federal Reserve in September, which reshapes global capital flows favorably for equity markets. The upward trend of A-shares remains unchanged, and market hotspots will still be in a rotation state, with an emphasis on structural allocation opportunities.
Allocation Opportunities: The growth sector has demonstrated high prosperity in the first half of the year. As industry trends accumulate upward, more clues of prosperity are expected to form a rotational main line. From a medium to long-term perspective, the improvement in supply and demand patterns and industry profit recovery will drive the 'reverse involution' concept, focusing on areas such as basic chemicals, building materials, photovoltaic equipment, and batteries; dividend assets with a safety margin in valuation continue to have clear allocation logic; the consumption sector, under policy support, has investment value, with the Ministry of Commerce indicating that several policy measures to expand service consumption will be introduced in September.
Chengtong Securities: Funds are likely to switch to underperforming sectors.
The A-share market's concentration and turnover rate are approaching historical highs; after a rapid rise in the short term, the market may experience an adjustment demand. In the last week of August, the leading AI-related index underwent adjustments, with funds showing signs of high-to-low switching, reflecting insufficient confidence in continuous upward trends among market participants. Overall, entering September, the short-term rapid rise and high concentration of the technology sector may lead to adjustments as the market consolidates gains from favorable news. However, on August 30, a U.S. court ruled that most of the global tariff policies implemented by Trump were illegal, with expectations of Federal Reserve interest rate cuts approaching in mid-September and October being an important policy window. The overall internal and external environment still supports the stock market, and the extent of adjustment may be limited.
A-share Allocation Strategy: Focus on underperforming sectors. The AI computing power industry chain has a high degree of fund congestion, and funds are likely to switch to underperforming sectors. Specifically, the Huawei HarmonyOS industry chain combines technological growth and independent control themes, with multiple catalytic events expected in September; the consumer sector, with the end of the mid-year report disclosure period, has largely priced in pessimistic expectations, and with the double festivals approaching, valuations are expected to rise; precious metals will benefit from rising U.S. inflation and the Federal Reserve's interest rate cuts in mid-September. Additionally, the CRO sector remains relatively undervalued historically, while basic metal inventory levels are low and will benefit from the Federal Reserve's interest rate cuts; chemical blue chips will also benefit from the reverse involution trend and low valuations.
Huayuan Securities: A Phase-Wise Comprehensive Bullish Outlook on the Bond Market
It is predicted that the increment in social financing for August will be 2.6 trillion yuan (with an increment of 3.03 trillion yuan for August 2024), which represents a year-on-year decrease, mainly attributable to net financing from credit and government bonds. It is expected that the increment in RMB loans to the real economy in August will be 880 billion yuan, with discounted banker's acceptances at +30 billion, net financing from corporate bonds at 150 billion, and net financing from government bonds at 1.35 trillion. Due to the year-on-year decrease in social financing, the growth rate of social financing at the end of August is expected to be 8.8%, a decline of 0.2 percentage points month-on-month. Looking ahead for the year, it is anticipated that new loans (measured by social financing) will experience a slight year-on-year decrease, while net financing from government bonds will expand significantly year-on-year. Social financing is expected to increase year-on-year, with the growth rate possibly rebounding and then retreating, reaching approximately 8.1% by the end of the year. Due to the misalignment in the issuance pace of government bonds, it is expected that the growth rate of social financing will peak in July, with a potential decline in the following months.
In September, it is recommended to go long on the bond market. The bullish outlook is primarily based on three points: 1) The central bank's easing policies, which are expected to keep funding rates low, supporting the bond market; 2) Economic downturn pressures may intensify in the second half of the year. Consumer subsidies may overspend on appliance demand, with consumption growth starting to decline in July, housing prices remaining sluggish, and investment growth significantly slowing, leading to increased economic downward pressure in the latter half of the year; 3) The continuous decrease in banks' liability costs, with adjusted government bonds holding certain allocation value for most banks, while weak credit demand supports banks in increasing their bond allocations. Currently, there is a comprehensive bullish outlook on the bond market, with a recommendation to focus on opportunities in 10Y national development bonds, 30Y government bonds, and 5Y capital bonds.
Minsheng Securities: August PMI: A Sign of Stabilization
On August 31, the National Bureau of Statistics announced the operating conditions of China's Purchasing Managers' Index (PMI) for August. In August, the manufacturing PMI was 49.4%, an increase of 0.1 percentage points from the previous month, indicating a slight improvement in the manufacturing sector's economic performance.
The August PMI met expectations for stabilization; however, the recovery highlights differences in the performance of the manufacturing and service sectors. As short-term disruptions such as extreme weather dissipate and pressures from 'anti-involution' policies ease, the manufacturing PMI shows early signs of 'weak stabilization,' rising by 0.1 percentage points from July, but still remaining below the threshold, reflecting ongoing structural challenges such as weak corporate inventory replenishment and employment pressure in the economy. In contrast, the service sector PMI not only remains firmly in the growth zone but also exhibits a more substantial rebound. The continued activity in the capital markets is expected to inject more vitality into the service sector and the overall economy in the third quarter, which may help partially offset the pressures from the manufacturing slowdown.
Guotai Junan: The 'Quasi-Fiscal' Function of Policy Financial Instruments in the Second Half of the Year is Worth Attention
This month's manufacturing PMI increase is in line with seasonal patterns, performing similarly to the average for the same period over the past three years. Among these, the PMI for large enterprises continues to rise, remaining above the critical point for four consecutive months. Meanwhile, the PMI for small and medium-sized enterprises is still operating at low levels within the contraction range. From a sectoral perspective, the PMI for high-tech manufacturing and equipment manufacturing has marginally increased, indicating relatively high levels of prosperity; however, the consumer goods sector and high-energy-consuming sectors remain in a pronounced contraction phase.
In August 2025, the Business Activity Index for the construction industry experienced a decline greater than seasonal trends, performing below the levels observed in the same period in recent years. The reasons for this include adverse factors such as high temperatures and heavy rainfall, as well as weak demand in the real estate sector and a marginal slowdown in fiscal spending on infrastructure projects. Notably, recent policy briefings on new types of policy-oriented financial instruments have been held intensively in various regions, which may accelerate the advancement of major project constructions. Additionally, urban renewal projects may also support infrastructure activities. Active Policy: Focus on policy-oriented financial instruments. In the first half of 2025, the fiscal schedule was advanced, and in the second half, the 'quasi-fiscal' function of policy-oriented financial instruments deserves attention, potentially focusing on supporting technological innovation, expanding consumption, and stabilizing foreign trade.
