Looking ahead, CICC believes that a short-term style rotation is unlikely to be sustained. Against the backdrop of synchronized easing cycles in global liquidity, the valuation of China's A-share market remains relatively reasonable. The AI technology revolution and the energy transition are driving demand from upstream raw materials to midstream manufacturing. The high growth momentum of emerging industries is boosting the earnings performance of listed companies, and the overall upward trend amidst fluctuations is still ongoing. From the current point until early next year, large-cap growth stocks will remain the key focus. A more prolonged style rotation may potentially occur around the first quarter of next year.
According to Zhitong Finance, CICC issued a research report stating that the A-share market experienced volatile adjustments in November, with trading activity declining. The style rotation demonstrated a temporary "high-to-low" shift but lacked clear direction and persistence, while dividend stocks showed relatively better performance. Globally, major economies' stock markets generally declined, as investors remained uncertain about the pace of Fed rate cuts. Additionally, concerns over potential bubbles in AI-related assets and the sustainability of the tech narrative gained traction.
Looking ahead, CICC believes that short-term style shifts are unlikely to persist. Against the backdrop of synchronized liquidity easing cycles at home and abroad, the A-share market's valuation remains relatively reasonable. The AI technology revolution and energy transformation continue to drive demand from upstream raw materials to midstream manufacturing, while high growth in emerging industries supports improved earnings for listed companies. The overall upward trend amid volatility is expected to continue. From now until early next year, large-cap growth stocks will remain a key focus, with more significant style shifts potentially occurring around the first quarter of next year. Since the fourth quarter, inflation expectations have broadly declined, and policy signals related to real estate and consumption stimulation by year-end remain to be observed.
The key viewpoints of CICC are as follows:
In November, the market underwent volatile adjustments, and the process of shifting from high-valuation to low-valuation stocks faced obstacles. Trading activity decreased, and although there was a temporary "high-to-low" style rotation, it lacked persistence and clarity, with dividend stocks showing relatively better performance. Globally, major economies’ stock markets generally fell as investors remained uncertain about the pace of Fed rate cuts. Concerns over potential bubbles in AI-related assets and the sustainability of the tech narrative gained traction. Looking ahead, we believe that short-term style shifts are unlikely to persist. Against the backdrop of synchronized liquidity easing cycles at home and abroad, the A-share market's valuation remains relatively reasonable. The AI technology revolution and energy transformation continue to drive demand from upstream raw materials to midstream manufacturing, while high growth in emerging industries supports improved earnings for listed companies. The overall upward trend amid volatility is expected to continue. From now until early next year, large-cap growth stocks will remain a key focus, with more significant style shifts potentially occurring around the first quarter of next year. Since the fourth quarter, inflation expectations have broadly declined, and policy signals related to real estate and consumption stimulation by year-end remain to be observed.
Examining the performance of various sectors: 1) Energy and basic materials: The implementation of anti-internal competition policies has led to diverging demands between new and traditional economies, while the pace of Fed rate cuts remains uncertain. Influenced by differentiated downstream sector demands, prices of cyclical commodities we observed in November showed variations. Prices of thermal coal, rebar, London gold, copper, lithium carbonate, neodymium-praseodymium oxide, tungsten, antimony, and cobalt increased by 6%, 1%, 5%, 3%, 16%, 8%, 16%, 10%, and 4% respectively, whereas coking coal, coke, iron ore, cement index, and glass index fell by 17%, 10%, 1%, 1%, and 5% respectively. Commodity prices related to the real estate sector continued their weak performance. The resumption of the U.S. government temporarily eased concerns over liquidity tightening, but the resilience of the U.S. job market persists. Attention should be paid to interest rate adjustments at upcoming Fed meetings. The AI technology revolution combined with the energy transition continues to support prices of upstream raw materials for electricity and high-end manufacturing.
2) Industrial products: Weak domestic real estate-linked sentiment contrasts with broad opportunities in emerging overseas markets, while price increases in the photovoltaic (PV) supply chain marginally slowed. In October, domestic excavator sales grew by 2% month-on-month, while exports surged by 13%. Cumulative investment in national grid projects rose by 10% year-on-year, while newly installed capacity in wind power and PV expanded by 53% and 44% respectively, albeit with slowing growth momentum. Export growth rates for lithium batteries and solar cells stood at 17% and 73%, respectively. China's competitive advantage lies predominantly in industrial products, where overseas gross margins in most sub-sectors exceed domestic levels. Over the past three years, overseas revenue has grown rapidly, with emerging markets gaining share quickly due to cost advantages. In November, the pace of price increases in the PV supply chain slowed, with prices for polysilicon, solar cells, polysilicon wafers, and PV modules remaining flat month-on-month.
3) Consumer goods: Traditional consumer sectors await a boost in confidence, with supportive policies gradually being introduced. Domestic appliance sales continued to decline, with October washer, refrigerator, and air conditioner sales falling by 23%, 27%, and 24% year-on-year, respectively. Retail sales of catering and merchandise grew by 3% each in October. The liquor industry is undergoing a phase of supply-side adjustment. In agricultural products, prices of live hogs, vegetables, chicken, eggs, and fresh milk remained largely stable month-on-month. Third-quarter earnings reports from listed companies revealed mixed performance in the pharmaceutical sector. Innovative drugs and medical R&D outsourcing performed well, while medical devices and pharmaceutical distribution lagged. Pro-growth policies increasingly emphasize supporting consumption, focusing on improving livelihoods on the demand side and increasing quality supply while reducing consumption restrictions on the supply side. The Central Committee of the Communist Party of China released the "Proposal for Formulating the Fifteenth Five-Year Plan for National Economic and Social Development," emphasizing the need to "vigorously stimulate consumption." Current domestic demand still requires further policy stimulus to unlock its potential. Six departments, including the Ministry of Industry and Information Technology, jointly issued the "Implementation Plan for Enhancing Supply-Demand Alignment in Consumer Goods and Further Promoting Consumption," aiming to establish three trillion-yuan consumption sectors and ten hundred-billion-yuan consumption hotspots by 2027.
4) Technology: Continuous innovation in AI applications and steady progress in domestic models benefit manufacturing segments supported by increased capital expenditures in computing power. In November, leading tech stocks generally adjusted due to rising trading congestion in certain sub-sectors. Given different positioning within the industry chain, we believe Chinese communication equipment manufacturers, with high global market shares, are well-positioned to benefit from North America’s growing capital expenditures in computing power. On the terminal demand side, mobile phone sales grew by 15% year-on-year in October, while notebook computers, computer hardware/displays, and peripherals declined by 27% and 15%, respectively. Global semiconductor sales grew by 25% year-on-year, with China’s semiconductor sales rising by 15%. Sub-sectors such as semiconductors, consumer electronics, intelligent driving, and embodied intelligence remain noteworthy. In October, 166 gaming licenses were issued, maintaining a high level, and China’s box office revenue reached approximately RMB 2.6 billion, remaining stable month-on-month, with no significant increase during the National Day holiday period.
5) Finance: The high dividend attribute of banks attracts medium- and long-term capital allocation, while sentiment and activity in the stock market have marginally declined. During the macroeconomic bottoming-out phase, bank stocks maintain stable profitability, leveraging dividend certainty and low valuations to attract continued increases in allocation from medium- and long-term funds such as insurance. In October, premium income in the insurance industry grew by 8% year-on-year, with total assets of insurance companies increasing by approximately 16% year-on-year. We believe premium growth is likely to remain robust during the “opening red” period. In November, the average daily trading volume of all A-shares fell to RMB 1.9 trillion, with margin financing balances remaining stable and the proportion of margin trading turnover to total market turnover declining. Consolidation and restructuring within the securities industry are still ongoing.
6) Real Estate: Inventory reduction and debt resolution remain key issues; attention should be paid to subsequent policy support and demand improvement. In November, sales areas of commercial housing in 30 major and medium-sized cities reached 7.49 million square meters, a year-on-year decrease of 36% but a 1% month-on-month increase. The sub-indexes for newly built commercial residential properties and second-hand homes in the housing sales price index of 70 major and medium-sized cities fell by 2.6% and 5.4%, respectively, on a year-on-year basis.
The following configuration strategies are recommended for December: 1) Artificial intelligence applications are still being implemented, with attention on domestic computing power, optical modules, cloud computing infrastructure, and application-side areas such as robotics, consumer electronics, intelligent driving, and software applications. Additionally, sectors like innovative drugs and energy storage are in favorable cycles. 2) Some segments of non-ferrous metals benefit from the restructuring of the global monetary order and improved demand. 3) Current export performance exceeds domestic demand, with offshore enterprises seeing improved profit margins. Sectors such as grid equipment, construction machinery, white goods, and commercial vehicles show promising prospects. 4) At present, the real estate chain and broad consumption trends may still lean towards the left side, but changes in the macro environment and reform dividends next year could help balance the “temperature gap” between new and old economies. The inflow of medium- and long-term capital is a long-term trend; focus on consumer leaders and pro-cyclical leaders based on quality cash flows, volatility, and dividend certainty. 5) Improved risk appetite in the capital markets boosts non-bank financial performance; pay attention to insurance and securities firms.
Chart 1: CICC’s A-share sector allocation views and detailed sub-items
Note: Data as of November 28, 2025
Source: FactSet, Wind, CICC Research Department
Chart 2: Fundamental conditions of various A-share sectors
Note: Data as of November 28, 2025, based on Wind consensus forecasts
Data source: FactSet, Wind, CICC Research Department
