Brokerage Analysis: Where is the resilience of A-shares from a global perspective?

【Global Times Finance and Business Report】Recently, amid repeated disruptions from external geopolitical factors, the A-share market has seen relatively large fluctuations during the week. Major indices have continued to extend their corrective trend, but compared with earlier declines, there are signs that the drawdowns have begun to narrow.

CICC Galaxy Securities recently issued a research report stating that the ongoing evolution of the geopolitical conflict situation still carries substantial uncertainty, and the suppressive impact on global risk assets is unlikely to be said to have eased in the short term. Before the trajectory of the conflict becomes clear, together with the global liquidity marginal tightening environment driven by rising inflation expectations, global equity markets are likely to continue exhibiting high-volatility operating characteristics. The A-share market is likely to be dominated by a churning process to digest the move.

However, CICC Galaxy Securities also pointed out that under external uncertainty, the domestic advantages of certainty have become more prominent, providing strong support for the resilience of the A-share market. In the opening year of the “15th Five-Year Plan,” reform measures are being implemented steadily; with policy support safeguarding the stable and healthy development of the capital market and a resonance of long-term funds entering the market, the improvement in the supply of mid- to long-term capital has certainty.

In particular, the certainty of the domestic manufacturing advantage stands out. Leveraging a complete industrial chain system and continuously upgraded competitive advantages, it has built an endogenous foundation for coping with external volatility. CICC Galaxy Securities believes that the main lines are clear—energy security, independently controllable capability, and industrial upgrading—making for stronger defensive attributes and better allocation value. As annual reports and first-quarter reports release their performance results in a concentrated manner, sectors with high earnings certainty and steadily improving business sentiment will become the core direction for capital focus.

As for specific investment directions, CICC Galaxy Securities recommends paying attention to three areas: first, the strengthening of energy and substitute demand driven by the geopolitical conflict trajectory, which will boost industries such as coal, coal chemical, new energy, shipping ports, and oil and gas; second, defensive assets such as finance (banks), utilities, and transportation; and third, the logic of certainty in technology innovation, independently controllable capability, and industrial trends. Over the mid- to long term, it still remains bullish on the two main lines of technology driven by industrial catalysts and the pricing-up story in cyclical sectors.