Caixin Securities Yuan Chuang: Valuation-Driven Market Continues; Seize Structural Opportunities After the Holiday

Currently, the A-share market is influenced by multiple intertwined factors, exhibiting valuation-driven and structural differentiation characteristics. Recently, Yuan Chuang, Chief Economist of Caixin Securities, told China Securities Journal that the current upward pattern of the market has not changed, and after the Spring Festival, A-shares are expected to continue their oscillating and strengthening trend, with a market shift toward growth styles. The subsequent core investment logic will revolve around the principle of “value setting the stage, growth taking the lead,” recommending balanced allocation across five major directions, cautiously responding to potential risks such as overseas disturbances, and seizing structural opportunities.

Multiple Factors Dominate Valuation-Driven Market Trends

Currently, the A-share market is affected by multiple factors, with a complex overall pattern characterized by clear trends, numerous short-term disturbances, and significant structural differentiation.

Yuan Chuang believes that the spontaneous upward trend of the market constitutes the core driving force, and the overall pattern of oscillating upward movement in A-shares has not changed. This trend is synergistic with regulatory counter-cyclical adjustments. Regulatory authorities are orderly resolving leverage risks and preventing market overheating, which are important guarantees for stable market operation, creating a stable environment for residents’ wealth preservation and appreciation, economic transformation and upgrading, and technological self-reliance and strength.

The core logic supporting the market’s upward movement mainly includes three aspects. Yuan Chuang stated that: first, corporate profit prospects are gradually improving; second, residents’ willingness to increase market participation through savings is strengthening, providing incremental funds; third, policies related to anti-inflation and anti-competition continue to advance, industry competition patterns are continuously optimized, further solidifying expectations for corporate performance improvement.

In the short term, holiday effects cause temporary market disturbances. Yuan Chuang explained that before the Lunar New Year, some funds, seeking to avoid uncertainties, chose to cash out, leading to a temporary decline in trading activity. However, this did not change the core trend of the market. On the overseas front, the performance of US tech giants, Federal Reserve policy directions, and geopolitical events indirectly influence the rhythm of sector rotation in A-shares.

From a structural perspective, Yuan Chuang believes that calendar effects and valuation-driven features are particularly prominent. In the spring rallies since 2009, the Wind All A Index rose on average for 57 days with an average increase of over 20%. Before the Spring Festival, value blue-chip sectors such as household appliances, social services, and banks had the highest win rates and return potential, with market capitalization showing a pattern where large-cap indices outperform mid-cap indices, which in turn outperform small-cap indices.

Regarding asset allocation, Yuan Chuang indicated that equities remain in a long bullish window from mid-December 2025 to early March 2026, with a trading rhythm characterized by “rapid gains with risk control and strategic dips for deployment.” The bond market is supported by delayed government bond supply pressures and a weakening bond-equity spread effect, with the 10-year government bond yield falling to 1.81%, expected to fluctuate narrowly between 1.80% and 1.85%. In commodities, gold benefits from easing macro disturbances and is suitable for value-based positioning on dips; copper prices, supported by increased post-holiday demand and low inventories, are likely to rise easily and be difficult to fall after March.

Expectations for Oscillating Strength Post-Spring Festival

Yuan Chuang stated, “After the Spring Festival, A-shares are expected to continue their oscillating and strengthening trend, driven by trend inertia, seasonal effects, and policy environment support.” The weak macroeconomic recovery continues, with the “double easing” policy tone remaining stable, providing solid support for the market. The downside space for indices is expected to be relatively limited. Meanwhile, regulatory authorities are focusing on counter-cyclical adjustments to prevent overheating, and the overall market shows a “steady upward” characteristic.

He advised investors to maintain moderate positions to seize market opportunities and balance volatility risks, employing flexible allocation of defensive and offensive assets according to their risk preferences.

Post-holiday, A-shares are highly likely to experience a “red envelope” rally. Yuan Chuang believes that the core driver is that the duration and magnitude of this rally are still significantly below the average of the previous five rallies, leaving room for further expansion. If consumption data during the Spring Festival exceeds expectations, it will further reinforce the support logic for cyclically favorable sectors.

Risks should not be overlooked and will impose clear constraints on the market. Yuan Chuang pointed out that overseas tech sectors face volatility risks. After three years of thematic hype around artificial intelligence, market focus has shifted from capital expenditure to monetization capabilities. If overseas AI applications fall short of expectations, it could disturb the tech sector in A-shares. The Federal Reserve’s policy stance warrants caution; if it signals a clear reduction in balance sheet size, it could trigger a re-pricing of global assets. Geopolitical conflicts also carry the risk of escalation. Since 2025, global trade tensions and geopolitical conflicts have intensified, with uncertainties such as US-Iran relations potentially impacting the market during the Spring Festival.

Additionally, style shifts in the future will become more pronounced. Yuan Chuang noted that growth sectors such as environmental protection, electronics, and computing have seen increased win rates and odds. Market capitalization rankings are expected to favor small-cap indices over mid-cap, large-cap, and mega-cap indices. Supported by liquidity easing and rising risk appetite, growth styles are likely to continue outperforming.

Five Major Investment Themes for Structural Opportunities

The core investment logic after the Spring Festival will follow the pattern of “value setting the stage, growth taking the lead,” with capital shifting from low-risk preferences to higher-risk ones. Technology and cyclical price-increasing sectors will be the main focus, while balancing defensive and offensive strategies. Based on the characteristics of spring market trends and medium- to long-term industry prospects, Yuan Chuang recommends investors focus on the following five major investment themes:

1. Artificial Intelligence Industry Chain: shifting from hardware to application logic. After initial thematic hype, tech investments now prioritize performance support, with storage chips and consumer electronics showing strong earnings certainty. In the medium to long term, breakthroughs in AI applications are key to opening commercial loops. Opportunities in media, computing, and Hong Kong-listed internet sectors related to application deployment are worth attention, but risks of increased global tech volatility in 2026 should be noted.

2. High-Dividend Allocation Theme: focusing on assets favored by institutional funds. By Q3 2025, insurance and securities firms’ equity investments continued to expand. Dividend strategies are expected to persist through this cycle, with emphasis on sectors like white goods, banking, gas, publishing, cement, and telecom operators—those with stable cash flows and high dividend yields.

3. Anti-Inflation/Anti-Overcompetition Direction: sectors benefiting from policy expectations shifting to fundamentals. Based on high state-owned enterprise ratios, industry concentration, and product price elasticity, coal, steel, photovoltaics, and lithium batteries are expected to benefit from improved competitive landscapes and performance.

4. Domestic Demand Recovery: focusing on consumption revival opportunities aligned with matching effects. Sectors with strong demand but insufficient supply—such as health, sports, beauty, IP economy, and pet economy—have growth potential. Travel-related industries like tourism, hotels, airlines, duty-free, and catering will continue to benefit from consumption scene recovery.

5. Resource Commodities Investment Opportunities: focusing on strategic minor metals and industrial metals’ rebound. Currently, the price spreads between precious metals, strategic minor metals, and industrial metals are widening. Based on monetary attributes and scarcity logic, 2026 is expected to see a rebound in strategic minor metals and industrial metals, aligning with the expansion phase of commodities.

Yuan Chuang believes that spring market rallies are independent, with their magnitude and persistence mainly reflecting current market temperature, not directly linked to the entire year’s trend. Under the backdrop of a continued rise in A-shares in 2026, he recommends investors focus on the technology growth theme, diversify risks through balanced allocation across multiple sectors, and cautiously respond to potential risks such as overseas disturbances and policy changes while seizing structural opportunities.

(From China Securities Journal)