CICC: A-Share Pessimistic Expectations Already Priced In, Five Key Sector Allocation Opportunities
Claire Weston
CICC's latest strategy report calls A-shares a second buying window for the year, with the uptrend since September 24 intact; the report maps bottom-up opportunities across upstream materials, midstream manufacturing, downstream consumer, TMT, and financials — five sectors where Q3 earnings delivery is the make-or-break test.
Why does CICC say the pessimism is spent?
As of July 26, the median year-to-date return for A-share listed companies had dropped to -21.0% — many stocks have fallen far enough to create opportunity.
Weekly turnover shrank by another RMB 140 billion; margin balances steadied. This means → selling pressure is fading, and the most bearish investors have largely exited.
CICC's call: the oscillating uptrend since September 24 remains intact, and investors need not be overly cautious.
Upstream materials — which metals look interesting?
Gold sits at a historical valuation trough; falling U.S. inflation expectations could unlock further upside in bullion prices.
Copper: supply stays tight, U.S. tariff expectations combine with the autumn peak season, and offshore inventories are low — copper prices are poised to strengthen.
Tin benefits from AI-driven solder demand; aluminium gains from Middle East supply cuts and seasonal demand, widening per-tonne margins; tungsten rides AI and memory-chip demand, with leaders likely to see both volume and price gains.
In plain terms = multiple non-ferrous metals are rallying together, but steel and building materials remain weighed down by weak domestic demand and a soft property market — the two groups should not be confused.
Midstream manufacturing — what is the logic on solar and power equipment?
Solar is a key beneficiary of the anti-involution push; the main supply chain could enter a rebound channel in Q3.
Power grid: China's 15th Five-Year-Plan grid investment reaches RMB 5 trillion, offering high long-term certainty; overseas AI data centres and renewables infrastructure add incremental demand, and Chinese equipment makers can win orders fast on shorter lead times and better value.
Machinery highlights: liquid cooling (low valuations within the tech space; Nvidia Rubin ramp-up should catalyse orders), gas turbines (data-centre power demand), and commercial aerospace (triple tailwind of technology, policy, and capital).
Construction machinery has a strong H2 earnings outlook; heavy trucks benefit from steady domestic demand plus rising export and new-energy penetration.
Consumer and TMT — which sub-sectors are "done falling, waiting for a catalyst"?
Hog farming: peak supply pressure has passed, hog prices are expected to rise moderately, and valuations are low.
Innovative drugs and CXO: the industry trend is intact; the recent pullback was driven by liquidity, not fundamentals. This means → the ESMO oncology conference in October will showcase a wave of Chinese clinical data, creating the next catalyst window.
TMT hardware: memory expansion orders are rising sequentially, downstream demand from domestic chip buyers is strong, and PCB and optical-module leaders hold clear advantages.
Software and gaming: AI infrastructure demand is firming with high visibility; a dense summer game-launch schedule keeps A-share gaming earnings at elevated levels in Q2.
Financials — how much room do brokerages have to re-rate?
Regional banks in Jiangsu-Zhejiang and Sichuan-Chongqing enjoy active local economies, fast balance-sheet growth, stable asset quality, and improving funding costs that underpin net interest margins.
Brokerages: fundamentals-based valuation repair has significant room to run; industry consolidation is showing early results, and top-tier brokers' return on equity (ROE) is poised to rise.
Insurance: as risk appetite declines, funds tend to flow back into insurers, and valuation recovery should continue.
In plain terms = the financial sector's thesis is "cheap valuations + improving fundamentals," but the pace of re-rating hinges on Q3 earnings delivery.
What is the single most important takeaway from CICC's report?
CICC explicitly calls the current market a second buying window for the year, but notes that fundamentals across sub-sectors are diverging sharply.
This means → not every sector will rally; whether Q3 earnings can meet expectations is the key checkpoint for judging whether this rebound lasts.
Put simply: the broad direction is not bearish, but picking the right sector matters more than calling the index.
Content is for reference only, not financial advice.