CITIC Securities: The core driving force behind this round of bull market has previously been weakened

CITIC Securities Research Report points out that currently, due to the outbreak and ongoing escalation of the US-Israel-Iran conflict, the weak dollar hypothesis faces challenges. In a high oil price environment, expectations for Federal Reserve rate cuts have shifted significantly, weakening the core momentum that previously drove this round of bull market. As we mentioned in our annual strategic outlook, in the second half of the bull market, the market will shift from valuing growth to valuing performance (digesting valuations). If earnings growth expectations remain positive, the A-share bull market is likely to continue. However, before growth expectations are confirmed, the market will face a transitional pain period from valuing growth to earning performance. Amid a sharp rise in global energy prices and suppressed consumption, sectors that could be significantly impacted include high-valuation sectors, high-energy-consuming (oil-consuming) industries, and demand-suppressed cost-increasing industries. We are optimistic about three directions: 1) industries benefiting from the closure of the Strait of Hormuz and sustained high oil prices, such as coal chemical, new energy, energy storage, nuclear power, and power grids; 2) defensive stocks with stable cash flow, such as coal and hydropower; 3) certainty growth stocks that are easily misjudged, such as AI supply chain and power shortage chains.