CITIC Securities: Which hot topics are expected to continue rising?

Source: CITIC Securities Research

Written by: Huang Wentao He Sheng

In terms of industry layout, you can allocate assets according to the following four approaches: first, closely track the main themes of energy security and high inflation; under pressure from unstable supply chains, coal-chemical industry and new energy can serve as alternative resources, reshaping the manufacturing sector, while pesticide and chemical fertilizer may be able to raise prices as natural gas and other input costs increase; second, hold defensive assets with stable cash flow, such as coal and hydropower, which have high dividend yields and stable dividend attributes; third, hunt for profit from market sentiment-driven mispricing with certain growth opportunities, such as AI computing power and innovative drugs that already have clear cyclical logic; fourth, focus on potentially cyclical sectors trading at low valuations, which may become beneficiary sectors under the current tightening of liquidity and the rotation from high to low valuations—for example, consumer sectors with relatively low transaction crowding currently; sectors to watch include coal-chemical industry, new energy, energy storage, lithium battery materials, pesticides, chemical fertilizers, coal, hydropower, AI computing power, metals, innovative drugs, and consumer, etc.

Market style tracking: From April to May 2025, the market’s core hot spots were concentrated in themes related to the trade war, with theme-based investment rallies being prevalent in the market; the style continued to favor small-cap growth. From July to August, the market rebounded: the SSE Composite Index repeatedly hit new highs, trading value remained at a high level, and small-cap growth was even more elastic. In September, the market entered an adjustment phase, with hot spots shifting to semiconductors, humanoid robots, and new energy. In early October, expectations for China-U.S. relations fluctuated repeatedly, and hot spots centered on defense industry and rare earths. From mid-October to late November, hot spots mainly followed the dual-line logic of price increases and the “Fifteenth Five-Year Plan” (15th Five-Year Plan); they focused on storage chips, lithium batteries, and quantum technology. From early December to early January, earlier hot-spot sectors adjusted; robots experienced an acquisition boom; controllable nuclear fusion entered a period of technical breakthroughs; with both commercial aerospace policies and product catalysts, commercial deployment accelerated for autonomous driving and brain-computer interfaces, and the hot-spot main lines centered on robot, controllable nuclear fusion, commercial aerospace, autonomous driving, and brain-computer interface concept sectors. In mid-January, adjustments occurred in commercial aerospace and AI applications. At the end of February, Middle East geopolitical risks caused some disturbance to the market; sub-sectors including power grid equipment, chemical and energy materials, metals, and AI computing power had upside potential.

(1) The effect of domestic demand-supporting policies is lower than expected. If, in the future, domestic real estate sales, investment, and other data still fail to recover for a long time, inflation remains persistently subdued, consumption does not show a clear boost, and enterprises’ earnings growth continues to decline; if the economic recovery is ultimately disproven, then the overall market trend will face pressure, and overly optimistic pricing expectations will need to be corrected.

(2) Increased risk from intensified strategic game between the U.S. and China. Be alert to risks that the strategic game between the U.S. and China spreads to more areas and intensifies. For example, the strategic game expands from trade to multiple domains such as technology, key resources, finance, shipping, logistics, and the military; a full-spectrum strategic conflict may affect normal economic activities and also impact the equity market.

(3) Volatility in the U.S. stock market exceeds expectations. If the U.S. economy deteriorates more than expected, or if the Federal Reserve’s easing力度 is less than expected, it may lead to significant volatility in the U.S. stock market, which would then spill over to domestic market sentiment and risk appetite.

Huang Wentao: PhD in economics, visiting scholar at the State University of New York. He currently serves as Chief Economist at CITIC Securities, and the co-head of the Research and Development Department; also a member of CITIC Securities’ Institutional Committee and Investment Committee; and Director General & Managing Director. He also serves as an advisor for master’s students at Tianjin University, a consulting committee member of the CITIC Reform Development Research Foundation, a council member of the China Chief Economists Forum, and a member of the Chief Economists Committee of the China Securities Association, etc. He has participated multiple times in form-analysis seminars and research projects involving ministries and commissions under the State Council and other institutions. Over many years, he has repeatedly won awards such as the Best Analyst at New Fortune (新财富), Crystal Ball (水晶球), Niu’nai Award (金牛奖), and the Insurance Asset Management Association. In the 2016 New Fortune best analyst evaluation, he won the No. 1 award in fixed income. In 2024, he won the Best Chief Economist for Serving High-Quality Development.

He Sheng: Bachelor’s and Master’s at Shanghai Jiao Tong University; currently mainly responsible for macro trend assessment, special topic research, and overseas strategy, etc. Previously served as a strategy analyst at Northeast Securities; joined CITIC Securities’ Research and Development Department in 2022.

Massive information, precise interpretation—everything is in the Sina Finance APP

Supervisor: Wang Ke