Electronic decline, power equipment on the rise! Brokerage golden stocks turned red last month, and industry distribution changed in April.

21st Century Business Herald Reporter Sun Yongle

The monthly “top stock” portfolio released by brokerage research institutes centrally reflects institutions’ assessments of the market’s outlook over the next month as well as their judgments on investment style. It has long been an important barometer of market sentiment.

Looking back at March, as geopolitical conflicts escalated and global capital markets fluctuated, the overall performance of brokerage “top stock” portfolios was not good. Data show that all 41 brokerage firms’ monthly “top stock” portfolios delivered negative returns, with an overall return of -8.4%.

Entering April, the latest round of brokerage “top stocks” was unveiled, and there was a clear shift in sector preference. After topping the charts for more than two years, the electronics sector’s heat was cut in half. In contrast, power equipment took the lead thanks to its favorable cyclical outlook, becoming the direction most concentratedly recommended by institutions.

Looking ahead, external disruptions still remain, and the period of intensive earnings releases has also arrived. On the sell-side, institutions generally tend to balance defensive attributes with earnings certainty in their positioning, seeking structural opportunities amid volatility. There are also sell-side chief executives urging, “Don’t panic,” saying that market adjustment is actually an opportunity and advising to actively deploy capital.

March portfolio “turns green” across the board

In March, affected by the escalation of the conflict in the Middle East, global capital markets were hit to varying degrees. With geopolitical conflict interfering, the A-share market overall showed a pattern of choppy consolidation and adjustment.

Among China’s major broad-based indexes, the Shanghai Composite index briefly broke above the prior stage high at the beginning of the month, then fell back in a period of volatility, with a cumulative decline of 6.51% for the month. The Beijing 50, CSI 1000, and CSI 500 adjusted by larger margins.

As a result, brokerage “top stocks” collectively “turned green.” According to an Open Source Securities research report, the overall return rate of brokerage “top stock” portfolios in March was -8.4%, and the return rate since 2026 was 0.0%.

However, from the full historical time span, the annualized return of all brokerage “top stock” portfolios was 13.5%, with performance that outpaced the CSI 300 and CSI 500 indexes.

On the industry front, in March’s brokerage “top stock” portfolios, the electronics sector’s recommendation rating remained in the lead. Next came nonferrous metals, basic chemicals, followed by pharmaceuticals and power equipment.

In fact, although the major indexes overall performed weakly in March, the market’s structural opportunities remained active. Sectors such as power, pharmaceuticals, computing power, and chemicals rotated and strengthened.

On individual stocks, brokerage “top stocks” with relatively high monthly returns included FoSu Plastic Technology, Yuanjie Technology, Yaxing Integration, BYD, Contemporary Amperex, and others. Their monthly return rates were 43.5%, 36.3%, 32.7%, 21.6%, and 21.1%, respectively.

April sector distribution changes hands

As April begins, external disruptions still persist, and the A-share 2025 annual report disclosure period is coming to a close.

The latest round of brokerage “top stocks” has been released, and the overall sector distribution has changed. After nearly two years of continuous first-place finishes, the electronics sector has fallen to the second position; its heat has nearly been cut in half. The brokerage community’s change in attitude this time is beyond what the market expected.

According to per-issuer data, compared with last month, the electronics sector became the sector with the largest decline in index weight, topping the “biggest heat drop” ranking; conversely, the power equipment sector saw the most significant increase in weight, with its heat rising by nearly 70% month over month.

The Open Source Securities research report believes that in April, the market value level of brokerage “top stocks” increased while valuation levels declined, which may indicate that brokerage “top stocks” shifted toward a value style in April.

Specifically, power equipment ranked first on the recommendation list, with the overseas energy substitution logic continuing to strengthen. Pharmaceuticals and health care returned to second place after a gap of several months; the divergence between industrial progress and stock price performance has been gradually repaired.

Nonferrous metals and basic chemicals ranked third and fourth, respectively. After undergoing deep pullbacks, the value of allocation for the two upstream sectors once again became prominent. The electronics sector slid to fifth place. The AI narrative cooled down temporarily, and combined with geopolitical disruptions and volatility in overseas market mapping, the sector faced clear overall pressure.

Of note, the recommendation rating for the banking sector rose sharply by 116% month over month, reflecting that with the sustained geopolitical disruptions in March, the market’s risk appetite fell back and investors’ risk-avoidance sentiment warmed significantly.

April “top stock” sector distribution (40 research institutes) Source: Meishi Technology (per Meishi)

On individual stocks, in April, brokerage “top stocks” such as Jichuang Xuchuang, Contemporary Amperex, Zijin Mining, Anjoy Foods, Keda Li, Midea Group, and Haitian Flavouring & Food were among those with higher numbers of recommendations.

According to per-issue data, Jichuang Xuchuang (300308.SZ) received recommendations from 10 brokerages and ranked first; following it, Contemporary Amperex (300750.SZ) was jointly recommended by 9 brokerages.

One is a global leading company in optical modules, and the other is a global leading company in power batteries. Why are these two listed companies so favored by brokerage research institutes?

Galaxy Securities believes that Jichuang Xuchuang mainly has three major driving factors: an increase in shipments of silicon photonics modules boosting gross margins; performance growth driven by strong demand and a favorable cycle for 1.6T and 800G optical modules; and with demand high but supply tight, the macro backdrop may narrow the year-over-year decline to some extent.

For Contemporary Amperex, Soochow Securities pointed out that the market generally believes that the decline in growth rate of electric vehicle sales in 2026 may affect battery demand, but they believe that with rising charge per power bike plus the explosive growth of energy storage, industry demand will keep moving upward, which will continue to drive the company’s leader market share and earnings growth.

Meanwhile, China Jushi, Zijin Mining, BYD, and Geely Automobile each received joint recommendations from 6 brokerages; China National Offshore Oil, China Merchants Shipbuilding and Shipping, Wuxi AppTec, and Satellite Chemical each received joint recommendations from 5 brokerages; and another 5 listed companies each received joint recommendations from 4 brokerages.

The market faces double validation

Looking ahead to April, sell-side institutions generally believe that the market faces double validation from geopolitical conflicts and earnings. They suggest that the allocation strategy should balance low-volatility defense with earnings certainty, so as to uncover certain opportunities amid uncertainty.

On the overall trend level, the chief strategist of Guotai Junan, Fang Yi, said directly, “Don’t panic.” Important bottoms and points of attack in China’s stock market are emerging. Stability is the underlying tone of China’s economy and stock market. China’s transition and industrial development can break the currently pervasive “stagflation with sluggish growth” narrative. Market adjustments are actually an opportunity, and investors are advised to actively deploy capital.

Liu Xiaoning, head of the research department at Huayuan Securities, placed even more emphasis on risk. He said that on one hand, in April, geopolitical risks in the Middle East may further heat up, bringing significant external disruptions. Judging from the long-term historical context and the real-world situation in the Middle East region, it is not recommended to take the easing of conflicts in the short term (especially in April) as a baseline assumption. Instead, it is advised to pay more attention to bottom-line thinking. On the other hand, against the backdrop of pressure on global capital markets, domestic macro narratives have become a key force affecting market direction, while liquidity may continue to influence the magnitude of market volatility.

The chief economist at Great Wall Securities, Wang Yi, also said that looking ahead to April, the Middle East geopolitical situation remains in a stalemate. Whether overseas markets will again see a “TACO trade” is still unknown. In the short term, there are still risks of market volatility, and it is difficult for overall market risk appetite to fully recover.

He pointed out that after the Shanghai Composite Index has experienced nearly two months of consolidation, 4,000 points has become an important psychological level. The market may build a bottom around this area in a range. A renewed push higher by the growth sector as a whole will still require improvement in the overall liquidity environment, and it is also necessary to watch whether market trading value shows signals of stabilizing and turning upward.

“However, there’s no need to worry excessively about the April outlook. In the short term, even though factors such as geopolitics that affect risk appetite may still exist, both the fundamentals and the policy side will provide support for the stock market,” Wang Yi said.

In terms of allocation, especially, the chief strategist of sell-side institutions emphasized “certainty.” It is recommended that at this point investors focus primarily on defensive sectors, growth sectors with strong certainty in their fundamentals and opportunities for oversold rebounds, and also pay attention—during the period of intensive earnings releases—to stock positioning opportunities brought about by earnings performance.

From a more macro perspective, Mu Yiling, chief strategist at Guojin Securities, recommended three main lines. First, under a pattern of global instability, energy security becomes particularly important; this year, development of primary energy is stronger than that of secondary energy—so he gives priority to crude oil, oil shipping, coal, copper, aluminum, gold, and rubber. Second, China’s manufacturing industry is the “keystone” that holds up the world, but physical logistics move slower than the flow of financial assets—waiting for a coming repricing. This points to power equipment, new energy in areas, mechanical equipment, and chemicals. Third, when suppressing factors are reversed, it is time to look for structural opportunities in consumption—tourism and scenic areas, seasoning and fermentation products, beer and other alcoholic beverages, pharmaceutical commerce, aesthetic medicine, and so on.

Yang Liu, chief strategist at Guosen Securities, provided even more detailed investment advice. He said that appropriately reducing position sizes or increasing allocations to low-volatility defensive positions remains an important lever for dealing with amplified volatility. Priority should be given to banks, power, and other sectors that have relatively clear certainty in their profit models and dividend returns.

In addition, with the start of the earnings season, the weight of earnings pricing power increases, so aggressive positions should also be concentrated toward directions that have the ability to verify earnings. First are areas where current earnings have strong certainty and still remain on an upward trend, such as communication equipment, components, power grid equipment, electronic chemicals, and others. Second are the new energy themes where expectations for energy substitution are combined with validation of overseas demand and cyclical strength, such as lithium battery energy storage, wind power, solar power, and so on.