Can spring still be lively? Institutional strategies reveal the latest insights

Ask AI · What are the key supporting factors for stability in China’s stock market?

The volatile first quarter has finally ended. How will the second quarter perform? Will the spring volatility reappear?

Stability is the underlying tone of China’s stock market

At Guotai Haitong Securities’ 2026 Spring Strategy Conference, Chief Strategy Analyst Fang Yi stated that stability is the fundamental tone of China’s stock market, and after the storm, new heights will be seen. Emerging technology is the main line, and value sectors will also have their spring. Focus on new forms of intelligent economy and new opportunities for transformation.

Guotai Haitong’s Chief Macroeconomist Liang Zhonghua said that the key macroeconomic focus in 2026 is “stabilizing prices.” Weak domestic demand requires fiscal marginal support and accelerated pace, with continued monetary easing. The real estate “volume” has overshot, but stabilizing prices depends on stabilizing expectations. Restoring residents’ wealth, income, and expectations is key to consumer recovery, and the growth rate of financing is an important leading indicator of demand. Residents’ wealth is undergoing a third “migration”: flowing back from real estate to “deposit+” allocations—pursuing stable returns on the basis of capital preservation. Under low inflation expectations, assets like deposits, insurance, and wealth management are favored for stability. After three years of risk pricing and valuation repair in the equity market, high-dividend strategies and structural opportunities in technological innovation are worth attention.

Bosera Fund believes that the market bets that the short-term conflict between the US, Israel, and Iran will be difficult to resolve quickly, and that tight dollar liquidity suppresses global risk appetite. The stagflation-like trade may continue, and it is worth considering defensive assets with low volatility and solid fundamentals, such as large-cap growth stocks. Domestically, the “price hike wave” drove profit growth in upstream and some midstream industries in January–February, with high export growth boosting export chain income. Downstream industries are under overall pressure, with computer, communication, and non-ferrous smelting industries contributing over 90% of the overall industrial enterprise profit growth. Regarding A-shares, the Middle East geopolitical conflict is still unresolved, and in the short term, global equity market risk appetite is disturbed. In the medium term, rising oil prices have a limited impact on China’s economic fundamentals, and A-shares are more resilient. Risks include upward pressure on oil prices and US bond yields affecting liquidity. Structurally, under short-term risk appetite decline, attention can be given to dividend assets, with structural opportunities in both old and new energy sources amid rising oil prices. As for Hong Kong stocks, domestic inflation has stabilized since the end of last year, generally supporting improved fundamentals and liquidity, but recent pressure from tight dollar liquidity persists. Crude oil remains volatile in the short term due to the Middle East conflict. Gold prices are impacted by the rapid rise in oil prices and the Fed’s monetary tightening risks.

AI remains the most core direction in technology

Morgan Stanley Fund believes that with developments in the Middle East, long-term expectations have significantly strengthened. Investors may no longer be exhausted by short-term event trading and will shift focus to medium- and long-term clues: global emphasis on energy diversification and green energy will increase markedly, with key directions including new energy, nuclear power, power equipment, and computing synergy. AI remains the most central direction in technology, currently driven mainly by performance catalysts. Although the AI sector is still affected by increased volatility in US tech stocks, it has strong performance certainty. The surge in demand for tokens triggered by OpenClaw is unprecedented, with domestic platforms seeing tenfold increases in call volumes. Price hikes have been ongoing for months, with an increasing proportion of products experiencing price increases, and the Middle East situation has intensified price hike expectations. Some varieties had already shown upward trends before the conflict, and it is expected that easing tensions will not change this trend. Domestic demand is about to be validated by performance, with some stocks already beginning to bottom out. Currently, the focus is more bottom-up, but the valuation reduction phase has been passed.

Morgan Stanley Fund Research Manager He Qian said that in the context of slowing global economic growth and reshaping energy structures, assets with “policy certainty + industrial necessity + long-term growth” are more likely to traverse cycles. Three key directions deserve attention: 1. AI infrastructure ( computing power + electricity ): Computing and electricity synergy is a national-level new infrastructure mainline. Large-scale intelligent computing clusters and new power system construction will attract sustained investment. Related targets combine growth and defense attributes and are expected to be core allocation directions in 2026. 2. Core links in new energy: wind, solar, and energy storage are the energy base for computing demand. Under the “dual carbon” goals and policies supporting computing and electricity synergy, demand growth is highly certain. Wind power and energy storage sectors may benefit from supporting demand for computing centers. 3. Power equipment and grid intelligence: During the 14th Five-Year Plan, fixed asset investment in the power grid is expected to reach 4 trillion yuan, focusing on ultra-high voltage and smart distribution networks. Power equipment companies will benefit from grid upgrades and computing power supply needs, with stable cash flows and valuation advantages. Overall, computing and electricity synergy is not only a short-term policy hotspot but also a long-term trend at the intersection of digital economy and energy revolution. Related assets are expected to continue releasing value amid industrial upgrades and policy dividends, becoming core investment lines in 2026 and beyond.

Jinxin Fund Manager Yang Chao analyzed that recently, signs of easing in the Middle East situation—indicating a potential ceasefire by both Iran and the US—have had the greatest impact on market sentiment. Especially with the US attitude shifting significantly, several government officials have stated the need to exit the Middle East quickly. China and Pakistan proposed five initiatives to restore Gulf and Middle East peace and stability, which received broad international recognition, easing market concerns about long-term conflict. Additionally, the strengthening of external markets has also somewhat boosted market confidence.

From sector perspectives, the pharmaceutical sector surged largely due to eased geopolitical risks and increased risk appetite. Recently, several innovative drug companies reported 2025 annual results showing losses turning into profits, with some entering a new phase of “profit realization” after “burning money on R&D,” driving valuation repairs. Moreover, outbound business development (BD) has continued high growth, with China’s innovative drug foreign BD transaction upfront payments remaining very high in Q1 2026. Over the past six months, the pharmaceutical sector has experienced significant adjustments, and some excellent companies now have high valuation-to-price ratios. Reporter Wang Jinping