CITIC Securities states that the A-shares have entered the second half of the bull market, focusing on the two main sectors of "computing power bull" and "recovery bull."

On May 11th, CITIC Securities (601066.SH) research report indicated that, looking forward to the second half of 2026, the bullish trend in A-shares will continue. From the perspective of market rhythm and characteristics, it will be more difficult for the valuation to expand in the latter half of the bull market, the overall A-shares index may slow down in growth, and structural differentiation will become more apparent. The firm expects A-shares to experience a structural slow bull market, driven by structural prosperity and capital clustering, recommending investors follow a “prosperity-oriented” investment strategy, focusing on the two main themes of “computing power bull” and “recovery bull.”

The firm believes that the current AI computing power theme has not yet reached a stage of full-blown bubble, and the market will not simply retreat from the technology sector due to overheated valuations. Instead, under the continued validation of industry trends, the prosperity will expand along the industrial chain to upstream and downstream segments based on three logical drivers: supply shortages leading to price increases, new demand exploration, and capacity crowding. Key areas to watch include: optical modules, PCBs, electronic fabrics/CCL, advanced packaging, CPUs, storage chips, liquid cooling, data center power supply, computing power leasing, and cloud services.

The “PPI-External Demand Chain” could become an important clue for guiding the “recovery bull” trend in the future. This year’s PPI is expected to show a phased recovery path. The allocation strategy is divided into three levels: 1) Upstream resource commodities with the most certain profit elasticity: oil and gas production, coal, coal chemicals, non-ferrous metals; 2) Midstream manufacturing sectors with global competitiveness in new energy (lithium batteries, wind power, nuclear power, energy storage, power grids); 3) Downstream sectors on the left side of the layout: petrochemicals, engineering machinery, non-bank financials, pig farming, and consumer services.