Sinolink: An index-level rebound in A-shares needs to wait; focus on gold, the energy chain, and export/overseas expansion

Sinolink released a research report stating that over the past month, technology assets weighed on global markets, with AI investment driving high interest rates and rising global capital costs, but AI has narrowed its focus to US technology. For A-share investors, at least the worst environment has now passed. At present, cracks in US technology investment will support a decline in real interest rates for some time. Market breadth may recover somewhat, but an index-level rebound needs to wait. The firm recommends: First, against the backdrop of a slowing AI industry trend and diverging fundamentals, the suppression from real interest rates is gradually easing, and gold is ushering in an allocation opportunity. Second, the energy and chemicals chain represented by coal, oil, and oil shipping will continue to benefit from global restocking demand for energy, while also possessing dividend attributes. Third, if interest rates continue to decline in the future, the export and overseas expansion sector will see a recovery, among which white goods, textile manufacturing, commercial vehicles, and home furnishings also combine dividend attributes. Sinolink's main views are as follows: AI industry trend slows, interest rates begin to fall before inflation This week, overseas technology fundamentals continued to release slowdown signals: on the one hand, Anthropic's revenue compound growth rate has fallen significantly; on the other hand, bond yields of new cloud vendors like CoreWeave have surged above 15%, and credit default swap (CDS) spreads have also widened substantially, deepening market concerns about declining long-term returns on AI. The macroeconomic implication is that the ability of US technology financing to attract global capital is weakening. Against the backdrop of weakening AI, US Treasury real interest rates continue to decline, driving a notable pullback in nominal rates. But at the same time, US September CPI and PPI both rose more than expected, with the impact of energy prices on inflation spreading to broader areas such as transportation, and the characteristic of "interest rates failing to outpace inflation" is beginning to emerge. Based on experience since 2022, when interest rates decline before inflation, the dollar tends to weaken, and gold may usher in a better allocation opportunity. At the equity market level, global technology stocks pulled back sharply this week, but non-technology sectors actually performed reasonably well; moreover, although the gain in the All-A index on Friday was limited, market breadth recovered somewhat, which may be a signal that broad-based indices are gradually stabilizing. If the market rebounds in the future, it is more likely to be accompanied by rising market breadth as in August. Over the past month, technology assets weighed on global markets, but the characteristic of technology narrowing internally to the US market represented the worst state for the market. At present, the loosening of US technology is at least a favorable turning point for A-share non-technology sectors. In addition, ETFs saw large net inflows this week, which the firm understands as playing a role more in alleviating liquidity risk, and it is not yet possible to judge from this that the market will shift to an upward trend: from 2022 to September 2024, ETFs continued to see net inflows but did not change the market's downward trend; in early 2024, after large ETF inflows the market recovered somewhat, but the rebound also ended quickly as ETF inflows slowed; during the second round of declines from May 2024 to September 2024, ETFs had already accelerated inflows in June and July, but the market bottom did not appear until September. The overall risk period for the market has passed, but it is hard to say there has been a reversal. Energy tightness and the boundaries of oil prices Recently, the US-Iran conflict has continued to seesaw without obvious improvement. Over the past period, Middle East crude oil exports have relied heavily on Saudi Arabia, but Saudi Arabia's crude oil shipments through the Strait of Hormuz have also begun to decline recently, and global crude oil and refined product inventories continue to fall. Current refinery utilization rates in Europe and the US are already at high levels. Even if the conflict eases, constrained by refinery capacity, tightness on the refined product side will be difficult to significantly improve in the short term, further intensifying energy tightness. However, it should be noted that surging crude oil prices and freight rates have eroded refinery profits in Europe and parts of Asia, and refineries may cut production, which will to some extent suppress crude oil and oil shipping demand, so the upside for oil prices may be limited in the near term. By comparison, coal will enter its peak demand season, and in the short term coal may be more favored than oil and petrochemicals. However, crude oil itself is still supported by global restocking demand; for example, China's crude oil inventories have been significantly drawn down and are below the same period in 2025, and imports may increase later; at the same time, oil and petrochemicals still possess dividend attributes, and confirmation of a shift higher in the center still brings investment value to the stocks. The export and overseas expansion bottom has appeared and also combines dividend attributes China's exports in September remained strong, with year-on-year growth of 36.3%, up 11.3% from the previous reading, corroborating the relatively strong manufacturing PMIs in major global regions in September. By component, in addition to AI continuing to maintain high growth, the year-on-year growth rates of textiles and apparel, home appliances, and automobiles all rose significantly, indicating that external demand is shifting from the single AI-chain structure after June toward a relatively balanced pattern. In the past, rising overseas interest rates may have been an important suppressing factor for the export and overseas expansion sector; if interest rates begin to decline in the future, suppressed demand in emerging markets such as ASEAN, Africa, and Latin America is expected to be released, and the K-shaped divergence in China's external demand will further converge, with the bottom for export and overseas expansion already visible. At the same time, white goods, textile manufacturing, commercial vehicles, and home furnishings within the export and overseas expansion sector themselves also have relatively high dividend yields. Market breadth may recover somewhat, but an index-level rebound needs to wait For A-share investors, at least the worst environment has now passed: AI investment brought high interest rates and rising global capital costs, but AI has narrowed its focus to US technology. At present, cracks in US technology investment will support a decline in real interest rates for some time. The market currently does not have the foundation for a V-shaped recovery, but the risk period has passed for now, and the firm has begun to make appropriate bets in non-AI areas. Overall, the firm recommends: First, against the backdrop of a slowing AI industry trend and diverging fundamentals, the suppression from real interest rates is gradually easing, and gold is ushering in an allocation opportunity. Second, the energy and chemicals chain represented by coal, oil, and oil shipping will continue to benefit from global restocking demand for energy, while also possessing dividend attributes. Third, export data show that AI is no longer the sole standout; if interest rates continue to decline in the future, the export and overseas expansion sector will see a recovery, among which white goods, textile manufacturing, commercial vehicles, and home furnishings also combine dividend attributes.