CITIC Securities A-share market investment strategy for 2026: Competing for pricing power and entering a low volatility market.

CITIC Securities released the 2026 investment strategy for the A-share market: A-share listed companies are gradually transforming from local companies with domestic exposure to multinational companies with global exposure. The Chinese capital market is also gradually shifting from an emerging market to a mature market. A-shares are not only China's A-shares, but also global A-shares. During the "15th Five-Year Plan" period, Chinese enterprises are expected to further elevate their position in global value chain distribution, transforming their market share advantage into pricing power. This is the foundation for the A-share market to move towards a low-volatility bull market. Looking ahead to 2026, from a macro trend perspective, A-share global revenue-exposed companies are no longer limited to a few companies, but are sufficient to drive the entire A-share market. In the future, the fundamentals of A-shares should be viewed in the context of global market demand, rather than just domestic demand. Within this framework, the China-US relationship will determine the pace and smoothness of the market. Two key periods may divide the market in 2026: from the signing of the agreement between China and the US to the US midterm elections, the China-US relationship is relatively stable, making this period the golden time for equity market long positions. In terms of market liquidity, there will be a continuous inflow of absolute return funds seeking stable returns, which is expected to be a core feature of the future capital market incremental liquidity landscape. This to some extent will push the A-share broad-based index volatility towards a long-term downward trend. Instrumental products will gradually occupy market share from traditional subjective long products, potentially amplifying the volatility of certain sectors and themes, but not affecting the overall market trend. Looking at industry allocation, three key clues deserve attention: first, the upgrading of the resource/traditional manufacturing industry will transform market share advantage into continuous rising pricing power and profit margins; second, Chinese enterprises going global and becoming more globalized will greatly open up the imagination space for profit growth and market capitalization ceiling; third, AI will further expand its commercial application landscape, continuing the trend of the technology sector and amplifying the relative competitive advantage of Chinese enterprises.