East Fortune Chen Guo: Asset revaluation logic will continue to be interpreted in 2026, and A-shares are expected to reach new highs.

Chen Guo, Chief Strategy Officer of Oriental Wealth Securities, stated that the logic of asset revaluation in China will continue to evolve in 2026, with both domestic and foreign investors expected to increase their allocation to the equity market. There is still ample room for improvement in the allocation of equity assets for domestic residents, and a new high for A-shares is expected. Chen Guo also mentioned that in 2025, the confidence in the Chinese stock market has been re-evaluated and risen. The valuation of the Chinese stock market has been somewhat repaired, but it has not overheated. At the same time, the earnings of A-shares in 2025 ended the downward cycle from 2022 to 2024. Due to earnings no longer being below market expectations and signs of a bottoming and warming up, the proportion of positive economic indicators has significantly increased. Looking ahead, Chen Guo remains optimistic about the Chinese stock market in 2026. Growth and cyclical styles are still the clear winning directions for 2026, corresponding to the two mid-range clues of the AI industry wave and the PPI rebound. In terms of the AI sector, domestic investment and substitution cycles are still in the early stages; in terms of cyclical aspects, with the support of the "anti-insularization" policy and the background of the cyclical endogenous bottoming out of manufacturing capacity, PPI has been continuously rebounding since August 2025, and under a neutral assumption, the market expects the narrowing of the year-on-year decline in PPI to continue next year, with a potential rise to a level of -0.44% in 2026. Historically, a rebound in PPI has often led to a relative excess return elasticity of cyclical styles compared to the entire A-share market.