Oriental Red Asset Management: A-share companies are expected to usher in a turning point in profit improvement within the year, and the market style is expected to shift towards balance.

On April 10th, Orient Red Asset Management released its equity strategy outlook for the second quarter of 2026, stating that geopolitical risks and artificial intelligence are becoming new main factors in asset pricing. High oil prices will exacerbate inflation pressure in the United States, putting pressure on both ends of the "K-shaped" economy, and the Federal Reserve is more likely to maintain a high interest rate outlook in the short term. Despite rising oil prices suppressing global total demand, in the background of other Asian industrial economies facing supply capacity damage due to rising energy costs, Chinese manufacturing is expected to increase export market share with cost stability and supply resilience. The highlight of China's economic growth in 2026 may switch from "real growth" to "nominal growth". Orient Red Asset Management believes that the turning point of global easing expectations is emerging, the liquidity environment for A-shares is more friendly, and downside risks are manageable. Currently, domestic broad-based interest rates are still in a downward trend, A-share liquidity remains generally loose, off-exchange positions in the "reservoir" are still abundant, and products with embedded options may be able to meet the demand for household reallocation in a low interest rate environment. On the fundamental side, A-share companies are expected to see a turning point in profit improvement in 2026. In terms of market style, the growth logic dependent solely on future valuation expansion may weaken, and the style is expected to shift towards balance.