CITIC Construction Investment: August is expected to open up a repair market, with a focus on industries such as AI computing power.

According to a research report by CITIC Construction Investment, since July, the A-share technology sector has undergone a significant adjustment due to global interconnected impacts, showing a gradient path from a decline led by mid- and small-cap stocks to a supplementary decline by leading stocks. This round of adjustment has been mainly driven by the sell-off of leveraged funds, with the root cause stemming from negative feedback from retail investors' leveraged ETFs in South Korea, leading to a temporary divergence between performance and stock prices. However, overall, the indiscriminate panic selling phase is likely over, and a corrective rally is expected to begin. Looking ahead to August, four major signals indicate a easing of funding pressure: the most severe phase of deleveraging in South Korea is past, with the storage sector stabilizing first; trading congestion in the A-shares is alleviating; the window for major events has passed, reducing uncertainty; and the market is re-evaluating strong performances. The pricing logic is shifting back towards fundamentals, likely paving the way for a recovery rally. Key industries to focus on include AI computing power, semiconductor equipment, non-ferrous metals, new energy, and machinery.