Shenwan Hongyuan Strategy: Stable Start for A-shares in the Year of the Horse, Maintaining the Mid-term "Two-Stage Bull Market" Outlook Unchanged

1. Key Clues in Global Asset Price Movements During the Spring Festival Holiday: 1. Rising concerns over US-Iran conflict; 2. Significant increase in divergence over Fed rate cuts, US stagflation expectations intensify; 3. Trump’s tariffs based on the International Emergency Economic Powers Act ruled illegal by the Supreme Court; 4. Technological structural highlights: robotics, large models, storage. Corresponding asset price performance: crude oil surged significantly, gold and silver rebounded; US Treasury yields rose, the US dollar index’s gains were limited, overall risk appetite remained suppressed. European and American stock markets rebounded from lows, Hong Kong stocks continued to decline, tech sectors led the rise (Korean stocks, large models, robots).

Reviewing the Spring Festival holiday, the key clues in global asset price movements, we focus on four points:

1. The US-Iran agreement still carries considerable uncertainty, with rising fears of US military strikes. In June 2025, the US conducted airstrikes on Iran, causing only a pulse-like increase in oil prices, which can be seen as the lower bound of potential impacts from US-Iran conflict on oil. During the holiday, crude oil surged sharply, gold and silver rebounded.

2. The January FOMC meeting minutes show increased divergence over rate cuts, with a reinforced “dual-direction” forward guidance on interest rates. US stagflation expectations rose; in Q4 2025, US GDP growth was only 1.4%, below expectations, directly reflecting the impact of the government shutdown; in December, core PCE YoY was 3.0%, above expectations. These factors suppressed stock market risk appetite and supported the rebound in gold and silver.

3. Trump’s tariffs based on the International Emergency Economic Powers Act were ruled illegal by the Supreme Court. Tariffs on fentanyl and reciprocal tariffs may be invalid; however, Trump’s latest imposition of a 15% temporary global tariff under the Trade Expansion Act of 1962, tariffs on Chinese steel and aluminum based on Section 232, and tariffs on automobiles, as well as tariffs on Chinese high-tech products under Section 301 of the Trade Act of 1974, remain unaffected. Considering the latest 15% global temporary tariffs, most US tariffs on China remain at lower levels. The impact of this change on asset prices may be limited; Trump is likely to seek alternative ways to impose tariffs, maintaining a relatively stable outlook. Therefore, during the holiday, the main impact on asset prices was an increase in US Treasury yields (due to increased issuance pressure), limited rebound of the dollar index (due to increased issuance pressure and loosening of dollar credit), and limited rebound in stocks affected by tariffs.

4. During the holiday, there were notable technological structural highlights: the Spring Festival Gala robots exceeded expectations in progress; Chinese large models saw significant stock price increases (Zhipu, MiniMax), continuing during the holiday; storage sector maintained high optimism, with Samsung and SK Hynix rising in resonance with Korean stocks and brokerages, driving Korea stocks to lead global gains during the holiday.

In summary, during the Spring Festival holiday, the performance of major global assets was: crude oil surged, gold and silver rebounded; US Treasury yields rose, the dollar index’s gains were limited. For equities, many risk factors remain; European and American markets broadly rose, mainly as a low-level rebound after previous rapid adjustments, while Hong Kong stocks continued to decline; structurally, tech sectors and the oil industry chain led the rise (Korean stocks, large models, robots).

2. Maintaining the Mid-term “Two-Stage Bull Market” Scenario: The spring 2026 rally is an extension and expansion of the 2025 structural market. Currently, we are still in the high region of the first stage of the rally. Historically, markets tend to front-run industry trend expectations, leading to valuation increases, but once sector valuations reach historical highs, resistance naturally increases. After the first stage of the rally, a prolonged period of consolidation typically follows. Since September 2025, the main structural themes have alternated, with multiple sectors reaching historical high valuations sequentially, then entering consolidation phases: September 2025 was Nvidia’s computing power chain, November was photovoltaics and energy storage, late December was Google’s computing chain, mid-January 2026 was commercial aerospace and AI applications, and the end of January was non-ferrous metals and basic chemicals. Currently, valuations in communications, electronics, defense and military industries, computers, and basic chemicals are all at historical highs, and the overall PE of A-shares is also at high levels, indicating internal demand for consolidation. This consolidation phase mainly waits for further reinforcement of industry trends, validation of fundamental inflection points (performance digestion of valuations), easing of valuation concerns, and more favorable conditions for residents’ asset allocation toward equities.

We maintain the view of a “second-stage rally” in the medium term, driven by cyclical improvement in fundamentals, new phases of technological industry trends, more favorable conditions for residents’ asset shifts into equities, and resonance with China’s increasing influence. The window for the second-stage rally is more likely around mid-2026. It is also important to note that the two-stage rally involves a consistent leadership in sectors and styles.

The structural market, as it evolves into low valuation areas, will be stabilized and further policy support, with A-shares gradually confirming a wave of consolidation. Before and after the Spring Festival, A-shares are in a minor correction phase, with the lower boundary of the consolidation range to be tested. Short-term valuation indicators suggest the correction is not yet sufficient. During the holiday, many risk factors remain, and a short-term continuation of adjustment may occur. Once the lower boundary of the consolidation range is confirmed, preparations for the “second-stage rally” can begin, opening a window for medium-term allocation opportunities. This is likely to be a slow start, allowing for a calm and strategic allocation.

Looking ahead to spring, the two sessions in March and the US-China relations observation window in late March/early April may both generate rebound phases within the oscillating market.

3. During the oscillation phase, the best opportunities are in new technological directions. The new highlights during the Spring Festival holiday—robotics (not yet at low valuation levels), AI large models (more reflected in AI application diffusion in A-shares), and storage—are the main sources of short-term structural opportunities. Focus on: robotics (not yet at low valuation levels), AI large models, storage. Additionally, rising US-Iran tensions warrant attention to oil and shipping sectors.

For medium-term allocation, sectors such as technology and cyclical stocks remain favorable. Key sectors include: overseas compute chains, AI applications (genuine opportunities in Hong Kong internet stocks), semiconductors, robotics, commercial aerospace, storage, etc. Cyclical alpha focus: non-ferrous metals and basic chemicals. The extension of medium-term cyclical alpha investments may include export/outbound chains. Also, the revaluation opportunities in non-bank financials are promising.

Risk warnings: Unexpected overseas economic recession; domestic economic recovery falling short of expectations.

(Source: Shenwan Hongyuan)