After notable divergence and deep corrections in July, the A-share market staged a rebound in August with moderately increased volume, accompanied by a marginal improvement in risk appetite. However, the real test is approaching—the concentrated release of interim reports in mid-to-late August may serve as a key window to assess the sustainability of this rebound. Have the earlier adjustment factors been fully priced in? Is the current recovery merely a technical bounce from oversold levels, or the starting point of a broad-based rally? Below are the latest insights from Great Wall Fund's equity fund managers.
Yang Jianhua: Short-term volatility likely to persist
On the domestic front, July's manufacturing purchasing managers' index (PMI) and non-manufacturing business activity index came in at 49.2% and 49.0%, respectively, both declining month-on-month. The Politburo meeting maintained a cautiously optimistic tone on the economy, acknowledging existing pressures while emphasizing the need to fully utilize current policies and step up counter-cyclical adjustments. As a result, we expect domestic policies to show a trend of marginal improvement in actual implementation. On the international front, conflicts in the Middle East remain the biggest uncertainty, though the market's reaction has gradually become less sensitive. The recent pullback in technology stocks has exceeded expectations, creating potential for a short-term oversold bounce. However, improvement in the capital flows that triggered the sharp sell-off will take time to digest, unless the AI narrative sees unexpected new catalysts. A sustained rebound for cyclical and high-dividend stocks also seems unlikely, given weak fundamentals and the fact that rapid gains in dividend stocks have to some extent suppressed their dividend yields. We expect the overall market to maintain a range-bound pattern in August, with stocks trading at relatively low valuations and showing sustained earnings improvement likely to generate excess returns.
Liao Hanbo: Focus on structural opportunities in sub-sectors
The AI hardware sector experienced a rapid decline in July, with monthly losses approaching historical highs. Disagreement has emerged in the capital market over the AI investment narrative. The one-sided rally in AI hardware and upstream semiconductor industries may have come to an end, with future trends likely shifting to a volatile phase. Going forward, attention should be on structural opportunities within specific sub-sectors. At the same time, the sharp adjustment has triggered a rethink of balanced investment structures. Non-AI sectors may see short-term valuation recovery opportunities, but fundamental improvements remain unclear. Key areas to watch include: first, stocks related to technological advancements in AI investment; and second, beneficiaries of declining model costs.
Tan Xiaobing: Seeking high-certainty directions
Looking ahead to August, after a global sell-off, both domestic and international macro environments are in a rare window of relative stability, with all parties inclined to support their capital markets. However, until a new industry narrative inflection point emerges, AI technology lacks the foundation for a significant rebound in this cycle. Meanwhile, non-AI sectors with relatively favorable positioning, after completing their initial "filling the gap" phase, will require strong fundamental turning points to sustain further upward momentum. Overall, we believe the market is likely to remain in a consolidation phase. The dispersion in year-to-date returns across CITIC first-tier industries has narrowed significantly. This suggests that we can look for directions and individual stocks with greater certainty over the next year based on medium-to-long-term logic.
Long Yufei: Focus on healthcare technology and new consumption
In the first half of the year, the market showed extreme structural divergence. We expect a need for rebalancing in the coming period. From an industry logic perspective, the sustained outperformance of AI model capabilities and computing infrastructure investment indicates that the empowerment of this AI revolution across various fields is still progressing. The future societal demand for health and the upgrade of healthcare technology supply offer strong certainty and vast space. Therefore, we will continue to focus on the medical technology field. Additionally, the consumer sector has been adjusting for as long as five and a half years. Supply-side adjustments in many industries are relatively complete. Once demand-side performance emerges, improved competitive dynamics and operating leverage effects could lead to surprising earnings elasticity. Thus, we will also closely monitor high-quality companies in new consumption areas, such as service-oriented and spiritual consumption.
Liang Furui: Focus on innovative drug pipeline execution and earnings growth
Currently, the trajectory of innovative drugs is volatile and indecisive, with few major catalysts overall and average liquidity. This has increased valuation uncertainty, making the verification cycles and pace in the capital market more protracted. However, some large companies are entering a phase of rapid earnings delivery. Going forward, on a semi-annual to annual basis, we will focus on targets with high pipeline execution certainty and explosive earnings growth characteristics.
Chen Ziyang: Traditional cyclical stocks may find support
Technology stocks saw a significant correction in July, while non-tech sectors underwent a rebalancing. The tech pullback is more about "strong reality, weak expectations"—a valuation adjustment triggered by market concerns over long-term capital expenditure. However, from an industry reality perspective, demand for next year is relatively clear. After the correction, core stocks with valuations at reasonably low levels for next year are worth an optimistic view. Furthermore, the U.S. economy remains fundamentally strong, providing support for traditional cyclical stocks with low inventory levels. These are worth watching on dips.
Zhang Jian: Bullish on the AI chain and broad dividend sectors
On one hand, we are bullish on the AI industry chain. Although current stock positions are high and volatility has increased, on a longer-term view, rapid earnings growth is expected to digest valuations. The current policy focus is also on AI-related industries. While stocks linked to the macro economy are cheap in valuation, the market finds it hard to believe in their sustained growth capability. On the other hand, we are bullish on the broad dividend sectors. After the recent pullback, the dividend yields of many industry leaders have exceeded 5%, with historical valuations at bottom levels. For those broad dividend stocks with relatively stable earnings, some growth, and low correlation with the macro economy, we expect reasonable return opportunities.
Su Junyan: Technology stocks may still lead the rebound
I am relatively optimistic about the August market. After a significant index correction, funds have provided support at key levels. At the same time, overseas markets are stabilizing, with signs of de-escalation in the Middle East conflict and effective risk release in the South Korean market. In terms of style, while technology stocks are still expected to be the main line of the rebound, the recovery is likely to be more balanced, making it difficult to replicate the extreme trend of the second quarter.
Lin Hao: Structural market trends likely to continue
Going forward, close attention should be paid to: 1) New catalysts in the AI industry chain, including the expansion of large models in application scenarios, update progress of various models, and bond issuance by cloud vendors; 2) Domestic and international interim earnings reports; 3) The impact of Middle East conflicts on oil prices and commodities; 4) Large-scale domestic and international IPOs and the lifting of lock-ups in Hong Kong stocks. In terms of direction, the competition between China and the US is a tug-of-war and a protracted one. Trends in self-reliance, controllability, and resource value revaluation are expected to persist. We predict that the A-share equity market will continue to trend upward with volatility through 2026, with structural trends persisting. We are relatively optimistic about technology growth directions related to AI, as well as sectors such as chemicals, non-ferrous metals, pharmaceuticals, and brokerages.