Everbright Securities Company Limited (601788) has published a research report suggesting that the A-share market may continue its rebound in the short term, with a focus on three key earnings themes. On one hand, the unexpected drop of 23,000 in the US July non-farm payrolls has cooled market expectations for a September rate hike by the Federal Reserve, potentially boosting risk appetite. On the other hand, recent stabilization and recovery in overseas stock markets, particularly the semiconductor sector, are positively influencing the stabilization of A-share technology stocks.
The mid-August earnings reporting season is expected to serve as a turning point for the market to shift from valuation digestion to earnings-driven momentum, making this period potentially the best allocation window for the second half of the year. The market's core concern revolves around the sustainability of overseas AI capital expenditure, but similar debates since 2020 have typically been resolved by the next earnings report, each time accompanied by a 10%-20% correction in the sector, followed by a recovery within a few months.
Currently, both domestic and international technology earnings are maintaining high growth, while overall profit growth is also steadily recovering driven by the Producer Price Index (PPI). The mid-report earnings growth for all A-shares excluding financials is expected to reach around 15%. Combined with systemic policy support, the gradual dissipation of the impact from the ChangXin Memory Technologies listing, and the declining sensitivity of A-shares to overseas shocks, the mid-August earnings reporting season could mark a pivot from valuation digestion to earnings-driven momentum, positioning the earnings season as the best allocation window for the second half of the year.
In terms of allocation, the report recommends focusing on three earnings themes. The first is technology hardware (semiconductors/AI computing/storage), which is the strongest area of earnings improvement this round. The second is the price-increase chain (non-ferrous metals/chemicals/coal), which directly benefits from the PPI rebound and offers high certainty of earnings realization. The third theme is export-oriented manufacturing (energy storage/power equipment/automobiles), benefiting from global manufacturing inventory replenishment and supply chain advantages. Additionally, sectors such as non-bank financials, pharmaceuticals/CRO (innovative drug exports), and defense (order inflection points) also warrant attention for their mid-report performance, presenting a scenario of multiple parallel earnings themes.
Risk analysis includes potential failure of historical patterns, a significant decline in market sentiment, economic growth rates falling substantially short of expectations, and continued escalation of the Middle East situation.