This week, the three major indices saw mixed performance, with the Shanghai Composite Index rising 0.09%, while the Shenzhen Component Index fell 2.29% and the ChiNext Index dropped 3.22%. The focus now turns to the market's future trajectory, with several institutions offering their perspectives.

CITIC Securities suggests that while a short-term rebound is possible for the A-share market, the upside potential appears limited, and a volatile trading pattern is likely to continue. The market demonstrated resilience after a low opening this week, but faces constraints from capital flows and cautious investor sentiment. Overseas liquidity expectations remain unstable, with the possibility of aggressive interest rate hikes still present. Overall, the domestic and external environment for A-shares is becoming more complex, potentially dampening risk appetite. The market is expected to fluctuate within a range, bounded on both the upside and downside. The recommended strategy centers on short-term portfolio rebalancing, moderating exposure to high volatility, focusing on sectors with stronger fundamental certainty, and awaiting a recalibration of expectations as uncertainties resolve. Key sectors to watch include AI (chips, semiconductors, optical communication), non-ferrous metals (industrial metals, minor metals), coal, non-bank financials, and new energy.

Shenwan Hongyuan strategy review notes a diversification of market themes, with technology sectors experiencing heightened short-term volatility but still holding medium-term trend opportunities. While tech is undergoing a corrective phase with elevated implied volatility, the medium-term outlook for the AI trend remains positive, positioning it as a primary battleground for major market moves. Sectors like optical communication, PCBs, memory, energy storage, gas turbines, and computing-power synergy continue to warrant attention. For the diversified theme, the focus is on sectors with earnings growth and reasonable valuations, specifically targeting new consumption, export chain leaders with alpha potential, and cyclical upturns. Additionally, non-bank financials stand out as a primary sector with high ROE and low PB, suggesting it may play a more significant role in the next market upcycle.

Zhejiang Securities advises a strategy based on the view that "the weight of technology growth in indices is adjusting, new positions await a secondary low, and style allocation should be more balanced." They recommend holding existing medium-term positions and considering adding exposure when the Shanghai Composite Index retests previous lows, forming a potential "secondary bottom." For the STAR and ChiNext indices, a range-bound trading approach is suggested, being more aggressive near the 60-day moving average and more cautious near previous highs. Sector-wise, technology remains the market focus and a core holding, but given recent high volatility and a shift in preference towards steadier styles, some allocation could be rotated towards dividend-paying stocks and large financials.

Kaiyuan Securities proposes a strategy of "first, a phased rebalancing, but the long-term theme likely remains technology." In the short term, attention should be on rebalancing opportunities, particularly in cyclical sectors like non-ferrous metals and chemicals that have been suppressed by oil price volatility, risk sentiment, and capital outflows to tech. However, the medium-term focus should not be solely on a simple cyclical recovery nor a mechanical return to the previously crowded tech trades. Instead, the aim should be to identify intersections of "secondary ignition and narrative momentum." Four key areas are highlighted: 1) Tech segments with profit verification and marginal improvement, such as domestic computing power, semiconductors, and parts of the AI hardware chain with actual orders and profits; 2) New growth areas emerging from tech spillover, like power equipment, electricity, energy metals, and liquid cooling; 3) New directions with industrial trends and narrative expansion potential, including commercial aerospace, defense, low-altitude economy, and robotics; 4) Sectors with recovery elasticity during the phased rebalancing, such as non-ferrous metals, chemicals, and machinery equipment, requiring further screening for sustainable growth momentum.

Huatai Securities assesses the potential "liquidity drain" effect of a SpaceX IPO, which is expected to be one of the largest listings in U.S. stock market history, with potential passive buying exceeding $10 billion. Post-listing, its total market cap could be around $1.77 trillion, with an initial free-float market cap between $75 billion and $86.25 billion, representing a float of only about 4.25%-4.86%. The limited tradable shares initially, combined with the company's large size and Nasdaq listing, could lead to rapid inclusion in major indices like the Nasdaq Composite, Nasdaq 100, CRSP, Russell, and MSCI, driving significant passive fund demand. Estimates based on index product sizes suggest potential passive buying of $9.1 billion to $11.3 billion, which could rise to $14 billion-$16 billion considering broader index coverage. Overall, the initial market impact is less about IPO fundraising draining liquidity and more about temporary supply-demand tension from a low initial float and concentrated index buying. This impact is expected to shift as the float expands post-Q2/Q3 earnings and lock-up expirations, transitioning from short-term demand-driven pressure to supply release and valuation digestion.

Everbright Securities observes a temporary shift in market style, recommending a focus on defensive sectors in the short term and three high-growth themes represented by hard tech for the medium term. Defensive plays like high-dividend and value stocks may see temporary performance, though this could be more sentiment-driven trading. For the medium to long term, high-growth sectors remain the core allocation, but this extends beyond just technology. Besides tech, the export chain and resource sectors are expected to see sustained fundamental improvement and warrant close attention. For hard tech, focus on electronics, communications, and defense; for the export chain, watch power equipment, machinery, and light industrial manufacturing; for upstream resources, monitor non-ferrous metals, coal, oil & petrochemicals, and basic chemicals.

Xiangcai Securities notes that May's PPI continued its rapid year-on-year increase, with the A-share market experiencing wide fluctuations. In the long term, 2026 marks the start of the 15th Five-Year Plan, with China expected to maintain proactive fiscal and moderately accommodative monetary policies, supporting steady economic growth and a potential "slow bull" market for A-shares. In the short term, as May's domestic macro data is released, price indices like PPI and CPI are largely in line with expectations. The market shows signs of short-term stabilization after a recent correction. Their three-dimensional model currently indicates a "strong-weak-strong" pattern, suggesting a potential short-term bottom formation. Short-term focus is on stabilized sectors like banking and securities within the dividend theme.

Bohai Securities states there is no immediate need to worry about calendar effects from events like the World Cup impacting A-shares. Looking ahead, while domestic demand shows weakening risks, rising PPI provides positive aspects for corporate earnings. The A-share market remains in a phase with a floor, and structural optimization of liquidity may bring new market characteristics. In the medium term, under policy guidance to "stabilize and boost capital market confidence," the market's oscillation center is expected to gradually shift upward. Sector-wise, attention can be paid to: 1) The computing power sector, which faces some capital pressure after extreme trading crowding and "siphoning effects," but may offer re-entry opportunities after consolidation given sustained sector momentum; 2) High-dividend yield sectors (like banking and coal) favored in a low-interest-rate environment for attracting long-term funds and offering defensive attributes.

Changjiang Securities discusses the "K-shaped" divergence in the market and when it might converge. Looking forward, market volatility may increase from June to August amid liquidity fluctuations, with a potential "risk-on"行情 restarting around September, where AI infrastructure and energy security could be key themes. The recommended allocation focuses on AI infrastructure and energy security. First, given stronger-than-expected tech capital expenditure, AI hardware like optical modules and memory is recommended, alongside new technology routes to improve computing efficiency, such as advanced packaging, focusing on packaging/testing manufacturing and glass substrates. Second, amid U.S.-Iran tensions, both traditional and new energy are recommended, focusing on energy storage, lithium batteries, oil & gas, coal, and electricity.

Central China Securities observes that the financial and non-ferrous metals sectors led gains as the A-share market rose amid volatility. The current average P/E ratios for the Shanghai Composite and ChiNext indices are 16.36 and 48.77, respectively, above the median levels of the past three years, suggesting suitability for long-term positioning. Friday's trading volume of 3,236.3 billion yuan is also above the median daily volume of the past three years. Key factors driving recent global market volatility include the much stronger-than-expected U.S. May non-farm payrolls data; rising market expectations for a Fed rate hike this year, leading to significant swings in overseas markets and major tech stocks on June 5th; and fluctuating tensions in the Middle East, further suppressing global risk appetite. The market remains in a short-term adjustment phase with frequent external disturbances, and indices may continue their volatile pattern. Medium-term, the AI industry trend remains intact, and Q2 corporate profits are expected to improve further supported by rising PPI. After a period of consolidation, the medium-term upward trend remains solid. The Shanghai Composite Index is likely to maintain a consolidative pattern. Close attention should be paid to macroeconomic data, overseas liquidity changes, and policy developments. Short-term investment opportunities can be found in sectors like power equipment, batteries, finance, and non-ferrous metals.