CITIC Construction Investment: In the second half of the year, the A-share market's oscillation center is expected to gradually rise and build momentum, with a focus on innovative drugs and other sectors

According to the Zhitong Finance APP, CITIC Securities has released a research report stating that in the second half of 2025, driven by the trend of a weak dollar, supportive capital market policies, and overall improvement in the liquidity environment, the A-share market's fluctuation center is expected to gradually rise and gain momentum. The key to the market's upward movement lies in: fiscal stimulus, interest rate cuts in China and the U.S., improvement in deflation, and development of emerging industries. It is recommended to continue using dividend assets as the core underlying variety and actively participate in investment opportunities in new tracks represented by "new intelligent medicine." Key industries to focus on include: innovative drugs, service consumption (beauty, pets, retail, social services), AI (AI Agent, AI applications), humanoid robots, banking, non-bank financials, transportation, public utilities, and non-ferrous metals.

CITIC Securities' main viewpoints are as follows:

A-share market assessment for the second half of the year: fluctuation center rising, gaining momentum. The A-share market is expected to first fluctuate and then rise in the second half of the year. The expectations for the fundamentals limit the market's short-term momentum for a significant rise, but the certainty of a weak dollar trend, supportive capital market policies, and overall improvement in the liquidity environment in the second half of the year are expected to drive the continuous rise of the A-share fluctuation center. Global fundamental improvements beyond expectations, the implementation of domestic incremental policies, and the development of emerging industries are expected to become key catalysts for the market's upward movement. Key focuses for upward movement include: fiscal incremental policies, synchronized interest rate cuts in China and the U.S., and a reversal of the deflation trend; the next Deepseek moment in the technology sector, progress in innovative drugs, and improving sentiment in new consumption.

New tracks as the decisive factor: The current macro environment: a combination of loose liquidity and weak macro demand has many similarities with the peak investment period in 2020-2021. Before the macro economy fully recovers, directions with structural prosperity in new tracks may become the most critical investment decisive factor. In new track investments, can active equity outperform passive investments?

The advantages of active equity include: 1) From an industrial perspective, the technology iteration in new tracks is fast, and there are multiple technological routes, making it suitable for active equity to make forward-looking layouts. 2) From a market perspective, the business complexity of new track companies is higher, and market capitalization indicators may not reflect the quality of the companies. 3) From an investment perspective, active equity can uncover hidden champions not included in indices, avoid outdated companies, and flexibly adjust positions to quickly respond to technological or policy changes. 4) From a funding perspective, excess returns from active equity are expected to create positive feedback from funds.

Dividends as the underlying asset, embracing the "new intelligent medicine" new track. We continue to be optimistic about the configuration strategy of using dividend assets as the underlying variety while actively embracing new tracks such as "new intelligent medicine": new consumption (beauty and personal care, pet food, jewelry, trendy toys, new tea drinks, etc.), humanoid robots (planetary roller screw, six-dimensional force sensors, dexterous hands, harmonic reducers, etc.), artificial intelligence (AI computing power, AI Agent, AI applications, intelligent driving, etc.), and innovative drugs (BD going overseas, pharmaceuticals, CXO, etc.).

Risk warnings: (1) The effectiveness of domestic demand support policies is lower than expected. (2) Risks of increased tariffs from the U.S. on China. (3) U.S. stock market volatility exceeds expectations