CITIC Securities: AI momentum pullback is not the dividing line between bull and bear markets
A CITIC Securities research report argues that the AI trend pullback is not the start of a bear market, and that non-AI sectors may instead face a more favorable environment, because in the short term the AI industry has produced negative externalities for other economic sectors such as sharp rises in materials and resource prices, surging interest rates, and crowding out of employment. The report judges that the main process of second-derivative valuation correction in AI sectors and valuation contraction in non-AI sectors is expected to be completed this year, with a higher probability afterward of narrowing divergence and broadening market breadth, but capital-side clearing will take time; at this stage, stable-return strategies represented by PB-ROE may be more advantageous.
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A CITIC Securities research report states that the AI trend pullback is not the start of a bear market, and non-AI sectors may instead face a more favorable environment. The key point is that in the short term, the AI industry does not broadly drive other sectors of the economy the way past industrial trends did; instead, it has created considerable negative externalities for other economic sectors (sharp rises in materials and resource prices, surging interest rates, and crowding out of employment). This also means that the past experience of "the end of an industrial trend rally = a turn from bull to bear" may no longer apply, and many non-AI sectors have long since entered a downtrend. At present, whether it is the second-derivative valuation correction of the AI sector or the valuation contraction of non-AI sectors, the main valuation contraction process is expected to be completed this year. Looking ahead, after a deep adjustment, there is a higher probability that divergence will gradually converge and the breadth of the market rally will expand. The only issue is that the clearing of liquidity/funding conditions takes time; at this stage, stable-return strategies represented by PB-ROE may be more advantageous.
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