Huatai Securities: The AI industry narrative is not yet over; the investment focus will shift from computing power investment to return verification

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The Huatai Securities 2027 Annual Investment Summit was held in Beijing from November 4 to 5, 2026. Under the theme "A New Chapter, Steady Command of the Trend," the summit focused on topics including the macroeconomy, global AI, mass consumption, energy development, and high-end manufacturing, and explored the macroeconomic outlook, industry trends, and asset allocation directions amid global political and economic shifts.

Liang Hong, Chairman of the Institutional Business Committee at Huatai Securities, said in her remarks that global economic and industrial transformation is accelerating, and that the opportunities for earnings improvement and valuation repair in Chinese assets deserve attention. Looking ahead to 2027, she said investors can focus on four main threads: China's economic rebalancing, the development of the AI industry and the sustainability of investment, the evolution of the global political and economic landscape, and policy adjustments in major economies. As the transition between old and new growth drivers continues, China's supply-demand rebalancing is expected to make positive progress.

Liang Hong believes that in the face of market volatility and style rotation, investors should return to fundamentals, strengthen portfolio resilience, reasonably control leverage and positions, pay attention to "ballast" assets with stable cash flow as well as high-quality sectors with solid fundamentals and continuously improving earnings, and actively capture the medium- and long-term allocation value of Chinese assets.

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Zhang Jiqiang, Director of the Huatai Securities Research Institute and Chief Fixed Income Analyst, said that in 2027 investors can focus on overseas policy, the evolution of the AI industry, domestic policy, and the debt cycle. Among these, AI investment is expected to gradually shift from capital expenditure toward applications and performance realization. Domestic asset allocation needs to place greater emphasis on the risk-return ratio, and the market level and valuation level at the beginning of 2027 will also affect the investment space for the full year.

Wang Weiguang, Co-Chief Strategist at the Huatai Securities Research Institute, said that the foundation for the medium-term upward trend in A-shares remains solid. The overall profitability of all A-share non-financial companies has passed the bottom inflection point. Improvements in industry competitive landscape, companies going global, and gains in operating efficiency will continue to support earnings recovery, and future market gains are expected to rely more on corporate earnings improvement. Wang Weiguang expects that in 2027 the growth rate of net profit attributable to parent companies for all A-share non-financial companies will be about 5.1%. The development stages and prosperity rhythms of different industries will diverge, bringing more structural opportunities, and domestic-demand consumption and pro-cyclical sectors are expected to usher in a bottom reversal. In terms of style, large-cap value and names with low ROE repair are expected to be relatively favored in the first half of 2027; in the second half, if the US dollar weakens and domestic credit and liquidity improve, the small-cap growth style is expected to see a recovery.

Regarding market attention on whether AI can continue as the main theme, Wang Weiguang believes that the AI industry narrative is not yet over, but the market will move from broad-based gains into a "midfield breather," and the investment focus will shift from computing power investment to return verification. Investors can focus on areas such as physical AI, on-device AI, AI applications, and power. In terms of allocation, Wang Weiguang recommends grasping three main investment threads: improvement in supply-demand dynamics, urban renewal and the construction of the "Six Networks," and high-quality leading exporters.

On Hong Kong stocks, Li Yujie, Co-Chief Strategist at the Huatai Securities Research Institute, said that the 2026 pullback in Hong Kong stocks mainly came from valuation contraction. Looking ahead to 2027, the period of greatest macroeconomic liquidity pressure may have passed, but some constraints remain, and opportunities in Hong Kong stocks will come more from structural earnings improvement and global capital rebalancing. In the short term, the market has already priced in pessimistic expectations to a relatively full extent, and Hong Kong stocks may see a sentiment recovery; the medium-term trend will still depend on improvement in domestic demand. At present, the overall valuation of Hong Kong stocks is not in a significantly undervalued range, and index upside will depend more on earnings growth, while southbound funds are expected to become an important force driving marginal improvement in the funding picture. In terms of allocation, it is recommended to use a high-dividend portfolio as the foundation and, after valuations stabilize and earnings expectations become stable, gradually increase allocation to offensive portfolios with simultaneous improvement in profitability, profit margins, and dividend yield, while paying attention to consumption and the domestic AI industry chain; alpha opportunities in individual stocks may be more prominent than index beta.

On US stocks, Li Yujie expects that under the baseline scenario, the S&P 500 index gain in 2027 may narrow to single digits, market volatility may increase, and event-driven characteristics may strengthen. In terms of allocation, it is recommended to emphasize diversification and hedging, while also considering defensive sectors, high-ROIC technology leaders, and opportunities on the AI application side.

Xu Te, Head of Financial Engineering Research at the Huatai Securities Research Institute, said that over the next six months global assets may see a relatively large-scale style rebalancing. The upward slope of capital expenditure growth in the AI industry chain may enter a phase of slowdown, but the length of the cycle driven by the technological revolution is uncertain, and the actual inflection point still needs to be verified against fundamental data such as computing power demand and industry-chain orders. Combined with a still-tight liquidity environment, growth-style assets may face certain pressure on both earnings and valuation.

In terms of allocation, Xu Te recommends that in an environment where major asset classes are highly correlated, investors focus on directions with low correlation, low crowding, and relatively clear trading structures. At the same time, a bottoming and recovery in the Kitchin cycle is expected to support restocking in traditional manufacturing, and investors can pay attention to domestic-demand consumer goods and domestically priced bulk commodities; if US economic performance falls short of expectations due to changes in the capacity cycle, gold is also expected to benefit.

(Source: China Securities Journal · CSI Taurus) Middle of the body Embedded advertisement