CITIC Securities 2027 Capital Market Strategy Conference: Viewing Market Breadth Through AI Enthusiasm, Focusing on Growth and Dividends

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“What do you think will be the best investment theme next year?” On November 3, at CITIC Securities’ 2027 Capital Market Strategy Conference held in Wuhan, Hubei, an on-site poll invited attendees to make a choice, and the AI industry chain remained the focus of attention.

The poll reflects the market’s attention to industry trends, and how to find opportunities beyond AI also became an important topic at this strategy conference. Zou Yingguang, Party Secretary and Chairman of CITIC Securities, made his first public appearance and delivered a speech after taking office. He said that the divergence between hot and cold in global markets is converging, and based on the stability and resilience of the Chinese economy, it is expected that the breadth of the A-share market in 2027 is expected to continue expanding.

From macroeconomic policy to asset allocation, and from computing infrastructure to Chinese manufacturing going global, the attending analysts held discussions on how market divergence will converge and how industrial growth will be realized. In their view, the investment themes for 2027 include not only the technological upgrading and application extension of the AI industry chain, but also structural opportunities brought by stable-return assets, outstanding export-oriented manufacturing, and domestic demand recovery.

From “visible growth” to broader opportunities

Zou Yingguang said that currently, global growth momentum shows “dual concentration.” From an industry perspective, growth is increasingly dependent on high-tech industries such as AI; from a country perspective, growth contributions are further concentrated in a small number of economies such as China and the United States. At the same time, the complexity and uncertainty of the external environment remain prominent, geopolitical conflicts are reshaping the logic of economic security, and supply security capacity and industrial chain resilience are more critical.

In his view, after these characteristics were amplified by capital behavior, they formed the distinct hot-and-cold divergence in this round of global stock market volatility: computing power, models, applications, and a small number of high-prosperity industries driven by artificial intelligence continue to heat up; traditional sectors with weaker growth narratives and earnings still bottoming out are relatively cold. Global capital is concentrating on “visible growth,” and the market shows obvious structural divergence.

However, this divergence is changing. Zou Yingguang analyzed that, on the one hand, excessively high expectations for the technology narrative are being corrected, and areas with excessive earlier gains are entering a digestion phase; on the other hand, capital is returning to fundamentals, paying more attention to technology, orders, and cash flow. At the same time, artificial intelligence is moving from the cloud to the device side, and smart terminals, intelligent driving, and embodied intelligence are accelerating into reality. The industrial logic is spilling over from a small number of leading companies to a longer industrial chain and more enterprises.

“After divergence converges, based on the stability and resilience of the Chinese economy, we expect the breadth of the A-share market in 2027 is expected to continue expanding, and opportunities are accumulating,” Zou Yingguang said. China has a super-large market, a complete industrial system, abundant talent resources, and sufficient policy space. The prosperity of technology manufacturing is expected to extend along the industrial chain to upstream and downstream, corporate globalization will move from commodity exports to the coordinated export of production capacity, brands, and management systems, and domestic demand will also recover steadily as measures to stabilize growth and promote consumption are implemented one after another.

Regarding the location of this strategy conference, Zou Yingguang said that Wuhan was chosen as the venue because it is an important window for observing China’s industrial upgrading. The scale advantages of China’s manufacturing industry, continuously increasing R&D investment, and the systemic completeness formed by upstream and downstream supporting industries and cluster development have laid a solid fundamental support for Chinese assets.

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Bao Chengchao said that during the stage of strong AI market performance, non-AI sectors had generally already entered a downward trend in advance and experienced relatively deep valuation adjustments. If AI investment growth slows in the future, factors such as falling interest rates and material prices and policy rebalancing may instead bring a turning point for non-AI sectors and promote a more balanced market.

Converging divergence and expanding market breadth may become the most important market characteristics in 2027. In Bao Chengchao’s view, the market adjustment was brought forward this year, structural turning points will increase next year, trends within the technology sector are expected to diverge, and non-AI sectors have broad opportunities for structural repair.

From convergence of economic divergence to focus on stable returns

Moving from market judgment to asset allocation, the pace of economic recovery and policy implementation has become an important clue for observation.

CITIC Securities Chief Economist Ming Ming expects China’s real GDP growth in 2027 to be around 4.5%, with infrastructure investment and consumption recovering marginally, new quality productive forces continuing to gain momentum, export growth possibly slowing, and structural economic divergence expected to converge marginally. Considering the inflation base effect, nominal GDP growth may decline; if fiscal and monetary policies are front-loaded, economic growth may gradually stabilize and rebound in the first three quarters of next year.

Ming Ming believes that in the fourth quarter of this year, the focus of macroeconomic policy is shifting from “introduction” to “effectiveness,” and fiscal expenditure is expected to accelerate from the fourth quarter to the beginning of next year. Fiscal policy in 2027 is expected to remain proactive, with the quota for new special bonds expected to rise to 4.5 trillion yuan, and the proportion used for project investment to increase; monetary policy will still focus on framework reform, strengthen the transmission of policy interest rates, and higher demand for macroeconomic policy coordination may catalyze cuts in reserve requirement ratios and interest rates.

For investors, changes in policy and fundamentals are also reflected in adjustments to return expectations. Bao Chengchao believes that clearing in the capital market requires time, investors will gradually return to reasonable return expectations, and stable-return strategies represented by price-to-book ratio and return on equity may have an advantage over prosperity strategies, and market style may change significantly.

In the bond market, Ming Ming expects that as the debt resolution policy enters its final stage, the scale of net government bond financing in 2027 may decline compared with this year, but some months may still face phased supply pressure. At the same time, a widening deposit-loan gap will support banks' allocation demand, and under the constraints of shrinking ultra-long bond supply and new asset-liability management rules, insurers' asset allocation demand will be further strengthened.

From computing power upgrades to global markets seeking earnings realization

Computing power infrastructure remains an important direction in the AI industry chain. Li Heran, chief analyst for the communications industry at CITIC Securities, believes that the high prosperity of AI computing power infrastructure will continue, the profitability of AI computing power-related companies will rise rapidly, the value of optical communications in AI clusters will grow steadily, and the optical communications sector is expected to maintain rapid growth in 2027.

Li Heran said that China's optical communications industry chain is gradually becoming complete, fully covering upstream materials, optical chips, optical modules, optical fibers and passive optical components. It not only has advantages in production capacity, high-precision manufacturing and scale, but is also improving its industrial position in key upstream and component segments and strengthening its voice in technological iteration, product research and development, and standard setting. He remains bullish on the growth of optical modules, optical chips, optical fibers and other fields, and is watching new opportunities brought by NPO/CPO, OCS, 3.2T pluggable optical modules and others.

The demand for computing power construction is also transmitting to materials and equipment. Leng Wei, chief analyst for basic materials and engineering services at CITIC Securities, expects that the supply-demand gap in the electronic cloth-copper clad laminate (CCL) industry chain is expected to further widen in 2027. Coupled with low inventories across the entire industry chain and smooth price increase transmission, industry performance is expected to exceed previous market consensus expectations.

Around the storage and equipment sectors, Cheng Ziying, chief analyst for key components at CITIC Securities, believes that AI will drive prosperity in the storage industry, technological breakthroughs will promote domestic storage capacity expansion and increase market share, and performance is expected to continue to be released. The scale of capacity expansion, the value of advanced process equipment and the increase in equipment localization rate will jointly open up growth space for domestic equipment.

As AI moves from infrastructure to applications, the commercialization path has become another focus of observation. Ye Minting, chief analyst for the media industry at CITIC Securities, said that the AI content industry is extending from tool efficiency improvement to content innovation, user relationships and upgrades of commercialization models. She recommends focusing on companies with high-quality IP and content copyrights, AI content production capabilities, and platform traffic and distribution advantages.

"Dividends in the near term, global markets in the distance." Li Yizhen, chief analyst for the home appliance industry at CITIC Securities, summarized the investment logic for white goods in this way, advocating laying out global growth at the prices of dividend assets. In the black goods sector, Li Yizhen believes that after Chinese companies increase their global share, premiumization will still bring considerable profit space. Based on global competitiveness, Li Yizhen is bullish on the continued transformation of Chinese home appliances' competitive advantages into global share, profit growth and shareholder returns.

Globalization opportunities are also reflected in the innovative drug industry chain. Li Anfei, chief analyst for innovative drugs at CITIC Securities, recommends paying attention to global CDMO opportunities after the launch of innovative drugs with complex structures, as well as opportunities in the CRO industry chain such as clinical trials, safety evaluation, and core raw and auxiliary materials, while also watching investment opportunities brought by AI pharmaceutical realization and technological breakthroughs.

Li Anfei believes that although the overall cost-control pressure on the medical insurance fund still exists, the new drug pricing mechanism, innovation support policies, and payment-side expansion policies such as commercial insurance and long-term care insurance are worth anticipating. He expects that business development (BD) cooperation among China, the United States and Europe will be smoother in 2027, Chinese innovative drug assets are expected to achieve global listing and commercialization realization, and he recommends continued attention to investment opportunities in the healthcare industry.

In addition to technological upgrading and globalization, resource supply and demand remain an important thread in allocation discussions. Ren Dan, chief analyst for energy transition at CITIC Securities, expects Brent crude oil to average around $100 per barrel in 2027, with geopolitical conditions determining the price ceiling and low inventories making oil prices easy to rise but hard to fall. Under the judgment of continued global diesel shortages, Ren Dan expects the refined product price spread to fluctuate at a high level of $50 to $100 per barrel throughout 2027, and is bullish on investment opportunities in crude oil, refined products, oil shipping and other sectors.

From the popularity of AI in on-site voting to the breadth of the market in the strategy outlook, this strategy conference presented more diverse investment perspectives. Seeking incremental growth along technological upgrading, observing growth along global competitiveness, and measuring value along earnings and shareholder returns constitute several main lines for the attending analysts' outlook on investment opportunities in 2027.

(Source: China Securities Journal) Mid-body embedded advertisement