China’s Top Brokerages: A-Shares Show Resilience Amid Volatility
China’s leading brokerages have issued a broadly optimistic outlook for the A-share market, asserting that Chinese stocks have demonstrated greater resilience compared to volatile overseas markets. With only two trading days remaining before the market enters the second half of 2026, analysts recommend focusing on short-term rebalancing opportunities while maintaining confidence in the medium-to-long-term trajectory, particularly driven by the AI and technology sectors.
According to The Paper, the consensus among ten major brokerages — including CITIC Securities, Shenwan Hongyuan, China Merchants Securities, and Huatai Securities — is that while short-term volatility is expected, the structural bull market remains intact.
Market Context and Recent Performance
The Shanghai Composite Index fell 1.55% for the week, matching the decline in the Shenzhen Component Index. The ChiNext Index dropped 1.37%, while the STAR Composite Index bucked the trend with a 1.99% gain. On June 29, the STAR Composite surged 4.61%, with pharmaceuticals and semiconductor equipment sectors rallying strongly.
This performance comes against a backdrop of extreme K-shaped divergence in global markets since May 2026, driven by U.S. dollar strength and rate hike expectations. The Magnificent Seven tech stocks have corrected 12% from their highs as of June 26, while the Philadelphia Semiconductor Index fell 7.9% in a single week.
Brokerage Views: Resilience and Rebalancing
CITIC Securities noted that “compared to the volatile overseas markets, A-shares show greater resilience,” adding that some non-AI sectors are showing signs of early-stage capital inflows. The brokerage highlighted that a few low-valuation sectors already have the foundation for recovery, merely awaiting the right catalyst.
Shenwan Hongyuan Securities took a similarly confident stance, stating that “the pattern of not fearing to wait for large-wave upward trends remains unchanged.” The firm expects the A-share market to restart during the Q2 earnings season after short-term volatility, emphasizing that “the large-wave rally is not over, nor is the tech-led rally.”
China Merchants Securities observed that the market has entered the third stage of its upward cycle, with the driving force shifting from incremental liquidity to earnings fundamentals. The brokerage expects indices to rise moderately in the second half of the year, driven by the technology sector.
Short-Term Rebalancing Recommended
Multiple brokerages advised investors to focus on rebalancing in the near term. Huatai Securities recommended using dividend stocks as a safety cushion while focusing on semiconductor equipment, memory, and MLCC within the technology space. The firm also highlighted brokerages with earnings recovery potential.
Dongfang Caifu Securities echoed this sentiment, noting that “in the short term, the internal structure of A-shares is crowded, with valuation divergence at historical highs.” The brokerage suggested that gradual structural rebalancing could be considered as the third quarter is expected to see marginal improvement.
However, Zheshang Securities cautioned that the ChiNext and STAR indices remain the absolute focus of the A-share market, stating that “the few investment opportunities available are basically from the ChiNext/STAR boards and AI-related sectors.”
AI and Tech: The Dominant Theme
Despite calls for rebalancing, AI and technology remain the dominant market themes. Hua’an Securities advised investors to continue strengthening positions in the AI industrial chain, viewing pullbacks as buying opportunities. The brokerage recommended focusing on AI upstream and midstream computing power, as well as mechanical equipment and robotics.
Shenwan Hongyuan’s Fu Jingtao, Chief A-Share Strategy Analyst, noted that June to July may be an adjustment phase for global technology stocks, with AI computing chain earnings materializing and stock prices correcting to digest valuations. However, he maintained that the medium-term outlook remains positive, as reported by 21st Century Business Herald.
Global Headwinds and Risk Factors
The brokerages identified several key risks, including U.S. monetary policy tightening, Middle East geopolitical tensions, tech valuation concerns, and potential contagion from the Korean market. U.S. May PCE inflation came in at 4.1% overall, with core PCE at 3.4% — the highest since 2023 — indicating sticky inflation.
According to Fitch Ratings, Asia-Pacific securities firms have demonstrated resilience amid ongoing market volatility, supported by adequate capital buffers, mature risk management frameworks, and stringent regulatory requirements.
Outlook for the Second Half
Looking ahead, most brokerages agree that the bull market structure remains intact. Shenwan Hongyuan explicitly forecasts “another round of rally in H2 2026,” while China Merchants Securities expects indices to rise moderately driven by tech. The shift from liquidity-driven to earnings-driven market dynamics is seen as a key transition point that could broaden the rally beyond AI into other sectors.
As the A-share market prepares to enter the second half of 2026, investors will be watching the July Politburo meeting for potential economic stimulus measures, the Q2 earnings season for tech sector performance, and developments in U.S. monetary policy. The consensus among China’s top brokerages is clear: resilience is the defining characteristic of Chinese equities, and opportunities abound for those who position strategically.