CITIC Securities said two recent narrative shifts, along with easing liquidity pressure, may help some non-AI sectors with earnings support recover.
According to Jin10, a CITIC Securities research report said K-shaped divergence has been amplified by market narratives, and that recent volatility and convergence driven by narrative swings are normal.
The report said two sets of marginal narrative changes occurred intensively over the past week. First, tied to assumptions about the global monetary environment, the market has begun to assess the U.S. Federal Reserve’s policy stance more comprehensively rather than presuming a hawkish rate-hike path. As the tightening and strong U.S. dollar narrative swung back, negative sentiment toward non-AI sectors was repaired.
Second, related to AI industry trends, the report said a piece of news about Meta sparked major controversy. It said this reflected the market’s low tolerance for any negative information about the AI industry and indicated that downstream segments need more diverse commercialization models to support more aggressive upstream investment expectations.
In addition, CITIC Securities expected outflow pressure from broad-based A-share ETFs to ease significantly, calling it the most important marginal change on the market’s liquidity front.
The report said the revision of the rate-hike narrative, combined with the marginal change in market liquidity, is expected to catalyze a recovery in some non-AI sectors supported by earnings.
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