The Zhitong Finance App learned that Huajin Securities released a research report saying that the current historical fraction of TMT price-earnings ratio has fallen to 84% from a high of 93% in recent March; TMT still accounts for more than 50% of turnover. The TMT financing balance fell by about 10% compared to the high before the adjustment. Strong industry trends and policy catalysts may bring the TMT adjustment to a close. Looking at fundamentals, the growth rate of short-term real estate investment may continue to be weak, the growth rate of infrastructure investment may stabilize, and the growth rate of investment in manufacturing in the high-tech industry may continue to pick up; finally, the short-term consumption growth rate may continue to rise steadily. In terms of allocation, industries such as high-performance technology, partial cycles, and undervaluation dividends are balanced in the short term.
The main views of Huajin Securities are as follows:
In the history of the review, the end of short-term adjustments in the TMT market was mainly driven by factors such as catalytic industrial events, further policy support, adequate adjustment of sentiment indicators, and loose liquidity
Since 2016, the TMT index has had 23 short- to medium- to short-term adjustments, and 4 medium- to long-term peak adjustments. The end of medium- to long-term adjustments in the TMT market was mainly driven by factors such as a recovery in fundamentals, introduction of policies, and easing liquidity. The end of the short-term adjustment of the TMT market was mainly driven by factors such as catalytic industrial events, introduction of active policies, adequate adjustment of sentiment indicators, and easing liquidity. First, catalysing industrial events is a core factor driving the end of TMT's short-term adjustments. Second, the introduction of active policies is also an important factor leading to the end of TMT's short-term adjustments. Third, sufficient adjustment of sentiment indicators is an important condition leading to the end of TMT's short-term adjustments: first, the TMT turnover fraction fell below 40%; secondly, TMT financing balances mostly fell by 5% or more than 10%. Fourth, liquidity easing also has an important impact on the end of TMT's short-term adjustments.
Looking at it now, strong industrial trends and policy catalysts may bring the TMT adjustment to an end
The catalyst for the upward trend in the industry continues in the short term. First, global demand for AI computing power continues to expand. Second, new products related to AI are constantly appearing. Third, in the short term, global AI-related companies are all likely to have high growth rates and exceed expectations. Fourth, financing for technology companies continues.
Active policies are likely to continue to be introduced and implemented in the short term. First, the 2026 World Artificial Intelligence Conference opens. Second, the “2026-2028 National Computing Power Infrastructure Construction Action Plan” was released. Third, Shanghai announced 13 “AI+ manufacturing” measures.
Sentiment indicators have declined somewhat, but the decline has not been sufficient. First, the current historical quantile of TMT's price-earnings ratio has fallen to 84% from a high of 93% in March; TMT still accounts for more than 50% of turnover. Second, the TMT financing balance fell by about 10% compared to the high before the adjustment.
Fundamental support is still strong. Short-term A-shares may fluctuate and bottom out, and there is limited room for further downside
The short-term economy and earnings are likely to continue to recover. First, the short-term economy may continue to recover at a high rate: first, short-term exports may continue to maintain a high growth rate; second, the growth rate of short-term real estate investment may continue to weaken, the growth rate of infrastructure investment may stabilize, and the growth rate of investment in the high-tech industry in manufacturing may continue to pick up; finally, the short-term consumption growth rate may continue to rise steadily. Second, the short-term profit growth rate is likely to continue to pick up: first, the short-term PPI year-on-year growth rate and the profit growth rate of industrial enterprises may continue to pick up; secondly, the short-term A-share profit growth rate may also continue to rise.
Short-term liquidity is likely to ease further. First, short-term macro-liquidity may be marginally relaxed: First, US short-term inflation expectations have cooled down, and overseas liquidity expectations may be marginally relaxed in the short term; secondly, domestic central banks have net investment of more than 1.9 trillion dollars this week, and domestic liquidity is likely to remain loose. Second, short-term capital inflows to the stock market may improve.
Short-term policies are likely to remain positive, and external risks may continue to be low. First, short-term policies are likely to continue to be positive: first, the July Politburo meeting may continue to set a positive tone; second, positive policies in the consumer and technology industries may continue to be implemented at an accelerated pace in the short term. Second, short-term external risks are likely to remain low: first, the short-term US-Iran conflict may have limited negative impact on the market; second, Sino-US relations will remain stable in the short term.
Industry allocation: Short-term balanced allocation of industries such as high-performance technology, partial cycles, and undervaluation dividends
Currently, PEG and sentiment in the growing industry are low; profits from petrochemicals, trade and retail, environmental protection, military, and computers in the interim report have been disclosed to be growing at a high year-on-year rate. Recommended balanced allocation: First, electronics (semiconductors, AI hardware), communications (AI hardware), computers (AI applications), media (AI applications, games), telecommunications (AI applications, lithium batteries), innovative drugs, military (commercial aerospace), non-ferrous metals, etc. where policies and industry trends are trending; the second is undervalued dividend industries such as big finance and electricity.
Risk Alerts
Historical experience may not be applicable in the future, policies have changed beyond expectations, and economic recovery falls short of expectations.