For stock investors, the research reports from Jin Qilin analysts are authoritative, professional, timely and comprehensive, helping you uncover potential thematic opportunities. Sinolink Securities Research. Authors: Mu Yiling, Fang Zhiyong, Mei Kai.
Summary
Investment Logic
Behind the divergence between Chinese and US tech stocks: valuation convergence under pressure from fundamental expectations
Recently, the performance of Chinese and US tech stocks has shown a clear divergence. The direct trigger behind this is the potential sanctions risk represented by the US FCC, which has led to concerns about future fundamentals, thereby suppressing valuations, and this has been further amplified by an still-crowded domestic trading structure. At present, after A-share tech stocks have undergone a major correction, prices and valuations have somewhat reflected investors' concerns about the future fundamentals of A-share tech stocks, but it is hard to say this has been fully priced in: A-share tech stock valuations are still not cheap enough, and are even still higher than those of US stocks. (1) From the perspective of their own valuation levels, the PE TTM valuation percentiles of growth sectors represented by optical modules, PCBs and computing power chips are still above 60%, while PB valuation percentiles are even higher, all still above 85%. Although dynamic valuations may be reasonable and ROE levels have already improved at present, this also means higher requirements are being placed on assumptions about future fundamentals, and the basis for those assumptions is facing various uncertainties. (2) Compared with US stocks: current A-share tech stock valuations are still higher than those of US stocks, with PB slightly higher and PE far higher. From the perspective of subsectors: the PB valuation of A-share optical modules and PCBs is still far above that of US stocks; the PE valuation of A-share AI chips is far above that of US stocks. The extreme relative scarcity and prosperity of Chinese tech stocks within the A-share market was the driving force behind their past excess returns and faster valuation increases; however, during a period of global tech contraction, this has also become a hidden concern for future performance from the perspective of cross-market comparison of global tech stocks.
Two possible directions for the future US AI investment cycle
After hitting new highs, US stocks are now also facing their own problems: earnings have begun to diverge due to differences in calculation standards, represented by OPEN AI's revenue figures (US$50 billion vs US$70 billion). Although optimists and pessimists each hold their own views, what is clear is that the future performance of US AI tech stocks also faces significant uncertainty. We discuss this by scenario. First, if the fundamentals of US tech stocks are confirmed to be problem-free, then their share prices will return to strength. For A-shares, we believe there may also be a recovery after the sharp decline, but the extent will not be too large, and it will most likely be weaker than US stocks. The reasons are as follows: (1) The fundamental mapping relationship between Chinese and US tech stocks has weakened. The core reason behind this is that US tech stocks have shifted from attracting global investment capital to redistributing profits after focusing on future returns, allowing profits from the global AI industrial chain to flow back to the United States to support more distant investment needs. This is an inevitable choice in a scenario where retaining overseas profits is scarce. Therefore, although the FCC measures have not yet landed, as long as they have not landed, they will continue to suppress fundamental expectations for Chinese sectors that cut into the US industrial chain, represented by optical modules. (2) Problems at the trading level have still not been fully digested. On Friday of this week (2026-10-09), A-share tech stocks showed a clear rebound after the sharp decline, mainly because ETFs and market stabilization funds entered to provide support, as the margin guarantee ratio has returned to near previous lows, increasing the necessity of stabilizing the market. Even so, the concentration of mutual fund holdings plus contrarian operations are the biggest factors constraining the rebound: since the end of July, during the weak rebound in tech stocks, mutual funds have shown clear contrarian operations in the electronics and communications sectors that were heavily held in Q2, namely reducing positions during rebounds and slightly adding during declines. Second, if the fundamentals of US tech stocks also run into problems, then under a downward trend in US tech stocks, A-share tech stocks may find it even harder to remain unaffected. In this case, the siphon effect of US AI on global capital will weaken, upward pressure on real interest rates will ease, and combined with a sharp decline in October rate hike expectations, pressure from rising nominal rates will also ease somewhat. At that point, the allocation opportunity for gold may instead arrive. Therefore, from a current global investment perspective, holding a combination of US AI tech stocks plus gold may be a hedging portfolio, but for domestic investors, A-share tech stocks do not have an advantage during the tech contraction process. At this time, the energy sector, which has lower sensitivity to interest rates and dividend attributes, becomes a better substitute.
Domestic demand: a potential hedging option, with positive short-term changes but also concerns
Against the backdrop of high overseas interest rates and the divergence between Chinese and US tech stocks, in addition to energy plus gold, domestic demand is also a potential hedging area for investors who do not want to leave the market or cannot leave it: (1) On the one hand, after years of sustained adjustment, the dividend yield of the consumer sector has become quite attractive, and the dividend yield of some subsectors has even surpassed that of banks. (2) On the other hand, policy has also recently been actively stepping up: on Friday of this week, the Ministry of Finance set the tone of "increasing the intensity of countercyclical adjustment and stepping up efforts to expand domestic demand," and it is expected that the physical work volume of infrastructure in the fourth quarter will accelerate, providing some support for domestic demand. However, there are also some concerns about domestic demand at present: September PMI data show strong supply and weak demand, and the weakening of reality may not yet be over, which constrains the sustainability of stock price performance.
Allocation approach under a full defensive framework
Since we proposed active defense, the market has clearly cooled; since we proposed full defense, market temperature has begun to decline further. The difference between active defense and full defense is that the former recognizes market risks but is still looking for assets with excess returns, while the latter is an asset allocation approach focused primarily on preventing downside risk. For overseas investors, holding US tech plus gold can still achieve effective hedging, but this does not hold for domestic investors. Gold is the dominant asset for the next scenario, and what can be sought at present is the energy chain, where demand has relatively low sensitivity to interest rates and the supply side has undergone major changes. Based on this, we recommend focusing on the following: First, the energy and chemicals chain represented by oil, oil shipping and coal will continue to benefit from global restocking demand for energy, while also being assets with dividend attributes. Second, against the backdrop of a slowing trend in the AI industry and disagreements over fundamentals, combined with a sharp decline in October rate hike expectations, the suppression from real interest rates is gradually easing, and gold is ushering in an allocation opportunity.
Risk warnings
Geopolitical conflicts continue to escalate; the AI industry trend sees a major breakthrough.
Table of Contents
How to view the current divergence between Chinese and US tech: valuation convergence under pressure from fundamental expectations. Future scenario analysis: two directions under the US AI investment cycle. Domestic demand: a potential hedging area, with some positive changes but also concerns. Allocation approach under a full defensive framework. Risk warnings. Main text.
How to view the current divergence between Chinese and US tech: valuation convergence under pressure from fundamental expectations
Recently, the performance of Chinese and US tech stocks has shown a clear divergence: while the Nasdaq index hit a new high for the year, the ChiNext index hit a new low for the year, and while the Philadelphia Semiconductor Index recovered to previous highs, the STAR 50 returned to near the position before the April market rally began. We believe this is not because current fundamentals have already run into problems, but rather because the potential sanctions risk represented by the US FCC has brought concerns about future fundamentals and led to valuation compression, while also being amplified by a crowded trading structure. After this round of adjustment, has the valuation of domestic tech stocks been cut enough? We analyze this from two dimensions: (1) From the perspective of their own valuation levels, the PE TTM valuation percentiles of growth sectors represented by optical modules, PCBs and computing power chips are still above 60%, while PB valuation percentiles are even higher, all still above 85%, so it is hard to say they have entered a relatively cheap range. (2) Comparison with US stocks: we select representative leading tech companies from China and the United States as analytical samples. From an overall valuation perspective, the PE and PB valuations of A-share tech stocks in this round have already halved from their highs, but US stock valuations have even declined while approaching new highs or rising. Therefore, current A-share tech stock valuations are still higher than those of US stocks, with PB slightly higher and PE far higher. From the perspective of subsectors: the PB valuation of A-share optical modules and PCBs is still far above that of US stocks; the PE valuation of A-share AI chips is far above that of US stocks; the valuation of the storage sector is the same. Therefore, based on the above analysis, we can draw the following conclusion: at present, after A-share tech stocks have undergone a major correction, prices and valuations have somewhat reflected investors' concerns about the future fundamentals of A-share tech stocks, but have not fully reflected them: valuations are still not cheap enough, and are even still higher than those of US stocks.
Future scenario analysis: two directions under the US AI investment cycle
After hitting new highs, US stocks are now also facing their own problems: on the one hand, high interest rates are suppressing valuations, so US stocks are basically only rising on earnings while valuations are even declining; on the other hand, earnings have also begun to diverge due to differences in calculation standards, represented by OPEN AI's revenue (US$50 billion vs US$70 billion). Although optimists and pessimists each hold their own views, what is clear is that the future performance of US AI tech stocks also faces significant uncertainty. We discuss this by scenario. First, if the fundamentals of US tech stocks are confirmed to be problem-free, then their share prices will return to strength. For A-shares, we believe there may also be a recovery after the sharp decline, but the extent will not be too large, and it will most likely be weaker than US stocks. The reasons are as follows: (1) The fact that US tech stock fundamentals are fine does not mean that the pressure on A-share fundamentals has been lifted. The fundamental mapping relationship between Chinese and US tech stocks has weakened. The core reason behind this is that US tech stocks have shifted from attracting global investment capital to redistributing profits after focusing on future returns, allowing profits from the global AI industrial chain to flow back to the United States to support more distant investment needs. Therefore, even if the fundamentals of US tech stocks continue to improve, what lies behind this is no longer a win-win situation under the previous expansion of the pie, but rather a process of taking shares from other non-US tech stocks under the requirements of future returns. Therefore, although the FCC measures have not yet landed, as long as they have not landed, they will continue to suppress fundamental expectations for Chinese sectors that cut into the US industrial chain, represented by optical modules. (2) Problems at the trading level have still not been fully digested. On Friday of this week (2026-10-09), A-share tech stocks showed a clear rebound after the sharp decline, mainly because ETFs and market stabilization funds entered to provide support, as the margin guarantee ratio has returned to near previous lows, increasing the necessity of stabilizing the market. Even so, the concentration of mutual fund holdings plus contrarian operations are the biggest factors constraining the rebound: since the end of July, during the weak rebound in tech stocks, mutual funds have shown clear contrarian operations in the electronics and communications sectors that were heavily held in Q2, namely reducing positions during rebounds and slightly adding during declines. Second, if the fundamentals of US tech stocks also run into problems, then under a downward trend in US tech stocks, A-share tech stocks may find it even harder to remain unaffected, and at that point the trends of Chinese and US tech stocks may instead begin to converge. In this case, the siphon effect of US AI on global capital will weaken, upward pressure on real interest rates will ease, and combined with a sharp decline in October rate hike expectations, pressure from rising nominal rates will also ease somewhat. At that point, the allocation opportunity for gold may instead arrive. The signal of slowing OPEN AI revenue and the recent slowdown in the rise of real interest rates have once again synchronized, which may be important verification of this scenario. Therefore, from a current perspective, holding a combination of US AI tech stocks plus gold may be a relatively prudent choice, but for domestic investors, the problems of A-share tech stocks themselves have not yet been completely resolved. At this time, the energy sector, which has lower sensitivity to interest rates and dividend attributes, becomes a better substitute. Energy plus gold may be a better combination for A-share investors.
Domestic demand: a potential hedging area, with some positive changes but also concerns
Against the backdrop of high overseas interest rates and the divergence between Chinese and US tech stocks, in addition to energy plus gold, domestic demand is also a potential hedging area for investors who do not want to leave the market or cannot leave it: (1) On the one hand, after years of sustained adjustment, the dividend yield of the consumer sector has become quite attractive, and the dividend yield of some subsectors has even surpassed that of banks. (2) On the other hand, policy has also recently been actively stepping up: on Friday of this week, the Ministry of Finance issued the "Ministry of Finance Arranges the Use of RMB 550 Billion in Local Government Debt Balance Limits" and the "Report on the Implementation of China's Fiscal Policy in the First Half of 2026," setting the tone of "increasing the intensity of countercyclical adjustment and stepping up efforts to expand domestic demand." It is expected that the physical work volume of infrastructure in the fourth quarter will accelerate, providing some support for domestic demand. Nevertheless, there are also some concerns about domestic demand at present: September PMI data show strong supply and weak demand, and the effect of policy stimulus on demand still needs further observation.
Allocation approach under a full defensive framework
Since we proposed active defense, the market has clearly cooled; since we proposed full defense, market temperature has begun to decline further. The difference between active defense and full defense is that the former recognizes market risks but is still looking for assets with excess returns, while the latter is an asset allocation approach focused primarily on preventing downside risk. For overseas investors, holding US tech plus gold can still achieve effective hedging, but this does not hold for domestic investors. Gold is the dominant asset for the next scenario, and what can be sought at present is the energy chain, where demand has relatively low sensitivity to interest rates and the supply side has undergone major changes. Based on this, we recommend focusing on the following: First, the energy and chemicals chain represented by oil, oil shipping and coal will continue to benefit from global restocking demand for energy, while also being assets with dividend attributes. Second, against the backdrop of a slowing trend in the AI industry and disagreements over fundamentals, combined with a sharp decline in October rate hike expectations, the suppression from real interest rates is gradually easing, and gold is ushering in an allocation opportunity.
Risk warnings
Geopolitical conflicts continue to escalate: if geopolitical conflicts continue to escalate, then oil price shocks will persist, and inflationary pressure will bring tightening expectations, which is inconsistent with the interest rate assumptions in this article. The AI industry trend sees a major breakthrough: if the AI industry trend sees a major breakthrough, then the market will return to the tech main line, and defensive thinking will no longer apply.