China Merchants Securities review of nine major A‑share drawdowns since 2015
finds sharp falls usually triggered by external shocks or liquidity stress;
stabilization has historically been marked by policy response. Post‑adjustment
mean rebound window is 34 trading days; Wind All‑A average bounce exceeds 19%,
with larger prior declines tending to produce bigger recoveries. Sector rotation
is two‑phased: first 10 trading days led by high‑beta, oversold names
(electronics, computers/TMT); between 20–60 trading days the market reverts to
earnings‑supported leaders (power equipment, food & beverage). Recommended
two‑step positioning for the current leg: early allocation to oversold,
high‑elasticity TMT (priority on onshore and offshore compute‑capacity leaders);
after ~10–20 trading days shift toward earnings/rebalancing exposure — focus on
power equipment, specialty pharmaceuticals/chemicals, coal and non‑bank
financials. Tradeable themes: beneficiaries of rising overseas compute pricing,
domestic compute hardware elasticity, and gold for hedge/rebalancing. Overall
portfolio framework: technology innovation, corporates expanding abroad, and
rebalancing into undervalued traditional sectors.
