CITIC Securities: It is expected that the turning point of PPI year-on-year growth turning positive is expected to be further advanced, and a new upward cycle will be officially established.

According to the research report of CITIC Securities, China's PPI growth rate has bottomed out for three consecutive months, and the Middle East conflict is expected to further accelerate the upward momentum. In past PPI upward cycles, upstream raw materials have shown higher profit elasticity with strong pricing power, while midstream manufacturing has responded with differentiated performance due to structural demand influences. We currently recommend focusing on upstream cyclical resources and China's advantageous manufacturing sectors benefiting from the PPI upturn. China's PPI shows a clear cyclical pattern, experiencing multiple upward cycles since 2000. These cycles are essentially the result of global demand recovery, domestic industrial policy guidance restructuring supply and demand dynamics, and resonating with the global rise in commodity prices. Since the second half of 2025, the year-on-year decline in PPI has been continuously narrowing, supported by the transmission of global commodity prices, effective capacity adjustments in key domestic industries, and gradual domestic demand recovery. We predict that the year-on-year turning point in PPI is expected to be further advanced, and a new upward cycle will be formally established.