CITIC Securities: The current adjustment of A-shares is more a correction of crowded trading than a Korean-style deleveraging shock.

CITIC Securities research report states that the current adjustment of A-shares is more a correction of crowded trading rather than a Korean-style de-leveraging shock. This is reflected in: 1) The overall leverage situation is relatively safe, with the number of stocks that rose in July nearing half of all A-shares, significantly exceeding June; 2) Compared to typical de-leveraging markets in global history, the current decline in financing is not substantial; 3) The ETF market is experiencing continuous capital inflow, with inflows into technology-related ETFs providing ample liquidity support. Of course, localized liquidity pressure still exists, especially among certain non-core AI stocks. The adjustment of these stocks has influenced the internal positioning changes within the technology sector, causing a temporary breakdown in pricing of core targets. However, we believe that this impact has largely been eliminated. The probability of a general recovery in August is increasing, but this is not merely a simple oversold rebound; the negative narrative for non-AI sectors is experiencing marginal improvement, and the funding environment supports appropriate recovery. In terms of allocation, it is recommended to increase exposure to energy and chemicals, non-ferrous metals, non-bank financials, and innovative pharmaceuticals, while technology positions need to focus more on consolidation during the rebound.