CITIC Securities: Industrial trends are still upward, but the pace has slowed.

CITIC Securities' research report divides the market into three performance clues: the North American AI chain, the outward expansion to non-US markets, and domestic demand. 1) For the North American AI chain, after half a month of recovery, the odds of price increases have significantly decreased. There have been some marginal changes in the recent AI narrative, but they are still insufficient to drive a revaluation of the entire sector. We need to be patient and wait for the emergence of a long-term new narrative; 2) Regarding the outward expansion to non-US markets, the trade disputes between China and Europe may continue to be intense for some time, suppressing the valuations of many high-end manufacturing sectors. Additionally, as we approach the intensive disclosure period for semi-annual reports, the impact of exchange rate losses should not be underestimated; 3) For pure domestic demand varieties, the relative advantage of domestic computing power is evident, but considering that valuations reflect an optimistic outlook for long-term narratives, the capital sentiment in this sector may not be independent of the North American AI chain. Overall, many sectors still show upward industrial trends, but the factors constraining valuation expansion are increasing, and the pace of upward movement may slow down. Situations where multiples are doubling in the second quarter are extremely rare over a ten-year horizon, and investors need to return to reasonable expected returns. Market opportunities may manifest more as a valuation recovery for varieties supported by performance; the subsequent market downturn will also optimize the capital structure and reprice quality assets, laying a solid foundation for the continuation of the mid- to long-term market trend.