CITIC Securities Qiu Xiang: Firmly Layout Around Valuation and Weighting of China's Advantageous Manufacturing Pricing Power

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Self-quoted from: Xinhua Finance

Xinhua Finance Beijing, March 19 (Reporter Liu Yulong) — “Our annual strategy framework is based on China’s ‘resource + traditional manufacturing pricing power revaluation’ as the foundation,” said Qi Xiang, Chief A-Share Strategist at CITIC Securities, at the CITIC Securities 2026 Spring Capital Market Forum on March 19. In terms of allocation, we are firmly focused on revaluing China’s advantageous manufacturing pricing power.

Qi Xiang stated that whether at the index level, valuation level, or macro liquidity level, the spring A-shares are at a critical juncture. Whether corporate profit margins can stabilize and rise in the long term is an important consideration. Meanwhile, the US-Iran conflict is a catalyst for market style shifts this year. Against the backdrop of rising global costs and weakening financial conditions, low valuation and pricing power are the two most important factors.

Qi Xiang explained that historically, major conflicts in the Middle East and oil price shocks have shown that low valuation is the “strongest shield.” He analyzed that during each major geopolitical conflict and oil supply disruption, global stock markets’ movements were unpredictable. But overall, the core strategy principles for dealing with rising global energy costs and weakening financial conditions are that low valuation beats high valuation, value beats growth, and large caps outperform small caps.

Qi Xiang recommended focusing on industries with a share advantage, high difficulty and cost of overseas capacity reset, and supply elasticity easily influenced by policies—such as chemicals, non-ferrous metals, electrical equipment, and new energy—as the basis for revaluing China’s advantageous manufacturing pricing power.

From an industry trend perspective, Qi Xiang noted that code expansion and physical scarcity in China manifest as an increase in the pricing power of advantageous manufacturing industries. Accelerating “disruptive” innovations in AI and disruptions in the global energy supply chain are reinforcing this trend.

He believes that, driven by short-term cyclical signals, price increases remain the sharpest “spear” in the first quarter. The US-Iran conflict and the potential closure of the Strait of Hormuz may temporarily raise oil prices, shifting the cost curve of many cyclical commodities to the right. Under this narrative, there are multiple clues and structural opportunities, such as chemical products with alternative raw materials/process routes during oil shocks, products with significant Middle Eastern/Western European capacity share, and supply-demand balanced commodities with cost increase windows due to rising costs.

Editor: Luo Hao

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