Sinolink: The domestic AI sector is clearing more slowly than that overseas; a comprehensive improvement in non-AI sectors will still require patience.

Sinolink released a research report stating that from the perspective of capital clearance, A-share AI-related stocks have cleared more slowly compared to overseas markets; hence, this week's rebound has been weaker than that overseas. From a fundamental perspective, the earnings reports from tech giants have relieved rather than eliminated concerns. While the fundamentals support the rebound, they are not strong enough to drive a reversalbefore the next validation point, rebounds across markets may move in the same direction, but with varying degrees. The top of the high real interest rates in the U.S. has been observed, yet a decline is uncertain; the bottom in non-AI sectors has emerged, but the period of adjustment continues. We wait patiently. Sinolink's main points are as follows: 1. How to view the domestic and international differences in the AI chain From the perspective of capital clearance, the signal for clearing the domestic AI chain is comparatively weaker than that of overseas markets, making this week's rebound more akin to a correction after a crash. The current state of the domestic capital structure is as follows: (1) According to estimations, institutional investors represented by public mutual funds are still increasing their positions despite holding high positions in the AI chain (this may also be a passive behavior after redemptions); (2) Individual investors represented by margin trading have reduced their leverage but have not yet stabilized; (3) Absolute return investors (Fixed Income + funds) have significantly increased their allocation to the AI chain direction by Q2 2026, but declines in these sectors may trigger stop-losses and result in exiting the market, although this has not yet happened; (4) The ETF supporting the market may have delayed the clearing process. In contrast, the clearing signals in overseas markets are more intense and clear, leading to stronger rebounds in the Korean and U.S. stock markets on Friday. Korea experienced this week: two consecutive trading days of circuit breakers the finance minister held an emergency meeting to apologize and formulate corrective measures to restore the market to normal as soon as possible the chairman of SK Group bought SK Hynix stocks the Korean government injected funds into the sovereign wealth fund, more resembling the characteristic of receiving incremental funds entry after capital clearance. U.S. stocks similarly exhibited classic clearing signals: hedge funds faced situational awareness collapses, selling all fund assets to Citadel. From a fundamental viewpoint, the earnings reports from tech giants have relieved rather than eliminated concerns; AI investments are generating quantifiable revenue returns, but the high capital expenditures are certainly eroding profits. Investors are starting to pay attention to the relative speed of growth in orders on hand vs growth in capital expenditures. Meanwhile, advancements in domestic large models are also challenging industry profit margins. Therefore, while fundamentals support the rebound, they are not strong enough to drive a reversalthe market needs to see more companies improving their AI investment return ratios, with the next validation point being NVIDIA's earnings report at the end of August. Before this next validation, rebounds in various markets may move in the same direction but with differing amplitudes. 2. The world outside AI: A bottom has emerged, but positive changes are still awaited This week, the Federal Reserve remained steady but internally divided + the Political Bureau emphasized increasing counter-cyclical adjustments. The former means that the strong bias in AI investments continues to support real interest rates, but it is not strong enough to support a rate hike: high interest rates exerting pressure on non-U.S. economies and non-AI industries is progressively peaking but still exists. The domestic Political Bureau meeting reiterated increasing counter-cyclical adjustment, resonating with the official manufacturing PMI dropping below the expansionary threshold published on July 31. This reinforces expectations for cuts in reserve requirements and interest rates in Q3, as well as expectations for fiscal stimulus in the second half of the year. However, domestic demand remains in a state of strong expectations, weak realities, with June's industrial enterprise profit growth down 6 percentage points to 15.1%. Overall, the current fundamentals are in a transition phase, meaning that there is still no strong signal of a new consensus emerging, whether in terms of economic growth or stock investment. Opportunities to watch on the left side are described in last weeks weekly report Waiting Patiently: if AI investments slow down, it could catalyze U.S. real interest rates to decline from the current high levels, releasing previously suppressed demand in emerging markets. The K-shaped divergence in Chinas external demand is expected to converge, with a more general export chain outside the AI chain showing resilience, thus stimulating global physical demand. 3. Energy chain: A certainty anchor under active defense Against the backdrop of unfinished deleveraging in the AI chain and shifting market styles, the energy chain (coal + electricity + oil and petrochemicals) may become the core focus for funds exiting technology due to its rigid supply, performance certainty, and high dividends. The supply rigidity of coal is accentuated, with Shanxis Seventeen Provisions marking coal supply constraints upgrading from temporary safety regulations to an institutionalized long-term mechanism; electricity has dual drivers of thermal power transformation and demand growth; the current situation differs from the early period of the U.S.-Iran ceasefire in May-June, as oil and petrochemicals are encountering valuation recovery opportunities. Future global inventory accumulation demand and supply contraction are expected to coexist, with oil prices settling above pre-conflict levels, and domestic refinery operating rates and price differentials expected to improve in unison. 4. In transition, actively defensive The strength of the global rebound may vary. Fundamentally, the comprehensive improvement in the non-AI world still requires waiting, but clear signals have emerged in specific areas. Our recommendations are: First, energy prices are gradually stabilizing at low levels, benefiting from China's manufacturing flow (coal + electricity) as a good absolute return combination; the oil and petrochemical sector will see profit valuation recovery as energy prices stabilize at the bottom. Second, Southern countries and Chinese manufacturing remain in a hovering period under the pressure of high real interest rates, with a potential bottom emerged, focusing on industrial metals, engineering machinery, electric grid equipment, and refining directions. Third, the dividend style benefits from the switch of absolute return seekers; in the context of unfinished deleveraging in the AI chain and increased market volatility, high dividends + low volatility + stable cash flows in dividend assets will become a favored direction for absolute return fund allocations. Risk Warning: Domestic economic recovery may underperform expectations, and overseas monetary policy expectations may tighten significantly.