For China’s equity markets, CICC’s call points to continued rotation from high-flying growth names on the ChiNext and STAR boards towards dividend-paying stocks, a group typically dominated by banks, utilities, energy and telecom companies. That could support relative strength in dividend indexes even if the broader market stays volatile. The trigger points are largely external: US inflation data and Fed signals this week bear on the overseas liquidity concerns CICC cites, while Middle East escalation and doubts over AI spending would weigh most on the technology half of the trade. A strong run of global chip earnings could revive appetite for growth names and narrow the case for defensive positioning.
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After a tech-led first half, CICC wants investors in China to hold their growth stocks in one hand and something steadier in the other.
Summary:
CICC says A-share technology growth stocks rallied in the first half of 2026, driven by the AI supply chain and high-end manufacturing
Since July, negative narratives around the global AI chain, expectations of tighter overseas liquidity and Middle East risk have triggered a notable correction in previously strong growth sectors
With growth-stock volatility higher and risk appetite weaker, the firm says the case for dividend-paying assets deserves re-evaluation
It expects a “technology plus dividends” dumbbell allocation to gain emphasis as a way to balance earnings growth, shareholder cash returns and stability
CICC favours tech companies with clear industry trends, durable advantages and proven earnings, and dividend stocks with stable cash flow, sustainable payouts and reasonable valuations
China International Capital Corp expects investors in China’s mainland stock market to place greater emphasis on a “technology plus dividends” dumbbell strategy, after a sharp pullback in growth stocks since July exposed the risks of a portfolio tilted heavily towards tech.
A dumbbell, or barbell, strategy concentrates holdings at two ends of the risk spectrum rather than in the middle: in this case, higher-growth technology stocks on one side and stable, dividend-paying companies on the other. The aim is to capture upside from structural growth themes while relying on dividend payers to cushion portfolios when markets turn volatile.
In a research note, CICC said A-share technology growth stocks benefited in the first half of 2026 from strong conditions across the AI supply chain and high-end manufacturing, sustaining a structural rally. Since July, however, three pressures have combined to drive a notable correction in those previously strong sectors: rising negative narratives around the global AI industry chain, expectations of tighter overseas liquidity and increased geopolitical risk in the Middle East.
The liquidity concern reflects the global rate backdrop. The US Federal Reserve raised interest rates in September and markets are still weighing whether further increases will follow, making this week’s US inflation data and remarks from Fed Chair Kevin Warsh relevant to Chinese equities as well.
With growth-stock volatility higher and risk appetite weaker, CICC said the relative appeal of dividend assets deserves a fresh look. It argued that in an environment where overall growth is limited but pockets of strong structural growth remain, and where risk sentiment swings sharply, combining technology with dividends offers a way to balance earnings growth potential, shareholder cash returns and portfolio stability.
On implementation, the firm recommends focusing on technology companies with clear industry trends, durable competitive advantages and a demonstrated ability to deliver profits. For the dividend side, it favours high-quality companies with stable earnings and cash flow, sustainable payout policies and reasonable valuations.
Whether the rotation deepens is likely to depend on the external triggers CICC identified, particularly the direction of US monetary policy and how the global AI earnings season unfolds over the coming weeks.
This article was written by Eamonn Sheridan at investinglive.com.
