A-share style rotation is underway: coal, consumer, and banking sectors are surging one after another—who will be next?
The A-share market is currently seeing a dramatic scene where “elephants dance” and sector rotation play out, as changes in capital flows hint that market style may have reached a key turning point.
Funds in the A-share market are shifting from previously popular tech growth sectors to traditional blue chips with lower valuations and stable dividends. Recently, sectors like coal, consumer goods, and banking have been surging one after another.
The latest market moves have highlighted this change. On the morning of November 12, there was a notable divergence in the market: while more than 3,800 stocks fell, the top 18 companies by market value led by Agricultural Bank of China surged together, driving the main indices into the green. At one point, Agricultural Bank of China's stock price rose 3%, hitting a record high and breaking through a market value of three trillion yuan.
Midea Group, PetroChina, and Bank of China all rose by 2%. Other heavyweight stocks such as Ping An Insurance, China Life, Industrial and Commercial Bank of China, and Postal Savings Bank also performed strongly.
According to market data, southbound funds saw significant net inflow last week (November 3 to 7), with banks, non-bank financials, and oil & petrochemical sectors being the main targets, together receiving around 18.4 billion yuan in net inflows. This shows that as market risk preference changes, investors are regaining their favor for traditional large-cap assets.
Behind this rotation is the market’s rebalancing between “certainty” and “high elasticity”. Several brokers’ research reports indicate the market is transitioning from chasing the “future narrative” of tech stocks to uncovering “valuation depressions” in traditional sectors, with the style shift arriving as expected. Some analysts believe the bull market will smooth out every “depression”, and expect this round, led by “old forces,” to last through the fourth quarter.
“Seesaw Pattern”: Rotation Between Dividend and Growth
Since 2025, a striking feature of the A-share market is the opposition and rotation between the two major styles of “dividend” and “tech growth”.
According to a research report from CITIC Construction Investment Securities, “Since 2025, a core feature of the A-share market is the significant divergence and rapid rotation between the two styles of ‘dividend’ and ‘tech growth’, forming a ‘seesaw pattern’.”
The report further explains the internal logic of this phenomenon: when “external environment uncertainty rises, funds flock into the dividend sector with stable cash flow and high payouts to seek ‘certainty now’”; but when “market risk preference warms up, capital quickly shifts to the tech growth track, betting on ‘high elasticity in the future’.”
The strong performance of large-cap blue chips recently is a direct reflection of the market seeking “certainty” under current conditions.
“Old Forces” Rise: Brokers Favor Valuation Depressions
With the change in market style, many institutions have turned their attention to traditional sectors that were previously underweighted. Pacific Securities pointed out in a strategy daily dated November 10:
“Dividend indexes are leading, consumer stocks outpace other industries, and the style rotation from old to new is arriving as expected. The ‘old’ forces we previously recommended continue to outperform and are expected to lead throughout the fourth quarter.”
The report believes continued rise in tech sectors needs to be confirmed by rising earnings, while traditional sectors offer more attractive valuations. It reads:
“Continued rise in narrative sectors like tech requires upside in profits to confirm, while previously underweighted sectors such as non-ferrous metals, coal, photovoltaics, banks, nuclear power, consumer, and chemicals remain at low levels. The bull market will smooth out every ‘depression’.”
CITIC Securities also expressed optimism on large-cap styles in their outlook and sees good allocation value in coal and photovoltaic industries.
The Logic of “Buying Well”: High Dividends and Safety Margins
At the heart of this style shift is the change in investor logic from simply pursuing high growth in “buying good” to balancing valuation cost-effectiveness in “buying well”.
Guosen Securities cited research by investment master Jeremy J. Siegel in a research report, pointing out that high growth does not necessarily bring high returns, while excessively high valuations actually erode long-term returns.
This logic has been verified in the banking sector. CITIC Construction Investment Securities believes that against the backdrop of weak macroeconomic recovery, “the high dividend strategy will continue to play out.” For allocation-focused funds, “the safety margin for demand focused on bottom-line thinking, high confidence, and high win-rate continues to rise.” The institution thus remains positive on high-dividend strategies and recommends state-owned major banks and some regional banks with stable dividends and valuation advantages.
This suggests that in an uncertain environment, assets with solid fundamentals and valuation safety cushions are becoming funding favorites.
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