During the recent period of weakness in long-duration growth stocks, a common question has emerged among investors: is this the right time to start building a position? Before jumping to conclusions, it is essential to understand the root cause of this pressure. Since the start of 2026, long-term US Treasury yields have remained elevated and volatile, with the 10-year yield briefly approaching 4.8% following stronger-than-expected August non-farm payroll data. Long-duration growth stocks are highly sensitive to interest rate fluctuations, as future earnings are discounted at higher rates, meaning even a modest move in yields can significantly alter valuations. This dynamic, combined with already crowded positioning in AI and semiconductor trades, triggered a structural deleveraging in the technology sector since July, resulting in a substantial correction.
Has the macro-level pressure now fully subsided? According to the latest analysis from China Merchants Securities, while the August US CPI report came in slightly above expectations, the market has largely priced in this data, suggesting that macro-driven trading may be nearing its conclusion. This does not imply that interest rates are about to drop sharply, but rather that the most intense phase of panic could be passing. The structural issues behind rising long-end yields—such as AI financing crowding out, fiscal deficits, and term premium expansion—still persist, but the most acute impact typically occurs when the data is released. The September FOMC meeting and US-Iran tensions remain variables, yet market participants are gradually digesting these expectations.
When considering a potential entry point now, a shift in strategy is necessary. The previous approach of simply buying and waiting for broad valuation expansion is unlikely to repeat in the near term. China Merchants Securities emphasizes that industry-level changes will drive the market's next phase, with investors increasingly rewarding marginal fundamental improvements rather than long-term narratives. This means not all long-duration growth stocks will experience a recovery; selectivity is key, focusing on areas where business momentum is genuinely improving and earnings are deliverable.
Which sectors deserve attention? The AI compute chain remains a core focus, but internal divergence is expected. Breakthroughs in new models across agent and scientific research applications are expanding AI's earnings ceiling, with profits shifting from hardware to software and applications. Semiconductor equipment and electronic chemicals, backed by strong domestic substitution logic and high order visibility, have firmer fundamentals support. The CPO supply chain, after its adjustment, has downside protection as long as North American cloud giants' capex guidance does not turn negative. Additionally, the premium equipment export theme is worth monitoring; sectors like construction machinery and power grid equipment benefit from resilient overseas demand and low valuations, offering a balanced risk-reward profile.
Regarding the pace of position-building, expecting an immediate full deployment would be unrealistic. According to China Merchants Securities, short-term volatility in the A-share market may increase, with a pattern of differentiated bottoming and range-bound recovery rather than a V-shaped rebound. A phased accumulation approach is advisable—initially taking a partial position to track the confirmation of business momentum, then gradually adding exposure as bottom signals become clearer, such as a narrowing decline in margin financing balances and stabilization in core tech assets. Maintaining a balanced allocation between "structural growth" and "dividend" plays is recommended, with dividend stocks serving as a base and growth stocks providing upside flexibility.
Ultimately, opportunities in long-duration growth stocks have not vanished, but the market has shifted from a "beta trade" to an "alpha selection" environment. The process of macro pressure gradually easing is precisely the time to distinguish genuine growth from cyclical noise. Companies that can deliver strong results despite high interest rates will be the core holdings for the next market rally.