Essence of Brokerage Morning Meeting | A-Share Bottom Form Finally Emerging

Last Friday, the market hit bottom and rebounded throughout the day, with the three major indexes showing mixed movements. Overall, individual stocks fell more than they rose, with over 3400 individual stocks falling in the entire market. The trading volume in Shanghai and Shenzhen totaled 574.7 billion yuan for the day, down 52.3 billion yuan from the previous trading day. In terms of sectors, the top performing sectors included smart governance, precious metals, real estate, and software development, while the sectors with the biggest declines were innovative drugs, photovoltaic equipment, batteries, and biological products. At the close last Friday, the Shanghai Composite Index rose by 0.03%, the Shenzhen Component Index fell by 0.15%, and the ChiNext Index fell by 0.64%. At today's securities morning meeting, Huatai believes that the bottoming out pattern of A-shares is beginning to appear; Central China stated that the overall economic situation is stable, and the market is expected to stabilize and rise; China Securities Co.,Ltd. pointed out that the investment and financing outlook of the pharmaceutical industry is expected to quickly recover, with valuation advantages. Huatai: A-share bottoming out pattern beginning to appear Huatai believes that last week, A-shares rebounded slightly, driven mainly by the landing of the 50 basis point rate cut by the Federal Reserve and expectations of domestic policy easing. Investors are concerned about whether the timing and space of this adjustment are in place. Huatai believes that the space for the bottoming out pattern of A-shares is beginning to appear. Margin trading balances show signs of stabilization, the cost-effectiveness of dividend stocks is improving, and last week, the previous strong stocks stopped falling, and contrary to the trend, there is a turning point in capital flow - recent industrial capital net increase turned positive. As for time, the Federal Reserve rate cut only provides favorable conditions, and a sustained rebound still requires patience. The following clues are being monitored for corresponding stocks: AH premium convergence, non-financial A50, actively replenishing and sustainable stocks, and those benefiting from rate cuts. Central China: Overall stable economic operation, market expected to stabilize and rise Central China points out that the recent statements from the central bank indicate strengthened countercyclical adjustment expectations, and the economy is expected to stabilize and rebound. The Federal Reserve rate cut cycle has begun, with an unexpectedly high 50 basis point cut for the first time, but Powell's stance is hawkish, with the extent of future rate cuts still to be observed. With the strengthening of expectations for macroeconomic regulation and the implementation of stable growth policies, the market is expected to stabilize and rebound. It is recommended to focus on sectors such as chips, home appliances, electricity and utilities, media, and non-ferrous metals. China Securities Co.,Ltd.: Investment and financing outlook of the pharmaceutical industry expected to quickly recover, with valuation advantages China Securities Co.,Ltd. points out that since the Federal Reserve first announced a rate cut in March 2020, global liquidity has improved marginally, and the investment and financing outlook of the pharmaceutical industry is expected to quickly recover, with valuation advantages. Key opportunities to focus on are in Hong Kong stocks and CXOs: 1. The opening of the rate cut cycle is relatively favorable for the pricing of innovative assets, with the representative segment being innovative drugs and pharmaceutical companies. Evaluation of differentiation, clinical value, compliance, commercialization capability, or platform capability is the core basis for stock selection. 2. With the rate cut cycle beginning, pharmaceutical investment and financing are expected to gradually recover, and the increase in research and development demand will benefit CXO leaders with global competitiveness and leading companies in niche areas. 3. For Hong Kong medical device companies, the opening of the rate cut cycle will benefit the improvement of cash flow and valuation, with some companies with high growth in performance expected to achieve high growth due to the volume of innovative products and rapid growth in overseas businesses. This article is reprinted from "Cailian Press", GMTEight editor: Xu Wenqiang.