Guotou Securities: The role of high dividend bottom warehouse configuration has not disappeared, market value management in the leading area will become an important breakthrough

Guotou Securities released a research report stating that after Trump took office, the pricing of internal demand stimulus around domestic consumption + real estate needs to wait for further confirmation from domestic incremental policies. The role of high dividend bottom allocation has not disappeared, and market value management in the main board sector will become an important breakthrough. In the face of technological blockade, directions for technology autonomy and controllability, such as semiconductors, information technology, and military industry, have formed important industry themes for investment opportunities. At the annual level, it is still emphasized repeatedly that "technology (scientific and technological innovation) should be viewed with a fluctuating mindset", and signs of the main line of technological growth with semiconductors as the core are beginning to emerge. The expectation is that semiconductors can form the basic industry theme under the three driving forces of domestic substitution in Huawei's Hongmeng industrial chain, Q2 turning point in economic prosperity, and overseas mapping of the AI industrial chain. Last week, the Shanghai Composite Index fell by 3.52%, the ChiNext Index fell by 3.36%, and the Hang Seng Index fell by 6.28%. Small-cap stocks had a larger decline, and the daily average trading volume of the entire A-shares last week was 218.19 billion, showing a decrease compared to the previous week. Structurally, in the report "The Victory of the Common People", Guotou Securities pointed out that the trading fervor of individual investors and speculative investors is showing signs of overheating. Currently, both short-term market trends and structural observations are in line with the market. In fact, since the National Day holiday, Guotou Securities has repeatedly emphasized that with the current valuation of A-shares index recovering to the median level, the current market trend is relatively appropriate compared to the beginning of 2019 (1. The A-share index at the beginning of 2019 was a classic case of reversal pricing, entering into fluctuations after a 30% increase; 2. Looking back in history, the fluctuation range is within 15%-30% of the bottom). For the current market, it can be seen that the most clear core contradiction after the 924 market is the significant improvement in risk appetite, rather than the confidence in the short-term obvious recovery of fundamentals. Currently, two major influencing factors are presented in risk appetite: 1. A more obvious "concern about the US" externally; 2. A reoccurrence of changes in the regulatory environment internally. Although the fundamentals have shown signs of improvement in October, especially in large consumer goods such as household appliances and automobiles have shown significant growth under policy stimulation, driving a 4.8% year-on-year increase in social retail sales in October, an increase of 1.6 percentage points from the previous month. However, Guotou Securities also noted that the growth rate of social financing stock in October slowed down by 0.2 percentage points to 7.8% compared to the end of the previous month, reaching a new low since recordkeeping, indicating that overall economic recovery remains weak this year. Combining the "return of Trump" and the implementation of the 10 trillion fiscalization and debt policy, Guotou Securities still maintains that the A-share market has transitioned to a fluctuating mindset after the sharp rise, judging the underlying "fluctuating market trend". Regarding the "concern about the US" external factor, Guotou Securities believes that one should be prepared for the possibility that it may linger until January next year when Trump takes office again. In a previous report titled "Trump Returns: A Brief Review of A-shares from 2017 to 2020", Guotou Securities proposed that if there is a sustained upward force in the domestic macroeconomic fundamentals and opportunities for the breakout of industry fundamentals, A-share pricing essentially depends on internal factors, and the renminbi exchange rate will become an important tracking indicator for the index. Recently, with the continued fermentation of Trump's trade wars, the US dollar index has surged significantly, and the renminbi exchange rate quickly depreciated from around 7.0 in early October to the latest around 7.24. Meanwhile, Hong Kong stocks, which are more sensitive to global liquidity, have shown weaker performance than A-shares. Since September 24th, the Hang Seng Index has retraced most of its gains, with a cumulative increase of only 6.46%. Regarding changes in the internal regulatory environment, including cracking down on "TikTok stock speculation", a series of regulatory actions may lead to a return of value for small and medium-cap stocks that have recently deviated significantly from fundamentals (the minimum market value index, the forecasted loss index, and the earnings disappointment index are significantly advantageous). In fact, the trend of differentiation between stocks with loss and earnings excellence has reached an extreme level before. In this process, Guotou Securities cannot confirm whether this "victory of the common people" has come to an end, but trading volume becomes an important intraday tracking indicator for this "victory of the common people", with the total A-share turnover continuing to exceed 1.5 trillion, providing a solid foundation for its existence.