Hong Kong stock concept tracking| Expected to usher in domestic demand recovery under policy guidance Institutions are optimistic about the reversal of the chemical sector's business cycle (with concept stocks)

Since the Politburo meeting at the end of September clarified the goal of reviving the economy and reversed the expectations of balance sheet deflation, countercyclical adjustment policies have been intensively released. China Securities Co., Ltd. believes that under policy driving, attention should be paid to the improvement expectations of the chemical industry's upstream sector by 2025, especially for the leading companies in various major intermediate industries closely related to China's domestic demand, which may experience systematic profit recovery. CICC released a research report stating that with the slowdown in investment growth in the chemical industry, the rapid growth of chemical production capacity is expected to gradually come to an end in 2H25. At the same time, continuous domestic policy tightening is expected to drive the recovery of demand for chemical products, gradually improve the supply and demand situation of chemical products, alleviate cost pressures due to the decline in bulk raw material prices, and the inflection point for profits in the intermediate chemical industry is expected to be close. In 2025, there may be opportunities for layout. Founder's research report pointed out: 1) The reversal of the chemical industry's prosperity may not be far off, and it is optimistic about the opportunity for counter-cyclical layout on the left side of the cycle. The chemical industry is the foundation of manufacturing and an indicator of the national economic cycle. After entering 2022, the effects of the "flooding" in Europe and the US gradually weakened, Europe's geopolitical conflicts resurfaced, the supply and demand relationship reversed, the global prosperity of the industry declined and has been delayed, with industry profits shifting to the upstream due to high oil and coal prices, and the bulk profit level of the chemical industry reaching its historical low. Although cost and supply-side pressures are difficult to ease in the short term, national policies have been continuously strengthened recently, and domestic demand is expected to once again become the main force driving prosperity, in a window period of transitioning between old and new energy sources, the reversal of prosperity may not be far off. 2) Optimistic about the opportunity for core assets in basic chemicals to reverse first at the industry's bottom and take advantage of the opportunities brought by regional supply and demand imbalances under the trend of anti-globalization. It is optimistic about the opportunity for core assets in the chemical industry to reverse first at the industry's bottom. In recent years, the de-industrialization process in Europe has accelerated, and US trade protectionism has risen again, exacerbating regional supply and demand imbalances in global chemical trade. This is a crisis and opportunity for China's chemical enterprises. On one hand, it is a benefit for domestic capacities that are not affected by sanctions to go overseas, and on the other hand, it is beneficial for the import substitution of domestic high-end products. List of leading chemical companies in Hong Kong stocks: SINOPEC CORP (00386), SHANGHAI PECHEM (00338), CHINA RISUN GP (01907), SINOPEC SEG (02386), L & M CHEMICAL (00746), YIP'S CHEMICAL (00408), CHINA SANJIANG (02198), TSAKER NE (01986), TIANDE CHEMICAL (00609), etc.