China Securities Co.,Ltd.: Short-term correction is an opportunity, the medium-term bull market remains unchanged.

China Securities Co., Ltd. released a research report stating that the short-term market is weaker than expected due to a combination of disturbances such as micro liquidity, exchange rate adjustments, policy vacuum, performance forecasts, and uncertainties brought by Trump. The underlying logic of the bull market has not been disrupted, and the reversal of deflation targets remains clear. Trump 2.0 does bring uncertainty, but external factors are secondary contradictions that affect the pace, not the trend. From the perspective of the financial markets, the impact of Trump's trade tensions has led to high U.S. bond yields and a feedback on inflation and optimistic fundamental expectations. This week, Hong Kong stocks and Chinese concept stocks stabilized overall, and there is currently no sufficient fundamental reason to continue the adjustment of A-shares. Furthermore, domestic policies are still worth anticipating, with signals of opportunistic interest rate cuts and reserve requirement cuts expected at the fourth quarter meeting of the central bank, along with additional policy adjustments. If these policies are substantively implemented, the market is expected to stabilize and embark on an offensive trend, with pullbacks seen as opportunities for positioning. Industries to watch include electronics, communications, non-ferrous metals, non-banking financial institutions, banks, construction, and food. Key points from China Securities Co., Ltd. include: Short-term market risk aversion is increasing, with some investors worrying about micro liquidity pressures leading to a deep plunge similar to early 2024. However, current market policy expectations, liquidity environment, and fundamental trend expectations are better than in early 2024. The policies and micro indicators that can stabilize the market have improved, and the market outlook is not comparable to early 2024. In the medium term, the underlying logic of the bull market since the end of September 2024 remains intact, with the goal of reversing deflation clear. In the short term, external factors such as Trump's policy inconsistencies and uncertainties in pace pose challenges, but domestic policy expectations are clear. The central bank's fourth quarter meeting this week has again signaled an opportune time for interest rate cuts and reserve requirement adjustments, with the State Development and Reform Commission showing increased support. If these policies are implemented substantively, the market is expected to stabilize and enter an offensive trend, making short-term pullbacks opportunities for positioning. It is worth noting that in previous market experiences since the early 2024 and the end of September, due to the presence of bottom-value investors, the Hong Kong stock market has tended to stabilize before A-shares. This week, preliminary signs of stabilization have appeared in Hong Kong stocks and Chinese concept stocks, which could help A-shares avoid excessive panic selling. Looking back at the performance of the Shenwan industries in the spring rallies since 2010, growth styles have shown high relative returns (relative to the CSI 300 index). Focus on areas where policies are heavily emphasized (such as "two new" initiatives and service consumption), such as consumer electronics, infrastructure chains (construction, non-ferrous metals), and the food industry, which are expected to benefit from better policy implementation. Additionally, attention towards the AI+ sector, where the new AI market trend is transitioning from overseas to drive domestic industry prosperity. Key sectors to watch include the domestic AI computing power industry chain and end-side AI direction (electronics, Siasun Robot & Automation, intelligent driving).