Is the A share adjustment coming to an end? What are the main investment themes? Top ten securities firms' strategies are here.

The latest strategic viewpoints from the top ten securities firms have been released, as follows: CITIC SEC: Diminishing market volatility and adjusting position structure Recent market liquidity characteristics have been observed both domestically and overseas. Feature One: ETF fund flows are clearly differentiated, with broad-based funds decreasing while industry/theme-based funds increasing, A shares decreasing while Hong Kong stocks increasing; looking at the holdings structures of various types of ETF holders and FOF appointees, the above fund behaviors reflect the presence of significant high-cut and low-cut characteristics in institutional allocation funds, while the recent strong trend sectors are still primarily driven by actively selected stock funds. Feature Two: The market may enter the final round of intensive subscription and redemption turnover stages of active mutual fund products since 2021, accompanying the rise in core assets favored by institutions, these products are expected to gradually digest the pressure brought about by redemptions, corresponding institutional favorites or the next round of industrial trends, as well as the focus of allocation during the economic recovery process, the strategy mode of favoring small over large, and avoiding institutional holdings tickets in recent years may no longer be valid, and the return to core assets is becoming reality. Feature Three: Overseas high-debt fund interest rates and the passive pressure of central banks to lower interest rates coexist. In an environment of high debt fund interest rates, European and American countries are forced to enter an interest rate reduction cycle, the pressure on Chinese manufacturing in global competition is easing, under the trend of reversing internal competition, the future advantage of Chinese manufacturing in market share is being transformed into pricing power, and then into a long-term increase in profit margins, making it one of the most important fundamental clues that can be foreseen in the medium to long term, the attractiveness of renminbi assets is continuing to increase. In terms of allocation strategy, it is recommended to diminish market volatility, adjust position structures, and continue to focus on structural opportunities in consumer electronics, resources, innovative pharmaceuticals, chemicals, and gaming. CMSC: Short-term market adjustment nearing completion The short-term market adjustment is nearing completion, transitioning to a sustained low incline. The market had a fast pace of rise earlier, especially since August, with a significant increase in slope, accompanied by a rapid increase in margin balance. After the adjustment, market sentiment may slow down marginally, with incremental funds pacing more healthily, as described in our September report, the market is likely to transition to a higher probability of a sustained low incline. We are still in the second stage of the bull market, the core strategy after adjustment is to embrace low-penetration race tracks. In terms of allocation, in September, focus should continue on AI computing power, solid-state batteries, humanoid robots & automation, and commercial aerospace/satellite internet. In addition, focus on high-quality strategies with high intrinsic return rates remains effective, with a focus on 300-quality growth and 500-quality growth. China Securities Co., Ltd.: Consolidation period in bull market, switching between high and low tracks is normal From September 2nd to September 4th, there were three consecutive days of decline, marking the first consolidation phase of the slow bull market trend. Mainly because the market has been overheated since late August, with funds significantly concentrated in the TMT sector leading to deteriorating trading structure; on the other hand, with important events and expectations of a Fed rate cut at the beginning of the month nearing realization, risk appetite has also decreased. Analyzing 11 consolidation trends during bull markets, we believe that in the background of a "slow bull" trend, index retracements are mild, consolidation periods are long, and the index shows a trend of oscillatory repair. During the consolidation period, the dividends sectors that continue to perform well due to reduced risk appetite should be retained as core positions, as the current AI computing power theme has not been invalidated, and focus should be on sectors that are expected to perform well during the next round of economic trends and industrial revitalization. Focus areas: New energy, new consumption, innovative pharmaceuticals, non-ferrous metals, basic chemicals, non-banking finance, dividends. Huaxi: Loose expectations rise again, A shares slow bull trend remains the main theme In recent days, A shares have been adjusting without any major negative factors. This is mainly due to profit-taking requirements and structural trading concentration, leading to an increase in implied market volatility. Historical analysis shows that retracements in bull markets are limited in terms of time and extent, short-term retracements are a part of releasing risks, and the 20-day and 60-day moving averages are important supports. In the medium term, the driving force of the current bull market has not changed, policies still provide strong support for a "stable stock market", long-term funds like insurance and pension funds are increasing their market entry, and there is still ample potential incremental funds on the retail side. At the same time, with heightened expectations of a Fed rate cut in the market and a weakening US dollar, the renminbi is expected to have a bias towards strength and foreign capital inflow into Chinese assets. In terms of industry allocation, the direction of the "slow bull" trend will be in line with national strategies. In a bull market, sectors benefitting from economic transitions may enjoy valuation premiums, such as solid-state batteries, energy storage, innovative pharmaceuticals, Siasun Robot & Automation, etc.; with expectations of a Fed rate cut, Hong Kong stocks may receive support from "foreign capital + southbound trading", focusing on Hong Kong stock internet companies. Zhongtai: How to view the recent oscillating adjustments in A shares? Although the market has experienced short-term adjustments, the medium-term trend has not reversed, and both the index and technology sectors have not reached a temporary high point. Firstly, looking at valuation and sentiment indicators, on September 5th, the Shanghai and Shenzhen 300 equities risk premium (ERP) stood at 5.32%, at a medium level in the past 10 years, indicating that there is still significant upward potential for the index. Secondly, potential catalytic moves from policies and external events are worth noting. If the mid-to-late October meeting between US and Chinese leaders materializes, it could ease external uncertainties; and the Fourth Plenary Session will focus on the "Fifteenth Five-Year Plan", which may define the strategic position of technological innovation and new productive forces for the next five years. These events could be key turning points in market sentiment and fund flows. As the market enters a period of oscillating adjustments in September, short-term strategies should focus on defense and stable returns. It is advisable to focus on sectors that have both cyclical properties and high dividend characteristics, such as coal, non-ferrous metals, etc. Additionally, dividend sectors remain preferred by foreign and long-term funds, emphasizing value highlights; the bond market also serves as a hedge, playing a balancing role in portfolios. Sinolink: Market likely to enter a period of sideways consolidation The current market volatility remains high, and based on past experiences, new catalysts will be required to start a new trend of directional upside breakout or surpass previous highs, the market is likely to enter a period of sideways consolidation, with a focus on the opportunities in the power equipment and non-ferrous metals sectors in the upcoming market trends. Global pro-cyclical trading in the fourth quarter may serve as a catalyst for the next phase of the market. For gold, which has reached new highs, the current price has slightly outpaced real interest rates, and new drivers can only emerge with a long-term increase in inflation expectations, with a focus on industrial commodities and gold, which are equally important sources of inflation. After gold prices hit new highs, gold stocks positioned at historically low levels relative to gold prices may show more resilience than gold prices. New structures are gradually emerging: first, benefiting from the improvement in operating conditions brought about by reversing internal competition domestically and manufacturing activity recovery post-overseas rate cuts merging with increased investment in physical assets: non-ferrous metals (copper, aluminum, gold), capital goods (lithium batteries, wind power equipment, engineering machinery, heavy-duty vehicles, photovoltaics), and raw materials (basic chemicals, fiberglass, paper, steel), crude oil; second, sectors related to domestic demand may gradually see opportunities after profit recovery: food and beverages, pigs, tourism and scenic areas, etc.; third, Long-term assets of insurers will benefit from the bottoming out and recovery of capital returns, followed by brokerage firms. East Money Information: A shares consolidate in sideways and Hong Kong stock opportunities rise This week, the Shanghai Composite Index has been consolidating sideways, with signs of switching leadership to the new energy power equipment sector. As we previously hinted in our weekly report, with the Shanghai Composite Index's ERP returning to its 10-year average position, some mid-to-low risk preference funds are gradually making adjustments between stocks and bonds, the net inflow of market funds is slowing down from fast pace, and the probability of broad fluctuation in A-share index in the short term is increasing, structurally, there may be some switching within the prosperity sectors, while as the US rate cut expectations rise and the weakening of the US dollar, the marginal suppression of Hong Kong interest rates diminishes further, enhancing the cost-effectiveness of Hong Kong stocks. Key industry focuses: New energy (lithium batteries, etc.), Hong Kong stock internet, innovative pharmaceuticals, non-ferrous metals, non-banking, semiconductor/computing power chain, etc. Thematic focuses: solid-state batteries, Siasun Robot & Automation, etc. Cinda: September sees a slight increase in volatility, but the main bullish trend remains strong As policy expectations increase in the second half of the year, the stock market is gradually becoming less sensitive to current earnings, with the structural profit-making effect of the stock market approaching its one-year mark, it is likely that retail funds will gradually increase, and the stock market has probably entered the main bullish trend. Last week saw an increase in market volatility, with the main reasons being: rapid rise in turnover: every bull market has multiple times when the turnover rate is near peak levels, high turnover rates make the market prone to oscillation or consolidation. The 5-day moving average turnover rate last week was higher than the average turnover rate between September 24, 2024, and October 8, carrying overcrowded trading in some sectors: the trading volume and rise in August was overly concentrated in computing power, historically, even in a bull market that hasn't ended, some sectors that accelerated growth for a month tend to consolidate. Given that no substantial negative factors have been observed, we believe that the scope for adjustment has probably been completed, there may be some further oscillations, but the main bullish trend is not changing. Industry outlook for allocation: 1. Financials: Shift from banks to non-banks. 2. Non-ferrous metals: Strong production capacity structure. Industries that could benefit from geopolitical division within the sub-industries such as gold and rare earths may perform well. 3. Power equipment: A few growth sectors positioned at low levels, with a high probability of bottoming out and stabilizing by 2026; (4) Cycles (steel, building materials, chemicals). Guotou Securities: The main index will maintain a high position and strong oscillations The A-share main index will continue to maintain a high position and strong oscillations under the theme of "strong banks, multiple parties singing". Looking towards September, we expect the style to be more balanced. Based on the exclusive construction of the "A-share high-cut low-market trend index," it is worth noting that the index is once again close to a high point in the range, indicating that the likelihood of a low-level rebound is increasing, this is also evident in the high-cut and low-cut within the tech sector. Additionally, considering the characteristics of A/H rotation of this year + the likelihood of a rate cut in September + the marginal impact of the delivery sector management, that was slowing down, this implies that the view we put forward of "Hong Kong tech stocks (Chinese tech) may catch up" could materialize in September. Also, it is worth noting that the rate cut in early September and the marginal positive pricing impact of the mid-autumn and national holiday +-state compensation on the consumption sector should be watched. The current structural ranking is: 1. Liquidity bull market-based: undervalued large-cap tech growth sectors (such as ChiNext index) + technology and innovation sectors based on industrial logic (innovative pharmaceuticals, AI, and semiconductors); 2. Fundamentally based bull market: outbound markets + global pricing resource sectors (awaiting resonance of the US, China, and European economies); 3. New and old energy transition bull: domestic pricing sector cyclical stocks + large-cap growth in traditional consumption (late-cycle). Industrial: "Healthy bull" unafraid of volatility, focus on structure Market adjustments in recent days have intensified, primarily due to two reasons, first, the previous rapid rise in slope, and second, extreme structural differentiation in the previous market trends, requiring short-term volatility to be assimilated and consolidated. Short-term volatility is more about rhythm and structure, the core logic supporting this round of "healthy bull" trend remains unchanged, unafraid of volatility, and volatility is a means to a better upward trend. It is reiterated, structure is more important than rhythm, the index's limited volatility space further suggests that structural rotations are key rather than position adjustments. Post the recent volatility, the structure may gradually move away from the extreme differentiation and the dominance of "one standout", heading towards rotational diffusion and a more diversified performance, managing oscillations through structural rotations. Key focus: Hong Kong Internet, innovative pharmaceuticals, new energy, new consumption, prosperity cycles (non-ferrous metals, chemicals).