CMSC: In November, the A-share market is expected to maintain a volatile momentum, with structural opportunities still around the trend of ShenZhen New Industries Biomedical Engineering.

CMSC released a research report saying that looking ahead to November, the market will continue to be volatile as it builds momentum for a major market rally at the end of the year. After the conclusion of the U.S.-China trade negotiations, third-quarter reports, and the Fourth Plenary Session of the 19th CPC Central Committee, the market is expected to enter a period where there is a vacuum in terms of performance, events, and policies. Without catalysts to determine the direction, the overall trend for November is expected to be volatile. Currently, there are still structural opportunities around the trend of ShenZhen New Industries Biomedical Engineering, and it is also advisable to consider early positioning in cyclical resources. November represents a trading window for "partial tracks" and "early positioning in cyclical sectors." Key points from CMSC's report include: Forecast and core logic: Looking ahead to November, the market will remain volatile as it prepares for a major rally at the end of the year. With the conclusion of the U.S.-China trade negotiations, third-quarter reports and the Fourth Plenary Session of the 19th CPC Central Committee, the market will enter a period of vacuum in terms of performance, events, and policies. Therefore, the market is likely to experience a period of volatility as it awaits new changes at the end of the year. From the perspective of corporate earnings, due to the low base, significant improvements in resource industries and technology, and increased activity in the capital market leading to better performance of the financial sector, overall listed company earnings in the third quarter have shown a significant increase, as well as a substantial improvement in free cash flow. A-shares have seen an improvement in earnings. However, current economic data is lackluster, and there is a lack of policy catalysts in November, maintaining economic expectations at a stable level. A-shares fundamentals remain stable. In terms of incremental funds, the market is still in the second phase of the bull market, with incremental funds entering the market through various channels. However, the pace is relatively stable. As U.S.-China relations ease and risk appetite stabilizes, overall, the market is expected to maintain a volatile trend in November, building momentum for a year-end rally after the Central Economic Work Conference. Style and industry allocation strategy: In terms of style selection, after entering November, domestic liquidity remains relatively loose overall, the external expectation of the U.S. Federal Reserve rate cut may be revised repeatedly, and the short-term rhythm of TMT may slow down. In general, the market style in November is expected to rebalance and return to a barbell structure. Recommended index styles for November include: broad-based indices (CSI 300 and CSI 2000), style indices (CSI 300 Dividend), and sectoral indices (CSI 300 Materials); At the industry level, considering the next one to two months, taking into account previous performance, valuation, trading activity, economic changes, policy guidance, and event catalysts, it is recommended to focus on the landing of third-quarter performance and the guidance of the "15th Five-Year Plan." Recommended industries to watch include: electronics (consumer electronics, semiconductors), power equipment (batteries, photovoltaic equipment, wind power equipment), automobiles (auto parts, commercial vehicles), machinery equipment (engineering machinery, automation equipment), and defense industry. Liquidity and funding supply and demand: Incremental funds in November are expected to continue to flow steadily into the market, with financing funds and industry/theme ETFs remaining active. In terms of macro liquidity, the overall money market liquidity in October showed the characteristics of "active protection by the central bank and reasonable abundance of liquidity." The money market achieved a smooth transition under the supportive monetary policy of the central bank in October, with emphasis on putting long-term liquidity (MLF and reverse repurchase net injection of 600 billion yuan) and combining short-term liquidity smoothing (reverse repurchase), effectively offsetting seasonality disturbances. Looking ahead to November, considering the clear supportive stance of the central bank's monetary policy, it is likely that the liquidity will continue to remain reasonably abundant. In terms of external liquidity, in October, the U.S. Federal Reserve chose to continue cutting interest rates and end balance sheet reduction in the face of data inadequacies and internal challenges, but at the same time maintained an open and cautious attitude towards the future easing path, leading to possible fluctuations in market expectations for interest rate cuts, potentially temporary strengthening of the U.S. dollar index. From the perspective of stock market funding supply and demand, while the scale of net inflows of trackable funds in the stock market decreased in October, on the supply side, the scale of new equity funds has fallen, and the net purchase scale of ETFs has shrunk, while the scale of net inflows of financing funds has also decreased. On the demand side, the scale of reductions by major shareholders has slightly decreased; IPO issuance and refinancing scale have both rebounded, but overall funding demand has decreased. In terms of major incremental funds in October, financing funds continue to be the main drivers of incremental funds in the market. Looking ahead to November, incremental funds are expected to continue to flow steadily into the market, with financing funds and industry/theme ETFs remaining active. Mid-term economic outlook and industry recommendations: Focus on sectors with high or improving third-quarter earnings growth. In terms of earnings, influenced by factors such as "anti-internal competition," technological innovation, and resilient exports, A-share earnings in the third quarter exceeded expectations. Among the major industries, improvement in earnings was seen in resource industries, information technology, finance, and real estate, with TMT leading in earnings growth, consumer services sector profits under pressure, and the pharmaceutical sector experiencing low profits. With technological self-reliance and anti-internal competition continuing to advance, combined with the easing of U.S.-China relations, corporate earnings are expected to continue to improve. In the short term, it is recommended to focus on sectors with high or improving business activity: those with higher or rising net profit growth rates, such as TMT (communication equipment, semiconductors, consumer electronics, optical/electronic, games, software development), mid-to-high end manufacturing (photovoltaic equipment, batteries, ground armaments, maritime equipment, military electronics, motorcycles, commercial vehicles), some resource industries (steel, precious metals, industrial metals, energy metals, minor metals, agricultural chemicals, fiberglass), as well as insurance and securities sectors. In the medium to long term, it is recommended to focus on sectors that are optimizing their supply structure and may experience a turnaround, such as software development, logistics, specialized equipment, beverages/dairy products, chemical products, aquaculture, pharmaceutical chemicals, aviation equipment, bioproducts, medical devices, etc. In terms of economic situation, in October, high-economic sectors were mainly concentrated in the middle-of-the-road manufacturing, information technology sectors, and some resource industries, with most industrial metal prices rising in the resource sector, new energy industrial chain prices rising in the middle-of-the-road manufacturing sector, a widening year-on-year decline in retail sales of the four major home appliances in the consumer services sector, and continued low sales of commercial housing in the financial real estate sector. Taking into account earnings, industry economic conditions, and trading perspectives, in November, we recommend focusing on the landing of third-quarter performance and the guidance of the "15th Five-Year Plan." Industries to watch include: electronics (consumer electronics, semiconductors), power equipment (batteries, photovoltaic equipment, wind power equipment), automobiles (auto parts, commercial vehicles), machinery equipment (engineering machinery, automation equipment), and defense industry. Investing in tracks and industry trends: NVIDIA's GTC national infrastructure is accelerating its realization, AI infrastructure is entering a phase of industrialization and platformization. At the just-concluded 2025 GTC Washington, D.C. conference on October 27-29, NVIDIA seized the opportunity once again with the theme of "AI infrastructure as the foundation of national defense", positioning itself as a "national AI infrastructure platform provider" instead of just a "high-end GPU supplier." The hardware, network, software, and industry ecosystem roadmaps announced at the conference showed that computing architecture is transitioning from "performance improvement at the chip level" to "system-level integration and optimization of connectivity", application scenarios are shifting from "Internet services" to "intelligent applications in the physical world and industrial-level implementation", and capital and supply chains are building medium- to long-term expansion projects and strategic partnerships around this shift. From this, it can be seen that AI is moving from the laboratory to industrialization on a fast track, and NVIDIA is aiming to take the lead in the new cycle of "industrialization + platformization", laying a new foundation for reshaping the global AI landscape and industry chain. Risk warning: Economic data falling short of expectations, incomplete policy understanding, and unexpected tightening of overseas policies.