Sinolink: In this round of spreading market trends, the short-term sub-increase in power equipment and chemicals are worth paying attention to.

Sinolink released a research report stating that the financial fragility of overseas tech giants is emerging, and the market is gradually focusing on high-certainty varieties. A-shares are also beginning a process of style rebalancing. The scarcity in the development of the tech industry has transitioned from the computing power infrastructure dominated by the US to China's more advantageous areas of electricity, manufacturing, and general infrastructure. This process is actually a repricing of Chinese assets. In recent years, the energy transition has been a complex process involving the entire industry chain, and during this period, it has been far more than just the new energy industry itself that has built industry advantages. This also forms the basis and opportunities for the current diffusion market, with a focus on the short-term rebound in power equipment and chemical industry. Sinolink's main points are as follows: The financial fragility of tech giants is emerging, markets are focusing on certainty Recently, the performance of large overseas tech stocks has been poor. In addition to the rapid increase in US money market interest rates causing some disturbances in investor risk preferences, market reactions to statements such as OpenAI's "AI needs US government backing" and the relatively hawkish interest rate statements from the Federal Reserve have been strong. This indicates that the market has started to become cautious about the financial cycles and overly high risks between AI tech giants. Intense capital spending and intensive large orders between giant companies are no longer the focus of the market, but rather a growing focus on the revenue-generating/cash-generating capabilities of their AI businesses themselves, whether these capabilities can cover their future spending commitments, and whether they can achieve sustainable growth. The scarcity in tech development is transitioning to traditional industries (such as storage and electricity). Behind the apparent diffusion is the repricing of Chinese assets with comprehensive electricity advantages A-shares have also begun a process of style rebalancing. The TMT sector, which is highly correlated with overseas tech giant stock prices, has begun to significantly lag behind sectors such as power equipment and chemicals benefiting from overseas power shortages. Some Chinese advantageous industries such as steel and coal are also performing well. The scarcity in tech industry development has transitioned from the US-dominated computing power infrastructure to China's more advantageous areas of electricity, manufacturing, and general infrastructure. This process is actually a repricing of Chinese assets. The market is gradually becoming aware of the true value of the massive production capacity China has built for energy transition: on one hand, the construction capabilities of new energy systems lead globally, creating conditions for low-cost and sustainable energy globally; on the other hand, it provides stable and low-cost energy usage advantages for the high-end transformation of China's manufacturing industry and participation in global competition. In the past few years, the energy transition has been a complex process involving the entire industry chain. Companies building industry advantages during this period are not limited to the new energy industry itself. The repricing road of Chinese manufacturing, seemingly "overcapacity", is opening. Three paths of the diffusion market: focus on chemical industry First, behind the high elasticity of the current power equipment market is the fact that it has been long undervalued by the market due to overcapacity in recent years. Under the constraints of supply-side anti-overlapping, the tail end of clearing coincided with the double restoration of valuation and performance brought about by overseas power shortages. Under a comprehensive revaluation market, within the current power equipment industry, electrotechnical instrument and meter trading has low congestion and a high match between profit and valuation, potentially presenting opportunities for a rebound. Second, the enormous production capacity built around energy transition in China is not limited to the power equipment sector. The chemical sector may be an important direction in the diffusion market: on one hand, some sectors of the chemical industry itself are core upstream materials for power equipment, with many companies internally laying out relevant production capacity to leverage the advantages of integrated industrial chains. On the other hand, some companies have entered the new energy track in the past through new production capacity and business expansion. Third, power shortages overseas may also lead to further cost increases for industries that are already high-energy consumers. Under demand-side driving, the competitive advantage of China's related industries with relatively abundant electricity resources will also further be highlighted. By calculating the electricity consumption per unit revenue under the corporate scope, industries with high electricity consumption per unit revenue include nonferrous metals, non-metallic mineral products, steel, textiles, and paper products. These are sectors with stricter constraints on anti-overlapping policies, limited downward price space internally, and expanding global electricity gaps externally. Pay attention to the opportunities for improving global market share with cost advantages. From computing power to electricity, repricing of Chinese assets The market structure that forms a combination of risks and opportunities is emerging, with old consensuses facing increasing constraints, and new consensuses also emerging: in the short term, the market revaluation trend around the electricity system will continue, and in the future, with the recovery of manufacturing industry momentum and the acceleration of physical asset investments, the global resonance led by China and the US with electricity consumption greater than GDP, a comprehensive revaluation trend of physical assets and China's advantageous manufacturing is expected to start. In the diffusion market, opportunities in some sub-industries in the power equipment and chemical sectors are worth considering: electrotechnical instruments and meters, titanium dioxide, organosilicon, coatings, inks, modified plastics, and film materials. Mid-term views remain unchanged, recommendations include: firstly, benefiting from the improvement in operating conditions brought about by domestic anti-overlapping, the recovery of manufacturing activities post-overseas interest rate cuts, and accelerating investments in physical assets: upstream resources (copper, aluminum, lithium, oil, coal), demand for restocking of physical assets may recover, pay attention to shipping; secondly, as "the shovel seller" in the global industrial chain, China's advantageous industries are cashing in overseas: capital goods (engineering machinery, power grid equipment, heavy trucks), national defense industry; thirdly, capital inflows, stable domestic prices in the food and beverage sector, aviation industry. Risk warning: Domestic economic recovery falls short of expectations; Overseas economic downturn significantly.