Brokerage Morning Meeting Highlights | Market Rebalancing Continues Around Three Clues

Market fluctuations and adjustments, all three major indexes rose and then fell back. The trading volume in the Shanghai and Shenzhen markets was 2 trillion, a decrease of 56.2 billion from the previous trading day. In terms of the market, the hot spots were quite chaotic, with over 3100 stocks falling across the board. The hot spots continued to rotate rapidly, with sectors such as organic silicon, fluorine chemical, phosphorus chemical, and batteries leading in gains, while AI models and software development sectors leading in losses. At the close, the Shanghai Composite Index fell by 0.25%, the Shenzhen Component Index fell by 0.36%, and the ChiNext Index fell by 0.51%. At today's morning meeting of securities firms, East Money Information Securities pointed out that the market continues to rebalance around three clues. CITIC SEC believes that it is appropriate to increase positions in the chemical, non-ferrous, and new energy sectors. Huaxi believes that November is a favorable month for "small and medium-sized market caps + themed investments". East Money Information Securities: The market continues to rebalance around three clues Last week, the market traded narrowly, with internal differentiation in the growth structure, and some PPI price hikes driving positive performance in cyclicals. Looking at the short-term market characteristics, sectors that performed well in the first three quarters are not necessarily leading, emphasizing stability and positioning for next year's economic trends. In the medium to long term, AI is still the main theme. In the short term, uncertainties in overseas financial markets persist due to events such as the US government shutdown, with US tech stocks facing short selling dangers. This is expected to disturb the risk appetite for A-share tech stocks, and some A-share companies representing computing power may not meet expectations in their third-quarter performance. Rebalancing in the market will continue to unfold. One can focus on three clues that are showing signs of sustainability: 1) expansion of the growth story under the AI narrative (including shortages in electricity), and emerging growth themes; 2) cyclicals benefiting from anti-inward growth and stable growth expectations; and 3) sectors with good fundamentals and chip structures at low levels. CITIC SEC: Moderately increase positions in chemicals, non-ferrous metals, and new energy Since October, market volatility has increased, but timing market success rates have not been high. The reason behind this is the changing structure of incremental funds, with the continuous entry of stable absolute yield-type funds reducing the effectiveness of traditional aggressive strategy timing. The real important variables are the stability of the corporate's overseas environment and AI, which involve Sino-US relations and the investment in AI infrastructure. Not only the TMT sector but also sectors like non-ferrous metals, chemicals, and new energy have been affected by the AI narrative, with these sectors combined representing over 60% of institutional holdings. In this situation, the strategy for repositioning is not to deliberately avoid the AI narrative but to choose varieties that show a rising trend in ROE. From this perspective, it is more optimal to moderately increase positions in sectors like chemicals, non-ferrous metals, and new energy that have been relatively quiet for a long time and have historically low profit margins and industry prosperity. Huaxi: November is a favorable month for "small and medium-sized market caps + themed investments" Looking back on the past decade, the probability of small cap style rising in November is higher than the large cap style. This calendar effect is due to A-shares being in a "vacuum period" in terms of performance and macro events, and the market entering an active phase of theme investing based on next year's profit expectations and industry trends. Recently, margin trading turnover as a percentage of A-share turnover has consistently been above 10%, reflecting that market heat is still being maintained, with relative micro liquidity in the A-share market being relatively loose. In addition, external USD liquidity tensions are only short-term disturbances, and their impact on the A-share market is limited. It is necessary to pay attention to the timing of the US government's reopening. In terms of industry allocation, 1) focus on "Fifteen-Five" related theme investments, such as AI applications, Siasun Robot & Automation, energy storage, domestic substitutes, new materials, and future industries; 2) focus on directions that benefit from the profit improvement brought about by the "anti-inward growth" trend, such as chemicals; 3) pay attention to signals from Hong Kong's innovative pharmaceuticals for the A-share market. This article is reprinted from "Cai Lianshe", GMTEight Editor: Liu Jiayin.