HAITONG INT'L: As the policy window approaches, the market rebound momentum is expected to continue.

HAITONG INT'L released a research report stating that the market experienced low trading volume fluctuations this week, and is expected to continue the rebound trend next week driven by policy expectations heating up. However, the strength of the rebound still depends on the intensity of policy implementation and whether the Fed will cut interest rates. At the same time, if the market anticipates too much in advance, there is also a need to be cautious of the risk of funds cashing in on positive news. It continues to see opportunities for a rebound in the technology sector, and recommends focusing on Hang Seng Technology, which has experienced a significant pullback, as well as opportunities in the science and technology innovation board driven by Changxin's upcoming IPO. In terms of policy direction, the securities sector has the foundation for an oversold rebound and is expected to see a rise with policy support; while the real estate industry, which has been in a rapid decline lately, and the consumer industry with sustained slumps are also expected to benefit from further policy support. Key viewpoints from HAITONG INT'L are as follows: HAITONG INT'L believes that after consolidating last week, the rebound is expected to continue, and there is still room for technology repair. This week, the Hong Kong and A-share markets fluctuated with low volume and saw a rise on Friday, with the market beginning to pay attention to China's policy initiatives. Non-ferrous metals performed strongly, led by a surge in international metal prices, while technology companies, particularly those focused on computing power, displayed relatively active performance. Next week, the market will face three key events: the Political Bureau meeting, the Central Economic Work Conference, and the Fed interest rate meeting, which could result in increased market volatility. On Friday, the market began trading in anticipation of the Political Bureau meeting, expecting signals of loose monetary and proactive fiscal policies. At the same time, expectations for long-term fund inflows into the market increased, with the China Banking and Insurance Regulatory Commission lowering insurance company risk factors and various other measures aiming to boost market confidence. Previously, HAITONG INT'L suggested that non-banking financial institutions have the potential to replace banks as new market stabilizers. The banking sector has been rebounding since October, cushioning the impact of the technology sector decline, and showing signs of stagnation. Amid policy support, insurance firms, with high dividend properties, have been performing well recently, while the securities sector, which had seen a year-to-date decline, is poised for an oversold rebound. In international markets, attention is focused on the US strategic adjustments and fluctuations in Japanese bond yields. This week, the probability of a December Fed rate cut stood at 86%, with the US Dollar Index falling below 99; the Renminbi exchange rate has been above 7.07 since December, indicating regulatory efforts to control the pace of Renminbi appreciation. In the US, the latest national security strategy emphasizes maintaining stability in the Western Hemisphere over "pivot to Asia" strategy, and a mutually beneficial relationship with China, which might boost market sentiment in China. Meanwhile, the Bank of Japan suggested a rate hike in December, causing a sharp increase in Japanese bond yields, with the 10-year Japanese bond yield reaching 1.93%, the highest since 2006; consequently, the 10-year US bond yield also rose to 4.13%, suppressing equity asset valuations. In terms of market turnover and fund flow, trading volume continued to decline this week, with daily average turnover in A-shares falling to less than 1.7 trillion, and in Hong Kong to 190 billion, reaching at least a four-month low. In terms of fund flows into A-shares, stock ETFs (excluding large-scale ones) remained relatively stable this week, with cumulative net inflows of 27.6 billion yuan since November. Margin financing saw a net inflow of 10 billion yuan this week, with the ratio of margin buying gradually dropping to 53% over the past year. In the bond market, long-term rates continued to rise on expectations of fiscal stimulus, with the 30-year treasury yield increasing by nearly 7 basis points to 2.25% for the week. The 30-year treasury futures, reflecting sentiment, hit a new low for the year, while the 10-year treasury yield rose to 1.83%, though not reaching the March peak, with an increase of 16 bp since the start of the year. As for southbound capital flows, net inflows decreased to 11.3 billion Hong Kong dollars this week. In terms of industry flows, the trend of funds flowing into the internet sector slowed down, with BABA-W (09988) seeing outflows after two weeks of significant inflows, Tencent (00700) seeing outflows of 3.8 billion, Semiconductor Manufacturing International Corporation (00981) experiencing net outflows of 1.4 billion, and Xiaomi-W (01810) net inflows rising to 4.6 billion. Risk warnings Progress of stabilizing growth policy falls short of expectations, economic recovery is slower than expected domestically, and uncertainties overseas are escalating.