China Galaxy Securities: The mid-term upward trend of A-shares remains unchanged, continue to focus on mainline opportunities.

China Galaxy Securities issued a research report stating that, in the midterm, the upward trend has not changed. The core of this round of growth in the ChiNext board hitting a new high is driven by both the industrial cycle and performance realization. The biggest feature of this round of market trends is the realization of high prosperity, with strong fundamental support. Currently, funds in A-shares continue to flow from low-growth industries such as finance, real estate, and traditional cycles to high-tech growth tracks with high R&D, high barriers to entry, and high incremental revenue. With continuous profit release, steady valuation increase, and continuous inflow of incremental funds, the midterm upward trend remains unchanged, emphasizing focusing on main line opportunities. In the short term, external market disturbances should not be ignored. The change of the US Federal Reserve chairman is entering a critical stage, and there is still uncertainty in the adjustment path of overseas monetary policies. In addition to high oil prices and rising expectations of inflation, the continuous high volatility of the US dollar index and the rise of US bond yields resonate, as the adjustment of global fund flows constrains the valuation repair of risk assets. After the A-share market has seen a volatile uptrend and the ChiNext Index has hit a historical high, there is a possibility of some funds taking profits and increasing investor divergences in the short term, and the short term trend may switch to a new rhythm of "volatile digestion, slow bull rise, and structural bull market". The main views of China Galaxy Securities are as follows: Market Trends this week: (1) This week (May 11th to May 15th), the A-share market rose and fell, with the main broad-based indexes showing differentiation. The overall A index fell by 0.74%. The ChiNext Index and the ChiNext 50 Index rose by 3.50% and 3.40% respectively, while the other indexes recorded declines, with the BSE 50 Index falling by 4.04%. (2) In terms of style, the market style was relatively dominant this week, with the Shanghai and Shenzhen 300 Index (-0.25%) outperforming the CSI 1000 Index (-0.67%); most of the five major style indexes fell, with only the growth style recording gains. (3) In terms of industries, there were more declines than gains in the primary industries. The top three industries in terms of gains were communications, electronics, and machinery and equipment. Non-ferrous metals, steel, and beauty care were at the forefront of declines. Capital flow this week: (1) Trading activity in the A-share market continued to rise. The average daily turnover this week was 3,371.5 billion yuan, an increase of 208.015 billion yuan from the previous week; the average turnover rate was 2.2207%, an increase of 0.1 percentage point from the previous week. (2) As of Thursday, the balance of margin financing and securities lending was 2,872.744 billion yuan, an increase of 80.246 billion yuan from the previous week. (3) From May 7th to May 13th, the net inflow of global funds into A-shares was -10.159 billion US dollars (previously -4.447 billion US dollars). Among them, the net inflow of overseas funds was 434 million US dollars (previously -433 million US dollars). Valuation changes this week: The PE (TTM) valuation of the overall A index decreased by 0.68% from the previous week to 24.29 times, at the 96.45th percentile since 2010; the PB (LF) valuation decreased by 0.49% to 1.93 times this week, at the 57.64th percentile since 2010. The interest differential for the overall A-shares was 2.3507%, near the 3-year rolling average (3.3054%)-1.79 times standard deviation, at the 40.62nd percentile since 2010. Portfolio opportunities: Focus one: Adhere to the core theme of technology prosperity, with TMT and midstream manufacturing as the main focus of repair, sectors such as semiconductors, other electronics, communication equipment, maritime equipment, batteries, etc. have performed better. However, it is important to note that with the differentiation of some hot spots at high levels, internal rotation characteristics may emerge, and sectors such as commercial spaceflight and humanoid Siasun Robot & Automation that have experienced relatively stagnant growth are attracting attention. Focus two: The recovery momentum is spreading to resource materials and some consumer services, including the basic chemical industry, non-ferrous metals, building materials, steel, which benefit from the rebound in PPI and price logic. At the same time, consumer sub-sectors benefit from economic recovery and policy support. Focus on the value of defensive holdings, focusing on coal, finance, utilities, etc. Risk warning: External uncertainty risks; policy risks below expectations; market sentiment instability and continuous liquidity adjustments.