Huajin Securities: A-shares in June continue to fluctuate with a slight bias towards strength, the technology sector remains unchanged.

HuaJin Securities released a research report stating that, reviewing history, the core factors affecting the June A-share market trends are policies and external events, fundamentals, and liquidity. The A-share market in June this year may continue its trend of oscillation with a slight strength, with limited impact from factors such as the World Cup. In terms of industry allocation, the technology sector may remain unchanged in June, and it is recommended to continue to allocate on dips: first, in industries where policies and industrial trends are upward, such as electronics (semiconductors, AI hardware), communications (AI hardware), electric vehicles (AI electricity, lithium batteries), defense industry (commercial aerospace), media (AI applications, games), computers (AI applications), non-ferrous metals, chemicals, and innovative pharmaceuticals; second, industries such as securities firms and consumer goods with improving fundamentals may also see growth in June. The main viewpoints of HuaJin Securities are as follows: Reviewing history, the core factors affecting the June A-share market trends are policies and external events, fundamentals, and liquidity. (1) The core factors affecting the June A-share market trends are policies and external events, fundamentals, and liquidity. Since 2010, the performance of the A-share market in June has been oscillating, with 8 out of 16 years seeing a rise in June. Positive policies and external events may lead to a slightly stronger performance in June for A-shares, while the opposite may result in a weaker performance. Economic fundamentals also play a crucial role in the June performance of A-shares. Liquidity also influences the performance in June. (2) Historically, during the World Cup in June, the performance of the A-share market has been oscillating, related to fundamentals, policies, external events, among other factors. Performance during the World Cup in June is related to fundamentals and policies. From 1994 onwards, in 7 World Cup periods, the Shanghai Composite Index has fallen 4 times in June, mainly due to weak economic fundamentals and negative external impacts; on the other hand, when it has risen, it was driven mainly by economic fundamentals and internal policy factors. Historically, overall market sentiment during the World Cup in June has been relatively low. In June this year, A-shares may continue the trend of oscillating with slight strength, with limited impact from factors such as the World Cup. (1) External risks in June may ease, and policies may lean towards a positive direction. External risks in June may ease: firstly, the risk of conflict between the US and Iran in June may ease; secondly, the relationship between China and the US in June may remain stable. Positive policies in June may also be further implemented. (2) Economic and profit growth in June may continue to rise. Economic stabilization and slight growth may be seen in June, with consumer growth picking up and export maintaining a higher growth rate. Lastly, the manufacturing investment growth may continue to rise, while real estate investment growth may remain weak. Profit growth in June may also continue to rise. (3) Liquidity in June may remain loose, with macro liquidity staying accommodating. Growth in June may continue to dominate, with a balanced style between large and small caps. (1) Growth sectors such as technology, media, and telecommunications (TMT) may continue to be favored in June. Historically, TMT consumption has led to high performance, driven by industry trends and fundamentals, among other factors. This year, TMT may continue to dominate in terms of growth, with sectors such as AI hardware showing positive trends. (2) Both large and small caps may see balanced styles this June, with neutral risk preferences being maintained. Additionally, some cyclical industries may see improvement in June. Industry allocation: The technology sector may remain unchanged in June. Tech, media, and telecommunications (TMT) may not see significant adjustments in the short term. The current situation suggests that TMT may not experience major adjustments, as external factors, liquidity, profitability, industry trends, financing, and valuation, among other factors, have been relatively stable. It is suggested to continue allocating on dips in June in industries where policies and industry trends are upward, such as electronics (semiconductors, AI hardware), communications (AI hardware), electric vehicles (AI electricity, lithium batteries), defense industry (commercial aerospace), media (AI applications, games), computers (AI applications), non-ferrous metals, chemicals, and innovative pharmaceuticals. Risk warning: Historical experiences may not necessarily apply in the future, policy changes may exceed expectations, and economic recovery may fall short of expectations.