Guotai Haitong: The new round of stock market in China has opened up.

Guotai Haitong released a research report stating that uncertainties will be resolved before the Dragon Boat Festival, with growth expectations being revised upward and incremental market entry resonating. The Chinese stock market is expected to open a new round of upward momentum in the future. It focuses on technology, manufacturing, securities/banking, and some traditional sectors for recovery. Guotai Haitong's main points are as follows: Overall judgment: Uncertainties will be resolved before the Dragon Boat Festival, opening a new round of upward momentum for the Chinese stock market. In the past one to two weeks, some investors have doubts about the U.S.-Iran situation, inflation, and whether the Federal Reserve will raise interest rates. Guotai Haitong is a firm believer in the Chinese market, and uncertainties will gradually be resolved before the Chinese Dragon Boat Festival, opening a new round of upward momentum for the Chinese stock market. Key points include: 1) Decrease in uncertainties: In June, international oil prices dropped to the range of $80-90 per barrel, and the peak of U.S. inflation and tightening expectations may be reached. With a cooling of the conflict and improvement in transportation, inflation expectations are expected to decline in the future, and the Federal Reserve's interest rate decision will also be made before the Chinese Dragon Boat Festival. 2) Revision of growth expectations: Strong Chinese export data in May not only responded to market doubts but also indicated an improvement in A-shares in the mid-year report. This reflects the huge demand for global AI capital expenditures and energy transformation, as well as shortages in the industry chain; the latest progress in the AGI of U.S. company Anthropic is also expected to boost expectations for AI capabilities and application demand. This brings historical opportunities for industrial innovation, catching up, and global competition. 3) Incremental market entry resonance: Risk-free returns are decreasing, leading to sustained wealth management demand and stronger support for the Chinese market. A new round of enhanced capital market inclusion reforms is imminent. In addition, announced reductions in holdings, acceleration of private equity filings, and mutual fund approvals since June are expected to lead to substantial incremental market entry capabilities after the Dragon Boat Festival. Absolute return equity allocation is also expected to flow back around mid-year 630 assessments, aiding in structural diffusion and market balance. Just as the bank predicted earlier, after a brief "shower," the Chinese market is expected to perform well in the third quarter, reaching new highs. Decrease in uncertainties and easing of micro trading pressure: Market value discovery functions will be effectively utilized, and market structure is expected to diversify. 1) Current global semiconductor sales growth is high, with shortages in the supply chain, and the latest progress in U.S. company Anthropic's AGI is lifting the boundaries of AI capabilities, which is expected to further drive demand diversification and tighten the supply chain links. Furthermore, historically, the technology industry trend is less sensitive to rising U.S. bond rates due to its high growth, and compared to previous bull markets in A-shares technology, the current AI computing power leader's long-term valuation (PE-FY3) remains at a relatively low level of 15-20 times (historical average of 30-40 times). Therefore, the logic for the technology sector remains solid from the liquidity, business cycle, and valuation perspectives, and is still the main theme in the market; 2) Q2 overseas manufacturing and financial sector profit expectations are revised upward, with Chinese exports surpassing market expectations in May. In addition to AI business cycle driving, exports of automobiles, ships, and lithium batteries have also seen high growth; Q2 average daily turnover in the two markets increased by 7.6% month-on-month. However, the performance of related sectors has been constrained by micro trading pressure, but with the improvement in market liquidity supply, the restoration of market value discovery functions is expected to drive stock price recovery; 3) With geopolitical easing and oil price declines, some traditional industries that were previously on an improving trend but limited by high oil prices are expected to see recovery: aviation/chemical pharmaceuticals/chemicals/building materials, etc. Industry comparison: Not a solo performance, but a variety of flowers will bloom. Optimistic about the main themes of technology/manufacturing, securities/banking, and improvement in traditional sectors. 1) Emerging technology: With increased investment in AI in China and the U.S., capacity shortages, and accelerated technological iterations, there is no turnaround in inventory turnover ratio and ROIC. The valuations of core leading companies have not deviated either. Recommended sectors include integrated circuits/communication equipment/high-end equipment/small metals, etc. 2) Competitive manufacturing: Global AI investment and energy transformation provide new historical growth opportunities for Chinese companies globalization. Recommended sectors include power equipment and new energy/engineering machinery/innovative drugs, etc. 3) Traditional recovery: Positive about securities/banking that have seen microstructure clearance and highlighted valuation advantages. The improvement in Taiwan Strait navigation also contributes to the recovery of some traditional industries. Recommended sectors include building materials/chemicals, as well as aviation/hotels. Theme recommendations: 1) New Infrastructure for AI: Acceleration of global opening of domestic models and investment in computing power networks. Optimistic about domestic computing power/AIDC/semiconductor manufacturing. 2) Siasun Robot&Automation: Acceleration of physical AI development process. Positive outlook for sensors/dexterous hands/screw shafts. 3) Commercial Space: SpaceX accelerating Starlink and Starship production. Positive outlook for aerospace infrastructure/satellite payloads. 4) Xinjiang Revitalization: Building a modern industrial system with regional advantages. Optimistic about clean energy development/port trading/tourism, etc. Risk warning: Overseas economic recession exceeding expectations, global geopolitical uncertainties.