Zhongtai: External disturbances are fading, and technology has become the true direction of odds.

Zhongtai released a research report stating that the market has emerged from extreme volume contraction and begun to rebound. The pre-holiday correction stemmed from rising rate hike expectations and funds taking profits and staying on the sidelines, but external disturbances are now fading at the margin. Currently, there are fewer and fewer sectors that simultaneously satisfy both prosperity and low valuation, and technology has become the true direction of odds. The valuations of storage, semiconductors, and semiconductor materials remain at low levels, and demand has not weakened significantly; although some AI hardware segments have already recovered, there is still room for further valuation repair. Zhongtai's main views are as follows: Over the past two weeks, the market has moved from extreme volume contraction to beginning to establish a rebound trend. Until the last two trading days before the Mid-Autumn Festival, the market adjusted again. Factors such as renewed rise in Federal Reserve rate hike expectations and the market expectation that the China-U.S. talks marked a sentiment peak pushed funds to prefer "taking profits and staying on the sidelines" before the holiday, and sectors with more accumulated floating gains saw larger pullbacks in the two trading days before the holiday. The current market environment is also different from early September, and the rebound trend will not stop because of disturbances. At that time, the market was mostly trading potential risks in advance that had not yet materialized, whereas now factors such as overseas interest rates, inflation, and policy expectations have been realized one after another, and the market has completed a round of repricing. After rate hike expectations heated up again this week, U.S. stocks and the Philadelphia Semiconductor Index did not continue to adjust, but stabilized and recovered on the following trading day; at the same time, China and the U.S. reached an eight-point consensus, and the negotiations were better than expected, with expectations for trade frictions, energy, and inflation risks easing at the margin, and external disturbances are fading. After experiencing "sharp surges and sharp drops," since July funds have been "bypassing technology" to seek safe undervalued industries in various directions. But at present, there are fewer and fewer industries that simultaneously satisfy "prosperity at least not deteriorating at the margin + cheap valuation." At this point, technology has begun to become the true direction of odds. There is very little time left before the end of the year, and both absolute-return and relative-return funds are facing the problem of an "asset shortage." Technology has become the final decisive factor, and only by "taking a step ahead" can one seize the initiative. The external shocks priced in advance and the rate hike disturbances in the last two trading days of this week, as well as the adjustment brought by cashing out previously profitable sectors, provide a rare window for buying technology again. While the undervalued areas in non-technology sectors are becoming fewer, more cost-effective sub-sectors are emerging within technology. The valuations of storage, semiconductors, and semiconductor materials remain at low levels, and demand has not weakened significantly; although some AI hardware segments have already recovered, there is still room for further valuation repair. Pay attention to the rebound opportunities in STAR Market and ChiNext, and grasp the final decisive factor for the fourth quarter. Risk warnings: Overseas AI technology progress falls short of expectations, the resonance logic of the global technology industry chain fractures, the supply-demand gap in memory and CPUs narrows ahead of schedule, domestic macroeconomic liquidity changes beyond expectations, information updates are not timely, etc.