Brokerage Morning Meeting Highlights | Optimistic Capital Flows in the Banking Sector

Yesterday, the market rebounded after touching bottom, with the Shanghai Composite Index closing in the red, while the ChiNext and STAR 50 indices had previously fallen more than 3%. Trading volume across the Shanghai and Shenzhen markets reached 1.68 trillion yuan. On the board, PCB concepts surged, while concepts such as the ice and snow economy, disperse dyes, and military-related sectors showed active performance. On the decline side, the battery sector weakened. As of the close, the Shanghai Composite Index rose 0.1%, the Shenzhen Component Index fell 0.25%, and the ChiNext Index fell 0.18%. CITIC SEC believes that capital flows in the banking sector are optimistic; Huatai believes that the EU energy transition and AI growth may lead to power shortages; CICC believes that the industrial control industry is experiencing a weak overall recovery, but structural opportunities stand out. CITIC SEC: Optimistic Capital Flows in the Banking Sector In the first week after the National Day holiday, safe-haven capital flowed into banks, and the sector outperformed major indices against the trend. On sector investment, from a fundamental perspective, looking ahead to the third quarter and the full year, core variables such as net interest margin and asset quality are expected to remain stable, the operating landscape is stable, and the profit trend is positive. From a medium-term perspective, the banking sector has entered the tail range of the risk cycle, and the first derivative of ROE has already improved. It is expected that the absolute ROE level of the industry will stabilize this year and next, in the range of 8-9%, helping to boost sector valuation. It is expected to be re-rated from a "high-dividend defensive asset" to a "high-certainty equity asset." The banking sector will continue to move in the direction of valuation upward, and the absolute return space for the full year will continue. Huatai: EU Energy Transition and AI Growth May Lead to Power Shortages In recent years, the rapid development of AIDC and transportation electrification has advanced in tandem with Europe's energy transition, and whether Europe's power system can meet new peak demand in the future has gradually attracted market attention. By reviewing the EU's power supply and demand structure and building an EU power supply-demand balance sheet, this report finds that: 1) Since 2008, European electricity demand has shifted from long-term growth to stagnation. Over the next decade, AIDC and transportation electrification are expected to drive a change in this trend, and peak load will also grow accordingly; 2) In the context of Europe's future energy transition, the share of wind and solar installed capacity will continue to rise, while traditional controllable power sources such as coal power will exit. Controllable installed capacity growth will lag peak load growth, and a power gap may emerge starting in 2027; 3) To compensate for the lack of peak capacity in the power system, electrochemical energy storage installations are expected to grow significantly. Flexible power sources such as the electrochemical energy storage industry chain will benefit. CICC: Weak Overall Recovery in the Industrial Control Industry, but Structural Opportunities Stand Out Since 2026, manufacturing profits have rebounded, but overall capacity expansion has been cautious. Against this backdrop, the automation market size in 1H26 increased by 1.5% year on year. The recovery was mainly driven by capital expenditure in advanced manufacturing industries and equipment upgrades, driving accelerated sales growth in products strongly related to high-end equipment such as servos and CNCs. Local leaders are increasing their share by leveraging capacity expansion in emerging industries, and deepening overseas expansion is opening up growth space. This article is reprinted from "Cailian Press," edited by GMTEight: Xu Wenqiang.