Brokerage Morning Meeting Highlights | 10-Year Treasury Yield Breaks Below 1.6%; Conditions for ChiNext Rebound Are Accumulating

On the previous trading day (November 4), the Shanghai Composite Index rose 2.16% to 3,686.17 points, the Shenzhen Component Index rose 4.22% to 11,335.69 points, and the ChiNext Index rose 6.40% to 2,544.73 points; turnover in the two markets was RMB2.037694 trillion; 4,667 stocks rose and 779 fell, with 118 hitting the limit up and 1 hitting the limit down. Guosheng believes that the 10-year government bond yield breaking below 1.6% does not mean the bond market rally is over, and there is still room for further declines at year-end and early next year; Guotai Haitong believes that the new policy on existing-home sales will hit investment in the short term and promote industry stability in the long term; Huafu Securities believes that quantum technology ranks first among the six future industries; Sinolink believes that wind power tender volume and prices point to a turning point in 2027. Guosheng: Fixed Income | 10-Year Government Bond Yield Breaks 1.6%, Trend Not Over In the morning session of November 4, 2026, the 10-year government bond yield officially broke through the 1.6% integer threshold. As of the morning of November 4, the 10-year government bond yield had officially broken through the key 1.6% integer threshold and had in fact fallen to near previous lows; after accounting for tax effects, the after-tax yield has in fact broken below the previous low. After the breakthrough, how the market will move nextwhether it will adjust upward or continue the downward trendhas become the focus of the current bond market. Breaking through a key level does not mean the rally is over, but rather that the trend continues, and there is still room for further declines in rates at year-end and early next year. Historically, after rates break through integer thresholds, the bond market does not necessarily adjust; rather, it depends on the fundamentals, liquidity conditions, and supply-demand structure of the bond market at the time. At present, government bond supply has declined somewhat, while allocation demand from small and medium-sized banks, insurers, and others remains strong, and allocation-type institutions may increase allocations at year-end. In addition, after the anchor change, the center of the rate system has declined somewhat, and combined with the recent weakness in equity markets, the central bank's tolerance for falling rates may have also increased. In short, rates breaking through the key 1.6% level does not mean the bond market rally is over; under current conditions, the downward trend in rates may continue, especially at year-end and early next year. We believe the 10-year government bond yield still has 10-15bp of downside room, with 1.50% likely in sight; the 30-year government bond yield is expected to fall to 1.80%-1.85%; and interbank certificates of deposit are expected to fall to 1.30%-1.35%. Guotai Securities: Strategy | The Ship Will Eventually Reach Shore What needs to be faced squarely now is that the ChiNext Index has cumulatively retraced more than 44% since peaking at 4,380.41 points on June 26 (as of early November), significantly deeper than the maximum drawdowns of the 2021 "Mao Index" and the 2022 "Ning Combination," and has largely exceeded the of our M-top framework. 1. High US Treasury yields have caused global AI technology funds to narrow toward core US AI leaders. On October 7, the 10-year US Treasury yield touched 5.36% intraday and the 30-year touched 5.73%, both the highest since 2002. At present, the deadlock of long-end rates being "easy to rise, hard to fall" has shown substantive loosening: on October 28, the Fed's FOMC voted 10-2 to keep rates unchanged at 3.75%-4.00%, and the 10-year US Treasury yield fell from its high to around 4.9% on October 30, down about 36 basis points for the month, but the warning of tightening liquidity has not been eliminated. 2. Controversy continues in the AI technology industry, and 2028 is temporarily unclear; this high degree of uncertainty itself creates a valuation discount. ROIC at the five major cloud vendors has declined, 2028 capex is expected to fall to the 20%-30% year-on-year range, trailing 12-month free cash flow has fallen from US$192.4 billion to US$125.9 billion, and Amazon and Oracle have turned negative. Under current plans, 2028 net leverage is only 0.6x and interest coverage is 14x, but the commercial loop needs hard evidence; the uncertainty over whether there will be a hard brake or a soft landing is itself the discount. 3. Market-wide funds have concentrated to an extreme in A-share technology, and absolute-return funds constitute the second passive selling trigger. In 2026Q2, active long-only public fund TMT holdings reached 61.9% at one point, and were still 54.7% in Q3, with electronics overweight at 18.0% and telecom at 8.8%, both at the 98.3rd percentile since 2012; insurers, fixed-income-plus funds, and others passively cut positions after net value drawdowns hit 3% and 5% risk-control lines, and margin financing balances fell to about RMB2.30 trillion, a decline of 20%. So when will the market bottom? In our "Bottoming Signals" weekly report, we proposed that a round of extreme adjustment is about 60% of the prior range gain and lasts 16-19 weeks. In 2015, the ChiNext Index retraced 62.8% over about 14 weeks; from end-2021 to April 2022, it retraced 59.9% over about 20 weeks; this round, since peaking on June 26, 2026, has lasted about 18 calendar weeks, and the retracement of the range gain has reached the 60% extreme level. The ChiNext Index PE is about 26x, already close to the level when the 2024 924 rally began; in terms of both time and space, it is already in an oversold state within the historical experience range. Looking ahead, macro constraints are easing and industry catalysts are being gradually verified, and the conditions for a major rebound are also accumulating. This round, the clearing of positions has been slow; in 26Q3, active public fund TMT holdings fell from 61.9% to 54.7%, mainly due to market value declines rather than active reductions. The 15.5% rebound in early August should be seen as a bounce during a sharp decline rather than a second top; if easing macro constraints and verification of industry catalysts resonate, the second wave of AI technology may gradually unfold within the year. The key to capturing the second top lies in repositioning rather than adding positions, that is, shifting from core beta leaders to second- and third-tier strong-alpha names. The directions are, first, varieties whose earnings peaks are relatively deferred (such as domestic computing power and PCB upstream), and second, new technologies and new applications with lighter positioning. The wind stops at the mountain, and the ship will eventually reach shore. Guotai Haitong: Real Estate | Industry Paradigm Reconstruction, Corporate Anchors Updated Local detailed rules have been introduced one after another, orderly promoting the implementation of the new policy on existing-home sales. As of October 17, seven citiesBeijing, Shanghai, Guangzhou, Wuhan, Tianjin, Hangzhou, and Shenzhenhad issued local detailed rules to improve the commercial housing sales system, implementing the deployment related to reforming and improving the commercial housing sales system, and existing-home sales have entered the implementation stage. Judging from the detailed rules already issued, the overall frameworks of the cities remain highly consistent. The cities are making a smooth transition through "new-old demarcation," uniformly using August 28 as the dividing point, setting transition periods for projects in progress, extended to as late as the end of 2028; at the same time, the pre-sale threshold has been uniformly raised to topping out of the main structure, and pre-sale funds are subject to full-process supervision in full. At the same time, the cities have also proposed differentiated arrangements according to local conditions. Measurement of the new policy's impact on real estate companies: an analysis based on local detailed rules. To quantitatively analyze the impact of the new existing-home sales policy on the project profitability, capital turnover efficiency, and capital return levels of real estate development enterprises, this measurement constructs a standardized residential development project and, while keeping the project's basic conditions relatively consistent, simulates eight scenarios, including traditional pre-sale, pre-sale at main structure topping out, existing-home sales, and transition policies for existing projects. We draw the following conclusions: 1) Compared with the traditional pre-sale model, the main pressure in the existing-home sales scenario is a marked increase in funding pressure and a decline in IRR; 2) Rough-finished sales and phased completion filing can improve IRR, but the peak funding requirement still depends on whether collections match large payments; 3) Deposits can lock in part of the home purchase price, but during the freezing period they cannot replace construction funds. 4) The existing-home sales scenario is relatively sensitive to both land acquisition costs and sales prices, and the current profit buffer comes from lower land prices or higher new home prices. Impact of the new policy on the industry: short-term shock, long-term stability. On the supply side, the new policy raises the threshold for development investment, and new home supply is expected to contract at an accelerated pace. Although the contraction in new supply may be faster than the recovery in demand, it does not mean inventory will immediately decline. On the demand side, the new policy helps reduce delivery risk, and fiscal support is simultaneously achieving breakthroughs. However, whether sales can stabilize in the future still requires the coordination of factors such as household purchasing power, housing price expectations, and inventory destocking. On the financial side, credit is contracting simultaneously at both the household and real estate enterprise ends. On the land side, the trend of declining land finance may lead to changes in the supply mechanism. In terms of the competitive landscape, the industry is shifting from high turnover and scale expansion to competition based on capital strength, product quality, and cash flow; real estate companies with strong financial strength, stable financing channels, deep regional cultivation, and outstanding product capabilities will benefit. Outlook: promoting high-quality industry development. We judge that the industry will enter a new stage of accelerated supply contraction, slow demand stabilization, and differentiated price repair, and that the new policy's impact on the real estate market has an obvious time lag: 2027 will be a period of accelerated supply contraction. Real estate development investment and new construction area will still face downward pressure. New home and second-hand home prices in core first-tier cities are expected to stabilize first. 2028 will be a period of rebalancing supply and demand. New supply will continue to decrease, and inventory pressure in some core cities will ease somewhat. 2029 will be a period of structural stabilization for the industry. Under the baseline scenario, the declines in real estate development investment and new construction area will narrow significantly, new home sales area will gradually stabilize, housing prices in core cities will repair first, and lower-tier cities will still face adjustment pressure. Huafu Securities: Machinery & Small and Mid-Caps | Quantum Technology Moves Toward Engineering Implementation Quantum applications are maturing, and laser systems are indispensable core components. Quantum technology is based on the principles of quantum mechanics and, through the precise preparation, control, and measurement of the quantum states of microscopic physical systems, utilizes unique physical phenomena such as quantum superposition, quantum entanglement, and quantum tunneling. It mainly includes three major fields: quantum computing, quantum communication, and quantum precision measurement. Among them: 1) Quantum computing: it has the core potential to disrupt traditional classical computing power and is a core strategic track in global technological competition. At present, the quantum computing industry has not yet formed a unified technical route; four major routessuperconducting, ion trap, neutral atom, and photonic quantumare racing in parallel, each with advantages and disadvantages. Different technical routes have clearly different requirements for core hardware such as light sources; 2) Quantum communication: it uses the laws of quantum mechanics to transmit, protect, or process information, with lasers generating single photons or entangled photon pairs; 3) Quantum measurement: it uses characteristics of quantum systems such as entanglement, squeezing, and higher-order correlations to achieve manipulation and measurement of quantum states. Quantum time-frequency synchronization accounts for the largest share of the market, and optical clock technology is developing rapidly. First among the six future industries, "15th Five-Year Plan" may see a key industrialization turning point. Policy documents such as the "15th Five-Year Plan" outline all place quantum technology first among future industries. At the same time, many local governments have issued related plans to promote the industrialization of quantum technology: Hefei, Beijing, Shanghai, Shenzhen, and other places have issued special policies, promoting industrialization through measures such as setting up industry funds, building innovation platforms, and cultivating application scenarios. According to PhotonBox, the global quantum computing industry size may be about US$6.61 billion / US$179.52 billion / US$681.71 billion in 2025/2030/2035, respectively; the global quantum communication security industry size may be about US$2.703 billion / US$11.805 billion / US$76.795 billion in 2025/2030/2035, respectively; and the global quantum sensing industry size may be US$1.88 billion / US$2.95 billion / US$5.07 billion in 2025/2030/2035, respectively. Sinolink: Power Equipment & New Energy | Wind Power Q3 Results: Profitability Bottoming, 2027 Turning Point 26Q3 wind power revenue was RMB66.6 billion (YoY -5.1%), with net profit attributable to parent of only RMB167 million (YoY -91.4%), dragged down by slower deliveries combined with low-priced orders, raw materials, and exchange rates. Q3 tenders were 39.7GW (+32%), onshore wind average prices rebounded, and high-priced orders to be delivered in 2027 will unleash turbine-maker elasticity. Submarine cable revenue recognition is accelerating, while components remain under pressure for now. Sector risks have been cleared; focus on low-valuation turbine makers and overseas submarine cables/piles.