China Securities Co., Ltd.: The end of October can be viewed as a reference for short-term bottom support for the market; focus on valuation switching at year-end.

China Securities Co., Ltd. released a research report stating that the late-October low is highly likely to already be this round's market bottom. AIAE indicates valuations are low, and November is the starting point for repair, but the pace is more likely to be "two steps forward, one step back," with the slope of recovery still subject to certain constraints. Market-stabilization policy has shifted from emergency support to mechanism building. Central Huijin's "quasi-stabilization fund," Guoxin and Chengton's "structural guidance," broad-based ETF inflows, and relending for share buybacks and increased holdings jointly build the lower bound. The late-October position can be viewed as a reference for short-term bottom support. Overseas rate hikes, the Nvidia incident, and AI regulatory uncertainty raise risk premiums in the short term and strengthen the self-controllability logic in the medium term. At year-end, focus on valuation switching; institutional positions are concentrated, and the odds for catch-up gains come from "underweight + low crowding," while also positioning for cross-year themes. China Securities Co., Ltd.'s main views are as follows: Market bottom is highly likely confirmed, oversold repair rally begins The late-October low is highly likely to already be this round's market bottom, and the AIAE model shows the current market is somewhat undervalued. We judge that November is expected to be the starting point of a repair rally, but more likely "two steps forward, one step back" rather than a one-way rise. Looking ahead, the slope of repair is subject to three constraints: first, the December Fed rate hike and high US Treasury yields suppress high-valuation growth; second, Nvidia's management change disturbs sentiment in the North American computing power chain; third, domestic turnover and leveraged funds are insufficient, with incremental funds mainly allocation-type. Market-stabilization package supports the bottom, building the market's lower bound Since November, market-stabilization policies have been intensively implemented, moving from emergency support to mechanism building. Stabilization institutions are another main line: Central Huijin is explicitly designated as a "quasi-stabilization fund," while Guoxin and Chengton assume the role of "structural guidance." For the market, this round of policy has given a relatively clear lower bound. The continued inflows into broad-based ETFs, increased holdings by Guoxin and Chengton, and low-cost funds from relending for buybacks and increased holdings correspond to the period when this round of policies was intensively introduced. The market's position at the end of October can be regarded as a reference point for short-term bottom support. The triple disturbance of overseas rate hikes, Nvidia, and AI regulation US October CPI strengthened, overseas rate-hike expectations heated up, and denominator-side suppression remains. The bigger variable comes from Nvidia. This incident involves personal matters and a board investigation, not only the impact of a management change on strategic continuity, customer relationships, and supply chain commitments, but also touching national security review. At the same time, uncertainty over US AI regulation is also rising. Since November, overseas markets have traded the Nvidia substitution logic, with Nvidia accelerating its decline while the Philadelphia Semiconductor Index and Nasdaq rose overall. For A-shares, short-term risk premiums rise, especially suppressing the North American computing power chain, while in the medium term it strengthens the policy logic of self-controllability. Note the year-end market characteristics of valuation style switching. Year-end is often the time when valuation and style switching are most likely to occur. As the late-October third-quarter report disclosures are completed, investors generally focus on the next year's prosperous industries, and sectors with low valuations and strong earnings certainty usually have a higher win rate at year-end. At present, institutional positions remain relatively concentrated, and the odds for catch-up gains come from "underweight + low crowding"; on the other hand, pay attention to cross-year thematic. Risk warnings (1) The effect of domestic demand support policies is lower than expected. If subsequent domestic data such as property sales and investment remain difficult to recover, inflation remains sluggish, consumption does not show obvious improvement, corporate profit growth continues to decline, and the economic recovery is ultimately falsified, then the overall market trend will come under pressure, and overly optimistic pricing expectations will face correction. (2) Risk of deterioration in the Middle East geopolitical situation. Watch for further escalation of the US-Iran conflict, with the international oil price center moving up, increasing global inflationary pressure and constraining monetary easing space for domestic and foreign central banks. If inflation develops malignantly, it may drag on aggregate economic demand, exacerbate the risk of global economic recession, and at the same time shock the equity market. (3) US stock market volatility exceeds expectations. If the US economy deteriorates more than expected, or if the Fed's easing intensity falls short of expectations, it may cause large fluctuations in the US stock market, which would then spill over to domestic market sentiment and risk appetite.