Guotai Junan: After the oversold rebound, the index still needs to establish a bottom and grind a bottom. More comprehensive investment opportunities and style changes may appear in the middle of the year.

Guotai Junan released a research report stating that last week, the Shanghai Composite Index achieved eight consecutive gains and broke through the 3000-point mark. After the stock index rebounded beyond expectations, the outlook for the future trend is as follows: 1) As previously predicted, the bottom brought about by trading clearance has been seen, and the low point in the market before the Spring Festival is the bottom of this round of stock market adjustment. 2) With important conferences such as the Two Sessions approaching, the expectations of new market entrants for policies and the presence of key stabilizers in the market, coupled with the expression of short-selling positions being constrained by trading, it is expected that the stock market will remain stable during this period, still with some room for performance. 3) Since market expectations have not followed the rise in stock prices, it is judged that after the oversold rebound, the index still needs to consolidate and grind lower, with more comprehensive investment opportunities and style changes possibly appearing in the mid-year. Guotai Junan's main points are as follows: Investment style: Rotation between growth within growth and value within value. Under past high-speed, sustained, and stable growth expectations, investors had a far-reaching outlook and ability to predict the future, allowing for the exploration of value investing thoughts. Market classification of investment styles varied, such as by cycle, consumption, technology, finance, stability, and so on. However, in the "once-in-a-century major change", driven by complex international, geopolitical, economic, and social factors, the market's ability to predict the future and the length of expectations have decreased. This can lead to the failure of traditional investment strategies and the emergence of new investment strategies. Investors with a low-risk preference seek safety margins, resulting in a value within value market (high dividends and fixed income) and a "steady premium" for low-risk characteristic assets. Investors with a high-risk preference pursue transformational growth, resulting in a growth within growth market and a "dream premium" for high-risk characteristic assets. If there are no major changes in the overall pricing environment, the rotation of investment styles in the future will occur between value within value and growth within growth, rather than the traditional structure. Industry comparison: The cost-effectiveness of high-dividend stocks is decreasing, and the style switch point will occur in the mid-year. Amid complex geopolitical, economic, and social factors, market participants have a diminished ability to forecast the future and predict, leading to a switch and fluctuation in investment styles between value within value and growth within growth. Regarding the future industry comparison: 1) In the short term, during important conference periods, high-dividend and technology theme stocks still have some room for performance; 2) The relative valuation of the high-dividend style in the general market has reached the upper limit of the mean valuation + two standard deviations, showing that its valuation cost-effectiveness has significantly decreased after rapid growth, and the turnover rate of the CSI dividend index has also reached near historic highs, indicating short-term trading is approaching overheating and should not be chased; 3) The second bottoming and grinding of the market, investors' economic expectations will bottom out; with the promotion of technology policies and industries, the expectations for technology growth stocks will rise, approaching a growth stock market in the mid-year, with the new energy sector leading the way, but the focus of the market will be on technology manufacturing. Recommended investment themes: Equipment updates/Native computing power/New quality productivity/Low-altitude economy. 1) Equipment updates: High-efficiency equipment applications are expected to become an important pathway for a new round of equipment updates, optimistic about industrial boilers/energy-saving motors and other high-efficiency equipment applications and resource recycling industries. 2) Native computing power: AI has become a focus of global technological competition, and the construction of domestic intelligent computing centers is expected to accelerate, with potential in domestic optical interconnection/computing power chips/Huawei intelligent computing industry chain. 3) New quality productivity: The State-owned Assets Supervision and Administration Commission proposed to accelerate the development of AI and foster new quality productivity, optimistic about new technologies and new scenarios such as intelligent manufacturing/new materials. 4) Low-altitude economy: The Financial and Economic Committee meeting emphasized reducing the overall logistics costs of society, creating a new model for low-altitude unmanned delivery, optimistic about low-altitude aircraft manufacturing/core components/flight service companies. Risk warning: Overseas high-interest rates last longer than expected, increasing global geopolitical uncertainty.