CSC Financial: Weak Sentiment, Stay Light and Wait

CSC Financial released a research report noting that the investor sentiment index fell into the doldrums this week, and investors should be alert to passive deleveraging in the short term; the continued role of market-stabilization funds in providing support is becoming particularly critical. The technology sector's short-term oversold condition has reached a historic level, and combined with generally good third-quarter earnings growth and still-supportive fundamentals, a technical rebound is expected after the oversold decline, but the medium term remains under triple pressure from funding/positioning, overseas rate hikes, and geopolitics. Overseas, although US September CPI exceeded expectations, its breadth declined; Fed officials have released dovish signals, reducing the urgency of consecutive rate hikes and potentially pushing the hike window to December; US Treasury yields have pulled back from highs, and marginal improvement in overseas liquidity is expected to provide valuation support for A-shares, especially growth styles. At the allocation level, short-term positioning should use certain dividend yields to lock in a base position, wait for style rebalancing with a light-position structure, and hedge both inflation and geopolitical risks with real assets. Sectors to focus on include: banks, non-bank financials, utilities, coal, oil, oil shipping, basic chemicals, hog farming, and the AI industry chain.