Huatai Securities A-share Strategy: Focus on oversold rebounds amid sentiment clearing

Huatai Securities released an A-share strategy research report stating that last week A-shares were weak early on and strengthened later, with a volume-driven recovery on Friday, though the main indices still closed slightly lower for the full week. By its estimates, the A-share sentiment index entered pessimistic territory for the first time since August, with bottom-supporting funds stepping up absorption, but overseas disturbances are still playing out, and it will take time for trading-oriented capital to return and for institutional positions to be cleared out; in the short term, it is more advisable to view this as an oversold rebound. Reviewing similar oversold-rebound phases for ChiNext in history, electronics, communications, machinery, power equipment and the small-cap style outperformed. On allocation, within the tech sector it suggests focusing on PCB, passive components, optical modules and other directions with sequential earnings improvement and prior oversold conditions, thematically on humanoid robots, defense and AI applications, and within non-tech sectors on general equipment, medical services and other directions with accelerating earnings.