Huaxi Securities: Liquidity in the stock market remains ample, which is conducive to the deepening of the slow bull market of A shares.

Huaxi Securities pointed out that the stock market liquidity remains abundant, which is conducive to the deepening of the slow bull market in A-shares. Unlike the "924" market trend last year, the characteristics of the current "623" A-share trend since have been more significant, with a more obvious "rotation rise and low position rise" feature, and a better sustainability of profit-making effects, which is conducive to attracting off-market funds into the market. As of the latest data, A-share margin financing balance has risen to around 2 trillion, and the ratio of margin financing balance to market capitalization is 2.3%, which is at the median level so far this year. This also reflects that the incremental sources of funds in this round of market trends are more diverse. In addition to margin financing funds, the participation of public and private institutions has also increased. Overall, the micro-liquidity of the current stock market is relatively abundant. In the context of asset allocation scarcity, the positive feedback effect of "residents' allocation funds entering the market and the slow rise of the stock market" is expected to strengthen. In terms of industry allocation, it is recommended to focus on: new technologies and growth directions, such as AI computing power, robots, solid-state batteries, etc.; dividend sectors that offer reconfiguration opportunities after a pullback, such as some undervalued mid-cap stocks. In terms of themes, focus on areas such as autonomous control, defense industry, low-altitude economy, and marine technology.