Huatai Securities: AI Chain, Innovative Medicine, Military Industry, and Big Finance remain strategic allocation priorities.

Huatai Securities pointed out that last week A-shares hit a new high on rising volume, with trading funds remaining active and market liquidity ample, which continues to be the main driver of the market. Firstly, from the perspective of financial data, there is a differentiation between real credit and M1, with the overall strength of traditional industry betas not strong. Deposit data reflects signs of residents' funds entering the market, and if the stock market can generate a sustained profit effect, current account deposits are one of the potential increments in the future. Secondly, at present, residents' funds entering the market are mainly leveraged with existing funds, reflecting continued stage highs in the activity of leveraged funds, while the number of new account openings, public offering of new shares, and improvement in the number of private equity filings have limited slopes. ETFs as a whole have seen net outflows in the past month, with increasing industry differentiation. Thirdly, foreign and insurance funds are also worth paying attention to as potential incremental funds, with recent activity levels both on the rise. The market trend is biased towards strength, and it is recommended to maintain a high position bias. In terms of allocation, AI chains, innovative pharmaceuticals, military industries, and large financials remain strategic allocation focuses. Internally, there should be moderate adjustments towards high positions, focusing on domestic computing power and AI applications for AI, and focusing on external demand-oriented CDMOs for pharmaceuticals.