According to a research report by Guotai Haitong Securities Co., Ltd. (GTHT), as year-end approaches, some investors are motivated to secure profits and reduce positions. The cooling expectations of Fed rate cuts, intensified volatility in U.S. stocks, and the absence of domestic policy support have collectively contributed to market fluctuations and weakened confidence. Additionally, the slowdown in equity product filings has led to insufficient incremental supply, negatively impacting the microstructure of the stock market.
Contrary to the prevailing cautious sentiment, GTHT remains firmly optimistic about China's market prospects, stating that stock indices have entered a "buying zone." The December-February period is seen as a window for policy, liquidity, and fundamentals to align positively. Post-adjustment, portfolios should gradually shift toward more aggressive positioning, with an emphasis on increasing exposure to China’s market. Key sectors to watch include technology, brokerage, and consumer goods.
**Key Views:** 1. **Market Outlook:** Risks have been largely released, and Chinese equities are now in a favorable buying zone. Recent sharp declines, including panic selling, reflect widespread pessimism. However, the correction—with the ChiNext Index down 12%, the STAR 50 Index nearly 20%, and the Hang Seng Tech Index 22%—matches historical pullbacks during bull markets, indicating that selling pressure has largely exhausted itself. 2. **Policy Catalyst:** Market expectations for the upcoming Central Economic Work Conference remain subdued. Given weak growth and the importance of economic momentum in the next Five-Year Plan, policy support is expected to revive sentiment. 3. **Reform Momentum:** The merger of CITIC Securities signals accelerated capital market reforms, while the rapid approval of 16 hard-tech ETFs underscores regulators’ commitment to stabilizing markets.
GTHT believes opportunities emerge amid panic, forecasting a gradual market stabilization followed by a year-end rally. China’s capital markets are entering a phase of revaluation and expansion, with traditional bearish factors (U.S.-China tensions, economic uncertainty, balance sheet contraction) fading. Increased confidence in RMB assets and reduced tail risks suggest significant upside potential.
**Investment Strategy:** - **Technology Growth:** AI advancements and domestic computing infrastructure shortages present opportunities. Recommended sectors: Hong Kong-listed internet, media, computing, and manufacturing exporters (power/industrial equipment). - **Financials:** Capital market reforms and potential mid-term bank dividends favor brokers and insurers. - **Consumer Goods:** After three years of correction, valuations and positioning are low. Structural opportunities exist in food & beverage, agriculture, hotels, and duty-free sectors.
**Thematic Picks:** 1. **AI Applications:** Breakthroughs by Google and Alibaba highlight opportunities in internet and global computing infrastructure. 2. **Robotics:** Accelerated product launches by key firms favor components and new materials. 3. **Domestic Consumption:** Sports events and winter tourism. 4. **Xinjiang Infrastructure:** Clean energy, power grids, and renewables.
**Risks:** Overseas recession risks and geopolitical uncertainties.
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