The three broad-based indices — ChiNext, CSI 1000, and STAR 50 — have seen panic sentiment approach historic high percentiles near 90%, yet the degree of chip clearing remains slightly insufficient.
This suggests the market may see a short-term rebound, but under unchanged external conditions, mid-term deleveraging is still required.
Looking ahead, if the intervention of exogenous variables is strong enough, it will also break the premise that the market needs to stabilize spontaneously. Recently, the CSI 300 ERP touched the threshold of the 10-year average plus 1 standard deviation. Whether institution-dominated ETFs will continue to flow in is an important observation indicator, and high-intensity inflows still require ERP to continue rising.
If a rebound occurs, allocation should revolve around three approaches. The first approach: oversold rebound. Although the entire market has not perfectly hit the bottom range signal, some sub-sectors have reached positions with sufficiently deep declines and sufficient chip clearing. Based on our screening, these industries are concentrated in four directions: electronics (semiconductors, consumer electronics), communications (communication equipment), machinery equipment (general equipment, automation equipment), and power equipment (grid equipment).
The second approach: after the previous main-line consensus breaks down, quality stocks at valuation bottoms may gain market attention. We screened 44 sub-industries, such as: biological products, other electronics, optical optoelectronics, etc. The third approach: if institution-dominated ETFs continue to see large inflows, broad-based weighted stocks will be the direction benefiting from the "backstop" effect.
Since July, the direct manifestations of market turbulence have been: new highs in US Treasury yields, rising geopolitical risks, and cracks in the AI narrative. Behind this is the contradiction between technology investment demand represented by the United States and insufficient savings outside China.
For some time, economic systems outside of AI have been continuously squeezed, while within AI the circle has also been continuously narrowing. To break this unsolvable cycle, it is actually necessary to see the US Treasury yield, the anchor of global capital costs, decline again. Although the current 10Y US Treasury yield has fallen from its high, it remains at a high level of 5%.
Since the 21st century, sharp declines in US real interest rates and nominal interest rates have both been able to drive a rapid recovery in global gross fixed capital formation growth and its share of GDP. The mechanism behind this is that investment is more sensitive to interest rates than consumption. Currently, the US real yield of 2.66% and nominal rate of 5% are both in the high range of the past two decades, similar to levels around 2008, thereby also suppressing investment outside the AI industry.
If a simple analogy is made, there may be two scenarios in the future: one is a "crisis mode," where economic stall prompts monetary easing and rates fall rapidly; the other is a "steady-state mode" similar to 2013-2019, where investment can stabilize without continuous rate cuts, but this requires rates to at least return to a reasonable threshold level.
Either way, from a mid-term perspective: the real opportunity requires seeing a substantial decline in interest rates, and the first half of a substantial decline in US Treasury yields is often agonizing. The market finally saw a large intraday rebound on October 23. But precisely because of the large intraday rebound, the "bottom" has not been fully consolidated. The flawed bottom reduces the magnitude and duration of the rebound and brings hidden concerns of a second bottom breach.
During the rebound, we recommend responding with three approaches: (1) oversold rebound in sub-sectors of electronics, communications, machinery equipment, and power equipment; (2) low-position value stocks: biological products, electronics sub-sectors, education, papermaking, chemical fibers, etc.; (3) broad-based weighted directions benefiting from the ETF "backstop" effect, mainly non-bank financials.
From a mid-term perspective, we still recommend gold as a strategic allocation for interest-rate reversal, as well as the energy chain (coal, crude oil, oil shipping) undergoing supply constraints and pattern reconstruction in this round.
Risk warning: overseas monetary policy expectations tighten significantly; AI industry trends see major breakthroughs.
Table of contents: 1. Strategy: An Imperfect Bottom 2. Core Views Non-ferrous Metals — Wu Jinkai: Zangge Mining Company Limited (000408.SZ) Utilities and Environmental Protection — Jiang Tao/Xu Ziyi: Jiangsu Guoxin Corp.,Ltd. (002608.SZ) Transportation — Li Dan: Fujian Highton Development Co.,Ltd. (603162.SH) Non-bank — Hong Xining: China Cssc Holdings Limited (3877.HK) Machinery — Man Zaipeng/Qin Yanan/Fang Lingcong: Opt Machine Vision Tech Co.,Ltd. (688686.SH), China Cssc Holdings Limited (600150.SH) Computer — Liu Gaochang: Foxconn Industrial Internet Co.,Ltd. (601138.SH) Military — Yang Chen: Hongdu Aviation Pharmaceutical and Biological — Gan Tanhuan/Ma Judong: Gan&Lee Pharmaceuticals. (603087.SH) Consumer — Zhao Zhongping: Shenzhen Yuto Packaging Technology Co.,Ltd. (002831.SZ) 3. Risk warnings
Strategy: An Imperfect Bottom. A rebound that was jumped the gun on. Recently, after a sharp decline, the market rebounded. Wind All A intraday fell to a low of 5,481.76 points on October 23, then the index climbed upward in the afternoon, with an amplitude of 5.16%.
This strong rebound raises a question: has the market already reached a phased bottom? Our conclusions from two dimensions — broad-based index option implied volatility and margin maintenance guarantee ratio — are that the panic sentiment of the three broad-based indices (ChiNext, CSI 1000, STAR 50) has approached historic high percentiles (90%), but the degree of chip clearing is slightly insufficient.
This means the market may rebound in the short term, but under unchanged external conditions, mid-term deleveraging is still needed. Specifically, the current rising-volatility decline state corresponds to a median future 20-day return of 1.55%, with a win rate of 54.43%. If IV can break through the 90% percentile threshold, the median return would rise to 5.79%, and the win rate would also rise to 79.05%.
From the perspective of chip clearing, the current market average guarantee ratio is 257.6%, and margin balances continue to decline, but there is still a gap compared with historical clearing bottom conditions. This will significantly weaken the rebound magnitude and duration relative to the ideal fully cleared type, and increase the probability of a second bottom breach.
Looking ahead, if the intervention of exogenous variables is strong enough, it will also break the premise that the market needs to stabilize spontaneously. Institution-dominated ETF inflows are positively correlated with CSI 300 ERP. The 10-year average plus 1 standard deviation is the starting point for net inflows, while the 10-year average plus 1.5 standard deviations is the peak of institution-dominated ETF inflows. Recently, the CSI 300 ERP touched the threshold of the 10-year average plus 1 standard deviation. Whether institution-dominated ETFs will begin sustained inflows in the future is an important observation indicator, and high-intensity inflows still require ERP to continue rising.
If a rebound occurs, allocation should revolve around three approaches. The first approach: oversold rebound. Although the entire market has not perfectly hit the bottom range signal, some sub-sectors have reached positions with sufficiently deep declines and sufficient chip clearing. These are the directions that funds will first replenish after the market rebounds.
We set thresholds of a decline of more than 15% since June 30 and a composite crowding degree below 40%, screening out 23 oversold rebound industries, concentrated in four directions: electronics (semiconductors, consumer electronics), communications (communication equipment), machinery equipment (general equipment, automation equipment), and power equipment (grid equipment).
The second approach: after the previous main-line consensus breaks down, quality stocks at valuation bottoms may gain market attention. We screened 44 sub-industries, typical examples being: biological products, other electronics, optical optoelectronics, etc. The third approach: if institution-dominated ETFs continue to see large inflows, broad-based weights will be the direction benefiting from the ETF "backstop" effect.
Where is the bottom? Signposts on the path of a major cycle reversal. Since July, the direct manifestations of market turbulence have been: new highs in US Treasury yields, rising geopolitical risks, and cracks in the AI narrative. Behind this is the contradiction between technology investment demand represented by the United States and insufficient savings outside China.
For some time, economic systems outside of AI have been continuously squeezed, while within AI the circle has also been continuously narrowing. To break this unsolvable cycle, it is actually necessary to see the US Treasury yield, the anchor of global capital costs, decline again. Although the current 10Y US Treasury yield has fallen from its high, it remains at a high level of 5%.
Since the 21st century, sharp declines in US real interest rates and nominal interest rates have both been able to drive a rapid recovery in global gross fixed capital formation growth and its share of GDP. The mechanism behind this is that investment is more sensitive to interest rates than consumption. Currently, the US real yield of 2.66% and nominal rate of 5% are both in the high range of the past two decades, similar to levels around 2008, thereby also suppressing investment outside the AI industry.
If a simple analogy is made, there may be two scenarios in the future: one is a "crisis mode," where economic stall prompts monetary easing and rates fall rapidly; the other is a "steady-state mode" similar to 2013-2019, where investment can stabilize without continuous rate cuts, but this requires rates to at least return to a reasonable threshold level.
Either way, from a mid-term perspective: the real opportunity requires seeing a substantial decline in interest rates, and the first half of a substantial decline in US Treasury yields is often agonizing.
A rebound that jumped the gun and a weak rebound. The market finally saw a large intraday rebound on October 23. But precisely because of the large intraday rebound, the "bottom" has not been fully consolidated. The flawed bottom reduces the magnitude and duration of the rebound and brings hidden concerns of a second bottom breach.
During the rebound, we recommend responding with three approaches: (1) oversold rebound in sub-sectors of electronics, communications, machinery equipment, and power equipment; (2) low-position value stocks: biological products, electronics sub-sectors, education, papermaking, chemical fibers, etc.; (3) broad-based weighted directions benefiting from the ETF "backstop" effect, mainly non-bank financials.
From a mid-term perspective, we still recommend gold as a strategic allocation for interest-rate reversal, as well as the energy chain (coal, crude oil, oil shipping) undergoing supply constraints and pattern reconstruction in this round.
Allocation strategy selection: This article follows a top-down logic and identifies 10 golden stocks and 3 ETFs recommended for attention. Risk warning: overseas monetary policy expectations tighten significantly; AI industry trends see major breakthroughs.
Core Views. 2.1 Non-ferrous Metals — Wu Jinkai: Zangge Mining Company Limited (000408.SZ). Mid- to long-term recommendation rationale: The Julong copper mine has outstanding resource security and the scarcity attribute of a super-large copper mine, with strong resource security attributes, and high-quality copper mine assets with super-large scale and sustainable expansion have scarcity value. At the same time, the company's potash fertilizer business provides a stable operating foundation, the lithium carbonate project continues growth, and the Mamucuo, Guoneng Mining, and Laos potash projects contribute mid- to long-term growth.
Short-term catalyst: copper prices rise, Julong Phase II continues to ramp up production, driving rapid growth in the company's investment income and performance. Risk warning: price fluctuation risks in copper, lithium, and potash; project advancement falling short of expectations; safety, environmental protection, and natural disaster risks.
2.2 Utilities and Environmental Protection — Jiang Tao/Xu Ziyi: Jiangsu Guoxin Corp.,Ltd. (002608.SZ). Mid- to long-term recommendation rationale: (1) The company is the group's thermal power business development platform, with a peak in installed capacity commissioning in recent years, and electricity prices are expected to bottom out and rebound to enhance profitability; (2) the financial segment is mainly Jiangsu Trust, which is the largest shareholder of Bank of Jiangsu and Lian Life, and long-term equity investment continues to increase profits. (3) The company's net assets attributable to parent company continue to grow, up 6.3% in 26Q3 compared with the end of 25, and the current PB is only 0.7x.
Short-term catalysts: (1) Jiangsu Province's monthly electricity prices in November-December are 7.2 and 5.4 cents/kWh higher than the 26-year long-term contract electricity price, respectively, and the 27-year long-term contract electricity price is expected to rise, repairing the company's profitability; (2) Guoxin Yangdian Phase III is expected to have both units put into operation during the 2027 summer peak period, also bringing volume growth. Risk warning: significant decline in thermal power utilization hours, on-grid electricity prices falling short of expectations, etc.
2.3 Transportation — Li Dan: Fujian Highton Development Co.,Ltd. (603162.SH). Mid- to long-term recommendation rationale: The Simandou project's shipping ramp-up is faster than expected, which may boost global dry bulk shipping demand by 10% in ton-miles; super El Niño risk leads to tightened Panama Canal transit, squeezing dry bulk vessel passage, resonating with the traditional Q4 peak season; the company's share repurchase and cancellation combined with the actual controller participating in private placement lock-up enhance market confidence, offsetting the negative impact of equity dilution from the private placement for ship purchases.
Short-term catalyst: The Simandou project's shipping ramp-up is faster than expected, which may boost global dry bulk shipping demand by 10% in ton-miles. Risk warning: macroeconomic fluctuation risk, shipping safety risk, exchange rate fluctuation risk.
2.4 Non-bank — Hong Xining: China Cssc Holdings Limited (3877.HK). Mid- to long-term recommendation rationale: The shipping industry maintains high prosperity, and rising oil prices, freight rates, and ship asset values support the company's continued performance growth. Short-term catalyst: 26H1 company net profit increased 11% year-on-year, the spot operation portion has large elasticity, the dividend payout ratio exceeds 50%, and the dividend yield is high. Risk warning: shipping industry prosperity downturn risk; interest rate fluctuation risk; geopolitical risk.
2.5 Machinery — Man Zaipeng/Qin Yanan/Fang Lingcong: Opt Machine Vision Tech Co.,Ltd. (688686.SH), China Cssc Holdings Limited (600150.SH). Opt Machine Vision Tech Co.,Ltd. mid- to long-term recommendation rationale: Apple's innovation cycle will drive high performance growth for the company. The company has long been deeply engaged in the Apple and contract manufacturing industry chain, accumulating a large amount of real production line data, defect libraries, visual algorithm models, process parameters, and project debugging experience in high-precision manufacturing scenarios. Data assets are difficult for pure algorithm companies or new entrants to replicate in the short term, and the company is already one step ahead of the industry. Next year, the company's physical AI business will enter an explosive period, opening up the growth ceiling.
Short-term catalyst: order landing. Risk warning: new business progress falling short of expectations. China Cssc Holdings Limited mid- to long-term recommendation rationale: the shipbuilding cycle continues to rise, and we are optimistic about the company's long-term profitability improvement. Short-term catalyst: shipbuilding price inflection upward, newly signed orders growing rapidly year-on-year. Risk warning: large oil price fluctuation risk, exchange rate fluctuation risk.
2.6 Computer — Liu Gaochang: Foxconn Industrial Internet Co.,Ltd. (601138.SH). Mid- to long-term recommendation rationale: 1) Global server contract manufacturing leader, deeply participating in NVIDIA Rubin full-rack contract manufacturing. 2) CPO switches open a second growth curve. Short-term catalysts: 1) NVIDIA Vera Rubin production capacity ramp-up, global delivery pace accelerating. 2) 2.2 Google TPU v8 accelerating. 3) DSX POD released, modular AI factory expands system delivery space. 4) High-speed switch business continues to grow rapidly. Risk warning: macro risk, AI chip supply risk, CPO switch promotion falling short of expectations, next-generation product mass production progress risk, intensifying competition risk, intellectual property risk.
2.8 Pharmaceutical and Biological — Gan Tanhuan/Ma Judong: Gan&Lee Pharmaceuticals. (603087.SH). Mid- to long-term recommendation rationale: The company's fourth-generation insulin R&D progress leads domestically, and the basal insulin weekly preparations GZR4/GZR102 have shown good efficacy and safety in clinical data, with BIC potential. Short-term catalyst: The company will confirm European BD revenue in Q4, with high single-quarter performance growth; the long-acting microsphere preparation is expected to begin clinical trials soon, a global first. Risk warning: commercialization falling short of expectations, R&D progress falling short of expectations, intensifying competition risk.
2.9 Consumer — Zhao Zhongping: Shenzhen Yuto Packaging Technology Co.,Ltd. (002831.SZ). Mid- to long-term recommendation logic: (1) Build a comprehensive technology platform for the AI era, leveraging the 27-28 downstream edge AI product explosion to achieve a reversal in the consumer electronics packaging business, with upstream AI hardware continuing to ramp up around servers, major A customers, and robots; (2) the company has safety margin and elasticity potential. Short-term catalysts: (1) 26Q3 quarterly report negative news lands and full-year expectations bottom out; (2) in November, its liquid cooling subsidiary Huayan Technology's ZQD is expected to ship in small batches. (3) The third-quarter report acquisition of Weibochi Heat opens space for server cold plates and mobile phone VC vapor chambers; (4) subsequent unpriced options are expected to gradually consolidate. Risk warning: consumer electronics AI terminal product recovery falling short of expectations, future AI hardware expansion expectations below expectations.
Overseas monetary policy expectations tighten significantly: If monetary policy expectations tighten significantly due to persistent stagflation expectations, the market may face unexpected downside risk. AI industry trends see major breakthroughs: If AI industry trends see major breakthroughs, the market will return to the technology main line, and other sectors will lag.
Securities research report: "November Strategy and Golden Stocks" External publication date: October 30, 2026 Report publishing institution: Guojin Securities Co., Ltd. Securities analyst: Mou Yiling SAC practice number: S1130525060002 Email: mouyiling@gjzq.com.cn Securities analyst: Mei Kai SAC practice number: S1130525060004 Email: meikai@gjzq.com.cn Sina statement: This message is reproduced from a Sina cooperative media. Sina publishes this article for the purpose of transmitting more information and does not mean it agrees with its views or confirms its description. The article content is for reference only and does not constitute investment advice. Investors operating based on this bear their own risks.
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