To The Moon

Institutional Outlook: Tech Mainline May Regain Advantage

Reviewing global asset performance during the National Day holiday: US Treasury yields stayed elevated, gold fluctuated, crude oil spiked then pulled back, while US equities 鈥?especially the AI tech theme 鈥?continued to strengthen, with the Nasdaq and NVIDIA hitting record highs. In Hong Kong stocks, driven by commercialization progress at the industry level, AI large models became the market focus. As A-shares approach their first trading day after the long holiday, brokerages鈥?strategy outlook reports generally agree that there were no major shocks from overseas markets during the holiday, the market has room for a rebound, and A-shares are expected to see 鈥渞ising volume and price鈥?after the holiday, with a 鈥淩ed October鈥?rally likely.

A-shares Are Expected to See 鈥淩ising Volume and Price鈥?After the Holiday

Before the National Day holiday, A-share trading volume had been relatively light. Most institutions judge that after the holiday, supported by returning capital and improved risk appetite, A-shares are likely to see a repair rally. GF Securities said that at the trading level, the pre-holiday contraction in A-share volume was mainly due to the long-holiday calendar effect and does not reflect a decline in overall market willingness to participate. This 鈥減re-holiday volume shrinkage鈥?pattern will largely fade within one week after the holiday, with turnover returning to pre-shrinkage levels. Soochow Securities believes A-shares will see a repair rally after the holiday: on one hand, A-shares had already adjusted for consecutive sessions before the holiday, with both market sentiment and capital participation low; on the other hand, the National Day calendar effect shows that after the holiday, the market鈥檚 volume center often rises significantly, liquidity is expected to gradually recover, and the index may experience a short-term rapid upward move. Shenwan Hongyuan Securities stated bluntly that in the short term, a small-scale 鈥淩ed October鈥?rally in A-shares is likely: on one hand, the proportion of strong stocks in the electronics and communications sectors has fallen to a mid-to-low range; on the other hand, 鈥淩ed October鈥?is one of the monthly calendar effects with the highest historical win rate. After the late-September market adjustment, the realization of a 鈥淩ed October鈥?rally is already a high-probability event. However, a larger-scale 鈥淩ed October鈥?rally may require major breakthroughs in the global asset allocation environment and the tech industry trend.

Third-Quarter Reports May Be the Key Variable for October

Looking at a longer time horizon, Soochow Securities said the market will most likely follow a path of 鈥渞epair first, then divergence.鈥?Driven jointly by relatively strong overseas tech and the seasonal effect of the National Day holiday, growth directions that fell more earlier and still have relatively high prosperity may show greater elasticity. But as the rally deepens, capital will gradually shift from 鈥渙versold repair鈥?to 鈥渆arnings verification,鈥?and third-quarter reports will become the key variable affecting the structure of the October market. CSC Financial believes that in October, A-shares will enter an earnings verification period, and industry sectors with high certainty of earnings growth are expected to attract capital. It expects tech sector earnings to maintain high growth, midstream manufacturing to improve marginally, and upstream cyclical sectors to pull back due to a high base. Prosperity within sub-sectors will further concentrate in areas such as tech hardware, upstream resources, and overseas-expansion manufacturing, while upward earnings revisions may cluster in AI hardware, biological products, and some financial sectors. China Galaxy Securities also recommends that investors focus on earnings and policy verification in October: on one hand, during the third-quarter report disclosure window, capital will further tilt toward earnings certainty, and sub-sectors with solid prosperity are likely to outperform; on the other hand, there is room for continued policy planning, and the 鈥渟ix networks鈥?layout is an important incremental policy direction at present, with attention to project-level implementation progress and the formation of physical workload. In the view of Zheshang Securities, with the Federal Reserve鈥檚 25-basis-point rate hike in September implemented and signs of easing in the Middle East situation, the previously negative overseas macro constraints have been temporarily lifted. Starting in October, the market will enter the third-quarter earnings window, and the market鈥檚 pricing focus is expected to return to industry prosperity. Historically in A-shares, the correlation between stock prices and earnings in October rises to a high for the year, and the characteristics of prosperity-based pricing are quite prominent; the ChiNext and STAR Market may enter an important year-end window for going long. In terms of style, tech is expected to regain dominance.

In Terms of Style, Tech Is Expected to Regain Dominance

It is worth noting that during the long holiday, the Philadelphia Semiconductor Index in the US extended its trend since late September, becoming insensitive to further elevated US Treasury yields and rising against the trend, while leading companies such as NVIDIA repeatedly set new highs. GF Securities analyzed that more than thirty years of US stock history shows that when US Treasury yields rise, the greater impact is on the Dow, not on tech growth sectors. Overall, this round of the tech industry cycle is most likely in an accelerating upward or high-speed oscillating phase, rather than quickly entering a sharp slowdown phase. After entering October, a series of catalytic factors in the AI industry are still worth watching and verifying, and may once again strengthen a new narrative on the demand side. Corresponding to A-shares, the upward move in the global tech industry also means that the A-share tech style still offers investment opportunities to tap excess returns. Changjiang Securities said that during the holiday, the 10-year US Treasury yield still did not suppress tech stocks after breaking above 5.3%, indicating that at this stage global capital is still willing to pay higher valuations for certainty-driven prosperity assets. Overall, major overseas markets are entering a phase where 鈥渕acro still faces pressure, but capital is once again choosing the strongest earnings assets,鈥?so investors are advised to focus on core tech assets with earnings, orders, and industry trends. For A-shares after the holiday, the index is expected to maintain a range-bound but slightly stronger run, with tech expected to regain dominance in style, and focus on rebound opportunities in the AI hardware sector. In addition, concepts such as commercial aerospace and innovative drugs may be active. Guosen Securities said a year-end rally in A-shares is likely in the fourth quarter. In allocation, tech remains the mainline of the market, and investors are advised to position for the second wave of opportunities in AI application diffusion and hardware sectors, while also paying attention to resource-based dividend sectors and catch-up opportunities in undervalued sectors such as real estate.