Source: Caixin.

Citic Securities: Expected large reversal, major market turning point.

Policy signals show significant changes, market expectations of a major reversal emerging, future domestic demand policies continue to intensify or push price signals to come earlier, the market will usher in a major turning point; after the expected major reversal, incremental funds mainly from retail investors entering the market will be a feature, the pulse-like short-term increase will continue, currently in the transitional phase from expected major reversal to market major turning point, focusing on low P/B and domestic demand recovery, waiting for price signals confirmation, after the market major turning point arrives, it will kick off an annual-level bull market characterized by the core feature of credit cycle re-upward movement, institutional investors will find a better entry time.

From a strategic allocation perspective, there are two main themes during the market transition phase. One is the revaluation of low P/B style, with industries concentrated in low P/B companies such as real estate, banks, non-banking financials, and construction materials being one of the most clear themes. The second is the valuation recovery of the domestic demand sector, suggesting a focus on consumer internet with dual offensive and defensive capabilities, undervalued high-return dairy products, popular dining necessities poised for stability first, as well as the cyclical sectors driven by economic recovery such as alcoholic beverages, human resources, hotels, etc.

Huaan Securities: Positive momentum expected to continue, preference for elasticity and stagnant rise to make up the rise

There is not much change in the domestic fundamentals, but after the real estate sets the tone for a turn, some positive signs have emerged, the risk of US recession has decreased, and the sharp rise in Hong Kong stocks has maintained a high market risk appetite, with A shares' positive momentum continuing.

In terms of strategic allocation, focus on elastic varieties and areas with prosperity support or potential policy catalyzing stagnant rise improvements, mainly including three main themes: 1) varieties representing market sentiment, mainly including brokerage, military industry, and computers. 2) Sectors with improved overall and micro liquidity, frequent catalysts, and growth sectors with third-quarter performance expected to exceed expectations, including electronics, new energy, communications, and military industry. 3) Other consumption sectors with prosperity or policy support, expected to benefit from diffusion and stagnant rise surge, including appliances, automobiles, pharmaceuticals, agriculture, and animal husbandry.

Huaxi Securities: Positioning in 'Brokerage' and 'Ultra-Low Price Stocks' is the optimal strategy at this stage.

"924" National News Conference and "926" Politburo meeting introduced significant policies, significantly boosting investor confidence, and Chinese assets launched a major comeback. As of now, the Hong Kong stock market has outperformed major global indexes, and A-share key indexes have also been significantly corrected in valuation. Huaxi Securities defines this round of Chinese asset surge as a policy-driven 'New Quality Bull Market'. Currently in the first stage of the 'New Quality Bull Market', positioning in 'Brokerage' and 'Ultra-Low Price Stocks' is the optimal strategy at this stage.

In terms of style allocation, quality consumption and growth are expected to be equally important. Focus on sectors benefiting from policy support such as major consumption (food & beverage, autos, home appliances, pharmaceuticals), high-quality growth (smart driving, artificial intelligence), and the restructuring and merger theme.

Guotai Junan: Stock indexes are expected to continue to rise.

Guotai Junan believes that optimistic expectations will continue to boost the stock market, with the Shanghai Composite Index expected to break through the 2021-2022 operating range. The rhythm will first rise and then fluctuate, with decisive actions towards the end of the year. Blue-chip stocks are quickly filling valuation gaps, and excess returns are bullish on growth. In addition, the decline in risk-free interest rates is the key driver of this round of market rally. This market rally needs to pay attention to the impact of new ETF tools on stock indexes and structures.

In terms of sector allocation, it is recommended to focus on sectors benefiting from the decline in risk-free interest rates and the boost in risk appetite: 1) Continuously increasing turnover + merger and acquisition expectations, recommendation: non-banking; 2) Boost in risk appetite, focus on valuations flexibility: computer/media/defense industry; 3) Stability expected by 2025, growth stocks with significant valuation adjustments are recommended: electronics/autos/communications/power equipment (batteries)/pharmaceuticals, and growth-oriented consumer sector.

Citic Securities: Bull Market Initiation, Pay Attention to Rhythm in the Early Bull Phase.

Citic Securities believes that in the short term, due to the significant increase in Hong Kong stocks during the holiday period, there may continue to be further upward momentum after the holiday. Looking at the current heat in A-shares, it is already close to the high levels seen since 2000. As of September 30, 2024, the overall turnover ratio of A-shares is as high as 3.38%, second only to the peaks in the first half of 2015 and 2006-2007. The maximum daily index increase in 10 days is only second to July 2015 post-2000. There is expected to be significant volatility after the holiday.

Recommended configuration sequence: new energy (oversold) > consumption (oversold) > media internet & consumer electronics (value stocks in growth stocks) > finance real estate (policy most benefited) > going global (good long-term logic + good short-term data) > upstream cycle (good production capacity structure + concerns about demand have been fully corrected).

Zhongtai Securities: Heat around Chinese assets may continue after National Day.

Last week, policy expectations strengthened, market enthusiasm rose rapidly, during the holiday period, Hong Kong stocks and U.S.-listed Chinese stocks performed well overall, Zhongtai Securities expects the heat around Chinese assets to continue after the holiday, predicting that this round of policy shift may trigger monthly to quarterly market trends, with significant upside potential ahead. They believe that this policy shift is fundamentally different from the past "four trillion" package, with fiscal stimulus likely to be less than market expectations. In the long term, the technology sector represented by "new quality productivity" is still expected to be the main theme in the second half of the year.

In terms of investment, as the core theme of this political gathering is "emphasizing the economy," sectors closely related to economic growth such as cyclical stocks and consumer stocks are expected to be the main styles; with the requirement for real estate being "strict control on the incremental construction of commercial housing," real estate stocks may be more important compared to upstream segments like black metals in the real estate chain, making real estate stocks and downstream consumption the key themes. Mergers and acquisitions are emphasized in this meeting, making central enterprise M&A a crucial theme following the indexing backstage; this round of fiscal policy stimulus may be less than market expectations, apart from structural opportunities in cyclical sectors, the technology sector is still expected to be one of the main themes in this rebound.

BOC International Securities: Strive to go long, adhere to "cyclical + high beta" industry allocation.

BOC International Securities believes that the rapid rebound of A-shares since the end of September stems from the unexpected change in policy tone leading to valuation recovery; looking ahead, regardless of comparison with Q1 2019 (bottoming of market risk appetite coupled with stable economic expectations) or Q2 2020-Q1 2021 (strong replenishment cycle initiation), there is still room for valuation bottom rebound in the current market setup. In terms of duration, the sustainability of this round of market trends requires close observation of the sustainability of policy releases and the trend of economic data recovery.

In terms of industry allocation, A-shares currently offer a high cost-effective allocation, adhering to the "cyclical + high beta" industry allocation after the holiday. Key focus areas are those benefiting from real estate policy driving, steel industry chain with superior supply-demand structure, aluminum, cement, etc., consumer goods with recovery expectations leading the way, with multiple logical catalysts such as baijiu, beer, consumer electronics, kitchen appliances, among others, technology chain with "cyclical" attributes and growth elasticity like financial IT, creativity in information technology, semiconductors, consumer electronics, 3C devices, and brokerages with high beta attributes.

Industrial Securities: Firm bullish market thinking, time and space temporarily unrestricted.

CICC believes that under the new policy guidance of 'grasping key points and taking initiative,' the market logic has reversed. In addition, from the historical experience, when a bull market starts, it mostly goes through a phase of rapid bottom repair. Subsequently, it gradually enters a window of relatively flat rising slope, longer duration, and stronger money-making effects. From a mid-term perspective, one should abandon bearish thinking, firmly hold a bullish mindset, and not limit the time and space of the market, as the fund dynamics are still continuous.

Structurally, in the market's beta-style recovery, attention is focused on the direction of deep rebounding. Key focus on three major themes: first is the 'technology bull,' including semiconductors, communications, electric vehicles, defense industry, computer AI, pharmaceutical biotech, new productive forces represented by advanced manufacturing, etc.; second is the 'domestic demand bull,' bullish on leading companies in the broad consumption industries such as emerging services and traditional consumption areas, paying attention to dividend distribution, increasing holdings, and buyback actions; third is the 'overseas expansion bull,' digging for winners in the overseas industry chain of electric vehicles, electric power equipment, household appliances, consumer electronics, furniture, etc.

Huajin Securities: A-share rapid uptrend has not shown signs of peaking.

Huajin Securities believes that the A-share rapid uptrend has not yet shown signs of peaking, the post-holiday uptrend is likely to continue, there may be fluctuations but it is difficult to see the peak. On the one hand, there is currently no sign of policy tightening or shifting. First, from an economic policy perspective, it is unlikely to shift in the short to medium term, while fiscal policies may even be further strengthened. Second, in terms of capital market policies, the short term is still likely to focus on boosting and being positive.

In terms of allocation, the short-term logic of supplementary gains continues to dominate. Following the holiday, it is advisable to continue focusing on technology growth, core assets, and financial real estate. After the holiday, it is recommended to keep an eye on: first, the computer sector (Hongmeng) and media (film, gaming), electronics (chips), and communications which may benefit from policies and industry trends; second, core assets (consumption, new energy, pharmaceuticals) benefiting from policy uplift in economic recovery expectations, supplementary gains, and foreign capital inflows; third, brokerages (including internet finance, etc.) and real estate benefiting from policy and sentiment improvements.

Guosen Securities: Seize the momentum with October's strategy.

Since September 24, various significant policies have been implemented, driving a rapid uptrend in the short term. Looking at the mid-term, improvements in the demand side will boost profits, with third-quarter performance results still being observed. Based on the current market valuations and sentiments, Guosen Securities believes that the A-share valuation recovery process is fast, with the absolute valuation not being high, sentiment leaning towards overexcitement but with still considerable space from the historical peak.

In terms of industry allocation, focus on resilient varieties + valuation bottom line + core broad-based approach. 1) In terms of resilient varieties, Hong Kong autos, resilient consumer stocks with moderate price corrections, non-bank with relatively cost-effective A-H selections, focus on forward valuation changes in Hong Kong technology, and continued attention towards optics optoelectronics and semiconductors with high A-share performance valuation matches; 2) Key indicators such as PB, PCF, market cap/total assets (including cash) are relatively low for nonferrous metals, machinery, power equipment, beauty care, food & beverage, pharmaceuticals, computers, utilities, etc.; 3) Incremental fund injections, lifting core broad-based opportunities, during ETF allocation process focus on A500 components, short-term slight advantage for entrepreneurship and innovation, with the CSI 1000 slightly favored.

Editor/Rocky