At today's Brokerage morning meeting, Galaxy Securities stated that the characteristics of a short-term structural economic recovery remain evident, with industries related to new productive forces performing better; HTSC believes that increased investment in global AI computing power is expected to drive the performance of businesses in sectors such as Optical Communications to remain positive; China Securities Co., Ltd. suggested that the industry allocation recommendations for April should focus on two main lines.
According to the Financial Association on April 1, the market experienced fluctuations and adjustments yesterday, with the Chinext Price Index leading the decline. The total transaction volume in the Shanghai and Shenzhen stock markets was 1.22 trillion, an increase of 102.6 billion compared to the previous trading day. In terms of sectors, Precious Metals, computing power, Banks, and Recent IPOs were among the top gainers, while photovoltaic, Hainan, aquaculture, and tourism sectors saw significant declines. By the close of yesterday, the Shanghai Index fell by 0.46%, the Shenzhen Component Index dropped by 0.97%, and the Chinext Price Index decreased by 1.15%.
At today's Brokerage morning meeting, Galaxy Securities stated that the characteristics of a short-term structural economic recovery remain evident, with industries related to new productive forces performing better; HTSC believes that increased investment in global AI computing power is expected to drive the performance of businesses in sectors such as Optical Communications to remain positive; China Securities Co., Ltd. suggested that the industry allocation recommendations for April should focus on two main lines.
Galaxy Securities: The characteristics of a short-term structural economic recovery remain evident, with better performance in industries related to new productivity.
Galaxy Securities stated that in March, the PMI for manufacturing, construction, and services was all in the expansion Range, demonstrating the resilience of China's economy. The drive for "New Economy" and exports is promoting ongoing expansion in production, with the significant growth in new order indices coming from increased government spending in the first quarter, the continued implementation of new economy policies, and external demand absorption. However, the persistent low prices, particularly in factory gate prices, are suppressing company profits, indicating that the phenomenon of corporate "involution" still exists. The deeper reason may be companies being cautious about the sustainability of the current demand increase, especially as exports may face further pressure, and household consumption shows no signs of improvement for now. Policies to address involution and domestic demand reforms will require patience; on the 29th, a relevant official from the State-owned Assets Supervision and Administration Commission of the State Council stated at the China Electric Vehicle Hundred People Conference forum that efforts will be made to rectify disorderly competition in the automotive industry and other issues; certain demand policies, such as childcare subsidies and urban village transformation plans, still need to be further implemented and put into effect.
In terms of investment, the characteristics of a short-term structural economic recovery remain clear, with industries related to new productive forces performing better. Galaxy Securities remains Bullish on two directions: at the numerator end, the Consumer and Machinery sectors supported by clear fiscal policies; at the denominator end, continuing to be optimistic about technology growth driven by improved risk appetite and liquidity.
HTSC: Increased investment in Global AI computing power is expected to drive positive performance in manufacturers within the optical Communications Sector.
HTSC took 36 A and H Communications Industry companies as samples and predicts that in the first quarter of 2025, the total Net income of the Communications Sector will grow by 9% year-on-year. Excluding the major stocks such as the three major operators and ZTE, the Sector's Net income is expected to grow by 49% year-on-year. In detail, the profits of telecom operators are steadily growing; leading manufacturers in the optical Communications Sector are benefiting from increased investment in AI computing power, with a high growth in demand for 400G and 800G expected to continue delivering results. Additionally, the Industry Chain shows a trend of Diffusion; IDC is benefiting from the rise in demand for intelligent computing centers both domestically and internationally, reaching a turning point; and military Communications are expected to see a recovery in performance. Looking ahead to the second quarter of 2025, HTSC believes that increased Global investment in AI computing power is expected to drive continuous positive performance in related manufacturers of optical Communications, cloud network equipment, and IDC; demand for Internet of Things modules is expected to continue recovering; and the performance of the operator Sector is expected to maintain steady growth.
China Securities Co., Ltd.: The industry allocation advice for April should focus on two main lines.
China Securities Co.,Ltd. stated that looking ahead to April, the market is expected to remain mainly oscillatory, gradually unfolding around the direction of good first-quarter reports. From a macro perspective: 1) Trump's tariff increases will take effect on April 2nd, and specific policies for the industry and their actual impact on China's economy need to be reassessed; 2) First-quarter macroeconomic data will gradually be disclosed. Based on data from January to February, the economy has started to improve somewhat, but the extent is limited, and profits for industrial enterprises in January and February are still under pressure. 3) The Politburo meeting at the end of the month is expected to continue to introduce policies aimed at stabilizing the economy in the following stages, especially after Trump's tariffs take effect, which may cause some fluctuations in China's exports. The April industry allocation suggestions should focus on two main lines: one being sectors with good first-quarter reports, including Electronics, AI, Wind Power, Construction Machinery, Non-ferrous Metals, Military Industry (differentiation), and Innovative Drugs; the other considers the uncertainties overseas and performance risks in mid to late April, recommending defensive sectors with high dividend directions, such as Banks, Home Appliances, Operators, and Electrical Utilities. In the medium to long term, there is continued optimism for low-valued sectors with performance such as Hang Seng Technology and Hang Seng Consumer. Furthermore, if there are further breakthroughs in the Technology sector, it may bring new rounds of significant investment opportunities for industry allocation.
