Zhongtai Securities: How do you think the market continues to rise this week?

The Zhitong Finance App learned that Zhongtai Securities released a research report saying that the continued rise in the market this week is more due to the phased correction of risk appetite driven by the cyclical sector. Towards the end of the year, domestic and foreign policies and news were relatively calm this week, and there were no new favorable factors directly impacting the market. The driving force of the market mainly came from changes in the internal structure of the market. Looking ahead to the future market, the overall market before the Spring Festival still has room to rise, and there are still opportunities for a dips in the short term.

The main views of Zhongtai Securities are as follows:

Record highs in the index coexist with individual stock differentiation, and the market has entered a stage of high structural rebalancing.

The A-share market continued to be strong at the index level this week. Judging from the performance of major indices, Wandequan A, Shanghai and Shenzhen 300 and the China Securities 2000 Index rose 2.78%, 1.95%, and 3.06% respectively this week. In terms of turnover, the average daily turnover of Wandequan A gradually increased from 1.76 trillion yuan last week to 1.97 trillion yuan, breaking the 2 trillion mark on Friday. Looking at the individual stock level, the average daily share of Wandequan A's rising individual stocks this week was about 52.20%, which is basically the same as last week. Overall, the upward trend of the index was further confirmed, but the upward pattern changed.

The continued rise in the market this week is due more to the phased correction of risk appetite driven by the cyclical sector.

Towards the end of the year, domestic and foreign policies and news were relatively calm this week, and there were no new favorable factors directly impacting the market. The driving force of the market mainly came from changes in the internal structure of the market. Judging from the market structure, the upward trend in the index this week was mainly driven by the cyclical sector, which is dominated by non-ferrous metals. Along with the marked strengthening of commodity prices of industrial metals, stock prices of industries related to resource products rose in the same cycle. Judging from the characteristics of capital and transactions, there are obvious signs that the overall risk appetite of the market has been fixed. Looking at the external environment, the gradual appreciation of the RMB exchange rate this week, combined with marginal improvements in overseas liquidity expectations, raised expectations of overseas capital inflows into the A-share market, and also provided external support for this round of risk appetite correction to a certain extent.

Looking ahead to the future market, the overall market before the Spring Festival still has room to rise, and there are still opportunities for a dips in the short term.

At this stage, the main risk factors limiting the market have clearly weakened compared to the previous period, and risk appetite is expected to remain at a high level. Looking at the external environment, early market concerns about the tightening of global liquidity expectations and the correction of the overvalued AI sector of US stocks were mitigated. Looking at the domestic environment, due to the late Spring Festival this year, the two sessions after the Spring Festival will be held relatively soon. Currently, the market's optimistic expectations about consumer policy are in an “unverifiable” period before the two sessions, which is conducive to maintaining an overall high level of risk appetite.

However, it should be emphasized that the current market is more in line with the characteristics of the stage of “preparing for the market before the Spring Festival after consolidating the bottom”, rather than the fact that the main upward wave has officially begun. Currently, market capital is more likely to adopt the participation method of “dipping layout and structural switching” rather than trending positions at a high level. This determines that the short-term market is more likely to be interpreted by “gradually raising the center of gravity in the midst of shocks and continuous adjustment of the internal structure” rather than a rapid rise and a one-sided, continuous profit effect.

Investment recommendations:

From the perspective of sector allocation, based on the characteristics of capital inflows last week and the past two months, and combined with the phased pattern of the spring market over the years, which are mainly theme-driven, we can currently focus on the following categories of directions.

1) The theme of science and technology is still the most flexible main direction in the spring market, focusing on segments such as robotics, commercial aerospace, and nuclear power;

2) Overseas computing power and semiconductor-related sectors are still sustainable in the medium term logic in the global industrial chain. For institutional investors, they can continue to be allocated using the idea of medium term holdings;

3) The non-bank financial sector has a certain allocation value at this stage;

4) In the consumer sector, it is more appropriate to seize thematic trading opportunities. In the context of the gradual decline in subsidies for new energy vehicles, the direction of policy support may be skewed more towards areas related to service consumption and aging, and may focus on segments such as sports consumption (the subsidy model may lean towards regional events and the strengthening of the league system), medical devices, and traditional Chinese medicine.

Risk warning: Global liquidity has tightened beyond expectations, the complexity of market games has exceeded expectations, the pace and complexity of policy changes has exceeded expectations, etc.