news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

on september 17, the mid-autumn festival holiday came to an end. the market was quiet before the holiday. when will the market really bottom out? where are the new structural opportunities? please see the latest strategies of the top ten brokerages.

citic securities: policy response needs to be observed, bottoming out process may accelerate

the trend of weak macro-price signals continues, and the response of internal policies still needs to be observed, while external signal disturbances are not enough to affect domestic policies; since september, the inflow of supporting funds has decreased, accelerating the stock price to fully reflect market expectations, and the bottoming process is expected to be shortened. before the introduction of incremental policies, it is expected that short-term capital games will still dominate the market;in terms of configuration, it is recommended to continue to hold the bottom position of dividends and go overseas, and wait patiently for the turning point signal.

first of all, from the changes of the three major signals,in terms of price signals,core cpi is close to its historical low, and housing prices are still on a downward trend;for external signals,the us economy has not shown any signs of recession. the federal reserve may start a "risk management" interest rate cut in september. the us election situation is still tense and the outcome is expected to be known in the final stage.in terms of policy signals,in the current environment of weak domestic demand, if the real estate industry continues to decline uncontrollably, it may create spillover risks. in the future, monetary policy may be strengthened to curb the spread of real estate risks.

secondly, from the perspective of the market bottoming out stage, central huijin has continued to reduce the scale of its purchases of stock etfs in the past two weeks. the reduction in "bottoming out" fund inflows may accelerate the progress of stock prices to fully reflect market expectations and sentiment, and shorten the bottoming out period of a-shares.

finally, from the perspective of allocation strategy, in an environment where economic fundamentals remain weak and long-term government bond interest rates continue to decline, the bottom-line value of dividends still exists, but the structure should avoid products with fundamental volatility risks; at the same time, excellent companies in the overseas sector that have fully reflected the risks of overseas recession and trade frictions have allocation value.

haitong securities: characteristics of this round of fed rate cuts and their impact on a-shares

the overseas environment for the fed's rate cut this time is more complicated. the us economy is similar to that of 1995, the us election is approaching, and the coordination of overseas monetary policies has declined.

according to fed watch data, as of 24/09/14, the market generally expects the fed to cut interest rates in september, but there are differences in the pace of rate cuts, with the probability of a 25bp and 50bp rate cut being 50%. compared with history, what are the similarities or differences between the macro background of this rate cut and the past? in this context, what pace of rate cuts might the fed take? we believe that from the three dimensions of the us economy, us politics and overseas monetary policy, the overseas environment for the fed's rate cut this time is more complicated, and the rate cut may be more precautionary.

in general, the fed's interest rate cut faces a more complex external environment. first, although the us economy is similar to that of 1995, there are some differences. the upcoming us election day may also have an impact on the fed's interest rate cut. in addition, the coordination of global central bank policies has declined compared with the past. in this environment, we believe that the fed's interest rate cut may be more preventive and the pace of interest rate cuts will be relatively slow. however, it should be noted that the fed's actual operations in the future will be flexibly adjusted according to changes in the macro situation at home and abroad.

the overseas environment for the fed's rate cut this time is more complicated. the us economy is similar to that of 1995, the us election is approaching, and the coordination of overseas monetary policies has declined.

every time the federal reserve cut interest rates, the economic and monetary policy cycles of china and the united states were relatively consistent, but this time there was a misalignment.looking back at history, the chinese economy is usually weak before the fed cuts interest rates, and the people's bank of china often follows suit after the rate cuts are implemented. generally speaking, the fed's rate cuts correspond to a recession/marginal slowdown in the us economy, that is, the us economy has generally weakened. in fact, the chinese economy was also weak before each fed rate cut.

the domestic economy was also weak before the fed cut interest rates this time. the difference is that this time the people's bank of my country started cutting interest rates before the fed. in fact, since the end of 21, the central bank has continued to make counter-cyclical adjustments to stimulate domestic economic recovery.

at the current point in time, the federal reserve is expected to cut interest rates imminently, and domestic economic growth is also weak, similar to the past. the difference is that this time my country's central bank will start cutting interest rates ahead of schedule at the end of 21, while the federal reserve will start raising interest rates in march 2022. this has led to a misalignment in the monetary policy cycles of china and the united states, which is reflected in asset prices. the 10-year treasury bond yield gap between china and the united states has continued to narrow, and has now fallen to a historical low of 11% since 2002.

the current economy may be moving from a difficult situation to a changing one. pay attention to the gradually accumulating positive signals.

general trend: the federal reserve’s preventive rate cut may help improve a-share liquidity, and in the medium and long term, we will focus on the verification of fundamental repair.according to the ddm model, the fed's interest rate cut may affect the future trend of a-shares by affecting the capital market, risk appetite and fundamentals. specifically:

from the perspective of liquidity, the fed’s interest rate cut may improve the macro and micro liquidity of a-shares in the short and medium term, helping a-shares to rise.

from a fundamental perspective, the medium- and long-term trend of a-shares is related to fundamentals, and the impact of interest rate cuts on the fundamentals of a-shares remains to be seen.

style: a-shares outperform in growth when the federal reserve takes preventive interest rate cuts, while a-shares outperform in value when the federal reserve takes bailout interest rate cuts.

industry: the fed’s interest rate cut will benefit a-share financial, food and beverage and other consumer industries in the short term, while technology will gradually gain the upper hand in the medium term.

① in the short term, the financial industry, which directly benefits from the improvement in macro liquidity, outperformed first. at the same time, consumer industries such as food, beverage, and beauty that are preferred by foreign capital have always been at the forefront of growth.

② in the medium term, the social service and power equipment industries are gradually outperforming, while interest rate-sensitive technology industries such as electronics and computers are gradually gaining the upper hand.

huaan securities: focus on growth-themed opportunities and oversold rebound opportunities in exports and aquaculture

main points:

the market has given optimistic expectations for the fed's rate cut, and the implementation of the rate cut has limited boost to the market. the core is that the domestic economic fundamentals have not improved, the market continues to fluctuate, and it continues to wait for policy efforts. actively look for structural opportunities in allocation, focusing on growth-themed opportunities such as electronics, communications, computers, and new quality productivity. oversold rebound opportunities with economic recovery or supporting policies, such as home appliances, automobiles, real estate, and agriculture and animal husbandry. in the medium term, seize the deterministic opportunities of cyclical products, such as non-ferrous metals (precious metals & industrial metals), utilities (electricity), and coal.

market view: the fed's interest rate cut has limited impact, and the market is volatile and waiting for policy to take effect

the fed’s interest rate cut has limited impact, and market fluctuations continue to await policy implementation.after the release of the us inflation data, the expectation of a rate cut in september was revised down to 25bp, but the expectation of a rate cut for the whole year was revised up to 125bp. the market has given optimistic expectations for the fed's rate cut, so the fed's rate cut has limited impact on the market. the domestic economic fundamentals have not seen significant improvement, and data such as retail sales, social financing, and inflation point to the need to boost effective demand. it is expected that the market will continue to fluctuate and continue to wait for policy efforts.

market hotspot 1: how do you view the economic and export data in august?driven by the booming export market, the overall production side has stabilized and improved, but effective demand still needs to be boosted, and retail sales and real estate continue to be weak. according to the medium- and high-frequency data from july to august, the fitted q3 growth rate is expected to be 4.4-4.5%. the export growth rate in august was relatively high, and the export growth this year will continue to be optimistic, expected to be around 5%. however, the weakening trend of global demand remains unchanged. the downward trend of asean exports may indicate that the pressure of slowing foreign demand in the medium term is gradually accumulating, and the pressure on my country's exports may be transmitted to china at the beginning of next year. the domestic macroeconomic policy to boost demand is still an important expectation of the current policy.

market hotspot 2: how to view the august social financing and inflation data?there is no trend change in social financing and inflation data, which confirms the weakness of domestic demand. with the implementation of the fed's interest rate cut, the domestic monetary policy space is expected to open up further. at the same time, when interpreting the august financial data, the head of the central bank pointed out that "increase the intensity of regulation and start to introduce some incremental policy measures." we believe that the focus of the follow-up can be on reducing the reserve requirement ratio, reducing interest rates, and adjusting the interest rates of existing mortgage loans.

market hotspot 3: how do you view the us inflation in august and its impact on the fed’s interest rate cut path?the u.s. inflation data in august was in line with expectations, providing more support for the fed's interest rate cut in september. however, the stronger core cpi month-on-month may further support the first 25bp rate cut, which also points to the resilience of the u.s. economy and the probability of a 25bp rate cut has greatly increased. however, after the release of the ppi data, the market lowered the fed's september rate cut and raised the rate cut this year to 125bp. the current market has a relatively optimistic expectation for the fed's rate cut path.

industry allocation: thematic opportunities in the growth sector and oversold rebound opportunities in the export and breeding chains are just in time

in september, a concentrated number of macro policies at home and abroad, such as interest rate cuts, industrial policies such as support for technology consumption, and industrial events such as the launch of electronic products, occurred. this created favorable conditions for the market to have active structural opportunities. therefore, from the perspective of industry allocation, we can actively seek to seize periodic opportunities.specific considerations: in the short term, catalytic events are the most important clues to thematic opportunities. at the same time, the direction with sufficient previous adjustments and economic recovery or policy support is also expected to usher in a phased rebound; in the medium term, the direction with an economic improvement trend or certainty is still the greatest common denominator of institutional consensus. correspondingly, focus on three main lines: 1) growth sector thematic catalytic opportunities, focus on electronics, ai (communications, media), and new quality productivity (low-altitude economy, equipment updates). 2) the previous adjustment is sufficient and the economic recovery or policy support brings rebound opportunities, pay attention to home appliances, automobiles, real estate, agriculture, forestry, animal husbandry and fishery. 3) cyclical products are still the direction with high medium-term certainty, pay attention to non-ferrous metals (industrial metals & precious metals), utilities (electricity), and coal.

configuration hotspot 1: why did high-dividend sectors such as banking, petroleum and petrochemicals, coal, and utilities plummet and what is the outlook for the future?catalyzed by events such as huawei's three-folding screen mobile phone and the release of the new generation of openai o1 model, growth industries such as communications, computers, and electronics have ushered in thematic opportunities. this has formed a seesaw effect with the previous strong high dividend direction in the stock game market, and banks, petroleum and petrochemicals, coal, and public utilities are facing capital outflow pressure. subsequent opportunities in industries such as petroleum and petrochemicals, and coal depend on changes in their own prosperity. in the short term, these industries may find it difficult to dominate, whether from the perspective of theme hotspots, changes in macro liquidity, or changes in their own prosperity. however, if considered from a mid-term dimension within the year, these sectors have the conditions for improving prosperity, such as seasonal increases in coal prices in the second half of the year and phased recovery in oil prices. therefore, these directions still have allocation value, but opportunities need to wait for the prosperity to improve and materialize.

configuration hotspot 2: why does agriculture, forestry, animal husbandry and fishery (live pigs) continue to pull back, and how to understand the divergence between stock prices and pork prices?the agriculture and animal husbandry sector has continued to pull back, with a drop of more than 10% since august. the main reason is that the concentrated slaughter of pigs in the second fattening has caused the pig price to fall slightly from the high point. the market has always had weak confidence in the continued upward trend of pig prices. after the previous increase in pig prices was realized, funds accelerated their exit, causing the sector to weaken. usually, there are three logics for the rise in the price of live pigs: destocking leads to expectations of continued increases in pig prices, new highs in pig prices open up expected space, and performance realization. from the perspective of this round of pig cycle, accelerated destocking is unlikely, but the current level of destocking may last for a long time. therefore, pig prices are expected to remain at a high level for a long time in this round, and the corresponding market will also show obvious band characteristics. considering that the current position is already very low after the previous adjustments, and the current round of pig cycle has not yet ended, there are still phased opportunities in the future, and the current window is also a good layout window.

risk warning

the speed and intensity of policy implementation were slower than expected; the speed and intensity of economic fundamentals recovery were slower than expected; the united states made an unexpected and unconventional interest rate cut, etc.

huaxi securities: analysis of the a-share trend after the historical reduction in trading volume

1. in most cases, the stock market rebounds temporarily after the a-share trading volume decreases.looking back at the past six times since 2020, after the a-share turnover dropped significantly from the previous high, the shanghai composite index rose five times, with the largest rebound after may 2020. only after the turnover bottomed out in september 2023, the shanghai composite index fell during 5, 10, 30 and 60 trading days. looking back, whether a-shares can rebound with a good profit effect after shrinking depends on whether the micro liquidity of the stock market is loose (such as shrinking turnover in may and september 2020, but fund issuance remains high) and whether the strength of macroeconomic policies can improve investors' pessimistic expectations (such as the relaxation of epidemic prevention and control in november 2022). in terms of style, growth style is better than value style in the market expansion stage.

2. characteristics of this round of a-share volume shrinkage: 1) a-share trading volume and turnover rate have declined significantly, and are currently higher than the low level in 2018.since august this year, the volume of a-shares has shrunk significantly. the daily trading volume of the two markets once fell below 500 billion yuan, and the turnover rate fell below 0.8%, hitting a new low since 2020, but still higher than the low in 2018. in addition, the total a-share trading volume/circulating market value and the total a-share trading volume/number of listed companies have fallen to the lowest level since 2019. from the perspective of major style indexes, compared with the high point of trading on april 29, the trading volume of low valuation and financial styles has declined the most;2) institutional behavior: public fund issuance is still at a freezing point, the proportion of passive funds has increased, and private equity positions have fallen to a historical low.at present, fund issuance has not yet rebounded significantly. structurally, the proportion of passive investment fund issuance has increased significantly: the number and share of index funds issued this year accounted for 57% and 57% of equity fund issuance, respectively, while this proportion was only 19% and 8% in 2020;3) etf net subscription is an important source of incremental funds. in the first half of the year, the scale of etf investment by the “national team” increased significantly.

3. on the numerator side, the a-share revenue and net profit in the interim report showed negative growth, and the "performance bottom" needs to be further confirmed.in the 2024 interim report, the cumulative growth rates of revenue and non-net profit of all a-shares (non-financial three oil companies) were -1.0% and -5.3%, respectively. the performance growth rate of a-shares has been declining for 13 consecutive quarters. historically, the bottoming out of a-shares is usually in a period of declining corporate profits, and the probability of a bear market in the upward cycle of corporate profits is relatively small. in addition, historical rules show that corporate profits of non-financial a-shares are positively correlated with ppi. in august, the year-on-year growth rate of ppi fell again to -1.8%, and it has been negative for 23 consecutive months. among them, the sharp drop in international oil prices is a factor, and there is also the impact of overcapacity in some industries. in a low inflation environment, a-share earnings are likely to continue to bottom out, and the turning point of earnings may need to wait for price factors to return to an upward trend.

4. investment strategy: valuation provides a safety margin, and the recovery of risk appetite depends on the implementation of incremental policies.the current csi 300 price-to-earnings ratio (ttm) is lower than 11 times, which is close to the low point in february, and more than half of the listed companies are valued lower than the low point in february this year. we should not be overly pessimistic at the current position. looking ahead, incremental macro policies are an important driving force for the valuation repair of a-shares. we believe that, for example, lowering the reserve requirement ratio and interest rates, reducing the interest rates of existing mortgage loans, and accelerating the issuance of special bonds can all be expected. if incremental policies can effectively boost confidence in fundamentals (such as november 2022), a-shares are expected to shift from the current shrinking bottoming out to a large-volume market.

risk warning:sharp fluctuations in overseas markets, domestic economic performance falling short of expectations, changes in the geopolitical situation, etc.

china merchants strategy: the impact of changes in the central bank's balance sheet, economic data and social financing structure on a-shares

【observation and market analysis】changes in the central bank's balance sheet, the structure of social financing and its turnaround. in august, two items on the central bank's balance sheet showed obvious changes:(1) the monetary authorities’ claims on the government increased by rmb 500 billion in august 2024. (2) the monetary authorities’ claims on other financial corporations increased by rmb 160 billion in august, an increase of rmb 580.9 billion from the beginning of this year.overall, the central bank is currently maintaining a trend of expanding its balance sheet.from a structural perspective, the central bank has significantly increased the use of direct monetary tools.judging from the economic data,the year-on-year growth rate of economic data in august is under certain downward pressure compared with july. if we want to "unswervingly achieve the annual economic and social development goals", we will need more policy support from government spending, real estate and the consumer end.the clue to the improvement of the industry in august is that1) investment areas driven by the policy of "large-scale equipment renewal"; 2) high-tech products whose output maintains a relatively high growth rate; 3) automobiles, mobile phones, and electromechanical products with strong export momentum; 4) essential consumption with relatively stable demand and consumer goods such as home appliances and communication equipment driven by the policy of "expanding domestic demand".according to social financing data,in august, both social financing and rmb credit increased less than the same period last year, with government bonds contributing the main increase.from the perspective of market transaction structure,since september, the net subscription of stock etfs has slowed down, but the subscription of chinext etfs has increased significantly.

[review and introspection] this week, the a-share market index rose and fell differently. the reasons are as follows:(1) cpi, ppi and other data did not exceed expectations, and economic recovery still needs time; (2) the shrinking market and the redemption pressure of public funds put pressure on the market; (3) before the mid-autumn festival holiday, the market's risk aversion increased; (4) the sales data of liquor was lower than expected, the sector was under pressure and had a negative feedback on the index.

[medium-term outlook·economic climate] in august, the year-on-year growth rate of automobile exports expanded, and the number of operating hours of excavators turned from negative to positive year-on-year.in august, the revenue of ic manufacturing, memory, packaging, pcb, passive components, most lenses, panels and led manufacturers in the taiwan stock market increased year-on-year, while the revenue of ic design and silicon wafer manufacturers decreased year-on-year. the year-on-year growth rate of integrated circuit imports and exports in august narrowed. in august, the year-on-year decline in production and sales of automobiles and passenger cars narrowed, and the three-month rolling year-on-year decline widened. the year-on-year growth rate of production and sales of new energy vehicles expanded, and the three-month rolling year-on-year growth rate narrowed, and the market share further expanded; in terms of exports, the year-on-year growth rate of automobile exports expanded. in august, the year-on-year growth rate of sales of various excavators expanded, and the three-month rolling year-on-year growth rate expanded. in august, the number of working hours of excavators in china turned from negative to positive year-on-year.

[funds·majority] net outflow of financing, and continued net subscription of etfs.in the first four trading days of this week, the total net outflow of financing funds was 2.44 billion yuan; 750 million new equity-oriented public funds were established, a decrease of 2.57 billion shares from the previous period; etfs were net subscribed, corresponding to a net inflow of 16.85 billion yuan. in terms of industry preferences, financing funds net bought banks, media, textiles and apparel, etc.; there were more subscriptions for pharmaceutical etfs, and more redemptions for financial real estate (excluding securities companies) etfs. the scale of major shareholders has expanded, and the scale of planned reduction has increased.

[topic and trend] open ai released the large model openai o1, an ai with complex reasoning capabilities.in the early morning of september 13th, beijing time, openai officially released a new ai model. in view of the significant progress of this model in solving complex reasoning tasks, openai will no longer put it in the gpt series.the name openai o1 is intended to define it as a new series of complex reasoning models.

[data valuation] this week, the valuation level of all a-shares declined compared with last week.pe (ttm) is 12.3, down 0.3 from last week, and at the 12.9% percentile of historical valuation levels. the valuations of all sectors fell, among which household appliances, real estate, and communications were relatively resistant to declines, while food and beverage, defense and military industry, and beauty care were the top losers.

risk warning:the level of support for the industry is lower than expected and the macro-economy is volatile.

minsheng securities: when will the rebound occur?

domestic: from weakening demand to recovery.

last week (2024-09-09 to 2024-09-15, the same as the whole text), domestic economic data for august were all released, which basically met the expectations of "weaker demand" in the capital market's previous transactions. but we need to see that the power of future demand recovery is accumulating: first of all, the domestic dependence on "price-for-volume" exports has not decreased, but has increased beyond expectations. the resilience of exports has exceeded investors' expectations many times this year amid market doubts; from the perspective of financial data, thanks to the accelerated issuance of government bonds, the scale of new social financing in august slightly exceeded expectations. whether in absolute value or proportion, the issuance of government bonds in august 2024 is the largest since 2017, which means that the unexpected contraction of fiscal revenue in the first half of the year has begun to reverse. in the future, under the joint effect of exports and fiscal revenue, the staged trough of domestic total demand may have appeared. since 2023, due to the impact of de-financialization and excessive capacity in the midstream, ppirm has been more flexible when going up and more resilient when going down than ppi. this means that the upstream is still a better tool to express demand recovery.

overseas: from recession trading to the accumulation stage of second inflation.

for overseas, the resilience of inflation was demonstrated again, with the core cpi slightly exceeding expectations. at the same time, long-term inflation expectations diverged again from short-term ones: the university of michigan's short-term inflation expectations continued to fall back to 2.70% in september, but the five-year inflation expectations rebounded to 3.10%. although the employment data is still weak, global commodities that were previously traded on recession expectations have begun to stabilize and rebound, which may mean that the recession trade has come to an end. from a fundamental perspective, a "soft landing" of the us economy is a high-probability scenario: the us fiscal deficit further expanded in august, significantly higher than the forecast and the same period in previous years. large-scale fiscal support ensures the resilience of the us economy; and the interest rate cut itself is more conducive to the restoration of physical demand.

get ready for the next scenario: the path after a precautionary rate cut.

taking the absolute value of the manufacturing pmi as a historical scale, this round of interest rate cuts is closer to the historical precautionary interest rate cuts. it takes about five months (the historical average time) from the interest rate cut to the substantial repair of the manufacturing data. although it is slower than the repair speed of the manufacturing pmi after the low interest rate cut, it is wrong to only look at the direction: the absolute degree of real demand is equally important. our statistics show that when the interest rate is cut under a relatively high manufacturing pmi, even if the manufacturing activity has not recovered immediately, the retracement of commodities has been very limited: from 1970 to the present, when the pmi is at a high level and the interest rate is cut, the average increase and decrease of the energy, metal and mineral indexes are -0.40%/-2.94% respectively. in contrast, when the pmi is at a low level, the average increase and decrease of the energy, metal and mineral indexes are -12.29%/-12.71% respectively. once the manufacturing activity rebounds, commodity prices will rise to varying degrees, among which energy and gold will rise more than other commodities. on the whole, considering that the current chinese real estate market has found a new lower platform, the recovery of global physical demand is only a matter of time, and the probability of commodities and related stocks transitioning from recession trading to interest rate cut trading has increased significantly.

a turning point may have occurred.

in the past two months, both the market as a whole and physical assets have faced systemic headwinds, including: a further decline in domestic real estate demand, a phased contraction in fiscal policy, and more importantly, recessionary transactions overseas. during the withdrawal of physical assets, the market also experienced a spiral decline, which verified the main market theme of physical consumption from the opposite side. at present, repressive factors are gradually fading, real estate investment is fluctuating on a lower platform, and fiscal spending has shown signs of marginal improvement. more importantly, continued strong exports and the approaching interest rate cuts overseas have allowed physical assets represented by commodities to accumulate strength for a rebound. similarly, the probability of a market rebound in february-april 2024 is also increasing. we recommend: first, after physical assets have experienced recessionary transactions, upstream resource assets will usher in a turnaround:energy (oil, coal), nonferrous metals (copper, gold, aluminum), shipping (oil shipping, shipbuilding, dry bulk);second, after the global recession expectations have been reversed, china's manufacturing industry is still a dominant industry, external demand is expected to stabilize marginally, and the country itself is in the process of clearing out its production capacity.household items, home appliances,intermediate goods driven by production in emerging markets(special steel)and capital goods under investment restart(instruments, general equipment); third, the relative advantage assets under the decline of capital return have become more cost-effective after adjustment, and are recommendedbanks, railways, gas and ports.

risk warning:the domestic economic recovery was slower than expected and the overseas economy declined sharply.

soochow securities: the signal significance of the rotation of strong sectors

in addition to the follow-up declines in strong sectors, many characteristics also indicate that the market has reached the bottom range."low volume means low price", the a-share market's trading activity has fallen back to a historical low range; all a-shares are experiencing a bottom in earnings, and the bottom of stock prices often leads the bottom in earnings. multiple signs indicate that the index is already in an oversold state and may rebound in the short term. in the medium and long term, as the steady growth policy is implemented and the slope of economic recovery is revised upward, a-shares are expected to enter a new round of upward range.

how to configure at the market bottom? from historical experience,the bottom rebound of the index is often accompanied by improved liquidity and recovery of risk appetite, and small-cap and growth styles have better resilience.from a fundamental perspective,the federal reserve's interest rate meeting is approaching, and the start of a rate cut cycle will be conducive to global fund rebalancing and promote the recovery of growth valuations. against the backdrop of a weak economic recovery, branches with strong industrial logic are expected to be favored by funds.

in terms of specific configuration,it is recommended to screen investment opportunities based on four perspectives: 1) high prosperity direction.against the backdrop of a relatively pressured index and liquidity environment, the share prices of some high-performing companies may not have fully responded to industry prosperity/industry prosperity expectations. we recommend paying attention to high-growth sectors, led by electronics and other technology hardware.2) areas where stock prices are oversold but fundamentals/fundamentals expectations have marginally improved.the fundamentals of some industries have bottomed out, but the stock price positions have fully or even excessively reflected pessimistic expectations. if some signals of marginal improvement emerge and are noticed by funds, the stock price is likely to recover upward. it is recommended to pay attention to military industry, energy storage, lithium batteries, games and other sectors.3) sectors where industrial trends/industrial policy expectations are strengthened.as domestic demand is recovering slowly and it is still unclear whether overseas economies will have a "soft landing", products with policy support, independent industrial logic, and relatively "insensitive" to the volatility of domestic and foreign demand may be more in line with the current market trading preferences. it is recommended to pay attention to directions with independent industrial policy support/clear industrial trends, such as low-altitude economy, autonomous driving, vehicle-road collaboration, semiconductor equipment, etc.4) assets sensitive to us dollar interest rates.there is a high degree of confidence in the federal reserve's interest rate cut in september, and the trend of a decline in the interest rates of us dollar assets may begin. it is recommended to pay attention to the valuation repair opportunities of interest rate sensitive assets such as innovative drugs and new energy.

risk warning:the domestic economic recovery is slower than expected; the fed’s interest rate cut is slower than expected; there are geopolitical risks; there are differences in data caliber and errors in calculation methods.

guojin securities: bottom-line allocation during the fed's rate cut cycle: innovative drugs and their combination selection

the important window for attack and defense decisions is approaching: a significant interest rate cut in september is crucial

the negative pressure of domestic ppi is obviously rising, which means that the "willingness to spend" of residents and enterprises and economic activities have entered a relatively depressed level. regardless of whether ppi or "profit bottom" are lagging indicators of credit, their starting point of recovery will be further delayed to the earliest q3 2025; the federal reserve may cut interest rates by 25bp in september, and the risk of a "hard landing" of the us economy is expected to be gradually confirmed around november.

we maintain our prediction: only if the domestic central bank cuts interest rates before the us economy experiences a "hard landing", especially if the 5-year lpr is at least 50bp above, and the actual rate of return of enterprises is kept within a controllable range (-1% to 0%), will it be possible to avoid domestic liquidity risks, control real estate risks and promote a rebound in m1 within the year. at that time, the "market bottom" will be revealed.suggested "right-side trading rate cut logic": ① if the domestic interest rate is cut by 25bp in september, it is expected that a-shares will usher in at least a one-month rebound "safe period"; it is still necessary to wait for another 25bp cut in october, and the rising trend can continue until the "hard landing" of the us economy is confirmed (about november), otherwise it will end. ② if the domestic interest rate is cut by 50bp in september, it is expected that a-shares will usher in at least a quarter of rebound "safe period" until the risk of a "hard landing" of the us economy is confirmed and even spreads. ③ if the interest rate is cut by 25bp in september, the corresponding investment style: switch from high dividends and banks to small and medium-sized stocks, oversold, undervalued and with dividend yield upward expectations of "growth and consumption", and the switching position can be more than half; if the interest rate is cut by more than 50bp in september, the above can be fully switched to "offensive".④ if there is no interest rate cut in september or it is lower than 25bp, market volatility may enter the "accelerated upward" channel, maintaining the "gold + innovative drugs" bottom position, and defending the value of the broader market such as banks and high dividends.

why are we optimistic about the allocation of innovative drugs? and how to select innovative drugs?

as a capital-sensitive industry, innovative drugs may benefit significantly from the federal reserve's implementation of loose monetary policy.due to the long r&d cycle and large initial capital investment, innovative drug companies cannot achieve stable cash flow through sales before industrialization is realized. this model makes innovative drug companies extremely dependent on financing activities to support the company's cash flow. historical rules show that after each fed rate cut cycle, u.s. treasury bond interest rates tend to fall. both a-shares and hong kong-listed innovative drugs have opportunities to rise and have excess returns. further screening innovative drug stock portfolios from three dimensions: splitting of internal and external demand, leading and non-leading factors, and roe factors. based on the conclusions of historical review, we can draw corresponding conclusions:① for the a-share market, the three factors of "dependence on external demand + non-leading companies + high roe" fully demonstrated the effectiveness of the strategy when constructing the portfolio. ② for the hong kong stock market, the effectiveness of the roe factor stock selection strategy is not significant, but the two factors of "dependence on external demand + leading companies" are still effective.at present, we believe that there are two favorable factors supporting the subsequent innovative drug market: ① with the cooling of us economic data, the fed's interest rate cut in september is close to being "set in stone", which will help the financing cost of innovative drugs to decline, not only to improve its cash flow and repair its expectations on the numerator side, but also to recover its valuation from a low level on the denominator side; ② domestically, there are favorable policies in the innovative drug industry chain, especially in the context of falling financing rates and expected recovery in industry prosperity, relevant policy support may become a plus for the recovery of the sector's risk appetite. in this context, we further combined the innovative drug stock selection factors to screen the innovative drug stocks of a-shares and hong kong stocks, and selected a total of 19 "elastic" combinations of a-shares and hong kong stocks.

style and industry allocation: maintain the "large-cap value defense" strategy before a significant interest rate cut in september

maintaining the "market value defense" strategy, we recommend: ① bank bottom position; ② gold + innovative drug "offense"; ③ non-cyclical industries with potential for sustained high dividends.

risk warning

the slowdown in domestic exports exceeded expectations; the pace and intensity of domestic "loose monetary policy" were lower than expected; the rebound in u.s. treasury yields exceeded expectations; historical experience has limitations.

boc international securities: pay attention to the implementation of interest rate cut transactions

domestic demand still awaits the implementation of incremental policies.the market continued to consolidate at a low level with shrinking volume before the holiday. domestically, the fundamental data reflect that the current pattern of weak domestic demand and strong external demand has not been broken, and expectations for real estate policies continue to heat up. financial and economic data in august show that domestic demand still needs to be boosted. on the production side, industrial added value and ppi weakened simultaneously in august, and industrial production volume and price fell simultaneously. on the investment side, under the influence of extreme weather and the slow pace of special bond issuance, the growth rate of infrastructure investment fell again in august; the positive side is that the growth rate of real estate investment stabilized in august, and the recovery of real estate sales and newly started area was the main factor for the stabilization of real estate investment in august, but high-frequency data showed that the transaction area of ​​new and second-hand houses in 50 cities has not shown a significant recovery trend, and the subsequent sustainability of real estate sales remains to be observed. in addition, although the new social financing in august has rebounded, the structure still needs to be improved: government bonds and corporate bills are the main support items for social financing in august, and residents' short-term loans, corporate short-term loans, and corporate medium and long-term loans continue to be weak, indicating that the consumption and investment willingness of residents and corporate sectors are still weak. in addition, the growth rate of m1 continued to bottom out, and the m1m2 gap accelerated, reflecting that the liquidity pressure in the real sector remained severe. overall, the weak economic data has temporarily warmed up the market's expectations for policies.

the suppression of overseas risk appetite has temporarily weakened, and attention will be paid to the extent of the fed's first rate cut.overseas, harris faced off against trump for the first time in the second televised debate of the us presidential election. under the influence of the "harris" deal and the fed's interest rate cut deal expectations, the suppression of overseas risk appetite has been temporarily weakened in the past two weeks. however, the incremental funds in the market are limited, and the wait-and-see sentiment is still strong. the dividend assets that had risen significantly in the previous period showed obvious adjustments before the holiday. technology stocks benefited from the launch of new products and the phased recovery of market risk appetite and performed well last week. the short-term market style balancing process is still continuing. next week will usher in key moments such as the federal reserve's september interest rate meeting. the extent of the fed's first cut and the subsequent interest rate cut path are the focus of current market attention. combined with historical experience, after the first cut, overseas risk assets may experience fluctuations caused by phased recession transactions. in the next two weeks, we need to focus on changes in domestic policies and global asset performance after the fed's interest rate cut.

ping an securities: taking multiple measures to boost the m&a and restructuring market

a-shares continued to fluctuate last week, with growth style dominating.last week, overseas markets continued to interpret interest rate cut transactions. the us cpi in august fell as expected. the market rekindled expectations that the federal reserve would cut interest rates by 50bp in september. the european central bank started its second interest rate cut this year. against this background, major overseas equity market indices generally rebounded, and the nasdaq rose 6% in a single week. the a-share market continued to fluctuate. economic, inflation, and financial data showed that the problem of insufficient domestic effective demand was still emerging. market transactions continued to fall before the mid-autumn festival. the average daily transaction of all a-shares fell to 519.4 billion yuan. the shanghai composite index closed down 2.2%, and the chinext index closed down slightly by 0.2%; structurally, the communications and computing industries had positive returns, with increases of 2.2% and 0.3% respectively, and the power equipment and new energy, home appliances, and non-bank financial industries fell by less than 1%.

overseas, the global interest rate cut trade continued to play out, the us cpi fell as expected, and the european central bank continued to cut interest rates. first, the us cpi in august was basically in line with expectations.the seasonally adjusted cpi in august was 2.6% year-on-year, 0.3 percentage points lower than the previous value, setting a new record low since april 2021; the seasonally adjusted core cpi in august was 0.3% month-on-month, slightly higher than the previous value and market expectations, mainly due to rising housing costs and service prices. after the release of the cpi data, the market strengthened its pricing for a 25bp rate cut in september. however, as several fed officials made dovish remarks, the market's trading volatility on the extent of the rate cut increased. as of september 17, cme pricing showed that the probability of a 50bp rate cut in september rose to 69%, exceeding the probability of a 25bp rate cut.second, the european central bank cut interest rates for the second time this year.the three major policy interest rates were lowered by 25bp-60bp, and the eurozone's economic growth forecast for the next three years was lowered by 0.1pct, while inflation expectations remained unchanged. from the performance of major global asset classes last week, the 10y us treasury bond rate fell by 6bp to 3.66%, the s&p 500 and nasdaq indexes rose by 4% and 6% respectively, and come gold, come silver and lme copper futures prices rose by 3.4%, 10.3% and 3.5% respectively.

domestically, export growth remains resilient, and the capital market has taken multiple measures to boost mergers and acquisitions and restructuring.various economic and financial data show that the problem of insufficient domestic demand is still emerging, and exports are relatively resilient. among them, exports in august increased by 8.7% year-on-year, 1.7 percentage points higher than the previous value. ships, integrated circuits, automobiles, and home appliances maintained rapid growth, with cumulative growth rates of 76%, 22%, 20%, and 14% respectively. the decline in mobile phone exports narrowed by 2 percentage points to -2% from the previous value; fixed asset investment increased by 3.4% year-on-year, 0.2 percentage points lower than the previous value, and real estate investment fell by 10.2% year-on-year; social retail sales in august increased by 2.1% year-on-year, 0.6 percentage points lower than the previous value; in terms of prices, cpi in august rebounded slightly by 0.1 percentage points to 0.6% year-on-year, and ppi fell by 1 percentage point year-on-year t to -1.8%; in terms of financial data, new social financing in august was 3.03 trillion yuan, basically the same as the same period last year. government bond financing was still the main contribution. the stock of social financing increased by 8.1% year-on-year, 0.1 percentage point lower than the previous value; credit demand was still weak. in terms of financial terms, new rmb loans in august were 900 billion yuan, a year-on-year increase of 460 billion yuan. the loans of residents and corporate sectors in august increased by 202.2 billion yuan and 108.8 billion yuan respectively; the negative spread of m1-m2 continued to widen. in august, m1 fell by 7.3% year-on-year, with the decline further widening by 0.7 percentage point, and m2 rose by 6.3% year-on-year, the same as the previous value.from a policy perspective,first, the national people's congress approved the plan to delay retirement, and at the same time proposed to coordinate the promotion of related work such as elderly care and childcare; second, the new ten national policies for the insurance industry were released, proposing to give full play to the long-term investment advantages of insurance funds, cultivate truly patient capital, and guide insurance funds to provide support for technological innovation, venture capital, rural revitalization, and green and low-carbon industrial development; third, multiple measures were taken to activate the m&a and restructuring market. the shanghai stock exchange issued the "a handbook of rules, policies and cases on mergers and acquisitions of listed companies", which aims to help listed companies accurately understand the rules, stimulate the vitality of the m&a and restructuring market, and promote the implementation of more typical demonstration cases.

overall, we believe that the current a-share valuation is at a historically low level. we should pay attention to the marginal changes of positive factors. the loosening of overseas liquidity has further opened up domestic easing space. the merger and reorganization of the a-share market has gradually entered an active period. the merger and acquisition of hard technology companies and the professional integration of central state-owned enterprises have continued to advance. structurally, we continue to recommend paying attention to the direction of long-term policy support and active industry catalysis, such as new quality productivity representing growth style (tmt/power equipment/defense and military industry/mechanical equipment, etc.), high-end manufacturing, and investment opportunities related to state-owned enterprise reform.

risk warning:1) macroeconomic recovery is slower than expected; 2) monetary policy tightens more than expected; 3) overseas market volatility increases.