Guosen Securities(SZ:002736) Guoxin Securities·2025-11-14 05:56Core Insights - The A-share market is at a critical turning point, transitioning from the "real estate-debt" old cycle to the "technology-innovation" new paradigm, mirroring the four pillars of the long bull market in the US stock market [3][5][6] - The new economic sectors are becoming the core drivers of ROE recovery, with the overall ROE for non-financial sectors in A-shares expected to rebound to 6.48% by Q3 2025, contrasting sharply with the deep losses in the real estate sector [3][7][18] - The economic structure and valuation paradigm are undergoing reconstruction, with hard technology becoming the new focus for capital allocation, as evidenced by the significant increase in market capitalization of sectors like electronics and biomedicine [3][4][24] - The investor ecosystem is shifting towards long-termism, driven by institutional changes that encourage value investing and stabilize the market [3][4][30] Group 1: Transition from Old to New Cycle - The A-share market is at a historical crossroads, moving away from the old real estate-debt driven model, with the current market volatility seen as a necessary pain in establishing a new growth paradigm [5][6] - The long bull market in the US is not a myth but is firmly based on technological innovation, institutional leadership, shareholder returns, and a survival-of-the-fittest mechanism, providing a clear blueprint for the future evolution of A-shares [6][17] Group 2: New Steady State of Profitability - A-share profitability is showing clear signs of bottoming out, with Q3 2025 ROE for non-financial sectors at 6.48%, up from 6.27% in Q2, driven primarily by improvements in net profit margins rather than increased leverage [7][8][10] - The recovery in profitability is not uniform but is concentrated in high-growth sectors like TMT and materials benefiting from policy changes, indicating a structural recovery led by new economic drivers [8][11][17] Group 3: Structural New Paradigm - The structural transformation of the Chinese capital market is deeply rooted in the continuity of supportive policies, with the technology sector's market capitalization surpassing all other styles during the "14th Five-Year Plan" [18][20] - The valuation system for the electronics sector has undergone significant reconstruction, reflecting a shift towards a narrative-driven or long-term value perspective, similar to the US market [22][24] Group 4: New Balance in Ecosystem - The funding ecosystem in the A-share market is highly differentiated, with institutional funds dominating core asset allocations, while small-cap and high-dividend sectors contribute to market diversity [30][32] - The ongoing optimization of the investor structure indicates a long-term trend towards maturity in the A-share market, with institutional reforms fostering a long-term investment mindset [33][36] Group 5: Awakening of Returns - The regulatory environment is shifting towards a focus on shareholder returns, with an increase in voluntary dividends and a significant rise in share buybacks, particularly cancellation buybacks, which enhance per-share value [38][39] - The rise in cancellation buybacks, with an expected total of 225.29 billion yuan in 2025, reflects a significant change in the value management awareness of A-share companies, supporting the long-term bull market narrative [39][41]