光大证券研究·2025-10-19 23:04Core Viewpoint - The A-share market has experienced a pullback due to declining risk appetite, increased uncertainty in US-China relations, and a general market sentiment decline, with major indices showing a downward trend [4][5]. Market Performance - The A-share market saw a significant decline this week, with the STAR Market 50 index dropping the most at 6.2%, while the Shanghai 50 index fell the least at 0.2%. The overall valuation of the market is at a historically high level since 2010 [4]. - Market styles have diverged, with value stocks performing better. Large-cap value stocks increased by 2.1%, while mid-cap growth stocks decreased by 5.8% [4]. Short-term Market Outlook - The A-share market has shown notable volatility, with the Shanghai Composite Index briefly surpassing 3900 points, a level not seen since August 2015, before falling back below that threshold [5]. - Increased market volatility is attributed to high valuations and rising uncertainties in US-China relations, with the VIX index also showing a significant increase [5]. - Historically, pullbacks during bull markets are common, typically occurring after 60-80 trading days into a bull market, with a usual retracement of 6-7% before resuming upward movement [5][6]. Current Market Phase - The market is likely still in a bull phase, although it may enter a wide-ranging fluctuation stage in the short term. The maximum drawdown observed so far is 4.01%, which is within historical norms [6]. Sector Focus - In the short term, the focus should be on defensive and consumer sectors, as historically, these sectors perform better during market fluctuations. High-dividend stocks and consumer sectors such as food and beverage, social services, and beauty care are expected to benefit from increased domestic demand [7][8]. - In the medium term, attention should be directed towards TMT (Technology, Media, and Telecommunications) and advanced manufacturing sectors, which may gain traction due to liquidity-driven trends and ongoing developments in AI [8].