Core Viewpoint - The recent fluctuations in the Hong Kong stock market present investment opportunities, driven by external volatility and investor sentiment to secure profits. The market is expected to recognize various positive factors, leading to potential upward movement after a period of consolidation [1]. Group 1: Macroeconomic and Policy Insights - The macroeconomic environment in China continues to show marginal slowdown, but the new economy, particularly technology, is experiencing strong growth with a half-year profit growth rate of 31.7%, providing robust support for the stock market [2]. - There are signs of easing tensions in US-China relations, with recent high-level talks resulting in several temporary measures, supporting the view of "competition without conflict." The government's upcoming policies are expected to focus on technology innovation, expanding domestic demand, and macroeconomic adjustments [2]. Group 2: Liquidity and Valuation - Continuous net inflows from foreign and southbound funds are observed, with the Federal Reserve expected to lower interest rates by 25 basis points in December and three additional cuts next year, totaling 75 basis points [3]. - The end of the Fed's balance sheet reduction in December is anticipated to alleviate liquidity pressures, further encouraging overseas capital to flow into the Hong Kong stock market [3]. - The combination of fundamental support, favorable policies, and improved liquidity positions the Hong Kong stock market in a valuation trough, which is expected to drive a rebound [3]. Group 3: Investment Strategy - The recommended investment strategy is a return to a "barbell strategy," focusing on offensive positions in technology (AI chain) and non-ferrous metals, while defensive positions should emphasize dividend stocks and turnaround opportunities [4]. - The AI industry chain is highlighted as a resilient growth sector with significant long-term potential, with recommendations for investments in internet-related AI, humanoid robots, autonomous driving, and electric power [4]. - Non-ferrous metals are expected to benefit from a combination of dollar depreciation, low interest rates, and liquidity, with gold also gaining from global central bank purchases and safe-haven demand [4]. Group 4: Defensive Strategies - The "turnaround" strategy focuses on essential consumer goods, which are showing signs of supply-demand inflection after four years of challenges, with valuations still at historical lows [5]. - Companies with competitive advantages are expected to increase market share and profit margins, suggesting a phased buying approach for long-term holding [5]. - High dividend strategies are emphasized, with the Hang Seng High Dividend Yield Index offering a stable dividend yield of 6%, driven by increasing demand for "fixed income plus" products from southbound funds [5].

Core Viewpoints - The report suggests that the recent fluctuations in the Hong Kong stock market present investment opportunities due to the expectation gap among investors [1][4] - It anticipates a shift from a bearish to a bullish trend, driven by several positive catalysts including advancements in China's technology sector, improved Sino-US relations, and supportive government policies [4][6] - The report recommends a "barbell strategy" for asset allocation, focusing on aggressive investments in technology and non-ferrous metals while maintaining defensive positions in dividend stocks and turnaround opportunities [2][4] Market Analysis - The macroeconomic environment is experiencing marginal slowdown, but the new economy, particularly technology, is showing strong growth with a reported profit growth rate of 31.7% [4][8] - The easing of tensions in Sino-US relations is expected to enhance market sentiment, with several agreements reached to alleviate trade disputes [14][17] - The "14th Five-Year Plan" is set to provide additional support for economic transformation and domestic demand, with policies aimed at technological innovation and macroeconomic stability [18][19] Liquidity and Valuation - Continuous net inflows from foreign and southbound funds are expected, with the report highlighting a significant net inflow of 9 billion USD from foreign investors in October [24][37] - The current valuation of the Hong Kong stock market is considered attractive, with the Hang Seng Index trading at a P/E ratio of 12.0, significantly lower than other major global indices [50][54] - The report emphasizes that the risk premium for Hong Kong stocks is notably high compared to the S&P 500, indicating a favorable investment environment [50][51] Investment Strategy - The report advocates for a focus on the AI industry chain and non-ferrous metals as key growth sectors, while also recommending investments in essential consumer goods that are showing signs of recovery [4][6] - The strategy includes a defensive approach towards high-dividend stocks, which are expected to remain in demand due to increasing interest from southbound funds and insurance capital [4][6] - The long-term outlook for the Hong Kong stock market remains positive, with expectations of a gradual upward trend supported by improved economic conditions and continued foreign investment [60]

Report Information - Report Date: November 11, 2025 [1] - Analyst: Zhang Hesheng [1] - Tel: 021 - 53686158 [1] - E - mail: zhanghesheng@shzq.com [1] - SAC Number: S0870523100004 [1] Market Performance Summary Stock Market - **U.S. Stocks**: Over the past week (20251103 - 20251109), the Nasdaq, S&P 500, and Dow Jones Industrial Average changed by -3.04%, -1.63%, and -1.21% respectively, and the Nasdaq China Technology Index changed by -3.39% [2] - **Hong Kong Stocks**: The Hang Seng Index changed by 1.29% during the same period [2] - **A - shares**: The wind All - A Index changed by 0.63%. Among different indices, the CSI A100, CSI 300, CSI 500, CSI 1000, CSI 2000, and wind Micro - cap stocks changed by 0.94%, 0.82%, -0.04%, 0.47%, 0.88%, and 3.16% respectively. In terms of sector styles, most indices in Shanghai and Shenzhen markets rose, while the North Securities 50 Index changed by -3.79%. Among 30 Citic industries, 17 industries rose and 13 fell, with electric power and new energy, steel, petrochemicals, coal, and basic chemicals leading the gains with weekly increases of over 3.0%. Grid equipment, photovoltaic, carbon neutrality, new energy, coal, environmental protection, and Hong Kong stock dividend ETFs led with weekly increases of over 4% [3] Bond Market - **Chinese Treasury Bonds**: In the past week (20251103 - 20251109), the 10 - year Treasury bond futures main contract fell by 0.22% compared to October 31, 2025. The yield of the 10 - year active Treasury bond increased by 1.88 BP to 1.8142%. Yields of all maturity varieties increased, and the yield curve shifted upward [4] - **Funding and Leverage**: As of November 7, 2025, R007 was 1.4677%, down 2.46 BP from October 31, 2025; DR007 was 1.4130%, down 4.21 BP, and the spread between them widened. The central bank's open - market operations had a net withdrawal of 1572.2 billion yuan in the past week. The bond market leverage level increased, with the 5 - day average of inter - bank pledged repo volume increasing from 6.70 trillion yuan on October 31, 2025, to 7.97 trillion yuan on November 7, 2025 [5][7] - **U.S. Treasury Bonds**: In the past week (20251103 - 20251109), long - term U.S. Treasury bond yields rose while short - term yields fell. As of November 7, 2025, the 10 - year U.S. Treasury bond yield remained unchanged at 4.11% compared to October 31, 2025. The yield curve became steeper [8] Currency and Commodity Markets - **Exchange Rates**: The U.S. dollar index decreased by 0.18% in the past week (20251103 - 20251109), and the U.S. dollar depreciated against the euro, pound, and yen. The U.S. dollar exchange rate against the offshore and onshore RMB increased slightly [9] - **Gold Prices**: Gold prices continued to fall in the past week (20251103 - 20251109). London gold spot prices decreased by 0.43% to $3994.10 per ounce, and COMEX gold futures prices decreased by 0.01% to $3995.20 per ounce. Domestic gold prices also fell, with Shanghai gold spot down 0.38% to 918.03 yuan per gram and futures down 0.16% to 919.02 yuan per gram [10] Outlook and Recommendations - **A - shares**: A - shares are likely to maintain a high - level oscillation. It is recommended to focus on investment opportunities in sectors such as electric power and new energy, photovoltaic, coal, steel, chemicals, chips, computing power, and artificial intelligence [11] - **Bond Market**: High risk appetite is not conducive to the bond market, but the high absolute yield has long - term allocation value [11] - **Gold**: Although the long - term upward trend of gold prices remains unchanged, there is a lack of short - term catalysts for growth, and it is likely to decline slightly or move sideways [11]

Core Viewpoint - The market is experiencing a style shift, with funds moving from high-valued technology sectors to lower-valued sectors such as energy, cyclical, dividend, and consumer goods, indicating a potential recovery opportunity in traditional sectors [3][4][10]. Market Performance - As of Monday's close, the Shanghai Composite Index stood at 4018.60 points, up 0.53%, while the Shenzhen Component Index rose 0.18% to 13427.61 points, and the ChiNext Index fell 0.92% to 3178.83 points [1]. - The consumer sectors, including liquor, dairy, and food and beverage, led the market rally, with over 3300 stocks rising, contrasting with the previous week where technology stocks drove the index up [2]. Fund Reallocation - There has been a significant shift in fund allocation, with technology stocks experiencing high volatility and profit-taking, while lower-valued sectors such as energy, chemicals, and consumer goods are seeing increased investment [4][10]. - The consumer sector's performance is attributed to improved expectations following a surprising CPI data release, signaling a potential economic recovery [6][8]. Macro Data and Policy Support - The unexpected rise in October's CPI indicates a recovery in consumer spending, enhancing market sentiment towards consumer-related industries [6]. - Ongoing policies aimed at stabilizing growth and promoting consumption have positively influenced the consumer sector's outlook [8]. Valuation and Positioning - Traditional consumer sectors like liquor and food and beverage have been trading at low valuations, making them attractive for institutional investors as expectations improve [9]. - The current market dynamics suggest that the consumer sector may be entering a phase of orderly accumulation by funds, indicating a potential for valuation recovery [10]. Style Shift Signals - The breakthrough of the 4000-point mark is seen as a psychological and technical milestone, with the market shifting focus from technology to consumer sectors [11]. - Investors are advised to be cautious with high-valued technology stocks while exploring opportunities in lower-valued sectors that are experiencing a rotation [11]. Short-term Market Outlook - The market is expected to continue fluctuating around the 4000-point level, with consumer stocks likely to see some profit-taking after initial gains [10]. - The technology sector may face pressure due to a lack of sustained funding, while the rotation among sectors is anticipated to accelerate [11].

Investment Rating - The report maintains a positive outlook on the textile and apparel industry, with specific recommendations for companies such as Bosideng and Anta [2][8]. Core Insights - The textile and apparel sector outperformed the market, with the SW textile and apparel index rising by 0.8% from November 3 to November 7, 2025, surpassing the SW All A index by 0.2 percentage points [3]. - October textile and apparel exports faced pressure, with a year-on-year decline of 12.6%, but recent US-China trade negotiations may help restore the export chain [8][10]. - The report highlights the potential for growth in the outdoor apparel segment due to the upcoming winter season and the Milan Winter Olympics, recommending brands like Bosideng and focusing on the recovery of women's apparel [10][12]. Summary by Sections Industry Performance - The textile and apparel sector showed strong performance compared to the market, with the SW apparel home textile index increasing by 2.2% and the SW textile manufacturing index rising by 1.0% during the same period [3][4]. Recent Industry Data - Retail sales for clothing, shoes, and textiles totaled 1,061.3 billion yuan from January to September, reflecting a 3.1% year-on-year growth [28]. - In October, China's textile and apparel export value was $22.26 billion, down 12.6% year-on-year, with textile exports at $11.258 billion (down 9.0%) and clothing exports at $11.004 billion (down 16.0%) [35][36]. Market Trends - The report notes that the recent easing of tariffs by the US may positively impact the export chain, with a recommendation to focus on the sports manufacturing and non-woven fabric sectors [8][10]. - The outdoor apparel market is expected to benefit from increased brand investments in winter sports products, with specific mentions of Anta and Li Ning's new product launches [10][12]. Company Performance - The report reviews the third-quarter performance of companies like Dezhu Fashion, which showed a recovery in profits, with a focus on online and direct sales channels [13][14]. - The report emphasizes the strong brand power and profitability of companies in the mid-to-high-end women's apparel sector, maintaining a "buy" rating for companies like Dezhu Fashion and Geli Si [12][17]. Investment Recommendations - The report recommends investing in sports and outdoor brands such as Bosideng, Anta, and Li Ning, as well as discount retailers like Hailan Home and companies in personal care and home cleaning sectors [10][12].

Market Performance Review - The A-share market continues to experience volatility, with large-cap indices leading the gains. The Shanghai 50 index rose by 0.89%, and the CSI 300 index increased by 0.82%, while the STAR 50 index showed a slight increase of 0.01% after significant fluctuations throughout the week [3][12] - In terms of style, cyclical stocks maintained strong performance, while stability and financial styles shifted from decline to growth compared to the previous week. Consumer stocks were the only style index to decline this week [3][12] - Large-cap stocks significantly outperformed small-cap stocks, with the core asset indices, such as the Moutai index and the Ningbo combination, both experiencing declines of 0.98% and 1.27%, respectively [3][12] Industry Insights - The third-quarter reports indicate a reversal in the "anti-involution" theme, with industries such as power equipment (up 4.98%), coal (up 4.52%), oil and petrochemicals (up 4.47%), steel (up 4.39%), and basic chemicals (up 3.54%) leading the gains. Conversely, sectors like beauty care (-3.10%), computers (-2.54%), pharmaceuticals (-2.40%), automobiles (-1.24%), and food and beverages (-0.56%) performed poorly [4][13] - The market has recognized a general profit improvement in industries aligned with the "anti-involution" theme following the third-quarter reports, gaining broader market consensus [4][13] Future Outlook and Investment Strategy - The outlook for the market suggests continued volatility, with a dual vacuum period in policy and performance expected from November to December. The lack of significant movement in household deposits indicates a potential weakness in future capital support, limiting upward space for A-shares [5][30] - The investment strategy emphasizes maintaining a growth style, with a focus on sectors that meet the "dilemma reversal + high growth" composite pricing requirements, particularly in photovoltaic equipment. Additionally, sectors that have lagged since September and are positioned favorably in the "14th Five-Year Plan" are also recommended [5][30]

Core Viewpoint - Huami Technology (NYSE: ZEPP) is identified as an undervalued emerging star in the Chinese tech sector, having undergone a turnaround from a significant decline in market value to a strong recovery, with a notable increase in revenue and stock price in 2025 [1]. Group 1: Company Transformation - The transformation of Huami Technology is primarily attributed to its focus on its own brand, Amazfit, which has become the sole revenue source since Q3 2025 [2]. - The company has successfully implemented a tiered product strategy, which has been crucial for its performance turnaround [2]. Group 2: Product Performance - The outdoor adventure product line has seen significant sales growth, aligning with the company's high-end strategy and meeting the increasing demand for reliable outdoor gear [3]. - The professional sports product line, exemplified by the newly launched Balance2, offers advanced tracking for various sports and features that cater to athletes' needs, enhancing its market appeal [4]. Group 3: Competitive Advantages - Huami Technology leverages its manufacturing capabilities and supply chain management, allowing it to offer high-quality products at lower prices compared to international competitors [7]. - The integration of advanced AI algorithms and personalized training suggestions through its software enhances user experience and product value [8]. Group 4: Brand Development - The company is actively working to strengthen its brand recognition by collaborating with professional athletes and engaging with emerging sports communities [9]. - Huami Technology has seen significant sales growth in the U.S. and EMEA regions, indicating a successful brand penetration strategy [10]. Group 5: Market Potential - Despite the challenges in competing with industry leaders like Garmin, Huami Technology has substantial growth potential, with a market cap of $400 million and the possibility of reaching a valuation ten times its current size [11].

Core Viewpoint - The report from Industrial Securities indicates that as the year-end approaches, market participants are increasingly focused on next year's economic outlook, with current economic conditions having a diminished impact on stock prices. Historical analysis since 2016 shows a strong positive correlation between industry performance rankings in the year-end market and their earnings growth in the following year, while the correlation with current earnings growth is weak or even negative [1]. Group 1: High Prosperity Industries - High prosperity industries for the next year, expected to have a net profit growth rate of over 30%, include AI hardware (communication equipment, consumer electronics, semiconductors), new energy (batteries, wind power equipment), military industry (ground armaments), and IT services [4]. - Other high prosperity sectors include electronics (components, optical optoelectronics), downstream AI (gaming, software development), automotive (passenger and commercial vehicles), military (naval and aerospace equipment, military electronics), automation equipment, and photovoltaic equipment [4]. - Industries expected to see a net profit growth rate of 10%-30% with improving economic conditions include pharmaceuticals (chemical pharmaceuticals, medical devices, biological products), downstream AI (digital media, computer equipment), machinery (engineering machinery, specialized equipment, general equipment), and new energy (grid equipment, motors) [4]. Group 2: Cyclical Industries - Cyclical industries expected to have high prosperity next year, with a net profit growth rate of over 30%, include aviation airports, building materials (glass fiber, plastics, non-metallic materials), new metal materials, and agriculture (planting and breeding) [6]. - Other cyclical sectors anticipated to see high prosperity include energy metals, chemical fibers, rubber, retail, and leisure foods [7]. - Industries projected to achieve a net profit growth rate of 10%-30% with improving economic conditions include new consumption (beverages, dairy products, accessories, entertainment products, cosmetics, personal care products, small home appliances), service consumption (education, hotel catering, tourism), agriculture (feed), chemicals (chemical raw materials, chemical products), special steel, and renovation materials [7].

Group 1 - The report emphasizes that the "earnings surprise" strategy is not effective during the third quarter reports, as it has shown a failure risk similar to that of the mid-year reports since 2010 [3][25] - The third quarter reports provide limited incremental information, leading to a market focus on longer-term earnings growth expectations rather than immediate performance [4][51] - The proportion of companies exceeding earnings expectations in the third quarter of 2025 was 19.25%, a significant increase from the historical low of 12.27% in 2024, indicating a recovery in market sentiment towards future earnings [4][5] Group 2 - The report identifies that only a few sectors, such as non-bank financials, coal, banking, non-ferrous metals, and telecommunications, had a higher proportion of upward adjustments compared to downward adjustments in earnings expectations after the third quarter reports [5][26] - The report suggests constructing a stock portfolio based on "turnaround" and "high growth next year" strategies to capture excess returns from individual stocks in November and December [5][55] - The analysis indicates that the market tends to price in significant "turnaround" and high growth expectations for the following year after the third quarter reports, but this pricing tends to decline over time [51][52] Group 3 - The report highlights that different industries respond variably to earnings surprises in the third quarter, with non-bank financials, machinery, steel, agriculture, and construction materials showing significantly higher success rates compared to others [26][27] - The report discusses the phenomenon of "growth illusion" and non-linear pricing characteristics in the market, where companies with earnings surprises may not receive proportional price increases due to overly optimistic expectations [30][32] - The report concludes that while the "turnaround" strategy remains a potential avenue for excess returns, the third quarter's unique characteristics necessitate a more nuanced approach to identifying profitable opportunities [38][55]

Group 1 - Amazon's cloud computing division, AWS, has signed a $38 billion agreement with OpenAI to provide computing capacity over seven years, including the supply of hundreds of thousands of NVIDIA GPUs [1] - The agreement aims to assist in generating responses and training next-generation models for ChatGPT [1] - Following the announcement, the CSI Artificial Intelligence Industry Index fell by 0.68%, with mixed performance among constituent stocks [1] Group 2 - The AI ETF (515980) recorded a turnover of 1.87% and a half-day trading volume of 150 million yuan, with a total size of 7.965 billion yuan [2] - Over the past five trading days, the AI ETF has seen net inflows on three days, totaling 353 million yuan [2] - The AI industry index reported a revenue growth rate of 26.23% and a profit growth rate of 74.75% in Q3, marking the highest values since 2019 [2] Group 3 - Market focus is shifting towards "turnaround" industries with average current performance but expected improvement next year, alongside cyclical industries benefiting from economic stimulus [3] - The AI industry is in a valuation digestion phase, providing a rare opportunity for long-term investors to accumulate positions since April [3] - The HuaFu AI ETF (515980) covers various aspects of the AI industry, tracking the only quarterly rebalancing AI index in the market [3]