"Stable growth" and pan-technology is the main line this week

Disc Observation

Friday's index shrank and oscillated upward, with a combined turnover of 1,099.107 billion in the two cities. Plate observation, defense industry, communications, agriculture, forestry, animal husbandry and fisheries industries rose, real estate, steel, extractive industries fell. The two cities up 96, down 6, northward capital inflow of 3.627 billion. Shanghai index rose 0.18%, at 3539.1 points, the Shenzhen Composite Index rose 0.04%, at 14705.37 points, the index fell 0.09%, at 3430.14 points.

Market Outlook

This week, the Shanghai index rose 1.36 percent, the Shenzhen Composite Index rose 1.68 percent, the Genomics Index rose 2.31 percent, the CSI 500 rose 2.36 percent and the CSI 1000 rose 4.17 percent. Among them, the biggest weekly gainers were real estate, defense industry, construction materials, communications, nonferrous metals, and non-banking finance. Overall, the small and medium-sized index is stronger than the large-cap blue-chip index. We believe that the market this week around two main lines, one is "stable growth", the other is to pan-technology-based market.

From the end of last week the U.S. House of Representatives passed 1.2 trillion worth of infrastructure bills, and then Wednesday's October financial statistics report, and combined with the recent trend of commodities and the official PMI data in October, we can more clearly outline a global economy "recession" is expected to heat up the main line! This main line is derived from what we believe is the "stable growth" expectations. Recently, the market has been in some areas of real estate policy marginal relaxation expectations. In addition, financial statistics in October showed that the proportion of medium- and long-term corporate loans in all new loans fell to 26.5% from 41.9% in the previous month, a record low since June 2019. This further raises expectations that direct financing will play a role in cross-cycle adjustment, and coupled with the official opening of the NSE next Monday, brokers are getting the attention of funds.

The other main line this week is pan-technology, the main core logic is that the industry capacity tends to be tight, we see the military industry and the chip is particularly obvious in this regard. Some organizations believe that 2022 military industry into the new capacity to release inflection point. Military sector is currently in the "fourteen-five" change the early stages of the cycle, taking into account the subsequent volume of mature models and new models have entered the batch production node, military industry capacity constraints will continue in the medium term. In addition, the chip in the global epidemic, the capacity was relatively tight. Superimposed on the stable growth and the future meta-universe scenarios can be realized and promoted expectations, may give rise to more chip demand, so as to digest the chip capacity released in the post epidemic era. We believe that the chip-based TMT industry is also worth digging deeper.

On the whole, we believe that the next period of time may still continue this week's "stable growth" and pan-technology investment line.

Operating strategy

From a weekly perspective, the index downward slope has slowed down, the bottom of the stage is more and more obvious, but the opportunity to more from the structural market. On the operation, continue to pay attention to the "stable growth" expected traditional infrastructure in the chemical industry, energy and non-ferrous metals, but also should pay attention to the credit expansion expectations of the financial (banks, brokerage houses, insurance). In addition, you can also pay attention to the new infrastructure in the new energy (photovoltaic, wind power, new energy vehicles) industry chain, as well as capacity constraints under the expectations of the military and chips.

Guangdao Securities senior investment adviser Lai Yanjun, license number: S0260612110012