Hua Jin Securities: How will industries rotate during the main rise of the spring market?

Hua Jin Securities released a research report stating that currently, in the spring market of this year, the main rising stage of technology CKH HOLDINGS in some cyclical industries may continue to have an advantage. In the short term, it is recommended to continue focusing on the technology CKH HOLDINGS cyclical growth theme. The agency believes that commercial aerospace and brain-machine interfaces may become the main themes for investment in the spring market: firstly, commercial aerospace is resonating with policies and industry trends at home and abroad, with huge development potential, and the space economy is expected to reach $1.8 trillion by 2035. Secondly, brain-machine interfaces are also supported by strong policies, and the market size may continue to expand. The core views are as follows: Reviewing history, there may be a replenishment surge in the main rising stage of the spring market, and industries that are upward in policy and industry trends may remain strong. (1) In the main rising stage of the spring market, there may be a replenishment surge, and industries with low valuation sentiment and substantial inflow of subsequent financing in growth industries. Firstly, industries with replenishment surges in the main rising stages during the consolidation period often have low valuation sentiment, such as media during the period of 2009/12/22-2010/1/4, electronics and computers during the period of 2019/12/24-2020/1/14, and non-ferrous metals during the period of 2021/2/5-2021/2/18. Secondly, there is usually a substantial inflow of financing into industries with replenishment surges during the main rising stage, such as electronics and computers in the period of 2019/12/24-2020/1/14, and non-ferrous metals in the period of 2021/2/5-2021/2/18. (2) Industries in the main rising stage of the spring market may have strong performance if policies and industry trends are upwards, such as communication during the period of 2009/12/22-2010/1/4, social services and beauty care during the period of 2021/1/25-2021/2/18, and media and communication during the period of 2023/1/30-2023/4/19. Currently, in the main rising stage of the spring market of this year, technology CKH HOLDINGS in some cyclical industries may continue to have an advantage. (1) Media, computers, electronics, medicine and other technology growth industries may have a replenishment surge in the subsequent spring market. First, media, medicine, computers, electronics, and other industries have low valuation and sentiment. Secondly, financing in the main rising stage of the spring market this year may continue to flow into technology CKH HOLDINGS in some cyclical industries. (2) In the short term, policies and industry trends in some cyclical industries of technology CKH HOLDINGS may continue to be upward. Firstly, the support policies for technology CKH HOLDINGS in cyclical industries may continue in the short term: first, policies encouraging commercial aerospace in Shanghai, Guangdong, and other places are being implemented, and eight departments have issued the "Special Action Program for" Artificial Intelligence + Manufacturing"; secondly, short-term anti-"involution" policies continue to be implemented. Secondly, in the short term, the industrial trends in some cyclical industries of technology CKH HOLDINGS may continue to be upward: first, the short-term industrial trends in related technology industries such as commercial aerospace and artificial intelligence continue to rise; secondly, the industrial trends in cyclical industries such as non-ferrous metals and chemicals may also continue to rise in the short term. In the short term, the spring market may enter the main rising stage. (1) Economic and profit recovery may continue to be weak in the short term. Firstly, economic recovery may continue to be weak in the short term. Secondly, profit growth rates may continue to rise in the short term: firstly, the year-on-year growth rate of PPI is showing that the profit growth rate of industrial enterprises is still in the rising cycle; secondly, the future profit growth of cyclical and technology companies may continue to rise. (2) Short-term liquidity may further loosen. Firstly, macro liquidity may further loosen in the short term: firstly, there is a high probability of a rate cut by the Federal Reserve in January; secondly, the domestic central bank may continue to cut reserve requirements and interest rates. Secondly, funds in the stock market may accelerate their inflow in the short term. (3) Short-term risk appetite may continue to rise. Firstly, positive policies in the short term may be further implemented. Secondly, overseas risks may be limited in the short term. Industry allocation: In the short term, continue to focus on the technology CKH HOLDINGS cyclical growth theme. (1) Main theme indexes in the main rising stage of the spring market usually show stronger performance. First, in the main rising stage of the spring market, the increase in theme indexes is usually higher than that of primary industry indexes. Secondly, some of the leading individual stocks in the main rising stage of the spring market have seen a decline in quarterly profit growth compared to the previous year's annual report, or are at a low level. (2) Commercial aerospace and brain-machine interfaces may become the main themes for investment in the spring market: firstly, commercial aerospace is resonating with policies and industry trends at home and abroad, with huge development potential, and the space economy is expected to reach $1.8 trillion by 2035. Secondly, brain-machine interfaces are also supported by strong policies, and the market size may continue to expand. (3) Currently growing industries such as power equipment and media have lower PEG ratios. (4) In the short term, it is recommended to continue to allocate on dips: first, military industry (commercial aerospace), power electronics (nuclear fusion, energy storage), media (AI applications, games), computers (AI applications, brain-machine interfaces), mechanical equipment (Siasun Robot&Automation), medicine (brain-machine interfaces, innovative drugs), electronics (semiconductors, AI hardware), communication (AI hardware), and other industries where there may be a replenishment surge and improvement in fundamentals in non-banking financial institutions, consumption (food, retail trade, social services), and other industries. Risk warning: Historical experience may not necessarily apply in the future, policy changes may exceed expectations, economic recovery may be less than expected.