November Market Outlook: Latest Institutional Research

Entering November, with the third-quarter earnings season concluded and the policy window approaching, institutions' judgments on market direction have become a focus of attention. A review found that although each institution takes a different angle, they have formed consensus on three core judgments: First, after the adjustment since the third quarter, market valuation and crowding have been significantly digested, and conditions for an oversold rebound are gradually improving; second, short-term constraints remain in positioning pressure and overseas disturbances, and the pattern of consolidation and buildup remains unchanged; third, in allocation, one should not bet on a single styleboth a value dividend base position and oversold growth rebound exposure should be balanced. It is worth noting that institutions have clearly divergent views on the pace of the reboundoptimists believe the rebound could be triggered at any time, while cautious voices emphasize the need for right-side confirmation signals. Is the November market a rebound window or a consolidation and bottoming process? And how should allocation choices be made? View 1: Conditions for an oversold rebound are improving, but views on pace diverge After the deep adjustment since the third quarter, market valuation and trading crowding have been significantly digested, and most brokerages regard the "oversold rebound" as the core judgment for November; however, institutions differ on when the rebound will be triggered and how strong it will be. Shenwan Hongyuan Group's judgment is the most positive. After the continued adjustment, conditions for an oversold rebound have further improved, and a rebound may be triggered at any time. An important medium- to long-term low may appear around the turn of the year, effectively placing the opportunity at a relatively early point in time. Guosen provides a more solid argument from a historical perspective. After comparing the adjustments following the two technology bull marketsthe internet boom in 2015 and the new energy boom in 2021the research team pointed out that this round's maximum declines from highs for the STAR 50, electronics, and communications were about 46%49%. Whether judged by valuation digestion, trading crowding, or market sentiment, the adequacy of the adjustment is basically comparable to the previous two rounds, and the preconditions for a rebound are gradually in place. In other words, this decline is not simply sentiment-driven selling, but a concentrated clearing of valuation and positioningthe foundation for a rebound is more solid than it appears on the surface. Zhongtai's stance is relatively cautious, believing that the main constraint remains overseas: the decline in U.S. Treasury yields is more driven by risk aversion and has limited transmission to risk assets. A-shares currently have "sufficient odds but an unsteady win rate," and it is advisable to wait for overseas disturbances to fade before making a judgment. Optimists look at timing, while cautious voices look for confirmationthis is precisely the divergence most worth tracking in the November market. View 2: Positioning pressure is the core contradiction; market-stabilizing funds and ETFs become key variables Beyond the "oversold rebound," most brokerages caution that short-term constraints come from the positioning level. CMSC states bluntly that the first principle of the current market is positioning pressuremicro-level funds such as active public funds, fixed income+, insurance, and margin financing positions face negative feedback and potential selling pressure. There are two paths out of the negative loop: wait for ETF volume expansion to break the spiral, or wait for positioning pressure to be moderately resolved before positioning on the right side. China Securities Co.,Ltd. further pointed out that the market is still in the second round of deleveraging since the end of September, and the formation of a medium-term bottom is often bumpy. The key to confirming a bottom lies in whether incremental market-stabilizing funds can continue to cover reduction pressure. Signals worth tracking include stabilization of margin financing, continued ETF absorption, and former leading decliners no longer making new lows on negative news. China Securities Co.,Ltd. Wealth Management, meanwhile, flagged opportunities from a valuation perspective: the CSI 500 has fallen 30.62% over the past four months, the third-largest drawdown since 2006, and the 10-year risk premium of the WIND All A Index is at the 85.8th percentile. A new medium-term regular investment window may be opening. Central China added another observation angle from the funding side: broad-based ETFs have seen continuous net inflows since late September, but the index is still making new lows, indicating that incremental funds have not yet reversed the positioning structure; however, the ChiNext Index's PE (TTM) has fallen to around 28x, showing obvious overshoot characteristics. It believes that the first batch of 18 active ETFs will bring incremental funds to the market, and the central bank's establishment of a liquidity support tool for large redemptions by non-bank institutions and its third SFISF operation will both help reduce the risk of the "redemptionselling" negative loop. View 3: In allocation, value and dividends first; certainty over elasticity After value style outperformed in October, many brokerages continued to emphasize dividend defense in November allocation. China Securities Co.,Ltd. pointed out that in the third quarter, active equity funds' growth-style holdings accounted for 66.5%, at the 98th historical percentile, while allocations to financials and consumer were only 3.5% and 12.4%, both at historical lows. Near year-end, institutional position rebalancing combined with underweight allocations may drive funds back toward dividends and low-position consumer sectors. It recommends using banks, utilities, transportation, and other dividend sectors as the base position, and selectively focusing on low-position improvement directions such as food and beverage, commerce and retail, and pharmaceuticals. Huaxi summarizes this judgment as the "triple advantages of value": valuations are at historical lows, dividend yields offer a premium over fixed income, and sensitivity to U.S. Treasury yield disturbances is weaker than in growth sectors. It recommends gradual buying on dips in batches rather than chasing highs. CITIC SEC, under its "four allocation mindsets" framework, noted that during a phase when funding conditions have not yet cleared, a steady-return strategy centered on PB-ROE and focused on high dividends and supply clearing is relatively more favorable. Shanxi also judges that the core contradiction in November will shift from earnings verification to a mix of policy expectations and cross-year allocation, and the value-outperformance style is expected to continue in a low-volume environment. View 4: Tech rebound depends on new catalysts; AI applications and physical AI become the focus In structural selection for the oversold rebound, technology growth is still regarded by most brokerages as the direction with the greatest elasticity, and new industrial catalyst clues have become the focus of discussion. Guosen pointed out that large models are accelerating their evolution from large language models to agents, and personal agents are expected to continue penetrating scenarios such as finance, media, and consumption; Tesla's Optimus has begun mass production in Fremont, and physical AI directions such as humanoid Siasun Robot&Automation may enter a period of explosive growth, potentially becoming a new catalyst driving this rebound. Zheshang summarizes this as shifting from a "dumbbell lie-flat" approach to "defense and counterattack": allocate the base position to value, flexibly trade growth rebounds, and focus on sectors such as physical AI (autos + machinery), AI healthcare (pharmaceuticals), and AI applications (computers). Founder believes the technology sector is a relatively high-certainty offensive direction in the rebound, recommending attention to semiconductor domestic substitution, high-end communications components, and core components for Siasun Robot&Automation, while hedging risk with low-volatility dividend assets and using gold as a medium- to long-term base position. Central China summarizes its November allocation as a "dumbbell." One end is independent controllability and new quality productive forces, focusing on semiconductor equipment and materials, domestic software, electrical equipment, chemicals, special machinery, and auto parts, and emphasizing that after the third-quarter earnings season, focus should be on hard-core sub-sectors with order and earnings delivery capability; the other end uses dividend assets such as coal and power as the base position. Operationally, it suggests that those with low positions can build left-side positions in batches and gradually allocate on adjustments, or patiently wait for catalyst signals. View 5: External variables are dense; APEC and the Fed become observation windows Entering November, external events have become observation coordinates repeatedly emphasized in institutional strategies. CMSC noted that three things need to be closely tracked in November: the meeting between the Chinese and U.S. heads of state during APEC (to observe implementation of earlier economic and trade consensus and new cooperation), the policy shift after the U.S. midterm elections, and the risk of escalation in the U.S.-Iran conflict; on overseas liquidity, the October FOMC kept rates unchanged, markets are pricing more than a 70% chance of a 25-basis-point hike in December, and U.S. Treasury yields are expected to continue fluctuating at high levels. Huajin Securities judges that domestic policy remains relatively proactive. In November, RMB1 trillion of MLF will mature, and the central bank may increase injections and may not rule out reserve requirement cuts or rate cuts. The APEC heads-of-state meeting in Shenzhen is expected to become a window for improving external expectations. Central China also pointed out that the Fed is in a rate-hike gap period in November, and external liquidity disturbances have somewhat cooled; the APEC Shenzhen summit on November 1819 will focus on topics such as new quality productive forces, AI, and independent controllability, and is expected to become a catalyst window for sentiment repair. However, it also cautioned that although broad-based ETFs have seen continuous net inflows since late September, the index is still making new lows, and the market still needs to wait for a new round of incremental catalyst signals; the clearing of technology crowding has not yet been completed. This article is reprinted from "Cailian Press"; GMTEight editor: Huang Xiaodong.