Huatai Securities: Focus on low-valued cyclical sectors amid profit perspective shift.

Huatai Securities research report pointed out that last week, A-shares oscillated upward, with manufacturing and cyclical stocks leading the way while technology stocks continued to adjust. We provide several observations: 1) Historically, the third stage of an uptrend is often mainly driven by profits. The rally in Chinese assets dominated by liquidity since "924" last year may gradually shift towards fundamentals; 2) After the third quarter reports, the market's profit perspective will shift to next year. As of Q3 25, advanced manufacturing with active inventory replenishment, domestic consumption transitioning from active destocking to passive destocking, and pro-cyclical investments may be attracting some investors early layout; 3) From a medium-term high-frequency data perspective, signs of improved economic conditions are mainly concentrated in AI chains deepening, price increases, capital goods, and mass consumer goods. In the short term, maintain a "dumbbell-shaped" allocation, with pressure on technology congestion potentially easing, dividend still offering allocation opportunities. Additionally, pay attention to sectors such as new energy and chemicals that have a logical relative low position in the market.