CITIC Securities: When adjusting positions, try to select securities with a rising trend in ROE from the bottom.

In its research report, CITIC Securities stated that market volatility has increased since October, but the success rate of timing the market is not high. The reason behind this is that the underlying structure of incremental funds is changing, and the continuous entry of stable absolute return funds into the market is reducing the effectiveness of traditional aggressive timing strategies. The current important variables are still the stability of the corporate overseas environment and AI, involving Sino-US relations and the investment process of AI infrastructure. Not only the TMT sector, but also the rise of non-ferrous metals, chemicals, and new energy sectors are directly or indirectly affected by the AI narrative. These sectors collectively account for over 60% of institutional holdings. In this situation, the strategy for rebalancing is not to deliberately avoid the AI narrative, but to select varieties with a trend of bottoming up ROE as much as possible. The AI narrative only affects the slope of the market rather than the trend.