Huatai Securities: Short-term dumbbell-shaped configuration strengthening, suggesting balanced allocation in growth, cyclical, and dividend stocks.

Huatai Securities released a strategic research report stating that the industry's overall business confidence index continued to decline in October, but the rate of decline has slowed down. Essential consumption, midstream manufacturing, and large financial sectors have shown significant improvements in business confidence, while the TMT sector continues to show differentiation. At the industry level, signs of improving business confidence are gradually emerging: 1) deepening of the AI chain: industries such as storage, communication equipment, and software are experiencing an upturn in business confidence, while components and consumer electronics may be experiencing a high level of consolidation; 2) price increase chain: industries such as non-ferrous metals, coal, some chemical products, and decoration materials are seeing an increase in business confidence due to global fiscal and monetary easing policies and domestic anti-insular policies; 3) capital goods and intermediate goods: industries such as batteries, photovoltaics, and engineering machinery are experiencing an upturn in business confidence; 4) mass consumer goods: industries such as dairy products and cosmetics are showing signs of recovery at the bottom of business confidence; 5) independent business cycle: industries such as pharmaceuticals, defense, and insurance are seeing a rise in business confidence. In terms of allocation, short-term dumbbell-shaped allocation is recommended, with a balanced allocation among growth, cyclical, and dividend stocks. It is suggested to explore varieties with improving business confidence, sustainability, low valuation, and still at a relatively low level of chips. After gradually digesting the pressure of technological overcrowding, there may be opportunities for repair, focusing on non-ferrous metals, chemical industry, electronics, general automation, storage, defense, insurance, etc. In addition, it may be advisable to partially allocate to mass and service consumption industries such as dairy products.