CSC Financial: The medium-term trend of the technology sector will still be dominated by range-bound bottoming.

CSC Research notes that during this round of adjustment, volatility in fund flows has widened again, leveraged funds have seen consecutive outflows, and the likelihood that the market will accelerate its decline due to passive deleveraging has risen, making the continued backstop role of market-stabilization funds increasingly critical. The technology sector continues to exhibit high volatility. The adjustment in this round of technology growth stocks has reached historically extreme levels in both magnitude and speed, which also implies that short-term selling pressure may have been fairly fully released, providing room for a technical rebound. Considering that the technology sector's third-quarter earnings growth is generally solid and fundamentals remain supportive, after pessimistic sentiment has been fully vented, the market is expected to see a technical rebound, but this is more of a repair after excessive declines rather than a trend reversal, and over the medium term it remains constrained by factors such as fund positioning, overseas rate hikes, and geopolitics. Before the above factors see substantive easing, the medium-term trend of the technology sector will remain dominated by range-bound bottoming. At the short-term level, the industry allocation approach is to use deterministic dividends to lock in core holdings, use lightly positioned structures to wait for style rebalancing, and use real assets to hedge the two-way risks of inflation and geopolitics. Sectors to focus on: banks, non-bank financials, utilities, coal, oil, oil shipping, basic chemicals, hog farming, the AI industry chain, etc.