Cailian Press November 10th news (Editor Lisu) The latest strategic views of the top ten brokerages have just been released, as follows:

China Merchants Securities: The intensity of this round of debt-to-equity swaps exceeds expectations.

China Merchants Securities believes that the intensity of this round of debt-to-equity swaps has exceeded expectations. Firstly, in terms of scale, with the arrangement of three measures, the actual scale of this round of debt swaps can reach 12 trillion, which is higher than the general market's previous expectations. In terms of actual impact, this large-scale debt swap round is expected to significantly loosen the local governments, open up space for local fiscal rearrangement, enhance the ability of local governments to ensure growth, free up time and energy that was originally used for debt swaps and risk management, and invest more in planning and promoting high-quality development. In addition to debt swaps, more proactive fiscal policies in the future are also worth looking forward to. Looking ahead, it is necessary to focus on the December Politburo meeting and the Central Economic Work Conference's orientation for next year's economic work.

From the perspective of industry and style allocation, China Merchants Securities judges that after the previous advantage of the mid-cap and small-cap styles, as the mid-cap and small-cap styles catch up, there is a higher proportion of trading and investment. The previously expected mergers and acquisitions may weaken with the gradual recovery of the IPO pace, and the probability of further advantage for mid-cap and small-cap styles decreases. In the future, with the smooth implementation of debt-to-equity swap policies, entering the stage of earnings revision in the fourth quarter and valuation switching at the end of the year, ETFs have gradually gained popularity, the CSI A500 has entered a period of bulk accumulation, and index styles biasing towards blue-chip stocks are expected to receive more positive support. From the perspective of industry selection, considering the next one to two months, comprehensively considering the previous performance, valuation, trading activity, economic changes, policy and event catalysts, we recommend focusing on areas that are expected to benefit from policy catalysts, improved earnings expectations, or higher growth rates, specifically involving electronics (consumer electronics, semiconductors), computers (computer equipment), home appliances (white goods, home appliance components, kitchen and bathroom appliances, etc.), automobiles (auto parts, passenger vehicles), machinery and equipment (construction machinery, automation equipment) and other industries. At the level of race selection, in November, the focus is on five major tracks with marginal improvements: defense and military industry, automobiles, artificial intelligence, photovoltaics, and consumer electronics.

Founder Securities: Super Macro Week Ends Short-term Focus on Partial Publicly Managed Stocks Requiring Valuation "Rebalancing."

The super macro week ends, the market awaits the landing of the "two boots": one is that Trump wins the election with an overwhelming advantage, and the other is the debt-equity policy of the November 8th Standing Committee of the National People's Congress. First, 10 trillion is just the first step, and the signal transmitted by the policy is much more important than the number itself. Founder Securities has emphasized more than once that 25 is the beginning of this new cycle of debt. As an economy that has relied on investment for the past 20 years, the downward trend of debt is one of the largest macro variables affecting the overall situation. In addition, the "first half" of this round of debt is mainly about stock, essentially converting implicit debt into explicit debt through debt replacement. Therefore, the size of the debt swap scale itself is not important, but the clear policy signal conveying the "central endorsement to guarantee local credit" is important. Second, this round of debt is closer to the debt's "stable landing." Third, the market in the "first half" of the debt swap rally: focusing on the denominator rather than the numerator. Fourth, for the short-term market, the focus is on low publicly managed stocks. Observing the structure of the market from 9.24 until now, it is clear that the short-term style of the market directly depends on the source of incremental funds. Starting in November, Founder Securities has observed a significant increase in new fund offerings, with short-term public funds likely to regain pricing power. Publicly managed stocks have underperformed in this round and also have room for valuation growth.

Allocation suggestions: Short-term focus on partially publicly managed stocks requiring valuation "rebalancing"; midterm focus on mergers and acquisitions and the new trend of debt (environmental protection/construction/central enterprises); in the long term, as the market has not yet priced in Trump's impact on global trade, it is suggested to continue to accumulate "safe assets" at low levels (non-ferrous metals, coal, generic public utilities), as well as outward-bound chains to Belt and Road Initiative countries (power grids, motorcycles, buses, etc.), and continue with the configuration of "Cott estimates" (semiconductors/computing power infrastructure/machine tools, etc.).

Huaan: The debt-to-equity swap meets expectations and will continue to play a new round of games with policy and fundamental repairs.

With the implementation of the debt-to-equity swap policy, which is basically in line with market expectations, the market will shift its focus to a new round of playing with policies and economic fundamental repairs. The gradual implementation of major events such as the Standing Committee of the National People's Congress, the U.S. election, and the November Fed interest rate meeting is largely in line with the mainstream market expectations, leading to a gradual convergence of market expectations. In the future, in addition to whether the economic fundamentals will continue to improve, market attention will shift to two areas: 1) The pace and strength of the subsequent implementation of fiscal policies, especially the detailed rules and scale of inventory house collection and the specific measures to expand the variety and scale of consumer goods for trade-ins. 2) The economic situation and policy strength next year, specifically the Central Economic Work Conference, which focuses on next year's deficit ratio and monetary policy direction.

Gtja: Short-term market fluctuations with rotation, the direction of the stock market will be determined at the end of the year.

This week, the Shanghai Composite Index rose by 5.51%, while the Chinext Price Index rebounded by 9.32%. The key to this round of the market lies in the decision-making level's shift in attitude towards economic turnaround and support for the capital market, which is gradually reshaping long-term expectations, elevating the bottom of the stock market, and moving away from the middle-term 'N-shaped' trend. The market has also seen a series of incremental policies being introduced. Gtja believes that following the decrease in policy divergence after the National People's Congress, but before the end of the year, the Economic Work Conference at the end of the year serves as a guide for incremental policies in 2025, the market will continue to speculate on expectations of incremental policies, driving market fluctuations and rotations, with the market showing ups and downs. The directional decision will be made at the end of the year. The key to whether the market can rise again lies in whether the policy orientation can shift from "expanding currency" to "expanding credit".

Resolving the debt crunch is creating conditions for reshaping long-term growth expectations and restarting credit expansion. In the transition from 'high-speed development' to 'high-quality development' of the economy, the rapid and premature credit contraction by local governments and the real estate sector over the past three years has objectively led to a certain degree of financial repression and a decline in risk appetite. Thus, the large-scale debt-to-equity swap has fired the first shot for the economy to break away from debt crunch. Gtja's view on this round of debt restructuring includes: 1) The '6+4' trillion yuan debt-to-equity arrangement, with approximately 2.8 trillion every year for the first three years, accounting for about 2.1% of the total GDP, which is generally moderate compared to past fiscal stimuli and debt restructuring scales. 2) This move can effectively reduce interest payments for debt entities, as well as alleviate the local government's real pressure to repay debt principal, freeing up more resources for economic development and livelihood security. In addition, the release of local debt risks can create space for government debt issuance, especially for central government debt issuance. For the stock market, loosening and lowering burdens help reduce market concerns about debt tightening and balance sheet recession, creating favorable conditions for reshaping long-term growth expectations, but this will take time and further policy efforts.

Theme recommendations: 1) Tesla's industry chain. Benefiting from the expected increase in U.S. electrification rates and relaxed regulations on intelligent driving, optimistic about the supply chain of auto parts/robots/intelligent driving. 2) Local debt restructuring. The implementation of the scheme eases local expenditure pressures, favorable for investments in fields heavily reliant on fiscal receivables, such as municipal engineering and innovative technologies. 3) Zhuhai Airshow. Debut of heavy-duty new equipment, optimistic about overall assembly and the unmanned/intelligent equipment industry chain. 4) Ice and Snow Economy. Industry development opinions issued by the State Council, benefiting from the widespread development of ice and snow venues in terms of design, construction, ice and snow equipment, and ice and snow tourism.

Huatai Securities: The changes and constants of the new round of debt-to-equity swaps.

A comprehensive combination of local hidden debt is being swapped out. On November 8, the Standing Committee of the National People's Congress approved the "State Council's proposal to consider increasing the cap on local government debt to replace existing hidden debts." The new round of debt-to-equity swap plan aims to reduce the total amount of hidden local government debts from 14.3 trillion to 2.3 trillion by the end of 2028 using three policy tools: 1) A 6 trillion yuan replacement quota over 3 years; 2) A 4 trillion yuan special debt-to-equity quota over 5 years; the above two items total 10 trillion yuan. Huatai Securities believes that the overall debt-to-equity swap plan meets expectations, the debt-to-equity swap strategy is more pragmatic, and the pressure and cash flow of local governments after the swap will be greatly improved, saving around 600 billion yuan in interest payments over five years.

Huatai Securities believes that the underlying logic of the debt-to-equity conversion strategy more reflects the idea of "bottoming out to prevent risks" rather than a "strong stimulus" strategy. With the current escalation of external geopolitical risks, foreign demand may come under further pressure; the market expects the next step of fiscal policy to focus more on easing the real estate sector, expanding consumer demand, and helping repair the balance sheets of local governments, companies, and residents. Huatai Securities believes that the debt-to-equity conversion strategy involves change and continuity. The debt-to-equity strategy has three main goals: ① Solve the urgent problems faced by local governments; ② Promote the resolution of various types of debt issues at the local level, reducing the bad debt losses of financial institutions. ③ Reverse the dilemma of excessive use of fiscal resources for existing debt. The three basic principles of debt-to-equity conversion have not changed: ① Do not change the debt repayment responsibility of local governments. The underlying logic remains "who owns the child, who takes care of it". ② Resolutely curb new hidden debts to avoid dealing with "old debts" only to accumulate "new debts". ③ Compared to the last round of debt-to-equity conversion from 2015 to 2018, future local government budgets and debt constraints will be stronger, indicating that in the past decade, it has become increasingly difficult for local governments to continually convert debts and incur new debts simultaneously. The autonomous financing capacity of local governments will be limited, and the urgency of transformation for local government investment is imminent.

Huatai Securities believes that after resolving the existing stock problem of debt-to-equity conversion, the next step of fiscal policy is expected to focus more on easing the real estate sector, expanding consumer demand, and other incremental directions. Huatai Securities believes that in 2025, there is hope for a more forceful combination of fiscal policies, assuming the following: ① The nominal fiscal deficit ratio will increase from 3% in 2024 to 4%; ② Considering the conversion and storage of debts-to-equity and new special debts, the scale of new special debts is expected to increase from 3.9 trillion in 2024 to 5 trillion yuan; ③ Special national bonds will increase to 2 trillion yuan, with the actual usage amount potentially remaining the same as in 2024.

China International Capital Corporation: The policy signals strengthen the future is not pessimistic, with medium-term attention to the repair of fundamentals.

China International Capital Corporation Research Department believes that, for the A-share market, the current bond conversion plan basically meets market expectations. However, this week, the A-share market has seen significant gains and some indices are close to previous highs, reflecting relatively high market expectations for policies. Future market fluctuations are inevitable, but short-term fluctuations do not change the positive trend of the market. The policy signals began to emerge at the end of September, and the implementation of this fiscal plan further clarifies the policy signals. Moreover, various works mentioned by the Ministry of Finance earlier are still under research and review, and the direction of next year's work is gradually becoming clear. The future implementation of policies is still worth looking forward to. Looking ahead, current investors' policy expectations are relatively high, and the expectation correction may lead to a certain level of short-term market volatility. However, with the formation of basic policy signals, and the current relatively positive funding situation, we believe that the market's performance in the future should not be pessimistic. After short-term fluctuations, the market is expected to continue its oscillating upward trend. The medium-term space will depend on whether the expectations for the repair of fundamentals can be substantially improved.

Central China Securities: Countercyclical adjustment effects are beginning to show, stabilizing market rebound.

Allocation recommendation: Countercyclical adjustment effects are beginning to show, market is stabilizing and rebounding. Looking at the high-frequency data for this week, growth is maintained in the logistics, exports, and services trade sectors. The sales volume of real estate in October shows signs of stabilizing compared to September, indicating a turning point towards recovery. The market has formed strong expectations regarding policies, with the current index entering a strong consolidation phase, potentially continuing its upward trend. Sector rotation will become more pronounced. Short-term recommendations focus on brokerages, non-bank financial institutions, semiconductors, artificial intelligence, 5G, software, among other strong sectors, while medium-term recommendations focus on infrastructure and power benefiting from policy stimulus, as well as sectors like photovoltaics, lithium batteries, and pharmaceuticals experiencing a turnaround of their predicament.

Zheshang Securities: Short-term complexity, medium-term adherence to bullish thinking.

This week the market has shown strong performance, with broad-based indexes all rising. Looking ahead, Zheshang Securities believes that the increase from September 24th to October 8th is only the "first wave" of this round of the bull market. After continuous significant gains, the broad market may face some internal pressure for a short-term adjustment. However, based on the current policies, sentiment, funds, and trends, it is advisable to firmly hold a bullish mindset in the medium term. Regarding allocation, it is recommended to maintain a bullish thinking in the medium term, not chase after rises, and even consider taking profits appropriately, while increasing positions at key technical levels during market retracements. In terms of sectors, the main line should be "finance + technology", adjusting positions based on timing, focusing on "switching between high and low" within selected tracks, while also paying attention to "light indexes, heavy individual stocks" as a secondary consideration.

Huajin Securities: In the short term, continue to focus on opportunities for the rotational rise of technology growth, core assets, and some cyclical sectors.

Huajin Securities believes that in the short term, continue to focus on opportunities for the rotational rise of technology growth, core assets, and some cyclical sectors. (1) Under financial efforts, technology and cyclical sectors may have relative advantages. First, historically, cyclical sectors have been relatively advantaged during financial efforts; secondly, in November, the Standing Committee of the National People's Congress clearly stated the total hidden debt scale of local governments at 10 trillion, and industries related to debt reduction such as cyclical sectors, technology, etc., may benefit. (2) Service-oriented robots, telecommunications operations, shipbuilding technology, trucks, and other growth industries have seen lower increases since September 24th and have the potential for catch-up growth. (3) Currently, industries such as coke, plate, building decoration, and property brokerage services have relatively low valuations. (4) Short-term recommendations to continue focusing on: Firstly, industries with upward trends in policies and industrial trends such as computers (domestic software, data factors), electronics (consumer electronics, semiconductors), communications (commercial aerospace, computing power), media (games, AI applications), secondly, core assets benefiting from possible improvements in fundamentals and inflow of foreign capital (electricity, medicine, consumption), and thirdly, cyclical industries such as building materials, construction, non-ferrous metals, and chemicals.

Huaxi Securities: The current new high-quality bull market is still in the 2.0 phase - moving forward amid fluctuations.

Market outlook: Steady progress is the key to success. The current new high-quality bull market is still in the 2.0 phase - moving forward amid fluctuations, with some profit-taking from earlier gains but still active trading volume. As individual investors remain the largest investors in A shares at present, the market's main characteristics of 'high volatility, rapid sector rotation, and active thematic investment' will prevail. Investors should stay calm and avoid blindly chasing highs. The following aspects are the recent focus of the market: 1) Overseas, the U.S. election results are in, leading to a 'Trump' trade outbreak. 2) The '6+4+2' trillion debt-to-equity swap plan being implemented boosts market confidence. 3) Based on statements from the central bank and the Ministry of Finance, there is still room for further incremental monetary and fiscal policies. 4) Trading volume in both markets has surged again, with rapid sector rotation and active thematic investments being the main features.

In terms of industry allocation, it is recommended to focus on: 1) 'New high-quality' core assets, such as AI+, low-altitude economy, humanoid robots, domestic substitutes, data factors, etc.; 2) Industries benefiting from increased activity in the capital markets and themes related to mergers and acquisitions, such as non-bank financial institutions.