According to the Securities Times app, CICC released a research report stating that in the past two months, combined with external disruptive factors, especially with the continuous strengthening of Trump's trade, both the A-share and Hong Kong stock markets have experienced a certain level of pullback. The Hong Kong stock market, which is more affected by external factors, has seen more adjustments, while the A-share market has shown relative resilience supported by the financial environment and has gradually warmed up recently. At this moment, the challenging period for A-shares in the past two months may be coming to an end, approaching the important policy window at year-end. Positive factors are expected to help A-shares welcome the 'year-end and early-year market trends.'

CICC's main points are as follows:

Learn from history: What historical patterns exist at year-end and early-year?

Reviewing the market performance at year-end and early-year in the past 15 years (from December to February of the following year), during this period, the market has risen more than half of the time, with obvious upward trends generally accompanied by improvements in investor policy expectations, boosts in fundamental expectations, and liquidity support. Specifically:

On a market-wide level, since 2010, the A-share market has seen a 'year-end and early-year market trends' more than half of the time, with the Wind Full A Index having a win rate of 57% and the CSI 300 Index having a relatively higher win rate of 64%. In the review of the past decade's trends, the periods of 2012-2013, 2014-2015, and 2018-2019 performed well, with the Full A Index rising more than 15%, supported mainly by the following factors: 1) Year-end and early-year as an important meeting window, improvements in investor policy expectations driving risk appetite increase; 2) Despite the empty period in listed company performance after December, improved economic data can support investor sentiment if it improves; 3) Macro liquidity injections and active stock market fund availability often provide strong support for market performance.

In terms of style, comparing growth and value styles, over the New Year period, the value style overall outperforms growth, but style shifts are likely to occur during this period. The year-end major style sequence is financials > consumer > cyclical > growth, with historical data showing that at the beginning of the year, growth style performance tends to be relatively better, with the major styles being growth > cyclical > financials > consumer. The reason for style shifts may be due to strong policy expectations during end-of-year key meetings, with sectors with high relevance likely to show relative performance increases, accompanied by increased risk appetite, leading to gradual activation of growth style.

Based on the current situation: How is the market expected to perform at the end of this year and the beginning of next year?

Combining the current macroeconomic and market environment, investors' policy expectations are warming up, the stock market funds remain active, economic activities show marginal improvement, and there is hope for a "year-end and new year performance", specifically:

Policy side: Important year-end meetings are expected to continue with a positive tone. Since late September, China's policies have been significantly strengthened, with multiple ministries launching multiple growth-stabilizing policies in areas such as local government debt, stabilizing the real estate market, and promoting consumption. Investor policy expectations have significantly improved. Considering the current macroeconomic environment at home and abroad, the main contradiction remains the insufficient effective demand domestically, and external pressure may further push counter-cyclical policies, especially with high expectations for enhanced fiscal efforts. The Central Political Bureau and the Central Economic Work Conference scheduled for December are expected to continue the positive tone set in the previous period, providing guidance for next year's economic work and helping boost investor confidence.

Fundamentals: Recent economic data in China indicate marginal improvement in economic growth momentum. Specific points include: 1) The Manufacturing Purchasing Managers' Index (PMI) rose by 0.2 percentage points to 50.3% month-on-month in November, remaining above the boom-bust line and beating market expectations. Economic data have shown overall marginal improvement, with policies promoting the replacement of old products with new ones driving social retail sales volume to improve, traditional infrastructure investment benefiting from faster fiscal spending progress leading to increased growth, and some city's real estate sales recovering due to policy support. 2) Fiscal revenue improved in October, with general public budget expenditure increasing by +10.4% year-on-year compared to September, reaching a new high since October 2023, and government support for the economy expected to continue to increase; general public budget income increased by +5.5% year-on-year, tax revenue increased by +1.8% year-on-year, turning positive for the first time this year. 3) The operational data of industrial enterprises improved, with the profit decline of large-scale industrial enterprises narrowing significantly by 17.1 percentage points compared to September, and profitability improving in 27 out of 41 major industrial sectors. 4) Looking at high-frequency data, investment is stable against the seasonal trend, with the marginal improvement in the capitalization rate of construction projects, and a slight rebound in apparent consumption of steel and building materials; consumer trends continue under the policy of replacing old products with new ones, with a total of over 4 million applications for national automobile scrappage and replacement subsidies, and over 30 million units of eight major categories of household appliances purchased by consumers nationwide (as of November 18/8), with expectations for subsequent social retail performance to improve.

Funding situation: Institutional positions are gradually increasing with room for further growth. Since late September, both individual and institutional investor sentiment has improved, with the daily average turnover of A-shares nearing 2 trillion yuan since October, corresponding to a turnover rate of over 5% calculated based on the free float market value, making it the most active period in the funding market since 2015. Specifically: 1) Institutional investors have increased their positions. As of the third quarter, looking at the overall holdings of public funds, with the market warming up in late September and the expansion of ETF fund sizes, stock holdings have rebounded by 3.3 percentage points to 20.4% from the previous quarter, with the scale of actively managed stock-type funds growing to 2.8 trillion yuan, and asset positioning increasing from 86.3% in the second quarter to 86.8%. Insurance funds have also increased their positions, with the size of insurance holdings in stocks and securities growing to 4.1 trillion yuan, reaching a new high since 2013, with positions rising by 0.54 percentage points to 12.8% month-on-month. The current insurance investment positions have just returned to the historical average, and with policies encouraging medium to long-term fund entrance into the market, there may still be room for further increases in insurance positions. 2) Individual investors' willingness to enter the market remains high. The recent increase in margin balances and improved trading activity have pushed margin balances to 1.83 trillion yuan as of November 28, higher than the 2021 levels. The number of new A-share accounts on the Shanghai Stock Exchange in October rose rapidly to 6.85 million households (vs. 1/1.83 million in August/September), reaching the third highest monthly level in history.

At the configuration level, it was previously believed that while the current cni mid-small cap.index style may encounter some setbacks, it is expected to be relatively advantageous. Although the policy expectations are strengthening towards the end of the year, they may favor the large cap styles, but the performance may be more towards the phase. At the industry level, it is recommended to start with the fundamentals and combine a good supply-demand structure to focus on booming industries, such as lithium batteries, military industry's high-end manufacturing, as well as semiconductors, consumer electronics, communication equipment, and other technology hardware. In addition, resilient external demand sectors such as power grid equipment, commercial vehicles, and white appliances are also worth paying attention to.