China Galaxy Securities: Margin trading exceeds 3 trillion, how to layout under the verification of prosperity?

China Galaxy Securities released a research report stating that the margin balance of A shares has exceeded 3 trillion yuan for the first time, reflecting investors' increased risk preference and continued market trading activity. This round of leverage funds exhibits significant structural characteristics, with incremental funds focusing on high-growth sectors such as AI hardware and semiconductors. Looking ahead, existing funds can provide bottom support for high-quality sectors with sustained growth, but the structural crowding feature also indicates faster sector rotation and differentiation. With the start of the mid-year report disclosure window in July, the market's core logic is shifting towards performance realization, and it is recommended to focus on hardcore technology and industry leaders with real orders, high profitability, and sustained prosperity. Key points from China Galaxy Securities: Market trends this week: This week (June 22-June 26), the A-share market experienced a volatile adjustment, with most major indices experiencing a pullback. The overall A-share index fell by 1.40%, while the Sci-Tech Innovation 50 index rose by 6.32%. In terms of style, the market's style was relatively dominant this week, with the CSI 300 index (-1.48%) outperforming the CSI 1000 index (-1.93%). The five style indices mostly declined, with cyclical and stable styles falling by 4.67% and 4.14% respectively, while only the growth style rose by 0.07%. In terms of industries, few primary industries saw gains. Only building materials, electronics, non-banking financials, and basic chemicals recorded gains, while non-ferrous metals, automobiles, and beauty care led the declines. Funds flow this week: Trading activity in the market increased. The average daily turnover this week was 3,545.9 billion yuan, an increase of 400.169 billion yuan from the previous week. The average turnover rate was 2.0961%, up by 0.16 percentage points from the previous week. As of Thursday, the margin balance was 3,032.964 billion yuan, an increase of 67.501 billion yuan from the previous week. From June 18 to June 24, the net flow of global funds into A shares was -4.742 billion USD (previous value -4.092 billion USD), with overseas funds at 651 million USD (previous value -791 million USD). Valuation changes this week: The PE (TTM) valuation of the overall A-share index decreased by 1.86% from the previous week to 23.63 times, placing it at the 94.47th percentile since 2010. The PB (LF) valuation fell by 1.69% this week to 1.89 times, placing it at the 53.45th percentile since 2010. The A-share bond yield was 2.5001%, near the 3-year rolling average of 3.2861% and -1.41 standard deviations, placing it at the 43.71st percentile since 2010. A-shares market outlook: With progress in US-Iran talks and expectations for the resumption of navigation in the strait, international oil prices have mostly returned to pre-conflict levels between the US and Iran. However, the continued impact of the Fed's rate hike expectations on market sentiment and global liquidity persists, leading to increased volatility in overseas capital markets. The prosperity of the tech industry continues to be validated. Micron Technology's latest financial report greatly exceeded market expectations, and subsequent performance indicators further validate the high demand for AI hardware globally. The positive impact has spread to the A-share market, driving structural market movements in memory chips and semiconductor materials, with further rotation adjustments within the technology sector. The market is adopting a pricing strategy of "prosperity and realization". Further consolidation of domestic industrial profits reinforces the main theme of market prosperity, with high-tech manufacturing and the electronics industry seeing significant profit growth, while sectors such as non-ferrous metals and chemicals continue to recover profits. Investment opportunities: Focus on a balanced strategy of "technology rotation + defensive positioning". Key areas of focus include: Overseas AI capital expenditure expansion resonating with domestic new infrastructure investment, accelerating the construction of underlying infrastructure such as computing power, communication, and power, with no change in the technology prosperity and industry trends. Additionally, focus on semiconductors, components, communication equipment, consumer electronics, other electronics, storage, humanoid robots, energy storage, commercial aerospace, etc. Emphasize the potential recovery of some resource and cyclical manufacturing sectors due to input-driven inflation pushing up price levels, improvements in domestic policy affecting supply patterns, combined with the repair of demand for new infrastructure and manufacturing going overseas. Pay attention to basic chemicals, non-ferrous metals, building materials, steel sectors, etc. Additionally, focus on the value of defensive positioning. Focus on coal, coal chemical, finance (banks, securities), utilities, new energy, etc. Risk warning: External uncertainty risks; policy risks below expectations; unstable market sentiment and continuous liquidity adjustments.