Adjusting to the second half? What economic indicators should we focus on? Top 10 securities firms' strategies are here.

The latest strategic viewpoints of the top ten securities firms are as follows: CITIC SEC: The index market is in a stage of consolidation in the middle of a medium-term market cycle, preparing for a new round of market trends. CITIC SEC's research report indicates the following four judgments. Firstly, the index market is in a stage of consolidation in the middle of a medium-term market cycle (characterized by a decline in the technology sector) and preparing for a new round of market trends (requiring the initiation of new sectors with valuation improvement potential), with short-term selling nearing completion. Secondly, in the short term, the North American AI chain may serve as a safe haven within the technology sector, and at the end of July, North American CSP's guidance may lead to a wave of recovery, but reaching a new level requires a new surge of AI models/products and expansion of commercial realization space, key to breaking the valuation framework of hardware companies' cyclical stocks and achieving a new round of system-level uplift for hardware and applications. Thirdly, the domestic AI chain highly depends on catalyzing and trend fund intensity, with main catalysts already materializing, while trend fund intensity, after experiencing severe retractions, may find it difficult to quickly return, and the relatively healthy financing position domestically implies that there is currently no point for chip clearance-based positioning, making it more probable for a convergence in valuations between domestic and North American sectors. Fourthly, the non-AI chain sees a feature of alternating recoveries, starting from innovative drugs and non-banking to the industrial chains of non-ferrous metals, chemicals, and lithium batteries, accompanied by trading with policy expectations from the domestic demand chain. Focus on the convergence of three dimensions in allocation: 1) convergence of upstream hardware and pricing varieties on the AI chain relative to downstream cloud service giants' excess profits; 2) relative restoration of non-AI industrial stocks compared to overseas benchmark companies; 3) convergence of technology and non-technology sectors. Huaan: Emotional sharp declines will not persist, confident in a corrective market scenario This week, the market has shown a clear irrational decline, comparing it to similar historical situations in terms of decline, the short term has clearly oversold, with a low probability of further major declines. As technology stocks continue to demonstrate high profitability and expectations for large IPOs, the market is expected to see a rebound. The main theme of the market still needs to focus on the middle and upper reaches of the AI industry, and this structural theme is expected to continue until the end of the year. In terms of allocation, industries with strong performance cycles and weak economic cycles should still focus on current growth opportunities in the industry. The second phase of earnings-driven market trends has not ended, and since the end of June, there has been a significant correction in growth technology stocks, providing more upside potential in the short term. Therefore, it is still advisable to increase positions closely around the trends in the AI industry, with a focus on the computing power centers and supporting hardware in the middle and upper reaches, which are the essential directions. This direction has a large industrial chain and investment capacity, currently experiencing institutional large-scale clustering in the medium term. Although there may be overheating trading in some sectors, the wide race track and the ability to "park and change horses" and the unchanged medium-term uptrend should be considered when trading cools down to low turnover levels, players should be prepared to invest. Overall, it is necessary to focus on the following two investment clues and rhythm: The first core theme is the AI industrial chain, especially focusing on the middle and upper reaches, including computing power hardware sectors. It is suggested to strategically position oneself in areas with the potential for rebound in computing power centers and supporting directions when participating in short-term recovery trends. The second main theme consists of areas that are likely to benefit from the diffusion and catalyzation of the AI chain, mainly including mechanical equipment, Siasun Robot & Automation, gaming, and software. Huaxi: Long-term funds are the ballast of A-shares in the current adjustments due to external shocks The adjustment in the current A-share market is mainly driven by micro liquidity shocks in overseas technology assets and cross-market resonance effects. With the release of selling pressure in the technology sector and multiple index divergence nearing the historical bottom, the short-term panic may be coming to an end, and the recovery momentum after oversold conditions is accumulating. Furthermore, A-share ETFs have seen substantial net purchases again since July, with long-term funds playing a strong supportive role in the market. Looking ahead, the most intense selling pressure phase is likely in the past, and the market is expected to enter a new phase of "volatility and slow recovery". The long-term technology trend is not over yet, but before a new strong catalyst appears, differentiation and rotation will be the main trend. In terms of industry allocation, it is recommended to focus on high-quality individual stocks with strong growth potential related to "AI+" industries. Also, attention can be paid to high-quality targets related to "innovative drugs, Hong Kong-listed internet companies, media, and gaming." Sinolink: The adjustment is approaching the second half The core contradiction of the current market may not be a shift in the main trend, but the future trajectory of the AI hardware market. Sinolink believes there are three possible future trajectories for the market: The first scenario is that the concerns about the industry chain are debunked, and a non-linear technological miracle occurs once again, so this adjustment is simply deleveraging, possibly even breaking through previous highs. The second scenario is that the concerns about the industry chain are confirmed, and after deleveraging, there is an extended adjustment phase dominated by fundamentals. The third scenario, which is considered the most likely, is that the total investment related to AI remains strong, the fundamental reversal signal is not sufficient, the market's trading structure adjustment is complete, and a structural rebound is initiated. The allocation recommendation remains unchanged, focusing on proactive defense: First, with energy prices gradually stabilizing at low levels, it is better to benefit from the flow of Chinese manufacturing (coal + electricity), as the coal and petroleum sector sees a valuation restoration. Second, the AI investment is still in the late stage of overheating, and the focus should be on controlling positions and increasing precision, as materials and equipment remain important flexible assets: Semiconductors/AI materials, semiconductor equipment, and manufacturing are vital ways to invest "inflation" and provide effective defense during the early stage of "stagflation." Third, Southern nations and Chinese manufacturing are still in a period of high real interest rate suppression, suggesting a slow entry approach, with focus on industrial metals, engineering machinery, power grid equipment, and refining. Industrial: The more fearful, the more rational you should look at the data After the initial panic-driven decline, the technology growth industry has seen a decline in its cost-effectiveness. The tracking of crowding has shown a shift in levels: low-consumption industries such as medicine, beauty care, and farming have reached higher levels of crowding, while most technology sectors have fallen to lower levels. The core direction of the AI industry chain has dropped to a medium or even low level of crowding, especially in the core North American AI chain represented by optical modules, optical fibers, PCBs, reaching historical lows. By analyzing this round's percentage adjustments (since July), oversold levels (RSI indicators), crowding levels (short-term trading crowding), and profit correction intensities (profit correction since July), industries that have significantly oversold and continue to have improving profits are selected as potential industries that may have been unduly affected. The main selections include TMT (optical modules, optical fiber cables, storage, panels, IDC), manufacturing (power grid, lithium battery industrial chain, photovoltaic auxiliary materials, etc.), and cyclical industries (rare earth, plastics, chemical fibers, etc.). Huajin Securities: When will the technology market correction end? Reviewing history, the short-term correction of the TMT industry is mainly driven by industry events, further policy support, adjustment of emotional indicators, and ample liquidity. Currently, strong industry trends and policy catalysts suggest that the TMT correction may be nearing its end. The fundamentals remain strong, and there is limited downside potential for further downward movement in the short term. Industry allocation: Balanced allocation of high-quality technology stocks, some cyclical stocks, and low-valuation dividend industries in the short term. (1) The consumption industries in the current growth sector such as electronics, communications, and defense have low PEG ratios and low sentiment. (2) Sectors with high year-on-year profit growth forecasts in the recent announcement include petrochemicals, trade, retail, environmental protection, defense, computers, among others. (3) Current recommendations for balanced allocation are: Firstly, electronics (semiconductors, AI hardware), communications (AI hardware), computers (AI applications), media (AI applications, gaming), new energy (AI power, lithium batteries), innovative drugs, defense (commercial aerospace), non-ferrous metals, etc.; Secondly, low-valuation dividend industries such as large financials, power utilities, etc. Shenwan Hongyuan Group: Selling pressure has concentrated and releases, rebound is imminent Selling pressure has been concentrated: Absolute return funds are maintaining balance and reducing holdings to control losses, while mid-level investors near balance have been redeeming equity products, and the preference for risk has fallen, leading to net sales on margin. The negative cycle mechanism of absolute return funds and mid-level investors is limited, and in the short term, structural stability may quickly return naturally. Given the current situation, it is appropriate to implement policies that will promote stability and likely show quick results in the short term. The listing of leading storage companies may result in a better-than-expected capital differentiation, representing an opportunity for oversold rebound in the AI industry chain, which is expected to see a quick bounce back, but a new medium-term market cycle will require substantial industry catalysts. In the inflation-driven market, segment segmentation may follow, with potential for a differentiated market trend. The clues to differentiation lie in the ability of specific industries to maintain a rising demand share. Assets with loosened supply constraints may face a downward shift in their valuation center. The rise in storage prices is due to increased resistance from cloud computing companies, and the profit transmission in the AI industry chain may not be smooth, potentially causing disruptions in the fundamental aspects later. The future of the AI industry chain may need to pass through a "slow-paced" phase. During the oversold rebound phase, the AI industry chain remains advantaged. Medium-term challenges for the AI industry chain may need to await significant industrial catalysts to initiate a new phase of the market. The large wave trend is likely to continue, with technology leading the return. The new market trend will require, and is likely to be, derived from an improvement in fundamentals from richer sources and increased flow of incremental funds. The future trend of the market will be characterized by a variety of opportunities, where assets within the technology sector can rise, besides overseas AI chains, domestic AI chains and small-cap technology themes should also be considered. Opportunities exist in non-technology sectors as well, with a preference for non-banking sectors, focusing on strategic resources, new consumption trends, and export/overseas opportunities. Zheshang: A-shares not exempt from the Asia-Pacific market shock, remain calm and wait for convergence This week, influenced by the volatility in Asia-Pacific stock markets, there was a sharp fluctuation in A-shares, with major indices experiencing declines. Looking ahead, due to recent significant market volatility, the adjustment angles of various broad-based indices have become steeper. This means that previous support indicators have mostly been invalidated, and the market will need a process of "rebound-convergence" to find new support. Taking the ChiNext Index as an example, after breaking major support lines such as the 20-day and 60-day moving averages, new support will mainly rely on the gradually rising yearly average. The Shanghai Composite Index, after breaking below the yearly average, will need to seek support on larger timeframes (such as weekly, monthly), where the 20-month moving average is a strong support level currently. It is important to note that despite recent market volatility, the current round of retracement objectively released the accumulated internal adjustment pressures, so it is important to maintain a calm and restrained approach rather than panic selling at the current position. In terms of allocation, based on the judgment that "volatility needs to gradually converge, and indices need to gradually establish new support," we suggest: In terms of timing, it is advisable to maintain existing positions and stay calm to avoid blind selling, waiting for the indices to stabilize gradually on new support levels; For short-term participation in rebounds, positions should be exited quickly to seize opportunities, while overall elasticity should be controlled. In terms of industries, sectors that have gradually emerged and shown potential include securities, innovative drugs, and the Hang Seng Technology Index, which can be considered as a rebalancing alternative outside of the technology sector. Soochow: What economic clues should be focused on after market adjustments? The recent correction in the A-share market is fundamentally driven by internal trading crowding and external market resonance, and has not altered the core logic of the industry trends. Currently, the market has entered a bottom range. First, comparing to the new energy market in 2021, the current duration and retracement of the AI core race track is matching historical thresholds, and the risks at the trading level have been sufficiently released. Second, the negative feedback from liquidity in the Korean stock market is gradually coming to an end, with retail funds counteractively receiving, establishing bottom support, and mitigating the emotional impact on the A-share technology sector. Third, there has been a substantial net inflow of funds into stock-based ETFs, providing strong long-term support for a slow bullish market. Looking ahead, as liquidity risks are gradually released and trading structures are repaired, high-growth industries with strong fundamentals are expected to stabilize and strengthen first, so it is important to focus on the pricing role of quality factors in the subsequent recovery market. Focus on: 1) The core varieties in AI hardware, including optical modules, optical chips, domestic chips, semiconductor equipment, 2) Innovation drugs/CXO, resonating with multiple factors such as earnings and policy, driving continuous growth, 3) Power equipment, with advantages in the overseas market such as grid and power supplies, 4) Sectors benefiting from active capital markets, such as securities. China Galaxy: Validation window of rebalancing, focus on two key "guiding stars" The current market adjustment is not due to a change in fundamentals or industry core logic but is a result of short-term internal and external pressures, particularly impacted by global technology sector volatility, leading to a revaluation of high-value tracks, increased play of existing capital, and short-term emotional releases. In the short term, the market will focus on volatility consolidation, structural rebalancing, but the industrial support logic remains intact, with limited downward potential for indexes, focusing on two key core guiding clues. First, validation of earnings expectations. Currently, during the peak reporting season, the market will shift its focus to profit realization. Second, validation of policy signals. Allocation opportunities: Balanced layout of "technology rotation + defensive allocation." Focus on: 1) The resonance between overseas AI capital expenditure expansion and domestic new infrastructure investment, accelerating the construction of underlying infrastructure such as computing power, communication, and power, as the technology trend and industry outlook remain unchanged, positioning opportunities should be sought as downward pressures are released. Focus on semiconductors and their industrial chain (storage chips, semiconductor equipment and materials, advanced packaging), components, communication equipment, energy storage/power supply, humanoid Siasun Robot & Automation, and commercial aerospace. 2) Resource and cyclic manufacturing sectors are expected to see a recovery. Focus on basic chemicals, non-ferrous metals, construction materials, steel industry, etc. 3) Emphasize the value of defensive low base allocations. Focus on coal, coal chemicals, finance, utilities, new energy, etc.