Highlights of the morning brokerage meeting | Hengke gains 5.5% dividend defense

The Zhitong Finance App learned that on the last trading day (November 5), the Shanghai Stock Exchange Index rose 0.10% to 3689.91 points, the Shenzhen Securities Index rose 1.19% to 11471.09 points, and the GEM index rose 0.87% to 2566.80 points; the turnover of the two markets was 2117.953 billion yuan; it rose 4,869 companies, fell 624 companies, rose or stopped by 76 companies, and fell to a standstill of 1.

Guosheng Securities believes that there was a “blue wave” that exceeded expectations in the midterm elections, splitting the government to strengthen checks and balances, but the existing policy direction is difficult to completely reverse; Huafu Securities believes that the dividend index has a high probability of positive return for a long period of time after a retracement signal, and the defensive value is prominent; CITIC Securities believes that falling interest rates are compounded by capital return, and the Hong Kong stock Internet is expected to repair the market; China Investment Securities believes that the domestic release of electronic grade hydroxylamine is imminent, and the short-term supply and demand gap will widen; China Pacific Securities believes that the medical device sector's revenue will steadily expand and improve.

Guosheng Securities: Macro | Comprehensive Assessment: The Impact of Trump's Midterm Election Big Loss

There was a “blue wave” that exceeded expectations in the 2026 US midterm elections. The Democratic Party not only took back control of the Senate and House of Representatives (both houses changed hands for the 5th time since World War II and the first time since 2006), but also achieved historic breakthroughs in several traditional Republican dominant states. Among them, Texas and Kansas elected Democratic senators for the first time since 1988 and 1932; in terms of the gubernatorial election, the Democratic Party regained a majority of US gubernatorial seats for the first time after a lapse of 16 years. In terms of policy, the split government pattern will strengthen checks and balances against Trump, but it is difficult to completely reverse the existing policy direction. From an internal perspective, fiscal expansion will be limited, and the bipartisan game may intensify. We need to pay attention to the expiration of the temporary funding bill on 12/11 and the debt ceiling before the second quarter of 2027; the direction of AI development is difficult to change, but regulatory restrictions may be strengthened, especially the impact of governor changes. Currently, the total capacity of the five governors in the red and blue states is 236GW, accounting for 38.4% of the US; from the outside world, Trump still has more initiative in the tariff and military fields, but the possibility of the US-Iran situation being downgraded in the short term under the pressure of congressional checks and impeachment pressure and the 2028 election More than an upgrade . Looking at the market, after the election results were clear, US stocks and gold clearly rebounded. US bond yields and the US dollar rose in the short term, then fluctuated, and the direction was weak compared to stocks. Election uncertainty subsides in the short term, boosting market risk appetite. In the medium term, various types of assets will still return to fundamentals, and performance should diverge. Among them, US stocks are expected to recover in the short term, and focus on AI risks in the medium term; US bonds are relatively beneficial in the short term and will still fluctuate at a high level in the medium term; gold is expected to recover to the bottom in the short term, and the medium- to long-term upward logic has not changed; the US dollar is weak in the short term, and there is still fundamental support in the medium term.

Huafu Securities: Strategy | Dividend: Defensive Attributes and Long-term Allocation Opportunities

The dividend index realized its defensive value in this round of adjustments. Since the end of June (November 3, same below), the total dividend income of the China Securities Securities has increased by 13.6%, and the total income of the Shanghai and Shenzhen 300 has decreased by 18.6%, and the profit margin has reached 32.2 percentage points. Since the beginning of the year, the two have risen 5.9% and decreased 11.6%, respectively.

Dividend index earnings resumed under the retracement signal. The backtest execution rules are a closing confirmation signal, the closing layout for the next trading day, tracking the earnings for the next 1, 3, 6, and 12 months, and using the full return scale of dividends and reinvestment. The probability of a positive return over a long holding period is high. The average return for 1 month of holding is 2.6%, with a positive return probability of 72.7%; 4.9% and 66.7% for 6 months; 12.3% and 76.2% for 12 months. Longer holding periods provide more room for earnings accumulation.

The profit performance of the dividend index after the retracement signal will change markedly with subsequent market trends. Under the strong rebound scenario, all 6 samples achieved positive absolute returns, but only 2 samples obtained excess returns; the average absolute return for this group was 45.1%, and the average excess return was -7.3 percentage points. The average excess benefit for the gentle restoration scenario sample was 4.0 percentage points. Under continued pressure, the strategy had a comparative advantage. The average excess return was 6.5 percentage points, but the average absolute return was -10.4%, and the sample positive return accounted for only 37.5%.

Differences in the compilation of various dividend indices and current allocation values. The five types of dividend indices are divided in terms of sample pool, sample selection logic, weighting rules, and risk constraints. At this point, dividend assets still have a stable cash return base. The PE and PB levels of the China Securities dividend were 99.75% and 99.42%, respectively, and the dividend ratio was 4.51%. The dividend rates for the Hong Kong Stock Connect Central Enterprise Dividend and the Hong Kong Stock Connect Dividend were 5.46% and 5.17%, respectively. Stabilizing the dividend rate also forms a solid valuation anchor, making dividend assets relatively resistant to falling during the downward phase of risk appetite. From the perspective of dynamic chips, 26Q3 active equity public funds tend to increase China Securities dividends and hold positions +1.76pct compared to the previous month, reflecting the defensive position adjustment trend of capital.

CITIC Securities: Internet | Interest rate inflection point compounded capital return, optimistic about the Hong Kong stock Internet repair market

On November 5, the Hang Seng Technology Index closed up 5.5%, the biggest one-day increase since the end of February 2025. We believe that the decline in US bond interest rates combined with the return of capital is expected to usher in a new round of market recovery for Hong Kong stocks. The expected rise in US bond interest rates after the midterm elections is a relatively slow variable, and the global liquidity spillover is expected to bring about continued capital recovery. On the valuation side, Hang Seng Technology's NTM PE is 17.6x, at 16.2% in the past 5 years. Hengke, which is sensitive to interest rates and has a low valuation, is expected to be the first to benefit; on the capital side, the allocation of foreign capital and domestic capital to the Internet is still low, and the net inflow of foreign capital in October has already exceeded the total of the previous three quarters, and recovery is taking place; on the performance side, the non-GAAP net profit growth rate of leading Internet companies bottomed out at 26Q2. Q3/Q4 is expected to increase 8%/37% year-on-year. The decline in interest rates has opened up room for valuation, capital reimbursement provides incremental increases, and performance implementation has consolidated the foundation. Combined with the continuous advancement of AI commercialization in China, we continue to firmly view Hong Kong stocks on the Internet.

SDIC Securities: Environmental Protection & Beijing Stock Exchange | Domestic release of electronic grade hydroxylamine is imminent, and the short-term supply and demand gap will still widen

The expansion of AI computing power is driving the increase in advanced cleaning consumables. With its dual properties of strong reducibility and weak alkalinity, hydroxylamine can effectively decompose metal oxides and crosslinked residues that are difficult to remove with traditional solvents and plasma ash through redox and nucleophilic reactions. Although cleaning agents have evolved through four generations of technology, in advanced logic, 3D NAND and G5 high-end scenarios, hydroxylamine-free solutions are limited by extreme corrosion margins, deep pore mass transfer restrictions, and metal protection requirements, making it difficult to achieve complete replacement, thus establishing the essential position of hydroxylamine in high-end wet cleaning processes. As demand for AI computing power grows, HBM/DRAM production capacity is being aggressively expanded and 3D NAND layers are stacked, driving a double jump in wafer production capacity and cleaning process frequency. It is estimated that by 2030, the global theoretical demand for G4/G5 electronic hydroxylamine will reach 205,000 tons, with a compound growth rate of 13.5% between 2024-2030.

Domestic substitution under process route restructuring. Electronic grade hydroxylamine is subject to extreme purity requirements at the ppb/ppt level, 2-3 year long cycle fab certification, and high-risk production safety barriers. The effective supply of the industry has been tight and highly concentrated for a long time. Overseas leader BASF's production capacity is physically embedded in the main caprolactam device. While it lacks motivation to independently expand production, it is also facing high energy and carbon tax cost pressure in Europe, and supply elasticity is weakening. Domestic enterprises have switched to a green cycle industry chain centered on ketoxime hydrolysis through the underlying process route, which not only realizes closed-loop use of materials and independent supply of hydroxylamine, eliminating physical dependence on the main device, but also drastically reducing total cost pressure. After crossing the barriers of purity and certification, it is expected that the share will penetrate rapidly.

Domestic production volumes have filled the total volume gap, and there is still a structural shortage in high-end supply. On the supply side, under the assumption that BASF will maintain a stock production capacity of about 7,200 tons/year, domestic production expansion has become the core source of global supply growth. Driven by this, the gap between global supply and demand may gradually converge. However, the actual effective supply of high-end products such as G5 grade is still deeply constrained by extreme purity control, process adaptability, and long-term customer certification barriers for fabricators. On the price side, short-term tight supply and demand will support product prices to maintain an upward channel. With the concentrated implementation of domestic production capacity after 2028, product prices are expected to face some downward pressure, but due to their technical barriers and electronic-grade material properties, the price center will still have a significant premium over traditional industrial-grade products.

Zhongtai Securities: Pharmaceuticals|Medical Devices Sector 2026 Third Quarterly Report Summary: Steady Revenue Recovery, Profit Improvement and Expansion

Domestic negative factors continue to be digested, revenue in the equipment sector has been steadily recovered, and the scope of profit improvement has been further expanded. The revenue of listed medical device companies in the first three quarters of 2026 was 20.312 billion yuan, up 8.22% year on year, after deducting non-net profit of 23.899 billion yuan, up 10.92% year on year. The different sub-sectors are clearly differentiated, with revenue growth rates from high to low value consumables (+18.45%), medical equipment (+9.60%), high-value consumables (+2.06%), and in vitro diagnostics (+1.83%); after deducting non-net profit growth from high to low, the growth rate for low-value consumables (+70.37%), in vitro diagnostics (+60.63%), medical equipment (-2.03%), and high-value consumables (-3.25%). Among them, low-value consumables are still mainly driven by glove volume and price resonance and a low base. Revenue from non-gloves varieties continued to grow, and profits in the first three quarters were still under pressure, but there was a slight improvement in Q3; demand for medical equipment recovered and the revenue side maintained rapid growth; profits in the first three quarters were still under pressure but improved year-on-year in Q3; revenue from high-value consumables remained steady, and innovative product sales and overseas expansion continued to increase; in vitro diagnosis revenue margins stabilized, and conventional IVD revenue and profits continued to recover after ICL was excluded.

Revenue continued to recover in 2026Q3, and all four major sub-sectors achieved positive growth after deducting non-net profit. In 2026Q3, the overall revenue of the medical device sector increased 9.00% year on year, and after deducting non-net profit, increased 24.92% year on year. The revenue growth rate of the four core sub-sectors from high to low was low value consumables (+20.75%), medical equipment (+8.40%), in vitro diagnosis (+2.56%); after deducting non-net profit, the growth rate from high to low was in vitro diagnosis (+130.82%), low value consumables (+75.86%), high-value consumables (+11.36%), and medical equipment (+4.73%). Low-value consumables continue to be driven by the glove boom, and the high increase in in-vitro diagnosis profits still contributed by a low ICL impairment base; the profit growth rate of high-value consumables and medical equipment changed from negative to positive, and the scope of sector profit improvement was further expanded.