Huajin Securities: The spring market in January next year may continue to grow in technology and dominate some cyclical industries

The Zhitong Finance App learned that Huajin Securities released a research report saying that at present, the spring market in January next year may continue, and A-shares may fluctuate strongly. The bank believes that technological growth and some cyclical industries may have a relative advantage. First, technological growth and industrial trends in some cyclical industries are likely to continue to rise in January next year: first, the technology industry trend represented by artificial intelligence is likely to continue to rise in the short to medium term; secondly, the non-ferrous metals, chemicals and other industries may continue to rise in January next year, driven by the Federal Reserve's interest rate cuts and AI demand. Second, catalysing themes such as commercial aerospace and controlled nuclear fusion is likely to continue in January next year. Third, in the first quarter of next year, the fund may continue to increase positions in technology growth and some cyclical industries.

The main views of Huajin Securities are as follows:

In retrading history, when the spring market started early, A-shares performed well in January, mainly affected by factors such as policies, external events, and liquidity.

(1) When the spring market started early, the performance of A-shares in January was mostly strong. (2) The main factors affecting the trend of A-shares in January were policies, external events, liquidity, etc. First, policies and external events are the core factors affecting the A-share trend in January: First, positive policies and external events may lead to a rise in the Shanghai Stock Exchange Index, such as easing trade frictions between China and the US in 2019 and optimization of the epidemic prevention policy in 2023; second, if external risk events occur or policies are tightened, it may lead to the end of the spring market, such as the European debt crisis in early 2010, the restart of the 2014 IPO, the new regulations dissolution in 2016, the COVID-19 pandemic in early 2020, and the new “Nine Rules” in 2025. Second, liquidity also had an important impact on the trend of A-shares in January: liquidity easing may cause A-shares to rise in January; conversely, A-shares may show weak performance in January. Third, the impact of economic and profit fundamentals on the trend of A-shares in January was limited.

Looking at the moment, the spring market in January next year is likely to continue, and A-shares may fluctuate strongly.

(1) Positive policy expectations may rise in January next year, and external risks may be limited. First, positive policies may be further introduced and implemented in January next year: first, more provincial “15th Five-Year Plan” planning proposals may be released in January next year; secondly, policies to boost consumption may also be introduced and implemented; finally, policies to ease mobility at the end of the year and the beginning of the year may be further implemented. Second, external risks may be relatively limited in January next year: first, central banks around the world may further ease in January next year; second, Sino-US relations may remain stable in January next year, and Sino-Japanese relations may still be tight, but the impact will be limited.

(2) Liquidity may be further relaxed in January next year. First, macro-liquidity may be further relaxed: first, the Federal Reserve is likely to continue to cut interest rates in January next year; second, the domestic central bank may cut interest rates further in January next year. Second, capital inflows to the stock market are likely to rise.

(3) The economy and profits may continue the weak recovery trend in January next year. First, the economy may continue to weaken in January next year. Second, corporate profit growth may continue to pick up in January next year: first, PPI growth may continue to pick up year on year; second, profits in technology and some cyclical industries may continue to improve.

Technological growth and some cyclical industries may dominate in January next year.

(1) Reviewing history. When the spring market started early, the growth performance of science and technology in January was relatively superior. First, according to statistics, when the spring market started early, firstly, the technology growth industry had a relative advantage in January; secondly, the industry that had an advantage in January also had a relative advantage in the overall spring market, while the industry that had an advantage in December did not clearly have an advantage in January. Second, the main factors driving the January industry's dominance in the spring market, which started early, were upward industry trends, theme catalysis, and increased fund positions.

(2) Looking at the present, technological growth and some cyclical industries may be relatively dominant in January next year. First, technological growth and industrial trends in some cyclical industries are likely to continue to rise in January next year: first, the technology industry trend represented by artificial intelligence is likely to continue to rise in the short to medium term; secondly, the non-ferrous metals, chemicals and other industries may continue to rise in January next year, driven by the Federal Reserve's interest rate cuts and AI demand. Second, catalysing themes such as commercial aerospace and controlled nuclear fusion is likely to continue in January next year. Third, in the first quarter of next year, the fund may continue to increase positions in technology growth and some cyclical industries.

Industry allocation: In January next year, it is recommended to continue to allocate industries such as technological growth, part of the cycle, and consumption in a balanced manner. (1) Currently growing power equipment, media, etc. have lower PEG. (2) Next January, it is proposed to continue the balanced allocation: first, industries such as machinery and equipment (robotics), military (commercial aerospace), electronics (nuclear fusion, energy storage), electronics (semiconductors, AI hardware), communications (AI hardware), computers (AI applications, satellite internet), media (AI applications, games), pharmaceuticals (innovative drugs), etc.; second, brokerage and consumption (food, trade, retail, social services) industries where policies and industrial trends may improve marginally.

Risk warning: Historical experience may not be applicable in the future, policies have changed beyond expectations, and economic recovery falls short of expectations.