Morning Brief

MarketResearch MorningBrief [November11th,2024] MorningBrief ZHOUJinyu021‐38674924zhoujinyu011178@gtjas.comS0880516080007 Contents TopRecommendations ●MacroResearch:UpdateReport ●A‐ShareStrategyWeekly:UntilThisYearend ●OverseasMarketStrategy:HongKongStocks ●ActiveQuantitativeResearch:UpdateReport ●Active(Passive)AssetAllocation:SpecialReport ●ComputerSector:UpdateReport ●PublicUtilitiesSector:In‐depthReport ●WarIndustrySector:UpdateReport LatestReports ●Luolai(002293):OW,TP@RMB8.40↑ ●WensFoodstuff(300498):OW,TP@RMB22.20↑ ●Optowide(688195):OW,TP@RMB61.50↑ ●TunnelEngineering(600820):OW,TP@RMB8.71 ●ChinaChemicalEngineering(601117):OW,TP@RMB10.73 ●SMICS(688981):OW,TP@RMB136.80 ●KweichowMoutai(600519):OW,TP@RMB2,240.12 ●DLGExpo(600826):OW,TP@RMB9.49↑ ●PetroChina(601857):OW,TP@RMB10.54 ●YihuaChemical(000422):OW,TP@RMB21.28 SectorRatingsoftheMonthMarketStrategyWeeklyViewpoint 本报告内容译自同日发布的简体中文报告《国泰君安晨报》，报告观点及内容如有任何不一致的地方，一律以该简体中文版报告为准。 TopRecommendations MacroResearch:UpdateReport OnNovember8th,the12thSessionoftheStandingCommitteeofthe14thNationalPeople’sCongresspassedtheresolutionoftheStandingCommitteeonapprovingthe“StateCouncil’sProposalforanIncreaseintheLocalGovernmentDebtCeilingtoReplacetheExistingHiddenDebts”,whichwillincreasethelocalgovernmentdebtceilingbyRMB6trntoreplacetheexistinghiddendebt,andwillembezzleRMB800bneveryyearfromthenewlocalgovernmentspecialbondsfordebtreductionforthenextfiveyearsstartingfrom2024. ThetotalamountofhiddenlocalgovernmentdebtstobereducedisRMB14.3trn,andtheRMB10trndebtreductionarrangementbythecentralgovernmentthistimeaccountsfor70%ofthetotalamount.Thisindicatesthatthelocalgovernmentsareyettoreducetheremaining30%debtsbythemselves.Therefore,sucharrangementbythecentralgovernmentnotonlyprovidesabottomlinesupport,butcanavoidthemoralhazardfromthelocalgovernmentsaswell. A‐ShareStrategyWeekly:UntilThisYearend A‐sharemarketmayrunintoshort‐termcorrections,andthegeneralmarkettrendwillbeclearbytheendofthisyear.Inlinewithourpredictionforthereboundoflarge‐capstocksinourstrategyreportdatedonNovember3rd,ShanghaiCompositeandChiNextreboundedby5.51%and9.32%thisweek.Thechangeoftheauthority’sattitudetowardeconomicsituationandcapitalmarketisthecornerstoneforA‐sharemarkettoleveloffandfollowamedium‐termN‐shapedcurve.Newsupportivepolicypackagehasalsobeenlaunched.Meanwhile,Trump’selectionasUSnewpresidenthasreducedgeopoliticalriskbutwillincreasetheUS‐Chinaconflictsineconomic,tradeandscience‐techsectors,makingitunnecessaryandunrealisticfortheChinesegovernmenttoresorttopolicytightening.Therefore,aftertheNPCStandingCommittee’sconferenceandbeforetheCentralEconomicWorkConferencethisyearend,theA‐sharemarketinvestorswillcontinuetospeculateonnewpolicies,resultinginmarketfluctuationsandsectorrotations.Thegeneraltrendofthemarketwillbecomeclearbytheendofthisyear,seeingtowhethertheauthoritydecidestomoveonfrom“monetaryeasing”to“creditexpansion”. Thecentralgovernment’seffortsonlocalgovernmentdebtreductionwillimprovelong‐termeconomicgrowthexpectationandmakeroomforcreditexpansion.Undertheguidanceof“high‐speeddevelopmentintohigh‐qualitydevelopment”,theearlycreditcontractionoflocalgovernmentsandrealestateindustryinthepastthreeyearshasdepressedfinancingandriskappetitetosomeextent.Thelarge‐scaledebtreductioneffortsbythecentralgovernmentareexpectedto(1)reducegovernmentdebtsbyRMB2.8trnayearinthefirstthreeyears(around2.1%ofGDP,amoderateamountcomparedtopreviousfiscalstimulusanddebtreduction),(2)effectivelyreducetheinterestexpensesofthelocalgovernmentsforthemtoputmoreresourcesoneconomicconstructionandsocialwelfare,and(3)makeroomforthefinancingofthegovernment,especiallythecentralgovernmentinfuture.Asforthestockmarket,itwilldismissmarketconcernoverdebtcontractionandbalancesheetdecay,and improvethelong‐termeconomicgrowthexpectation.Anyway,itwilltakesometimeandrelyonstrongerandfaithfullyenforcement. Duringthecontinuedshort‐termmarketfluctuationsandsectorrotation,wepreferlarge‐capstockstoreaprelativegains.Tobespecific,werecommend(1)(bettercompanyassetqualityaftergovernmentdebtreduction)construction,environmentalprotectionandITapplicationinnovationsectors;(2)(turnaroundofbusinessperformancein2025)electronic,automobile,constructionmachineryandalternativeenergysectors;(3)(reboundofstockvaluationdrivenbyliquidityeasing)telecomoperator,railwayandexpresswaysectors. Asforinvestmentthemes,werecommend(1)“TeslaIndustryChain”:autoparts,robotandsmart‐drivingsupplychain;(2)“LocalGovtDebtReduction”:municipalengineering,ITapplicationinnovationandother“newqualityproductiveforces”;(3)“ZhuhaiAirshow”:assemblyandunmannedequipmentandsmartequipmentindustrychain;(4)“WinterSportsEconomy”:stadiumandsportsgrounddesignandconstruction,wintersportsequipment,andwintersports‐relatedtourism. Risks:bigger‐than‐expectedrecessionofoverseaseconomies;globalgeopoliticaluncertainties. OverseasMarketStrategy:HongKongStocks TheconfirmationofU.S.presidentialelectionresult,thelaunchingoflocalgovernmentdebtreductionpolicyandtheclarificationofdomesticpolicydirectionwillhelptoenh