Morning Brief
Morning BriefContents TopRecommendations ●MacroResearch:UpdateReport●A‐ShareStrategyWeekly:UntilThisYearend(Nov10,2024)●OverseasMarketStrategy:HongKongStocks●ActiveQuantitativeResearch:UpdateReport●AirlinesSector:In‐depthReport●NonferrousMetalsSector:UpdateReport LatestReports ●Alibaba(9988.HK):OW,TP@HKD121.00●RoyalFlush(300033):OW,TP@RMB280.57●EverbestMachinery(002980):OW,TP@RMB37.93●ATCDI(603357):OW,TP@RMB12.46●Tencent(0700.HK):OW,TP@HKD460.00●HongqiChain(002697):OW,TP@RMB7.26↑●NewHope(000876):OW,TP@RMB11.97↓●CapolIntl(002949):OW,TP@RMB16.37●HangzhouOxygen(002430):OW,TP@RMB34.25↑●HongluSteelConstruction(002541):OW,TP@RMB23.80●Qingmu(301110):OW,TP@RMB57.00●HengtongOptic‐Electric(600487):OW,TP@RMB23.06↑ SectorRatingsoftheMonthMarketStrategyWeeklyViewpoint TopRecommendations MacroResearch:UpdateReport MuchfasterGDPgrowthin2024Q4mayleadtocompletionoftheyearlyGDPtarget.Intermsofexpenditureapproach,consumptionmaybestimulatedbythenationwidegovernment subsidies and regional restaurant coupons;infrastructureinvestmentmay remain resilient under the support of CSRC’s proposal of“twoRMB100bnexpenditures”;exportandmanufacturingindustryinvestmentmaybothenjoybetterdemandbeforetheriseoftariffs.Intermsofproductionapproach,theproductionindexofserviceindustrythisOctoberhityearlyhighof6.3%.Becausetherehasbeennorevivalofcateringconsumption,themaincontributorsshouldbetherealestateandfinancialindustries,whichwillcontinuetosupportthenear‐termGDPgrowthoftertiaryindustries. In2025,themarginaleffectofhomeappliancepurchasesubsidiesmaybecomesmaller,thecontinuedrecoveryofhomesalesisinquestion,andTrump’stariffthreatmaybecomereal.Therefore,theChinesegovernmentmayhavetocontinuetoresorttostimulatingdomesticdemand,whichmaybeconfirmedbytheresultsofthePolitburo’smeetingandCentralEconomicWorkConferenceinDecember2024. A‐ShareStrategyWeekly:UntilThisYearend(Nov10,2024) A‐sharemarketmayrunintoshort‐termcorrections,andthegeneralmarkettrendwillbeclearbytheendofthisyear.Inlinewithourpredictionforthereboundoflarge‐capstocksinourstrategyreportdatedonNovember3rd,ShanghaiCompositeandChiNextreboundedby5.51%and9.32%thisweek.Thechangeoftheauthority’sattitudetowardeconomicsituationandcapitalmarketisthecornerstoneforA‐sharemarkettoleveloffandfollowamedium‐termN‐shapedcurve.Newsupportivepolicypackagehasalsobeenlaunched.Meanwhile,Trump’selectionasUSnewpresidenthasreducedgeopoliticalriskbutwillincreasetheUS‐Chinaconflictsineconomic,tradeandscience‐tech sectors,making it unnecessary and unrealistic for the Chinesegovernmentto resort to policy tightening.Therefore,after the NPC StandingCommittee’sconference and before the Central Economic Work Conference thisyearend,theA‐sharemarketinvestorswillcontinuetospeculateonnewpolicies,resultinginmarketfluctuationsandsectorrotations.Thegeneraltrendofthemarketwillbecomeclearbytheendofthisyear,seeingtowhethertheauthoritydecidestomoveonfrom“monetaryeasing”to“creditexpansion”. Thecentralgovernment’seffortsonlocalgovernmentdebtreductionwillimprovelong‐termeconomicgrowthexpectationandmakeroomforcreditexpansion.Undertheguidanceof“high‐speeddevelopmentintohigh‐qualitydevelopment”,theearlycreditcontractionoflocalgovernmentsandrealestateindustryinthepastthreeyearshasdepressed financing and risk appetite to some extent.The large‐scale debtreductioneffortsbythecentralgovernmentareexpectedto(1)reducegovernmentdebtsbyRMB2.8trnayearinthefirstthreeyears(around2.1%ofGDP,amoderateamountcompared to previous fiscal stimulus and debt reduction),(2)effectivelyreducetheinterestexpensesofthelocalgovernmentsforthemtoputmoreresourcesoneconomicconstructionandsocialwelfare,and(3)makeroomforthefinancingof thegovernment,especiallythecentralgovernmentinfuture.Asforthestockmarket,itwilldismissmarketconcernoverdebtcontractionandbalancesheetdecay,andimprovethelong‐termeconomicgrowthexpectation.Anyway,itwilltakesometimeandrelyonstrongerandfaithfullyenforcement. Duringthecontinuedshort‐termmarketfluctuationsandsectorrotation,wepreferlarge‐capstockstoreaprelativegains.Tobespecific,werecommend(1)(bettercompany asset quality after government debt reduction)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)“Winter Sports Economy”:stadium and sports ground design andconstruction,wintersportsequipment,andwintersports‐relatedtourism. Risks:bigger‐than‐expectedrecessionofoverseaseconomies;globalgeopoliticaluncertainties. OverseasMarketStrategy:HongKongStocks Intheshortrun,theforexfluctuationswillcontinuetocurbtheriseofHongKongstocks.Butd
