China Securities Co., Ltd.: The bottom of the market has been established earlier, strategically need to break out of bear market thinking.

China Securities Co., Ltd. released a research report stating that after a rapid recovery in the previous period, the market experienced some fluctuations last week, but overall, the market remains strong. In the future, attention will be given to the resumption of work after the Spring Festival, economic data, and the implementation of policies during the Two Sessions. Overall, the market bottom has been established in the previous period based on various conditions. Strategically, it is necessary to move away from bearish thinking, and tactically, patience is required. Rome was not built in a day; external central bank interest rate cuts are clear, internal real estate stability also requires time. Industries to watch include electricity, oil, coal, media, communications, computers, electronics, and defense. Key points from China Securities Co., Ltd. are as follows: Foreign capital has shifted from pessimism to neutrality, and more signs of fundamental improvement are needed for long-term funds to enter the market. Last week, northbound capital had a net inflow of 23.55 billion yuan, with net inflows exceeding 10 billion yuan on Tuesday and Thursday. The structured portfolio funds had a net inflow of 7.99 billion yuan, while trading funds had an inflow of 18.16 billion yuan. Currently, hedge funds' expectations for Chinese assets have shifted from extremely pessimistic last year to neutral. For long-term funds, more signs of fundamental improvement are still needed to support further inflows. The Two Sessions are still the focus of market trading, and the focus will shift from micro liquidity and policy expectations to fundamentals in the future. The market's focus since the beginning of the year has been mainly on the deterioration and recovery of micro liquidity, gradually shifting to expectations for the Two Sessions' policies, especially with various government meetings and documents opening up the market's imagination recently. As fundamental data and first-quarter performance forecasts increase in March, the market's focus will gradually shift to fundamentals. Currently, macro and mid-term economic data remain differentiated, with March PMI data showing weaker manufacturing but stronger service industries than expected, travel data remains decent, and previous real estate policies have intensified but new home sales have not followed suit, hence further policy adjustments are awaited. In terms of industrial policy direction, promoting the development of "new productive forces" is the current main trend. The meeting of the Politburo of the Communist Party of China on February 29 emphasized the need to vigorously promote the construction of a modern industrial system and accelerate the development of new productive forces. In local government work reports, provinces' plans for new productive forces aim to improve their economies through measures such as upgrading traditional industries, digital transformation, and future industry layout. Overall, it is expected that policies related to new productive forces will continue to be implemented in the future. The rapid decline in bond yields remains a focus of allocation, but logic in certain industries is beginning to emerge. Recently, with expectations of loose policies, both long and short-term interest rates have seen further reductions, with the 30-year treasury rate dropping to 2.49% and the 10-year rate dropping to 2.37%. The continued decline in bond rates highlights the advantages of high dividend sectors. Currently, it is still advisable to focus on dividends for allocation, but logic in certain industries is beginning to emerge. Recent policies have focused on large-scale equipment renewal and the issue of upgrading consumer goods, mainly in the machinery and production equipment sector, as well as the automotive and home appliance sectors in terms of consumer goods. In terms of future allocation strategies, there may be a gradual shift from oversold rebounds, general recoveries, to a focus on industry outlook and first-quarter reports such as computing power, electronics (Huawei's chain/storage/semiconductor equipment), panels, Siasun Robot & Automation, smart cars, among others. Risk warning: Unexpected downturn in the real estate sector, overseas market risks, geopolitical risks, etc.