Sector Positioning Still Outweighs Longs
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Following the National Day holiday, A-share volatility has intensified and the market lacks stable expectations, so Huatai Securities recommends maintaining neutral positioning and staying on the sidelines for now. Key focal points are whether daily turnover can return to RMB2tn, the earnings quality of AI hardware, the pace of Federal Reserve rate cuts, and the outcome of China-EU trade negotiations. On allocation, the report advises holding technology stocks, moderately raising exposure to high-dividend-yield (HDY) assets such as banks, nuclear power and coal, and prioritizing event-driven trades, including oil shipping, fertilizer and agriculture, plus export chains (new energy vehicles, solar) should the trade talks deliver a recovery. Independent upcycle plays include innovative drugs and shipbuilding/offshore engineering. In convertibles, valuation pressure on high-priced bonds has eased while the risk-reward of low-priced issues has improved; investors with low allocations may add modestly on dips, but overall exposure should not exceed neutral. Watch turnover, AI hardware earnings validation, the Fed's easing pace, and China-EU talks.