Investment Strategy: Focus on the rotational spread of Hong Kong stocks in five major directions, including the Internet and semiconductor equipment materials

The Zhitong Finance App learned that Societe Generale Securities released a research report saying that in the current “healthy cow” environment, various sectors need to rotate alternately and move upward in order for the market to move more smoothly and sustainably. Looking back, with the concentrated release of the boom in the field of new kinetic energy, there are still many segments worth exploring in the technological growth sector, and structure is more important than rhythm. However, after experiencing extreme differentiation in the early stages, if the market is to go further and be healthier, all sectors still need to “blossom more” and rotate upward alternately, so that “healthy cows” can be interpreted more fully.

Therefore, the subsequent layout is based on the idea of rotational diffusion, which focuses on the spread of the main line of AI and the main line of growth. After experiencing internal segmentation in the early stages, the subsequent focus was on laying out the main AI line using the idea of diffusion, focusing on rotating diffusion in five major directions, including the Hong Kong stock Internet, semiconductor equipment materials, software applications, innovative drugs, and the new energy industry chain.

Societe Generale Securities's main views are as follows:

1. “Healthy Cows”: Structure is more important than rhythm

The market structure differentiation was interpreted to the extreme this week. The differentiation between the technology growth sector represented by TMT and procyclical sectors such as consumption, cycle, financial real estate, etc., has further increased, while the computing power sector represented by communications and electronics has outperformed by a large margin.

What is behind this market characteristic is that after experiencing transformation and upgrading in the past few years, the domestic economy began to unleash its economic advantages in the field of new kinetic energy, setting the background for this round of “scientific and technological growth bulls.” Since this year, China has continued to strengthen its global competitiveness in various fields such as AI, semiconductors, robotics, military industry, innovative pharmaceuticals, etc., and industrial highlights have continuously emerged, driving the revitalization of market confidence while also transforming it more substantively into a boom advantage in the field of new kinetic energy. In 25Q1, the net profit growth gap between the new kinetic energy sector represented by the technology manufacturing sector and the old kinetic energy sector was corrected to 4%, and further rose to 8.3% in 25Q2. The economic advantage in the field of new kinetic energy continues to be unleashed, laying the groundwork for this round of “technological growth bulls”.

Among these, AI upstream computing power is the field where the boom was first realized and unleashed, and its economic advantage over other sectors was further highlighted, and as a result, it has become the core direction of centralized pricing in the recent market.

However, under extreme differentiation, market volatility has also increased markedly, and the Shanghai Stock Exchange's current trend rate hit a new high since the Japanese round of upward movement on June 23.

What is behind the increase in volatility is, on the one hand, that after experiencing previous continuous increases, the market needs to be digested and consolidated through short-term fluctuations.

More importantly, in this “healthy cow” environment, all sectors need to rotate and move forward alternately in order for the market to move more smoothly and sustainably. Looking back, with the concentrated release of the boom in the field of new kinetic energy, there are still many segments worth exploring in the technological growth sector, and structure is more important than rhythm. However, after experiencing extreme differentiation in the early stages, if the market is to go further and be healthier, all sectors still need to “blossom more” and rotate upward alternately, so that “healthy cows” can be interpreted more fully.

Therefore, the subsequent layout is based on the idea of rotational diffusion, which focuses on the spread of the main line of AI and the main line of growth.

2. Focus on rotational diffusion in five major directions: Hong Kong stock Internet, semiconductor equipment materials, software applications, innovative drugs, and the new energy industry chain

(1) AI diffusion: Hong Kong stock Internet, semiconductor equipment materials, software applications

After experiencing internal segmentation in the early stages, the subsequent focus was on laying out the main AI line with the idea of diffusion, including the spread of domestic computing power chains (semiconductor equipment materials) and the spread of domestic midstream and downstream applications (Hong Kong stock Internet, software applications):

Hong Kong Stock Internet: Since June, the Hong Kong Stock Internet has continued to outperform the A-share TMT industry chain. Following that, the Hong Kong Stock Internet has multiple correction logic: First, a new round of US interest rate cuts is expected to start, which is beneficial to the Hong Kong stock Internet, which is sensitive to external liquidity and was previously heavily suppressed; second, Ali's latest quarter's cloud revenue and capital expenses all exceeded market expectations, which is expected to drive the sector to gradually move from the “takeout internal volume” narrative to return to AI narratives and technological growth narratives, which is conducive to sector valuation repair; third, the AI market spreads to the middle and downstream, with the best scenarios and social ecology The Internet platform was launched as an application In the direction of first benefiting, the diffusion logic is smoother.

Semiconductor equipment materials: The domestic computing power beta market started, and domestic core leaders such as AI chips and GPUs took the lead in rising. Compared with North American computing power chain leaders, the increase is still low, and we have continued to pay attention for a long time. At the same time, the entire domestic replacement industry chain has benefited, and the market is expected to continue to deepen. Within the industry chain, emphasis is placed on diffusion towards lower upstream levels such as semiconductor equipment materials, etc., benefiting from the production capacity volume of domestic chips in the second half of the year, and there is a logic of supplementing the increase.

Software application: Since June, upstream computing power has continued to outperform midstream software services & downstream end-side applications. After the current upstream computing power market has been interpreted to the extreme, attention is being paid to the spread of midstream and downstream software applications. Focus on midstream software services (cloud computing, big models, AIAgent, SAAS) and downstream applications (consumer electronics, games, humanoid robots, smart healthcare, e-government) based on dimensions such as boom, follow-up catalysis, and stock price position.

(2) Innovative drugs

First, after early adjustments, the current level of congestion in the innovative drug industry chain has been reduced to a moderate level. This is a segment where emotional digestion is currently sufficient in the main line of growth.

Second, under the big innovation cycle, many innovative pharmaceutical companies' products have been approved for sale, the industrial chain has gradually entered the commercialization stage, and leading performance has already been released. At 25H1, leading companies in the innovative pharmaceutical industry chain represented by BeiGene Shenzhou, Pharmaceutical Kangde, and Hengrui Pharmaceuticals all had outstanding performance. Driven by new technology, innovative drugs and high-potential single products, the company's investment over the years has paid off, and the industrial chain is expected to enter a new round of performance release.

Third, the industrial chain will later have multiple catalysts such as interest rate cut transactions, industry conferences, health insurance policy adjustments, and external licensing transactions. On the one hand, the innovative drug industry conference in the second half of the year was intensive. Recently, WCLC (World Lung Cancer Conference) abstracts were released, and companies such as Dizhe Pharmaceutical and Fuhong Hanlin all announced excellent data on key products. The WCLC meeting in September and the ESMO (European Society of Medical Oncology) summary update are worth paying attention to. On the other hand, the adjustment of the health insurance catalogue and promotion of commercial insurance policies in the second half of the year were also important catalysts for the industry. At the same time, foreign licensing transactions have continued to progress this year. Among them, there is no shortage of major deals. Currently, it can be expected that there are still many high-quality domestically produced innovative drugs with potential opportunities to go overseas, and potential authorized transactions are worth looking forward to.

(3) New energy industry chain

First, within the main line of technological growth, TMT has outperformed manufacturing by a large margin since August. Subsequent manufacturing sectors are expected to attract “high cut and low” allocations of capital in pursuit of flexible returns with its own industrial logic. Among them, the new energy industry chain, as a sector with a lot of stagnant growth in the early stages, is expected to usher in rotational opportunities to make up for gains.

Second, judging from the interim report data, the signals of an accelerated clean-up of the industrial chain and an improvement in the supply and demand pattern have been further strengthened, and fundamentals are gradually coming out of the bottom. The supply experience in the new energy industry has accelerated in the past two years. Among them, 25Q2 for batteries, wind power components, etc., showed signs of inventory replenishment and increased capital expenditure. The operating rate may take the lead in reaching an inflection point, and performance is expected to stabilize first. The supply of new additions to the photovoltaic industry chain continues to slow. The inventory ratio, capacity utilization rate, and expansionary capital expenditure have all fallen to the bottom of history, and supply is being cleared at an accelerated pace.

Third, the “anti-internal circulation” policy attaches great importance to, the bottom of the inventory+production capacity cycle is clear, and the chips are fully cleared. Currently, the new energy industry chain is at a stage where profits and gaps are dulled and sensitive to advantages. Once policies that exceed expectations are implemented, the pessimistic expectations of the industry can be mitigated or even reversed, and the recovery space and slope of the entire sector is quite impressive.

Finally, new technology has to provide a powerful technological path for the industrial chain to break down internal competition and achieve quality and efficiency improvements. Empowered by new technology, the industry is expected to usher in a second growth pole, helping the sector return to the narrative of technological growth. Technology iteration promotes battery efficiency, and cost reduction and efficiency are the core logic of the development of the new energy industry. In terms of photovoltaic cells, BC and HJT technology are already in the early stages of quantitative transformation and are expected to drive the photovoltaic industry to reduce costs and increase efficiency. In terms of lithium batteries, solid-state batteries will become the key direction of technological upgrading in the industry. With the iterative development and gradual implementation of new technologies, the industry is expected to usher in a second growth pole. Technological upgrading and market pattern optimization will become core elements of enterprise competition, helping the sector return to the narrative of technological growth.