CITIC Securities: Expectations of Fed rate cuts heating up, favorable for domestic easing expectations, awaiting important meetings this week

According to the financial news app Zhitong Finance, CITIC Securities released a research report stating that the market halted its continuous adjustment trend last week. The new margin trading rules issued by the CSRC signaled market protection, and the increasing expectation of a Fed rate cut also favored domestic easing expectations. A-share market saw a slight net inflow of funds, with investors waiting for important meetings this week. Key areas of focus include gold, electricity, telecommunications operators, banks, the Apple supply chain, Huawei automotive, and smart driving.

Recently, long-term government bond yields were blocked after a recent decline, leading to intensified differentiation in dividend sectors. Sectors with stable performance and negative profit growth, such as coal, have shown significant adjustments. Overall, CITIC Securities believes that patience is still needed for domestic demand fundamentals to recover, with signs of marginal slowdown in external demand. The market's major opportunities still require waiting, and in the next phase, attention needs to be paid to the Fed's rate cut expectations, whether the RMB exchange rate can stabilize and rise, and whether China's monetary and fiscal policies will see significant tightening.

The market halted its continuous adjustment trend last week. Trading volume and valuation indicators are close to historical extremes, with the CSRC issuing new margin trading rules and marginal improvement in overseas liquidity. The CSRC has legally approved the suspension of securities lending and borrowing business by China Securities Finance Corporation, further strengthening counter-cyclical regulation of margin trading.

The weak growth in US non-farm payrolls in June and consecutive declines in inflation data have led to continued economic cooling, bringing about marginal improvement in overseas liquidity. At the same time, recent speeches by Federal Reserve Chairman Powell at events like the ECB Central Bank Forum have boosted market expectations of a rate cut. Reviewing the performance of major asset classes and A-share internal industries under previous rate cuts, overall, US stocks have performed well among various asset classes, with the food and beverage sector in A-shares historically performing well.

The market is anticipating strong reforms at the Third Plenary Session of the 7th Central Committee of the Communist Party of China. The market is focused on whether economic and profit expectations can improve after the meeting, with attention on new productive forces and the direction of fiscal and tax reforms.

Stock prices in July were significantly affected by interim report performance, with a further focus on stable performance in the dividend sector and significant adjustments in sectors with negative profit growth, such as coal. Overall, CITIC Securities believes that patience is still needed for the recovery of domestic demand fundamentals, with signs of marginal slowdown in external demand. The market's major opportunities still require waiting, and in the next phase, attention needs to be paid to the Fed's rate cut expectations, whether the RMB exchange rate can stabilize and rise, and whether China's monetary and fiscal policies will see significant tightening. Key areas of focus include gold, electricity, telecommunications operators, banks, the Apple supply chain, Huawei automotive, and smart driving