What are the main lines of the A-share market in December? The latest strategy of brokerages is coming

On the last trading day of November, the market maintained a volatile pattern, and the hot spots in the early stage were clearly differentiated. Northbound funds flowed unilaterally in the afternoon, and small and medium-cap varieties showed signs of stabilization.

Looking ahead, many institutions believe that the current round of A-share rebound has not yet ended, but the upward momentum may weaken month-on-month in the short term. In addition, December is an important time period for the organization to lay out for next year, and it is recommended to focus on the new energy vehicle industry chain and innovative drugs and other sectors.

The Shanghai Composite Index edged up 0.36% in November

Looking back at the trend of the A-share market in November, the Shanghai Composite Index rose for 12 of the 22 trading days of this month, and the overall increase was 0.36% during the period;

The Shenzhen Component Index rose for 9 days, during which it fell 1.39% as a whole;

The GEM index fell 2.32% as a whole during the period.

According to Wind data, in terms of sectors, sub-new stocks (up 16.96% monthly), display panels (up 12.53% monthly), and humanoid robots (up 12% monthly) were among the top gainers this month, while insurance (down 7.4% this month), banks (down 6.29% monthly), and lithium mines (down 4.74% this month) were among the top decliners.

In terms of individual stocks, after excluding the new stocks listed this month, Kaihua Materials (monthly increase of 512%), Kunbo Seiko (monthly increase of 499%), and Zhisheng Information (monthly increase of 268%) were among the top gainers;

The top three decliners were Lifang Holdings (monthly decline of 52%), Deguan New Materials (monthly decline of 46%), and Belden Energy (monthly decline of 41%).

In terms of funds, in the trading day in November, northbound funds sold a total of 1.777 billion yuan, including a net inflow of 4.581 billion yuan in Shanghai-Hong Kong Stock Connect and a net outflow of 6.357 billion yuan in Shenzhen-Hong Kong Stock Connect.

The A-share rally is not over yet

Looking forward to December, Haitong Securities said that the current round of market has not yet ended, and the market is slowly unfolding at the end of the year and the beginning of the year. First of all, even during the volatile market or bear market in the history of A-shares, there are still at least two upside opportunities with an increase of about 10-15% from an annual perspective, such as 2011, 2018 and 2022. On the other hand, this year, as of 2023/11/25, there is only one wave of market, including the overall market from the end of October last year to the end of January this year, and the structural market from February to early May this year.

Secondly, it is now the end of the year and the beginning of the year, and investors are very concerned about and looking forward to the stock market at the end of the year and the beginning of the year. Judging from the review of the restless market at the end of the year and the beginning of the year, the market at the end of the year and the beginning of the year usually occurs every year, and the reason behind it is that the end of the year and the beginning of the year are often the time window for major meetings, and at the same time, the disclosure of A-share fundamental data from November to March is less, and the risk appetite of investors at the beginning of the year is relatively higher. If the third and fourth quarters of the market are weak, the spring market starts earlier (late October or early November), and if the third and fourth quarters are better, the spring market starts later (mid-to-late January or early February). Due to the weak performance of A-shares from May to October this year, the current round of year-end and New Year market may start earlier.

Guojin Securities also believes that the current round of A-share rebound has not yet ended, but in the short term, the upward momentum may weaken month-on-month, maintain a cautious and optimistic attitude, and recommend not chasing high, but dare to intervene in the dip. In terms of style, looking forward to December and even the first quarter of 2024, judging that the growth style will still be the main line of the market, among which, it is expected that the logic of thematic investment, small and medium-cap, and even micro-cap will remain unchanged with a high probability.

CICC pointed out that the valuation of A-shares is still at a historically extreme level, and there is more room for repair in the future. Although the A-share market has fluctuated in the short term after a sustained rebound in the early stage, the current asset prices still imply the cautious expectations of investors, and there is no need to be pessimistic about the subsequent market performance.

What are the main lines of the A-share market in December? It was found that many brokerages mainly recommended three major directions: smart cars, innovative drugs and technology.

CICC believes that the rebound in risk appetite is expected to drive the A-share small-cap style to continue to dominate, but it needs to pay attention to the degree of valuation differentiation of the small-cap style, and historical experience shows that a large valuation divergence may also bring about short-term style rebalancing. At the industry level, it is recommended to pay attention to the investment opportunities in the semiconductor industry chain and the smart car industry chain, as well as innovative drugs that benefit from the company's overseas expansion and the easing of the interest rate environment.

Guojin Securities said that it would maintain a firm grasp of the growth theme of "grabbing a rebound". Growth is likely to rotate, and it is recommended to have a balanced allocation, including: automobiles, especially the certainty of the "smart car, unmanned" track, and the introduction of policy support documents for unmanned driving, which will be conducive to accelerating the expansion and penetration of the industry; AI is especially optimistic about electronics, media and computers, and will benefit from the recovery of the inflection point of the industry's prosperity and the acceleration of the upgrading of AI technology; pharmaceutical and biotechnology, especially CXO and innovative drugs, will benefit from the downward trend of the US interest rate pivot and the increase of institutional positions; mechanical automation (including robots, Industrial machine tools, etc.) are more likely to benefit from the bottoming out of the industry's business cycle, and power equipment is expected to rebound, benefiting from the marginal improvement of supply and demand.

Galaxy Securities said that the sectors benefiting from favorable policy expectations + good economic repair are the main directions of allocation in December. The investment strategy should focus on low-valuation value stocks + growth value stocks in the sector that benefit from policy support. It is recommended to strategically deploy value stocks in sectors such as consumption, technology, brokerage, and coal.