In September, as the Asian stock index plunged and global stocks experienced a significant rally, speculation within the market suggested that A-shares could open on a high note in OctoberObserving various securities firms' investment strategies for October, it becomes apparent that the general sentiment leans towards optimism, with many analysts believing that the short-term adjustment phase is nearing its endFurthermore, the securities firms have been actively releasing their top stock picks for October, revealing a preference for leading companies across different industries, with several stocks receiving multiple recommendations.

Market Expectations for Interest Rate Stabilization

Surge in Global Markets Amidst New Trends

During the period when A-shares were suspended due to the National Day holiday, major global stock indices painted a rosy picture, which starkly contrasted with their sluggish performance earlier in the year

Analysts suggest that the recent rebound in stock indices may be linked to a cooling expectation regarding interest rate hikes by the Federal Reserve.

For instance, following a decline in the ISM Manufacturing PMI to 50.9% and a drop in consumer spending in the U.Sduring September, Fed Vice Chair Lael Brainard indicated that the Federal Reserve is closely monitoring the effects of its policy decisions on the global economy and financial systemAs a result, the market has adjusted its expectations for further rate hikes by the Fed.

Simultaneously, treasury yields that reflect market risk appetite have begun to decline after a sustained uptickData from Wind shows that the yield on the 10-year U.STreasury has dropped from a peak of 3.97% on September 27 to 3.62% by October 4. This shift has further contributed to the bullish sentiment emerging in the stock markets.

In addition to U.S

• Energy Crisis Meets Fed's Monetary Tightening
• Global Stock Markets Surge: Will A-Shares Follow?
• U.S. Inflation Nearing Its Peak
• Kunlun Wanwei's AI Ambitions and Hurdles
• Battery Firm Targets $1B Off-Road EV Market

stocks, major stock indices in Europe and Asia also entered a rebound modeThe Hang Seng Index, for instance, witnessed its largest gain in nearly a decade with a 5.90% spike on October 5. Since 2010, there have only been six trading days when the Hang Seng Index surged by over 5%, and this latest leap secured its place as the third highest gain in that timeframe.

June-August Adjustment Followed by September "Squat"

Short-Term A-Share Rebound Anticipated

During September, the A-shares were adversely affected by fluctuations in the global market and impending interest rate hikes from the Fed, resulting in accelerated declinesData from Wind indicates that the Shanghai Composite Index, Shenzhen Index, and ChiNext dropped by 5.55%, 8.78%, and 10.95%, respectively, marking their largest monthly declines in nearly a year.

Moreover, trading volumes dwindled considerably

Statistics reveal that the total trading volume for A-shares in September was 15.27 trillion yuan, the second lowest for the yearThe average daily trading volume was merely 727.1 billion yuanNotably, between September 19 and September 30, daily trading volumes consistently fell below 700 billion yuan.

As these indices adjusted, it highlighted the overall valuation advantage within the A-share marketAccording to data sourced from Wind, as of September 30, the valuations of the Shanghai Composite, Shenzhen, and ChiNext were 12.31 times, 34.72 times, and 52.06 times earnings, respectively—down 18%, 9.6%, and 40% from the start of the year.

With the global market experiencing a broad recovery from the previous downturn, the question arises: can A-shares expect a rebound? Recent strategies revealed by brokers reflect overall optimismFor example, Shanxi Securities notes that the current trading volume in the A-share market remains around the historical low of 650 billion yuan, indicating that previously high-prospect sectors have adjusted to undervalued, less crowded areas, suggesting that October may serve as a favorable observation and allocation period.

Guoyuan Securities echoes this sentiment, highlighting the stability of economic data from August that hasn’t spiraled downward like the drastic conditions noted at the end of April

With lingering concerns regarding tightened liquidity abroad and key domestic conferences on the horizon, the market is possibly entering a phase ripe for stabilization and potential recovery, thereby entering an advantageous period for positioningThey went as far to suggest that opportunities for left-side positioning exist, advocating for a strategy of gradual accumulation.

Securities Firms Enhance Recommendations for October's Golden Stocks

Potential Resurgence of Themed Stocks

In light of the current backdrop, many securities firms believe that stocks in the new energy and technology sectors are poised for a comebackAccording to an incomplete tally, as of now, 45 firms, including Everbright Securities, Western Securities, China International Capital Corporation, CITIC Securities, Huatai Securities, and others have rolled out their top stock picks for October, covering a total of 275 stocks

The focus remains predominantly on fields such as new energy vehicles, photovoltaics, and semiconductors.

For instance, when it comes to the new energy vehicle sector, there are nine companies related to automotive parts, such as Aikedi and Baolong Technology, while four companies are connected to lithium batteries, including Contemporary Amperex Technology and Canaan IncIn the photovoltaic field, five companies like Aiex and Longi Green Energy have been highlighted; the semiconductor sector also boasts five notable players, including North China Device and Haiguang Information.

Furthermore, the consumer stocks also received abundant endorsements from the brokers, with ten companies within the home appliance and liquor segments, such as Haier, Midea Group, and Kweichow Moutai among others included in the recommendations.

Overall, a review reveals that these highlighted companies exhibit a common characteristic of having previously encountered significant declines

Over the third quarter, sixteen stocks experienced a drop exceeding 10%, accounting for nearly half of the total selectedNotably, three of these stocks saw their prices fall more than 30%.

PULA YAH and Others Received Joint Recommendations

Companies with Stable Long-term Upward Trends

Typically, being jointly recommended by multiple securities firms reflects a company’s heightened visibility in the marketWithin the framework of October’s golden stocks, a number of individual stocks garnered recommendations from two or more brokerage firmsReports indicate that among the 275 golden stocks, 59 were endorsed by two or more brokers, with 20 receiving recommendations from three or more firmsProminent mentions include PULA YAH and Kweichow Moutai, which collectively received seven and five endorsements from brokers respectively.

It’s noteworthy that many of the stocks receiving multiple broker endorsements tend to be leaders within their specific niches, as firms focus on their competitive market advantages

Take PULA YAH for instance, they are considered a leading player in the cosmetics industry, with endorsements indicating a potential shift as international brands fortify their positions against high-quality domestic brands, substantiated by rising popularity during significant sales events.

Similarly, Desay SV also received recommendations from four brokersKnown for its strength in the smart cockpit sector, analysts have highlighted its competition in rapid autonomous vehicle development as having promising applications in domestic manufacturers.

Underneath the substantial broker emphases lies a significant history of stable stock price increases for both companiesFor instance, since 2018, the stock price of PULA YAH has shown a consistent upward trend with a cumulative increase of 783%. From 2019, the stock price of Desay SV has similarly witnessed a sustained rise, increasing by 751% to date.

(Note: The stocks mentioned in this article are for illustrative purposes and do not constitute buy or sell recommendations.)