Bank stocks collectively pull back; can the "seesaw" effect between dividend assets and growth sectors trigger rotation?

On November 3, major A-share indices showed weak performance, with AI-related sectors such as optical modules and chips continuing to decline, while new energy sectors such as batteries and photovoltaics took over from the robotics sector's rally at the end of October.

Leading stock Sungrow (300274.SZ) rose 5.63%, gaining for two consecutive days; in the power battery sector, EVE Energy (300014.SZ), Sunwoda (300207.SZ) and others rebounded for multiple consecutive days. State-owned bank stocks, which hit new highs on November 2, pulled back.

The "seesaw" effect between dividend assets and growth sectors, and whether the market can thereby launch a new round of rotation, have drawn investor attention.

Industry insiders interviewed by Yicai reporters believe that bank stocks were previously concentrated in by funds as dividend defensive assets, and after the third-quarter earnings disclosure period ended, some funds began flowing out of defensive sectors to buy back growth directions that had fallen sharply earlier; in the short term, oversold sectors such as semiconductors, communications equipment and electrical equipment/new energy can be watched.

Bank stocks collectively pull back

On the morning of November 3, ICBC (601398.SH) fell 2.53% and China Construction Bank (601939.SH) fell 2.65%, with the banking sector falling overall, changing its previous strong performance.

Li Qian, investment adviser at Guangzhou Yuesheng Wealth Management, told Yicai reporters that banks were previously concentrated in as dividend defensive assets, and after the third-quarter earnings disclosure period ended, some funds began flowing out of defensive sectors to buy back oversold growth directions. Although the market shows a characteristic of funds switching from high-level defensive sectors to low-level growth sectors, institutions generally characterize it as sentiment repair after an oversold decline rather than a trend reversal, and subsequent sector rotation may accelerate.

Yu Fenghui, consultant at the Hong Kong Stock 100 Research Center, said the "seesaw" is tilting again, but its nature is still a phased style rebalancing after an oversold decline. After the third-quarter reports landed, the dominant factor in the market is shifting from earnings verification to policy and liquidity expectations; the ChiNext and STAR Market "dual innovation" sectors have room for rotation, but still need relevant conditions to cooperate. Earlier, a small number of investors accumulated considerable floating profits in dividend assets, and as market risk appetite marginally improved, funds began shifting from low-volatility defensive sectors to oversold growth tracks.

Li Mingluo, investment manager at Cheese Fund, said whether "dual innovation" can have a new round of rebound still has room for continuation in the short term, but compared with confirmation of a new upward trend, it is more likely valuation repair and risk appetite recovery after a sharp decline. Regulatory authorities have further increased structural monetary policy tools, and the policy bottom has been further consolidated. Although broad-based indices fell in this morning's trading, more than 3,300 individual stocks across the market rose, with sectors such as gaming, batteries, film and television, and rare earths strengthening, while technology sectors such as semiconductors, CPO, storage and robotics led declines. Market funds have not left the market, but are making high-low sector switches under policy catalysis: withdrawing from high-level computing power hardware and banks and flowing to oversold AI applications, batteries and rare earths. The oversold condition of sectors is the most primitive driving force for a rebound, and combined with real policy support in terms of volume, it can be expected that technology stocks will recover gradually.

Expecting oversold repair after third-quarter reports

Regarding market style, market participants believe rotation is concentrated in leading stocks with certain earnings and stable cash flow.

Li Mingluo said this round of market action is still oversold repair under a stock-game environment. In the next stage, the focus is on whether semiconductors, domestic computing power, AI hardware and others can take over from robotics, especially whether turnover can be maintained continuously and whether the number of advancing stocks can maintain an advantage. In terms of allocation, it is not advisable to guess the bottom; investors are advised to control positions and build positions in batches, preferring leaders that are already profitable with solid cash flow, and to reserve cash to wait for confirmation of a new round of trend in the dual innovation market.

Yu Fenghui said that after the third-quarter disclosure period ended, the marginal pricing weight of earnings on the market has declined somewhat. Historical data show that the window period after the end of third-quarter disclosures is a stage with a relatively high probability of A-share gains, with 12 increases in 15 years. The reason is not simply whether earnings are good or bad, but that October declines had already priced in some negative factors in advance; after financial reports landed, new variables such as policy and liquidity began to dominate valuation repair. The market's main focus has shifted from whether earnings can be delivered to whether liquidity expectations can improve. "Dual innovation" has room for repair, but it still belongs to repair-oriented rotation, not the start of a new trend.

Li Qian said semiconductors and AI hardware have earnings support, policy support for the capital market is clear, and medium- and long-term funds entering the market as well as buybacks and increased holdings are all progressing. Restraining factors include tight external liquidity, a rising probability of a Federal Reserve rate hike in December, and some AI hardware sectors surging and then falling back during the rebound, showing that concerns about high valuations have not been fully eliminated. Going forward, attention can be paid to whether events such as the semiconductor expo in mid-November and the APEC meeting can provide new catalysts.

Deng Lijun, strategy analyst at Huajin Securities, said that looking back at history, A-share trends in November are mainly driven by policy and external events, fundamentals, liquidity and other factors. Liquidity may remain accommodative; in November the domestic central bank may continue to increase fund injection, and it is also difficult for the Federal Reserve to continue raising rates. In terms of market style, large- and small-cap styles may be relatively balanced in November, and it is recommended to allocate in a balanced way to oversold technology growth and low-valuation blue chips and other sectors; in November, some technology growth and consumer sectors may be relatively favored.