--- title: "Industrial Securities: Layout Strategy Under Overseas Disturbances" type: "News" locale: "en" url: "https://longbridge.com/en/news/265007537.md" description: "Industrial Securities released a research report indicating that global risk assets experienced significant volatility this week due to tightening overseas liquidity and the narrative of the \"AI bubble.\" The Federal Reserve's hawkish remarks and the U.S. government shutdown have intensified market liquidity pressures, leading to a stronger dollar and suppressing global stock markets. Despite the liquidity crunch, the probability of systemic risk remains low. If the government shutdown ends as scheduled, market expectations for a Federal Reserve rate cut will be recalibrated, potentially ushering in a repair window" datetime: "2025-11-09T08:23:29.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/265007537.md) - [en](https://longbridge.com/en/news/265007537.md) - [zh-HK](https://longbridge.com/zh-HK/news/265007537.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/265007537.md) | [繁體中文](https://longbridge.com/zh-HK/news/265007537.md) # Industrial Securities: Layout Strategy Under Overseas Disturbances According to the Zhitong Finance APP, Industrial Securities released a research report stating that due to concerns over tightening overseas liquidity and the narrative of an "AI bubble," global risk assets experienced significant volatility this week. On one hand, the lack of economic data and frequent hawkish statements from the Federal Reserve have led to a cautious market outlook regarding interest rate cuts in December. Coupled with the U.S. government shutdown and ongoing fiscal pressures that have increased liquidity stress in the money market, the strengthening dollar has suppressed global stock markets and commodity prices. On the other hand, as U.S. tech giants continue to ramp up capital expenditures, recent discussions overseas about the "AI bubble" have intensified, exacerbating investors' concerns about tech stock valuations. The Nikkei 225, South Korean indices, and Nasdaq, which have a high proportion of technology stocks, have led the global market decline this week. ## The main points from Industrial Securities are as follows: **Looking ahead, on one hand, the probability of tightening overseas liquidity evolving into systemic risk is low. As the Federal Reserve outlines solutions and negotiations between the two parties regarding the government reopening progress, the external disturbances affecting risk appetite may gradually diminish. On the other hand, if the U.S. government shutdown ends as scheduled in mid-November and more economic data is released in the future, the market's expectations for Federal Reserve interest rate cuts will be recalibrated, potentially ushering in a window for global resonance and recovery:** **First, the probability of tightening overseas liquidity evolving into systemic risk is low, and risk appetite has already begun to warm up as solutions progress.** Although overseas liquidity is tightening, the upward movement of the SOFR-OIS, which reflects the degree of liquidity tension, is far less than during the "cash crunch" in 2019 and the SVB crisis in 2023, making the risk temporarily controllable. Moreover, recent liquidity tensions have led the Federal Reserve to announce a halt to balance sheet reduction in December, and New York Fed President Williams recently stated that the Federal Reserve may soon need to expand its balance sheet by purchasing bonds to meet the liquidity needs of the financial system. Therefore, the probability of this overseas liquidity tightening evolving into systemic risk is low, and the necessity to shift to comprehensive risk aversion is not strong. **Second, if the U.S. government shutdown ends as scheduled in mid-November and more economic data is released in the future, the market's expectations for Federal Reserve interest rate cuts will be recalibrated, potentially ushering in a window for global resonance and recovery.** Currently, the government shutdown has set a historical record, and informal talks among some members of Congress from both parties are accelerating. After the local elections in New York and California, the motivation for the Democratic Party to obstruct voting has weakened, with expectations that the government may reopen around mid-November. Once the Treasury releases funds, global liquidity will be replenished. Furthermore, as more economic data is released after the government reopens and the market's expectations for Federal Reserve interest rate cuts are recalibrated, a window for global resonance and recovery may emerge. **Additionally, benefiting from the stability expectations supported by internal certainty, Chinese assets will also exhibit certain resilience under external disturbances.** Amid external liquidity disturbances, domestic policies continue to increase support, with the central bank conducting a 700 billion yuan three-month reverse repurchase operation on November 5, which helps to release liquidity and stabilize market expectations. In an environment where domestic economic expectations are stable, cyclical sectors can also attract market funds and enthusiasm during the phase of adjustment in some technology growth sectors **However, the recent discussions about the "AI bubble" have caused some disturbances in the domestic AI industry chain. However, Industrial Securities believes that the current empowerment of AI for traditional industries is still in its early stages, and both from the perspective of industrial development stages and investment logic, it cannot be compared with the internet bubble of 1999-2000. The current development logic of the AI industry is clear, and global tech giants are continuously clarifying their AI strategies.** The balance sheets, cash flow statements, and income statements of leading companies represented by M7 in the US stock market are all performing excellently. Continuous investment in R&D and capital expenditures make their fundamentals sustainable, which in turn allows for continued investment in R&D and capital expenditures, forming a virtuous cycle. This is in stark contrast to the internet bubble period of 1999-2000, when the market primarily speculated on small companies, even leading to "snake swallowing elephant" merger cases, where the market would blindly invest upon hearing related concepts. Currently, with a certain technological wave, although AI development is still in the relatively early stage of "infrastructure construction," concentrated in the capital expansion of computing power, it will soon enter a phase of widespread application scenarios, where infrastructure construction and application implementation will mutually promote a positive feedback loop. **For the domestic market, during the "14th Five-Year Plan" period, the development path of promoting great power competition, self-control, and the integration and innovation of the technology industry with AI as a breakthrough is gradually becoming clear. The AI industry chain will still be a key area with favorable prosperity advantages to be explored next year. With the alleviation of overseas liquidity concerns, the recalibration of expectations for Federal Reserve interest rate cuts, and the new catalysts provided by NVIDIA's performance release on November 19, the local prosperity expectations for next year may become smoother.** In summary, the current probability of overseas liquidity tightening evolving into systemic risk is low, and as relevant solutions are gradually advanced, its drag on market risk appetite has been alleviated. Supported by stable economic and policy expectations, the A-share market may still possess resilience, continuing to "take the lead," with two strategies laid out for next year's prosperity expectations. On one hand, the recovery of October CPI and PPI verifies the trend of marginal economic improvement, emphasizing the recovery opportunities in cyclical sectors such as steel, chemicals, building materials, new consumption & service consumption, and agriculture. On the other hand, the resonance of prosperity advantages, industrial trends, and policy support continues to uphold the strong industrial trend represented by AI computing power, exploring low-position technology growth directions such as AI software applications, military industry, and innovative pharmaceuticals. **"Taking the lead," two strategies laid out for next year's prosperity expectations** **The year-end market is an important window for laying out next year's prosperity expectations.** Reviewing the year-end market since 2016 (November-December), from a retrospective perspective, the performance rankings of various industries show a strong positive correlation with their performance growth rates in the following year, while the correlation with the current performance growth rate is weak or even negative. From this perspective, investors often seek to lay out in industries with better prospects for the next year at the end of the year, with the core being to find directions where the strong remain strong or where there is a turnaround from difficulties. **According to consensus expectations, next year, high prosperity or turnaround from difficulties with elasticity, and the technology growth industries with relatively low current gains are concentrated in the downstream of AI, military industry, pharmaceuticals, automobiles, and certain new energy industry chains:** Next year, high prosperity (expected net profit year-on-year growth rate \> 30%) and accelerating prosperity: including AI hardware (communication equipment, consumer electronics, semiconductors), new energy (batteries, wind power equipment), military industry (ground weapons), and computers (IT services), among which wind power equipment, ground weapons, and IT services have relatively low increases in this round. Next year, high prosperity: including electronics (components, optical optoelectronics), AI downstream (games, software development), automobiles (passenger cars, commercial vehicles), military industry (marine and aerospace equipment, military electronics), automation equipment, and photovoltaic equipment. Next year, expected net profit year-on-year growth rate of 10%-30%, and marginal prosperity improving (prosperity accelerating/reversal of difficulties): including pharmaceuticals (chemical pharmaceuticals, medical devices, biological products), AI downstream (digital media, computer equipment), machinery equipment (engineering machinery, specialized equipment, general equipment), new energy (grid equipment, motors), etc. According to consensus expectations, next year, high prosperity or reversal of difficulties with elasticity, and this round of low increases in cyclical industries concentrated in steel, chemicals, building materials, new consumption & service consumption, agriculture, etc.: Next year, high prosperity (expected net profit year-on-year growth rate \> 30%) and accelerating prosperity: including aviation airports, building materials (glass fiber, plastics, non-metallic materials), new metal materials, agriculture (planting industry, breeding industry), etc. Next year, high prosperity: including energy metals, chemical fibers, rubber, retail, and leisure foods, etc. Next year, expected net profit year-on-year growth rate of 10%-30%, and marginal prosperity improving (prosperity accelerating/reversal of difficulties): including new consumption (beverages and dairy products, accessories, entertainment products, cosmetics, personal care products, small appliances), service consumption (education, hotels and catering, tourist attractions), agriculture (feed), chemicals (chemical raw materials, chemical products), special steel, and renovation building materials, etc. **Risk Warning** Fluctuations in economic data, policy easing lower than expected, and the Federal Reserve's interest rate cuts not meeting expectations, etc ## Related News & Research - [Trump threatens to hit Iran 'extremely hard' over next two to three weeks](https://longbridge.com/en/news/281445712.md) - [Here's How Much $100 Invested In abrdn Physical Silver Shares ETF 10 Years Ago Would Be Worth Today](https://longbridge.com/en/news/281394387.md) - [Destiny Tech100 Stock Rises After SpaceX IPO Rumors](https://longbridge.com/en/news/281415250.md) - [BREAKINGVIEWS-SpaceX IPO will gauge market moxie more than depth](https://longbridge.com/en/news/281406751.md) - [Fired via email? 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