On the previous trading day (November 5), the Shanghai Composite Index rose 0.10% to 3,689.91 points, the Shenzhen Component Index gained 1.19% to 11,471.09 points, and the ChiNext Index advanced 0.87% to 2,566.80 points. Combined market turnover reached 2,117.953 billion yuan, with 4,869 stocks rising and 624 declining, including 76 limit-up and 1 limit-down.

Guosheng Securities believes an unexpected "blue wave" emerged in the midterm elections, and a divided government will strengthen checks and balances, though the existing policy direction is difficult to fully reverse. Huafu Securities believes the dividend index has a high probability of positive returns over long holding periods after a drawdown signal, highlighting its defensive value. CITIC Securities believes that falling interest rates combined with capital inflows could usher in a recovery rally for Hong Kong internet stocks. SDIC Securities believes domestic production of electronic-grade hydroxylamine is imminent, and the short-term supply-demand gap will continue to widen. Zhongtai Securities believes revenue in the medical device sector is steadily recovering, with profit improvement broadening.

Guosheng Securities: Macro | Comprehensive Assessment: The Impact of Trump's Crushing Midterm Election Defeat

The 2026 U.S. midterm elections produced an unexpected "blue wave." Democrats not only retook both the Senate and the House (the fifth time both chambers flipped in the same midterm since World War II and the first since 2006), but also achieved historic breakthroughs in several traditionally Republican stronghold states. Texas and Kansas each elected a Democratic senator for the first time since 1988 and 1932, respectively. In gubernatorial races, Democrats regained a majority of governorships nationwide for the first time in 16 years, and Texas ended more than 30 years of Republican control of the governor's office since 1995. From a policy perspective, the divided government will strengthen checks on Trump, but the existing policy direction is difficult to fully reverse. Domestically, fiscal expansion will be constrained, and bipartisan wrangling may intensify. Attention should be paid to the expiration of the temporary appropriations bill on December 11 and the debt ceiling issue before the second quarter of 2027. The AI development direction is unlikely to change, but regulatory constraints may strengthen, especially given the impact of gubernatorial turnovers. The five states that flipped from red to blue have data center total capacity of 236 GW, accounting for 38.4% of the national total.

Externally, Trump still holds considerable initiative in tariff and military matters, but under congressional checks, impeachment pressure, and pressure from the 2028 election, the likelihood of short-term de-escalation in the U.S.-Iran situation is greater than escalation. From a market perspective, after the midterm results became clear, U.S. stocks and gold rebounded notably, while U.S. Treasury yields and the dollar briefly surged before entering consolidation, with directionality relatively weaker than stocks and gold. The dissipation of election uncertainty has boosted short-term risk appetite. In the medium term, various asset classes will still return to fundamentals, and performance should diverge. Among them, U.S. stocks are expected to recover in the short term, with AI risks to watch in the medium term. U.S. Treasuries will benefit relatively in the short term but remain range-bound at elevated levels in the medium term. Gold is expected to bottom out and recover in the short term, with the long-term upward logic unchanged. The dollar will be relatively weak in the short term but still has fundamental support in the medium term.

Huafu Securities: Strategy | Dividends: Defensive Attributes and Long-Term Allocation Opportunities

The dividend index has delivered on its defensive value during this correction. From the end of June to now (November 3, same below), the CSI Dividend Total Return Index rose 13.6%, while the CSI 300 Total Return Index fell 18.6%, a return gap of 32.2 percentage points. Year-to-date, the two rose 5.9% and fell 11.6%, respectively. Reviewing dividend index returns under drawdown signals. The backtest execution rule is to confirm the signal at close and position at the next trading day's close, tracking subsequent 1-, 3-, 6-, and 12-month returns, using the total return caliber with dividend reinvestment. The probability of positive returns over long holding periods is relatively high. The average return over a 1-month holding period is 2.6%, with a positive return probability of 72.7%. For 6 months, it is 4.9% and 66.7%. For 12 months, it is 12.3% and 76.2%. Longer holding periods provide more room for return accumulation.

The dividend index's performance after a drawdown signal will shift significantly depending on subsequent market direction. In a strong rebound scenario, all 6 samples achieved positive absolute returns, but only 2 samples achieved excess returns. This group's average absolute return was 45.1%, with an average excess return of -7.3 percentage points. In a moderate recovery scenario, the average excess return was 4.0 percentage points. In a continued pressure scenario, the strategy had a relative advantage, with an average excess return of 6.5 percentage points, but the average absolute return was -10.4%, with only 37.5% of samples showing positive returns.

Differences in compilation methodologies across various dividend indices and current allocation value. Five types of dividend indices differ in sample pools, selection logic, weighting rules, and risk constraints. At the current juncture, dividend assets still have a stable cash return foundation. The PE and PB percentiles of the CSI Dividend Index are 99.75% and 99.42%, respectively, with a dividend yield of 4.51%. The dividend yields of the Hong Kong Stock Connect Central SOE Dividend Index and the Hong Kong Stock Connect Dividend Low Volatility Index are 5.46% and 5.17%, respectively. A stable dividend yield also forms a solid valuation anchor, giving dividend assets relative resilience during periods of declining risk appetite. From a dynamic positioning perspective, active equity public funds tended to increase holdings of the CSI Dividend Index in the third quarter of 2026, with holdings up 1.76 percentage points quarter-on-quarter, reflecting a defensive rebalancing tendency among funds.

CITIC Securities: Internet | Interest Rate Turning Point Plus Capital Return, Bullish on Hong Kong Internet Recovery

On November 5, the Hang Seng Tech Index closed up 5.5%, the largest single-day gain since late February 2025. We believe that falling U.S. Treasury yields combined with capital inflows could usher in a new round of recovery for Hong Kong internet stocks. After the midterm elections, expectations for lower U.S. Treasury yields have risen, which is a relatively slow variable, and global liquidity spillover is expected to bring sustained capital replenishment. On the valuation side, the Hang Seng Tech NTM PE is 17.6x, at the 16.2% percentile over the past five years. Hang Seng Tech, being rate-sensitive and at low valuations, is expected to benefit first. On the capital side, foreign and domestic allocations to internet stocks remain at low levels, while foreign net inflows in October have already exceeded the total for the first three quarters, indicating that replenishment is underway. On the earnings side, the Non-GAAP net profit growth of leading internet companies bottomed in the second quarter of 2026, and is expected to grow 8% and 37% year-on-year in the third and fourth quarters, respectively, with EPS recovery entering a realization phase. Falling interest rates open up valuation space, capital replenishment provides incremental support, earnings realization solidifies the foundation, and combined with the continued advancement of AI commercialization in China, we remain firmly bullish on Hong Kong internet stocks.

SDIC Securities: Environmental Protection & Utilities & Beijing Stock Exchange | Domestic Electronic-Grade Hydroxylamine Production Imminent, Short-Term Supply-Demand Gap to Widen Further

AI computing power expansion is driving incremental demand for advanced cleaning consumables. Hydroxylamine, with its dual attributes of strong reducing properties and weak alkalinity, can effectively break down metal oxides and cross-linked residues that traditional solvents and plasma ashing struggle to remove through redox and nucleophilic reactions. Although cleaning agents have undergone four generations of technological evolution, in advanced logic, 3D NAND, and G5-level high-end scenarios, hydroxylamine-free solutions are constrained by extreme corrosion margins, deep-hole mass transfer limitations, and metal protection requirements, making complete substitution difficult. This establishes hydroxylamine's indispensable role in high-end wet cleaning processes. With the growth of AI computing demand, aggressive HBM/DRAM capacity expansion and 3D NAND layer stacking are driving a dual leap in wafer capacity and cleaning process frequency. It is estimated that by 2030, global theoretical demand for G4/G5-grade electronic hydroxylamine will reach 20,500 tons, with a compound annual growth rate of 13.5% from 2024 to 2030.

Domestic substitution under process route restructuring. Electronic-grade hydroxylamine is constrained by ppb/ppt-level purity requirements, 2-3 year long-cycle fab certification, and high-risk safety production barriers. Effective industry supply has long been tight and highly concentrated. Overseas leader BASF's capacity is physically embedded in its caprolactam main plant. While lacking independent expansion motivation, it also faces high energy and carbon tax cost pressures in Europe, weakening supply elasticity. Domestic enterprises, by switching underlying process routes to a green circular industry chain centered on ketoxime hydrolysis, have not only achieved closed-loop material utilization and independent hydroxylamine supply, breaking free from physical dependence on the main plant, but also significantly reduced full costs. After overcoming purity and certification barriers, they are expected to achieve rapid share penetration.

Domestic volume ramp-up to fill the total gap, with structural shortages remaining in high-end supply. On the supply side, assuming BASF maintains approximately 7,200 tons per year of existing capacity, domestic expansion becomes the core source of global supply increments. Driven by this, the global supply-demand gap may gradually converge. However, the actual effective supply of G5-grade and other high-end products remains deeply constrained by extreme purity control, process adaptability, and long-cycle fab customer certification barriers. On the price side, short-term supply tightness will support product prices in an upward channel. After the concentrated realization of domestic capacity after 2028, product prices are expected to face some downward pressure, but given their technical barriers and electronic-grade material attributes, the price center will still command a significant premium over traditional industrial-grade products.

Zhongtai Securities: Pharmaceuticals | Medical Device Sector 2026 Q3 Report Summary: Revenue Steadily Recovering, Profit Improvement Broadening

Domestic negative factors continue to be digested, the device sector's revenue is steadily recovering, and the scope of profit improvement has further expanded. In the first three quarters of 2026, listed medical device companies recorded revenue of 200.312 billion yuan, up 8.22% year-on-year, and non-GAAP net profit of 23.899 billion yuan, up 10.92% year-on-year. Divergence among sub-sectors was evident. Revenue growth from high to low was: low-value consumables (+18.45%), medical equipment (+9.60%), high-value consumables (+2.06%), and in-vitro diagnostics (+1.83%). Non-GAAP net profit growth from high to low was: low-value consumables (+70.37%), in-vitro diagnostics (+60.63%), medical equipment (-2.03%), and high-value consumables (-3.25%). Among them, low-value consumables continued to be driven by the resonance of glove volume and price and a low base, with non-glove product revenue maintaining growth. Profit still faced pressure in the first three quarters but improved slightly in Q3. Medical equipment demand recovery combined with new business ramp-up kept revenue growth relatively fast. Profit remained under pressure in the first three quarters but improved year-on-year in Q3. High-value consumables revenue remained steady, with innovative product ramp-up and overseas expansion continuing to contribute incremental growth. In-vitro diagnostics revenue stabilized marginally, and excluding ICL, routine IVD revenue and profit also continued to recover.

2026 Q3 revenue continued to recover, with all four major sub-sectors achieving positive non-GAAP net profit growth. In Q3 2026, the medical device sector's overall revenue grew 9.00% year-on-year, and non-GAAP net profit grew 24.92% year-on-year. Revenue growth across the four core sub-sectors from high to low was: low-value consumables (+20.75%), medical equipment (+8.40%), in-vitro diagnostics (+4.99%), and high-value consumables (+2.56%). Non-GAAP net profit growth from high to low was: in-vitro diagnostics (+130.82%), low-value consumables (+75.86%), high-value consumables (+11.36%), and medical equipment (+4.73%). Low-value consumables continued to be driven by glove sector prosperity, while the high profit growth in in-vitro diagnostics still benefited from a low base from ICL impairment. High-value consumables and medical equipment saw profit growth turn positive from negative, further broadening the scope of profitability improvement in the sector.