Last week, the A-share market experienced a recovery trend, with most major indices closing higher. The market hotspots are concentrated on the TMT mainline, and the technology sector is experiencing a rebound against the backdrop of oversold. However, looking at the overall market situation in November, A-shares showed a high low switching feature, with funds flowing from overvalued growth stocks to undervalued cyclical stocks and dividend assets, and the attractiveness of defense sectors increasing. As the last month of trading approaches in 2025, this week's institutional strategy outlook report suggests that various factors that previously disrupted the market have gradually eased, and the volatility of the A-share market has decreased. The market is generally optimistic about the economic fundamentals and equity market expectations for 2026, and the risk appetite of funds may gradually increase. The December New Year's Eve market will usher in a layout period. All kinds of disturbing factors are gradually easing the recovery of A-share market last week. Everbright Securities analysis said that the market rise was mainly driven by a variety of favorable factors, including the expected rise of the Federal Reserve's interest rate cut in December, investors' concerns about the AI foam in overseas markets have eased, and domestic policies have been actively promoted. The overall direction of the market is still in an upward trend. Xingye Securities also stated that various factors that previously disrupted the market have gradually eased recently. Firstly, the overseas disturbance factors have further eased, and the Federal Reserve's statement and economic data have jointly pushed up expectations of interest rate cuts, promoting the resonance repair of global risk assets. Secondly, the bright progress of the global AI industry is also continuing to ease the "AI foam" concern. Finally, the domestic market continues to provide the "east wind" for China's asset recovery, especially with the recent acceleration of the RMB exchange rate breaking through the 7.08 mark, which resonates with the recovery of the capital market and the strengthening of the exchange rate. Dongfang Wealth Securities also mentioned that a recent phenomenon worth paying attention to is that the RMB exchange rate against the US dollar has shown a stable to strong trend since November. Dongfang Wealth Securities believes that the expectation of further interest rate cuts by the Federal Reserve and the demand for foreign exchange settlement by export enterprises are the main reasons for the recent strong expectation of RMB appreciation. From the perspective of asset allocation logic, the expectation of appreciation enhances the relative return attractiveness of RMB assets, which is expected to accelerate the pace of foreign investment in the A-share market. The December New Year's Eve market is entering a layout period. Looking ahead to December, as the previous disturbance factors gradually ease, institutions unanimously believe that the A-share New Year's Eve market has a good foundation. Huaxi Securities stated that in December, the A-share market will enter an important policy observation window at home and abroad, and market risk appetite may gradually rise, ushering in a layout period for the New Year market. Overseas, there is a high probability of the Federal Reserve cutting interest rates, easing concerns about US dollar liquidity, and the strong operation of the Chinese yuan exchange rate, which is conducive to foreign investment increasing the allocation of Chinese assets. Domestically, the economic development goals and macroeconomic policy tone for 2026 are expected to be clarified, and the main themes of "anti involution", boosting consumption, and new quality productivity are expected to continue to benefit from policy catalysis. Dongfang Wealth Securities stated that the market is generally optimistic about the economic fundamentals and equity market in 2026, and is preparing to take off after volume adjustments. Short term advice for investors is to focus on thematic investment opportunities with ample room for imagination. Looking ahead to December, the cross year market trend is the focus of strategic layout. From the past 5 years' cross year market trends, policy factors are the core driving factors. In terms of performance rhythm, the rotation path of the cross year market often presents a dynamic balance from value style dominance to growth style succession. In the view of Guangfa Securities, the profit margin of A-share listed companies will improve in 2026, the policy tone will continue to be positive, the market liquidity will be abundant, and external disturbance factors will gradually ease. The new year's market is worth looking forward to. From historical experience, December of that year to January of the following year is a good time for investors to plan for the cross year market, especially for sectors where the annual report forecast is likely to meet or exceed expectations and the business outlook for the following year is good. Considering that many subdivision concepts have undergone significant adjustments recently and valuation digestion is basically in place, they can be gradually included in the observation range in December. Technological growth remains the main focus in the medium to long term, and Shenwan Hongyuan Securities remains optimistic about the future performance of the technology growth sector. The institution believes that the adjustment of the technology growth sector since November is mainly due to the digestion of higher valuations in the early stage, and is still in the mid-term bottom zone of "sufficient amplitude and insufficient time". Investors can patiently wait for the accumulation of industry catalytic factors and the digestion of valuation through performance verification. After the long-term cost-effectiveness has been restored to the historical median, the upward trend of the technology sector is expected to restart. As for the market before the 2026 Spring Festival, Zhongtai Securities believes that robots and securities firms will be the main focus. At the same time, the market will enter a critical policy window period at the end of the year, and there may be phased trading opportunities in areas such as consumption and real estate. In the view of Everbright Securities, short-term investors can focus on sectors with defensive attributes such as consumption. The logic is that when the market is in a volatile phase, the stagnant sectors in the early stage usually perform better. In this round of market trends, this mainly refers to high dividend and consumer sectors. In the medium term, there are many catalytic factors in the TMT sector, such as further interest rate cuts by the Federal Reserve and the continued development of AI industry trends. Therefore, in the medium term, TMT and advanced manufacturing sectors are still expected to become the main market trends. (New Society)