Western Securities(SZ:002673) Sou Hu Cai Jing·2025-10-19 05:50Core Conclusion - The market is transitioning from TMT (Technology, Media, Telecommunications) to cyclical sectors such as resources, consumption, and manufacturing, marking a significant shift in investment strategy for the fourth quarter and the upcoming year [1][2]. Group 1: Reasons for the Transition - The Federal Reserve's interest rate hikes in recent years led to significant capital outflows from China, estimated to exceed 16 trillion yuan, while domestic production factors remained stagnant, causing a decline in factor prices [6][7]. - China's counter-cyclical monetary policy, including interest rate cuts, has spurred capital expenditure in manufacturing, enhancing global competitiveness despite a superficial appearance of deflation and a bearish A-share market [2][3]. - The recent shift in the Federal Reserve's policy to lower interest rates is expected to accelerate capital inflows back to China, creating opportunities in consumer markets and high-end manufacturing [5][6]. Group 2: Six Supporting Logics for the Transition - Capital inflows are anticipated to break the negative cycle of "deflation—export—re-deflation," ushering in a "re-inflation" era for Chinese assets [7]. - High-end manufacturing is transitioning from a focus on building barriers ("high walls") to enhancing cash flow and operational efficiency ("storing grain") [8][10]. - Consumer spending is expected to shift from a late-cycle to an early-cycle driver of economic growth, supported by improved consumer confidence and capital inflows [11]. - Signals for a style switch in the fourth quarter include extreme relative performance of the CSI 2000 index, high TMT holdings by public funds, and concentrated trading in a few companies [13]. - Investment focus is shifting towards sectors characterized as "have," "new," and "high," including precious metals, new consumer trends, and high-end manufacturing [12][14]. Group 3: Future Outlook - The anticipated capital inflows and re-inflation will support a recovery in consumer spending and manufacturing upgrades, positioning these sectors for growth [15].