Core Viewpoint - The report from CITIC Securities anticipates a GDP growth target of around 5% for 2026, with an emphasis on optimizing industrial structure and enhancing technological innovation [1] Economic Outlook - GDP growth target is set at approximately 5% [1] - Average consumption growth rate is expected to be around 5% [1] - Consumer Price Index (CPI) is likely to return to positive territory, while Producer Price Index (PPI) remains in negative territory [1] - The real estate market is expected to stabilize after hitting a bottom [1] - Fiscal deficit rate is projected to maintain an expansionary trend at around 4%, with the broad fiscal deficit rate increasing to approximately 8.3% [1] Asset Allocation Recommendations - Anticipation of rising gold prices and slight increases in oil prices [1] - Suggestion to overweight A-shares while maintaining a cautiously optimistic stance on the bond market [1] - Caution advised for U.S. stocks, with expectations of a bull market for U.S. Treasuries [1] - Potential upward movement for the Renminbi is anticipated [1] Investment Opportunities - Recommended focus on four main investment themes: technological innovation, cyclical infrastructure, service consumption, and public utility dividends [1]

Inflation Data - October CPI increased by 0.2% year-on-year, up from -0.3% in the previous month, exceeding market expectations of -0.1% and prior forecasts of 0.1%[1] - October PPI recorded a year-on-year decline of -2.1%, an improvement from -2.3% in the previous month, also above market expectations of -2.3%[7] Price Movements - Food prices decreased by 2.9%, with the decline narrowing by 1.5 percentage points compared to the previous month, impacting CPI by approximately -0.54 percentage points[3] - Core CPI rose by 1.2%, marking the highest increase since March 2024, with service prices increasing by 0.8%[3] Sector Analysis - Significant price increases were observed in gold jewelry, with prices rising by 50.3% for gold and 46.1% for platinum, driven by sustained demand and new tax policies[4] - The manufacturing sector showed signs of slowing, with the production index at 49.7%, down 2.2 percentage points from the previous month[8] Market Outlook - The fourth quarter is expected to see a shift in asset performance, with a transition from technology growth stocks to low-volatility dividend stocks as risk appetite declines[1] - Bond yields are anticipated to decrease in Q4 due to weakening fundamentals and potential monetary easing as risk preferences shift[1]

- The artificial intelligence global asset allocation model applies machine learning to asset allocation problems, using factor investment ideas to score and rank assets, ultimately constructing a monthly quantitative equal-weighted strategy for global asset allocation[38][39][40] - The dynamic macroeconomic event factor-based stock-bond rotation strategy includes three risk preference models (conservative, balanced, and aggressive), utilizing macro timing modules and risk budgeting frameworks to determine stock and bond weights[43][44][45] - The dividend style timing model uses 10 indicators from economic growth and monetary liquidity dimensions, constructing a timing strategy for the dividend index, which shows significant stability improvement compared to the CSI Dividend Total Return Index[51][54][55] Model Backtesting Results - Artificial intelligence global asset allocation model: annualized return 38.76%, Sharpe ratio 1.07, maximum drawdown -6.56%, year-to-date return 6.81%[39][40][42] - Dynamic macroeconomic event factor-based stock-bond rotation strategy: aggressive model annualized return 20.14%, Sharpe ratio 1.30, maximum drawdown -13.72%, year-to-date return 14.42%; balanced model annualized return 10.92%, Sharpe ratio 1.19, maximum drawdown -6.77%, year-to-date return 4.13%; conservative model annualized return 5.94%, Sharpe ratio 1.50, maximum drawdown -3.55%, year-to-date return 0.97%[43][49][50] - Dividend style timing model: annualized return 16.52%, Sharpe ratio 1.07, maximum drawdown -13.77%, year-to-date return 0%[51][54][55]

Core Insights - China Galaxy's executives attended the Q3 2025 earnings conference, highlighting their unique strategies in international business, wealth management, and institutional services [1] - The low-interest environment has become a focal point for investors regarding asset allocation strategies [2] Group 1: International Business - The company maintains a functional-first approach in its investment banking operations, focusing on enhancing service quality aligned with national strategies and key industries outlined in the 14th Five-Year Plan [3] - China Galaxy's international business network spans regions including Hong Kong, Singapore, Malaysia, Indonesia, and Thailand, making it one of the most widely networked Chinese brokers in Asia [3] - Future plans include strengthening overseas subsidiaries' management and enhancing integrated operations to solidify its position in Southeast Asia [3] Group 2: Wealth Management - The wealth management division aims to resonate with national goals, collaborate with partners, and align closely with client needs, continuously upgrading its trading systems to create a diverse and stable service ecosystem [3] Group 3: Institutional Services - The institutional business is focused on becoming a reliable full-service provider, integrating technology deeply into operations, and offering a comprehensive range of services including research, derivatives, asset management, and brokerage [3] Group 4: Investment Strategy - In the current low-interest environment, traditional fixed-income investments face challenges such as low spreads and high volatility, prompting a shift towards quantitative, neutral, and structured investment strategies to enhance returns [3] - The company is also leveraging its own funds and responding to new financial policies to maintain stable investment scales in OCI accounts while exploring opportunities in the convertible bond market [4] Group 5: Strategic Planning - The company is engaged in thorough discussions and rigorous evaluations for its new strategic plan, which is crucial for its development over the next five years and beyond, ensuring that the strategy is clear, feasible, and capable of creating long-term value for shareholders [4]

Economic Growth Trends - East Asian economies are experiencing a slowdown in growth, with GDP growth expected to be slightly below 5% over the next five years[13] - After surpassing a per capita GDP of $12,000 (in 2015 USD), East Asian economies see a decline in growth rates from over 9% to a range of 3%-7%[13] - China's GDP growth rate during the transition period (2021-2024) is projected to average 5.53%[13] GDP Projections - To achieve the 2035 economic goals, China's GDP growth must average around 4.5% annually over the next decade[15] - By 2035, the aim is for per capita GDP to reach the level of moderately developed countries, enhancing overall living standards[15] Industry and Innovation - Emphasis on maintaining a reasonable proportion of manufacturing while fostering emerging industries and high-quality service sector growth[15] - The focus on technological innovation is crucial for enhancing productivity and capturing opportunities in the new technological revolution[15] Monetary Policy and Investment - The central bank's monetary policy is gradually normalizing but will remain accommodative for an extended period[39] - The narrowing of the interest rate differential between China and the US is expected to support the appreciation of the Renminbi[39] Market Outlook - A-shares are expected to experience a slight upward trend, with recommendations to overweight A-shares throughout the year[39] - Hong Kong stocks are also projected to trend upwards, driven by strong earnings expectations in the AI sector and improved liquidity conditions[59]

Macro and Technical Perspectives on Asset Allocation - The macro perspective indicates a bearish outlook on equity assets, while the technical perspective shows an upward trend with moderate valuation and a state of capital outflow [1][5][20] - For bonds, the macro perspective is bullish, but the technical perspective indicates a downward trend [1][5][20] - Industrial products are viewed negatively from a macro perspective, with a downward price trend also noted technically [1][5][20] - Gold assets are favored in the macro view, with a technical upward price trend [1][5][20] Asset Performance Tracking - The fixed ratio + macro indicators + technical indicators combination yielded a return of 10.51% in 2025, with an annualized return of 12.05% since April 2006 [2][21] - The volatility-controlled + macro indicators + technical indicators combination achieved a return of 15.69%, while the risk parity + macro indicators + technical indicators combination returned 6.99% [2][30] Asset Class Analysis - Equity assets are currently under pressure from macro indicators, while technical indicators suggest an upward trend but with capital outflow [20][21] - Bond assets are supported by macro indicators, but technical indicators show a downward trend [20][21] - Industrial products face macro headwinds and technical downward trends [20][21] - Gold assets benefit from favorable macro indicators and an upward technical trend [20][21] Valuation and Capital Flow Indicators - The equity risk premium (ERP) for the CSI 800 index is at 53.94%, indicating a moderate valuation level [13][14] - The latest capital flow indicator for equity assets shows a net outflow of 316 billion, reflecting a capital outflow state [16][17] Summary of Asset Class Scores - The overall scores for asset classes based on macro and technical indicators show equities at 1, bonds at 3, industrial products at -2, and gold at 2 [19][20] - The combined analysis suggests a bearish outlook for equities and industrial products, while bonds and gold are viewed positively [20][21]

- The macro scoring model indicates a shift in asset preferences, showing a downgrade in risk asset scores and an upgrade in Chinese government bonds to neutral. This adjustment reflects the marginal weakening of domestic and global economic indicators, as well as a balanced outlook for risk assets[19][20] - The US equity timing model suggests potential short-term upside for US equities due to strong AI narratives and the absence of critical economic data during the government shutdown. However, risks may emerge once the government reopens and economic data is released, potentially falling below market expectations[21][22] - The gold timing model highlights continued support for gold's medium-term upward trend, driven by accelerated global de-dollarization. However, short-term pressures from strong US economic expectations and dollar strength may lead to gold price fluctuations[23][27] - The crude oil timing model shows a weakening fundamental outlook, with the oil sentiment index dropping from 0.39 to 0.14. All sub-indicators, including demand, inventory, and macro risk levels, have declined, suggesting limited upward elasticity for oil prices[26][28][30] - The asset allocation strategy for October achieved a return of 2.1%, with a 12.9% return over the past year and a maximum drawdown of 2.9%. The optimized allocation increased the proportion of 10-year government bonds to 58.7%, while reducing exposure to risk assets such as equities, gold, and copper[3][31][34]

Core Viewpoint - The article discusses the significant fluctuations in global asset prices in 2025, attributing these changes to two long-term trends: the reconstruction of monetary order leading to a depreciation of the US dollar, and the AI technology revolution driving stock market growth. It suggests maintaining an overweight position in gold and technology stocks while underweighting dollar assets and commodities [3][4]. Summary by Sections Factors Changing Market Trends - Four main factors that could alter market trends are identified: high valuations, tightening policies, geopolitical shocks, and growth shifts. High valuations alone are not expected to trigger market adjustments without other driving factors [5][6][12]. - The article notes that Chinese stocks are currently at median valuation levels, suggesting potential for further upside if supported by fundamentals. In contrast, gold and US stocks are viewed as relatively expensive but still have strong long-term bullish narratives [6][12]. - Policy tightening is highlighted as a critical factor, with historical evidence showing that bull markets in stocks and gold often end during periods of tightening. The US inflation cycle is expected to peak around mid-2026, which could impact market dynamics [12][13]. - Geopolitical tensions are seen as beneficial for gold but detrimental to stocks, with historical data indicating that geopolitical events typically have short-lived impacts on asset prices [12][15]. - The article discusses the potential for economic growth shifts, emphasizing that if both the US and China experience stronger growth, it could favor stocks while challenging gold prices [12][16]. Asset Allocation Recommendations for 2026 H1 - Chinese Stocks: Maintain an overweight position, with a balanced style favoring technology growth stocks and cyclical value sectors as economic expectations improve [18]. - US Stocks: Maintain a neutral position, benefiting from macro liquidity and technology trends, while favoring Chinese stocks due to expected dollar depreciation [19]. - Chinese Bonds: Downgrade from neutral to underweight, as the bond market may face pressure from economic shifts and rising risk appetite [19]. - US Bonds: Maintain a neutral stance, with potential for yields to drop below 4%, but caution is advised due to rising inflation and fiscal expansion risks [19]. - Commodities: Upgrade from underweight to neutral, as they may benefit from improved economic conditions and serve as a hedge against geopolitical risks [19]. - Gold: Maintain an overweight position, supported by strong fundamentals such as monetary order reconstruction and rising geopolitical risks, with potential for prices to reach $5,000 per ounce [20].

Report Industry Investment Rating No relevant content provided. Core Viewpoints - From October 24th to October 31st, the Fed cut interest rates by 25BP as expected. With Fed Chair Powell's hawkish remarks, the uncertainty of a December dollar interest rate cut increased. Globally, stocks rose while bonds and commodities declined. In China, stocks were divided, bonds rose, and commodities declined. Overall, as macro - expectations are fulfilled, the market is entering a "quiet period" with potentially narrower price fluctuations of major asset classes [3]. Summary by Directory 1. Global Major Asset Performance 1.1 Global Stock Market Overview - From October 24th to October 31st, market sentiment fluctuated. Global stock markets were divided. US stocks continued to rise due to better - than - expected corporate earnings. European stocks performed poorly, and emerging markets outperformed developed markets. The VIX index rebounded from a weekly low [8]. - In the Asia - Pacific region, the MSCI Asia - Pacific region rose 1.08% weekly, the Shanghai Composite Index rose 0.11%, and the Hang Seng Index fell - 0.97%. In the Americas, the MSCI US rose 0.77%, and the S&P 500 rose 0.71%. In other markets, the Saudi All - Share Index rose 0.38%, and the Israeli TA125 rose 1.88% [11][12][13]. 1.2 Global Bond Market Overview - From October 24th to October 31st, although the Fed cut interest rates as expected, there were significant differences within the committee regarding a December interest rate cut. The yields of medium - and long - term US bonds increased. The 10 - year US bond yield rose 9BP to 4.11%. The bond market declined weekly. Globally, high - yield bonds > government bonds > credit bonds [14]. 1.3 Global Foreign Exchange Market Overview - From October 24th to October 31st, differences in the dollar interest rate cut within the year increased, and the dollar index rose weekly. Major non - dollar currencies against the dollar had mixed performance, and the RMB exchange rate fluctuated. The dollar index rose 0.80% weekly [15]. 1.4 Global Commodity Market Overview - The OPEC+ meeting met expectations, and international oil prices were weak weekly. Precious metal prices fluctuated at high levels and declined weekly. Most agricultural product prices rose, and non - ferrous metal prices had mixed performance [19]. 2. Domestic Major Asset Performance 2.1 Domestic Stock Market Overview - From October 24th to October 31st, A - share major broad - based indexes lacked further upward momentum and had mixed performance. The average daily trading volume of the two markets increased compared to the previous week. The Sci - tech Innovation 50 performed poorly. In terms of sectors, basic chemicals and new energy led the gains, while communications and banks performed poorly. The Shanghai Composite Index rose 0.11% weekly [22]. 2.2 Domestic Bond Market Overview - From October 24th to October 31st, the central bank's net open - market operation injection was 14008 billion yuan. The capital market was relatively loose, and the bond market was strong weekly. Overall, government bonds > credit bonds > corporate bonds [25]. 2.3 Domestic Commodity Market Overview - The domestic commodity market declined weekly. Among major commodity sectors, the black sector led the gains, and the chemical sector performed poorly [26]. 3. Major Asset Price Outlook - As macro - expectations are fulfilled, the market lacks clear short - term guidance and is entering a "quiet period". The price fluctuations of major asset classes may narrow [3][29].

Core Insights - The overall market signals for stocks, bonds, and gold as of October 2025 indicate negative, positive, and negative trends respectively for November 2025 [1][3]. Asset Allocation Signals - As of September 2025, both credit spreads and term spreads are signaling a narrowing trend, with the macroeconomic environment forecasted to be inflationary for Q4 [2]. Macro Momentum Model Signals - The cumulative return of the industry composite trend factor combination from January 2015 to October 2025 is 122.58%, with an excess return of 48.40%. The factor signal for October 2025 was positive, while the Wind All A monthly return was -0.04%. The industry composite trend factor as of October 2025 is 0.34, indicating a rebound and issuing a positive signal [3].