Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - In Q3 2025, the A-share market broke through the shock pattern and continued to rise. The external environment remains complex in Q4. The US tariff pressure on China persists, and the "rush to export" trend is unsustainable, putting pressure on the current account. However, the weakening of the US dollar eases the pressure on the RMB's passive depreciation, and the capital account is expected to continue to recover. Domestically, the conversion of expectations into reality is evident, but the continuous effect of the "anti-involution" policy on deflation still requires demand-side support, and the recovery of corporate profits is not yet stable. Policy and monetary effects will take time to be transmitted to the PPI, which is expected to turn positive in mid-2026, bringing about a resonance of profit and valuation in the stock index market. The index's range-bound pattern may continue, and the previous long IF and short IM hedging portfolio is recommended to be held. Allocation investors need to control their stock index positions, and long-term investors should focus on the progress of profit repair and policy effects [3][4]. Summary by Relevant Catalogs 1. Stock Indexes Break Through the Shock Pattern - **Market Review**: In Q1, the A-share market continued the shock pattern since Q4 2024. After being affected by Trump's "reciprocal tariff" remarks in April, the market recovered with the implementation of domestic policies and the easing of Sino-US trade frictions. In Q3, multiple positive factors supported the market, including the "anti-involution" policy, the continuation of the "rush to export" trend, the appreciation of the RMB, and the narrowing of the Sino-US interest rate spread, providing sufficient liquidity for the stock index market [9]. - **Industry Performance**: In the first three quarters of 2025, industries showed significant differentiation. Precious metals and related non-ferrous metals led the gains due to Trump's tariff policy, the Middle East situation, and the Fed's interest rate cut expectations. As of September 26, communication, non-ferrous metals, and electronics had the highest increases, while coal, food and beverage, and petroleum and petrochemicals had the largest declines [11]. - **Stock Index Basis**: The expansion of neutral strategies and the increase in the index dividend rate led to a larger discount in stock index futures. The injection of rescue funds and the active trading sentiment increased the trading volume of the A-share market, and the small and medium-cap style was dominant. The expansion of neutral strategies increased the hedging demand for stock index futures, and the high dividend rate of listed companies also contributed to the larger discount [13][17]. 2. Market Valuation: Focus on Earnings-Driven Valuation Digestion - **CSI 500 and CSI 1000 Indexes**: The valuation levels of the CSI 500 and CSI 1000 indexes have been significantly repaired. As of September 26, their price-to-book ratios were at historically low levels in the past 10 years [22]. - **SSE 50 and CSI 300 Indexes**: There is a divergence in the valuations of the SSE 50 and CSI 300 indexes. Their price-to-earnings ratios are generally in the high historical range, while the price-to-book ratios are relatively low. This difference is due to the significant valuation recovery since September last year, but the improvement in market profitability still takes time [22]. - **Index Crowding**: There is a potential for short-term style rebalancing. The crowding degree of the CSI 500 and CSI 1000 indexes has narrowed, and the market's enthusiasm for the CSI 500 index remains high. The relative valuation of the CSI 1000 index has further recovered. The crowding degree difference between the CSI 1000 and CSI 300 indexes has reached a high level in the past two years, increasing the potential for mean reversion [26][29][32]. - **Stock-Bond Cost-Effectiveness**: The stock market does not have an obvious relative advantage. After the continuous rise since September last year, the stock market is at a low level in terms of the stock-bond cost-effectiveness indicator. Although the domestic interest rate cut window is opening, the relative valuation of the stock market compared to the bond market is still at a relatively high level [35]. - **Valuation Summary**: After the continuous repair of the A-share market valuation this year, the relative valuation advantage of the stock index market over bonds has weakened, and the current stock-bond cost-effectiveness is still at a low level. There is a differentiation pattern within the market, and the valuation repair is faster than the profit recovery. Attention should be paid to the subsequent profit repair to drive the convergence of indicators. The CSI 1000 index may experience a style rebalancing [37]. 3. The Effect of Transforming Domestic Expectations into Reality is Evident - **Improvement in Financial Transmission Efficiency and the Need for Further Policy Release**: In August 2025, the "gap" between M2 and M1 growth rates narrowed, indicating an improvement in the capital activity and efficiency of enterprises. However, the structure of social financing shows that the endogenous economic momentum is still insufficient, and policies need to be continuously strengthened in Q4. The growth rate of social financing stock slowed down for the first time this year, mainly due to the high base last year, the decrease in government bond financing, and the weak demand for entity financing [38]. - **The "Anti-Involution" Policy Improves Deflation Expectations, but Profit Recovery Still Depends on Demand-Side Support**: The "anti-involution" policy proposed in early July is an important driving force for the stock market, but the policy's effectiveness takes time. The net profit of the four major index component stocks and the profits of industrial enterprises above the designated size are still at the bottoming stage. The price level is still weak, and the recovery of demand is insufficient. The scissors gap between the purchase price index and the ex-factory price index squeezes corporate profit margins. The PPI is expected to turn positive around Q2 2026 [41][46]. 4. Signs of Asset Allocation Transfer Appear, and the Pressure on the Capital Account May Continue to Ease - **Initial Signs of Asset Allocation Transfer**: After the loan prime rate (LPR) was lowered in May, commercial banks lowered deposit rates, and some banks' one-year fixed deposit rates fell below 1%. The increase in listed companies' dividends and the entry of rescue funds are changing the asset allocation behavior of residents. Funds are flowing from traditional bank deposits to non-bank financial institutions, and the A-share market is expected to receive sufficient allocation funds [50][53]. - **The Change in the Dominant Factor of the US Dollar and the Easing of Pressure on the Capital and Financial Account**: The US dollar's traditional safe-haven asset status is fading, and its price is now more influenced by interest rates. The continuous expansion of the US debt and geopolitical conflicts have eroded the US dollar's credit foundation, leading to a weakening trend. The weakening of the US dollar supports the RMB, and the capital and financial account is expected to recover [55][57]. - **The Unsustainable "Rush to Export" Trend and the Pressure on the Current Account**: During the Sino-US trade negotiations, the "rush to export" trend was obvious, supporting economic growth in the first three quarters. However, due to the high tariffs on Chinese exports and the passage of the "Big and Beautiful Act" in the US, the "rush to export" trend is difficult to sustain, and the current account will face significant pressure in Q4 [59][64]. 5. Summary - The US's tariff measures against China have limited room for adjustment, and the "rush to export" trend is difficult to sustain, putting more pressure on China's current account in Q4. However, the weakening of the US dollar eases the pressure on the RMB's passive depreciation, and cross-border capital flows are expected to continue to recover. Domestically, although the financial system's transmission efficiency has improved and the "anti-involution" policy may marginally improve deflation in Q4, the price increase still depends on demand-side support, and the deflation risk has not been completely eliminated. After the valuation repair of the A-share market, the relative attractiveness of equity assets has weakened. The profit recovery is the key to whether the market's overall center can rise. The PPI is expected to turn positive in mid-2026, bringing about a resonance of profit and valuation in the stock index market. The style may rebalance, and the previous hedging portfolio is recommended to be held, while investors should control their positions and focus on profit recovery [65][67].

Group 1 - The report by Morgan Stanley highlights the resilience and growth potential of the Chinese consumer market despite global economic uncertainties, projecting a 10.2% year-on-year growth in retail sales for 2024 [1] - Online consumption is expected to grow at a rate of 15.6% in 2024, significantly outpacing the 8.3% growth rate of offline consumption [2] - The share of service consumption is projected to increase from 45.9% in 2019 to 50.2% in 2024, indicating a shift in consumption structure [2] Group 2 - The spending power of Generation Z (born 1995-2009) is becoming more prominent, with their share of total consumer spending rising from 10% in 2019 to 15% in 2024 [2] - Consumer preferences are shifting towards quality, health, and personalization, with health food sales expected to grow by 22% and smart home products by 18% in 2024 [2] - The report identifies opportunities in emerging consumption sectors such as smart home technology, health food, and green consumption, particularly for companies with innovation capabilities and brand advantages [3] Group 3 - Leading companies in the smart home sector are projected to achieve over 30% revenue growth in 2024 [3] - The report notes potential risks such as economic slowdown, increased market competition, and rising raw material costs, which have increased by 10%-15% for some consumer goods companies in 2024 [3]

Core Viewpoint - Bilibili (BILI.US) is experiencing a pre-market increase of nearly 1%, reaching $22.5, driven by positive industry outlook and policy support for the gaming sector [1] Industry Summary - According to a report from China Merchants Securities, the gaming industry is expected to achieve high growth in the mid-year report, with third-quarter performance likely to continue improving on a quarter-over-quarter basis [1] - The current high level of industry prosperity is reflected in an average valuation of approximately 20 times, compared to a historical average exceeding 30 times, indicating potential for upward movement in valuations [1] - Future growth in the gaming sector is anticipated to transition from "alpha" driven performance to new "beta" drivers, fueled by the rise of emerging consumer trends and AI applications [1]

Group 1 - The overall performance of the gaming industry chain has exceeded market expectations, with strong performance anticipated in Q3 for companies like Huatuo, Tencent, and Gigabit [1][2] - The gaming industry has experienced significant growth due to policy support, with major companies reporting impressive mid-year results, such as Tencent's gaming revenue reaching 119.7 billion yuan, a 24% increase [2][3] - The average valuation of the gaming industry is currently around 20 times, with potential for upward movement compared to historical levels above 30 times [1][2] Group 2 - Emerging consumption and AI applications are expected to drive significant development in the gaming sector, with the industry benefiting from new consumer trends and technological advancements [3] - Global gaming companies like Nintendo and Take-Two have reached historical stock price highs, reflecting the industry's resilience to macroeconomic factors and its appeal to younger consumers [3] - The gaming industry is poised to be a major beneficiary of AI advancements, with companies having strong cash flows that may lead to acquisition opportunities in the AI space [3]

Core Viewpoint - The Chinese stock market is expected to continue rising, driven by accelerated transformation, declining risk-free returns, and capital market reforms, with a focus on mid-cap and low-priced blue-chip stocks for future growth [1][2]. Group 1: Market Outlook - The Chinese market is anticipated to reach new highs, supported by reduced uncertainty in economic and social development, and a historical shift in capital inflow from residents [1][2]. - The current market environment shows no signs of overheating, with margin trading levels and overall valuation remaining at historical averages [1][2]. - The potential for interest rate cuts by the Federal Reserve may provide opportunities for the People's Bank of China to implement monetary easing and restart government bond trading [1]. Group 2: Investment Strategy - There is an expected expansion in market styles, with increased allocations to mid-cap stocks and low-priced blue-chip stocks, as traditional industries stabilize and policy interventions reduce risks [2]. - The focus on domestic demand and innovation in the "14th Five-Year Plan" is expected to enhance the visibility of long-term economic stability [2]. - The diversification of market participants and investment logic suggests that the market will not be limited to small-cap stocks, with mid-cap and quality blue-chip stocks likely to drive the next phase of market growth [2]. Group 3: Sector Recommendations - Emerging technology remains a key focus, while cyclical financial sectors are seen as potential dark horses, with a positive outlook for Hong Kong stocks [3]. - Recommendations include financial sectors such as brokerage, insurance, and banking, as well as new technology trends and consumer demand in AI applications, internet, media, and innovative pharmaceuticals [3]. - The improvement of supply-demand dynamics in cyclical goods is anticipated, with recommendations for sectors like chemicals, non-ferrous metals, and real estate [3]. Group 4: Thematic Recommendations - AI applications are expected to accelerate due to policy support, with a focus on finance, office, gaming, and education sectors [4]. - The robotics industry is transitioning from technological exploration to large-scale commercialization, highlighting opportunities in key components and lightweight materials [4]. - New consumption trends are emphasized, with a focus on high-performance IP toys and pet-related sectors, driven by policy support for innovative consumption [4]. - High-end equipment sectors are expected to benefit from fiscal support for equipment upgrades, particularly in military, semiconductor, and energy sectors [4].

Core Viewpoint - The Chinese stock market is expected to continue rising and reach new highs due to accelerated transformation, declining risk-free returns, and capital market reforms [1][2]. Group 1: Market Outlook - The market is anticipated to expand, with a focus on mid-cap stocks and low-priced blue-chip stocks as key drivers for the next phase of market growth [3]. - The overall market sentiment is positive, with the potential for sustainable growth supported by healthy market dynamics and a favorable economic environment [2]. Group 2: Investment Themes - AI applications are highlighted as a key investment theme, with significant growth expected in finance, office, gaming, and education sectors due to policy support [1][4]. - The robotics industry is transitioning from technological exploration to large-scale commercialization, with a focus on key components and lightweight materials benefiting from technological upgrades [1]. - Emerging consumption trends are emphasized, particularly in IP toys and pet-related sectors, which are expected to see high performance due to policy-driven innovation [1]. - High-end equipment sectors, including military, semiconductor, and energy, are projected to benefit from substantial fiscal support and investment in equipment upgrades [1][4]. Group 3: Sector Comparisons - New emerging technologies are identified as a primary focus, while cyclical finance is seen as a potential dark horse in the market [4]. - The financial sector, including brokers, insurance, and banks, is recommended for investment due to low valuations and potential for rebound [4]. - The market is expected to see improvements in supply-demand dynamics for cyclical products, with recommendations for chemicals, non-ferrous metals, and real estate sectors [4].

Group 1 - The A-share market has shown strong performance recently, while the Hong Kong stock market appears weaker, yet southbound capital continues to flow into Hong Kong stocks, with a record net purchase of approximately 35.88 billion HKD on August 15, 2023, and a cumulative net inflow of 938.92 billion HKD this year, surpassing last year's total of 807.87 billion HKD [1] - Global investors, particularly Chinese investors, are increasingly optimistic about the Chinese stock market, with expectations for a "long bull" market in Hong Kong stocks [1] - The Changcheng Hong Kong Stock Connect Value Selection Multi-Strategy Fund has a high allocation to Hong Kong stocks, with 89.17% of its net asset value invested in Hong Kong stocks as of the end of Q2 2023, providing a convenient investment tool for those bullish on the Hong Kong market [1] Group 2 - The fund's A-class shares achieved a net value growth rate of 65.31% over the past year, significantly outperforming the benchmark's growth of 25.14%, indicating strong excess returns [1] - The fund manager, Qu Shaojie, has focused on technology internet and emerging consumption sectors, identifying opportunities in AI-integrated internet, new energy vehicles, gaming, and smart wearables [1][2] - Qu Shaojie employs a bottom-up stock selection strategy, focusing on high-barrier leading companies with stable fundamentals, and emphasizes long-term holding while avoiding frequent trading [1][2] Group 3 - Looking ahead, Qu Shaojie believes that Chinese technology has reached a global leading position, particularly in AI, robotics, and smart driving, with significant growth potential in the Hong Kong technology internet sector [2] - The fund's performance over the past five years shows varying annual returns, with the A-class shares achieving a return of 17.41% in 2024, closely matching the benchmark's return of 17.21% [2]

Group 1 - In July, the growth rate of total retail sales of consumer goods increased by 3.7% year-on-year, a decrease of 1.1 percentage points compared to the previous month, while service retail remained stable with a 5.2% increase from January to July [1][2] - The sales of home appliances, audio-visual equipment, cultural and office supplies, furniture, and communication equipment saw significant growth, with year-on-year increases of 28.7%, 13.8%, 20.6%, 14.9% respectively in July [2] - The demand for cultural, sports, and entertainment products has increased, leading to a year-on-year growth of 13.7% for sports and entertainment goods and 8.2% for gold and silver jewelry in July [2] Group 2 - The tourism and cultural service retail sector experienced robust growth, driven by increased travel demand during the summer, with double-digit growth in tourism consulting, transportation services, and cultural and recreational services from January to July [2] - Online retail and emerging consumption trends are developing positively, with a 6.3% year-on-year increase in physical goods online retail from January to July, and new consumption models like live streaming shopping gaining traction [3] - The government plans to continue implementing measures to boost consumption, focusing on expanding goods consumption while fostering new growth points in service consumption [3]

Core Insights - In July, the retail sales of consumer goods in China showed a year-on-year growth of 3.7%, a decrease of 1.1 percentage points compared to the previous month, indicating a slowdown in the growth rate of the goods market [1] - The service retail sector remained stable, with a growth rate of 5.2% from January to July, consistent with the previous six months, suggesting that the overall consumption trend is still on the rise [1] Group 1: Goods Retail Performance - The "old-for-new" consumption policy has positively impacted sales, with retail sales of home appliances and audio-visual equipment, cultural and office supplies, furniture, and communication equipment growing by 28.7%, 13.8%, 20.6%, and 14.9% respectively in July [1] - There is a notable increase in the sales of upgraded goods, driven by rising consumer demand for quality, with retail sales of sports and entertainment goods and gold and jewelry growing by 13.7% and 8.2% respectively [1] Group 2: Service Retail Performance - The cultural and tourism service retail sector has seen significant growth, driven by increased travel demand during the summer, with various services such as tourism consulting, transportation, and cultural leisure services maintaining double-digit growth [2] - Information service retail has also experienced rapid growth, with retail sales in the telecommunications and information services sector increasing by over 10%, reflecting a positive development trend in the industry [2] Group 3: Emerging Consumption Trends - Online and emerging consumption channels are thriving, with physical goods online retail sales growing by 6.3% year-on-year, an acceleration of 0.3 percentage points compared to the first half of the year [2] - New consumption models such as live-streaming sales and the silver economy are rapidly developing, indicating the emergence of new growth points in consumption [2]

Core Viewpoint - The A-share market has been on the rise, with the Shanghai Composite Index reaching a nearly four-year high of 3688 points on August 13, and a total trading volume of 2.15 trillion yuan, indicating strong market momentum and investor sentiment [1] Fund Performance - As of August 11, among the top fund management companies with over 100 billion yuan in mixed fund management scale, Fortune Fund achieved an average return of 30.06%, ranking third [1] - Fortune Fund's stock funds have also performed exceptionally well, with an average return of 43.47% over the past year [1] - A total of 145 products under Fortune Fund have achieved returns exceeding 30% in the past year, with 73 products exceeding 50%, and 14 products achieving returns over 80% [2] Specific Fund Highlights - The best-performing fund is the Hong Kong Stock Connect Medical ETF managed by Tian Ximeng, with a return of 112.38% [2] - Other notable funds with returns exceeding 90% include Fortune Active Growth One Year, Fortune Hang Seng Medical ETF, and Fortune North China 50 [2] - The Fortune Optimized Enhanced Bond Fund, managed by Liu Xingwang, achieved a return of 41.97%, ranking high among peers [2] Net Asset Value Achievements - Nearly 50 active equity funds under Fortune Fund have reached historical net asset value highs as of August 13 [3] - Funds such as Fortune Active Growth One Year and Fortune Small Cap Selection have set new highs since their inception [3] Competitive Rankings - Six active equity funds from Fortune Fund rank first in their respective categories, with 24 funds in the top five [4] - The Fortune Medical Innovation Fund, managed by Zhao Wei and Wang Chao, ranked first among 46 similar funds, showcasing strong stock-picking capabilities [4] - The Fortune Consumption Selection Fund, managed by Zhou Wenbo, also ranked first in its category, benefiting from the new consumption investment trend [4] Continued Focus on Innovation - The Fortune New Materials and New Energy Fund, managed by Xu Zhixiang, ranks first among 24 similar funds, while the Fortune Craft Growth Fund achieved a return of 80.49%, ranking in the top three [5] - The Fortune New Vitality Fund, managed by Wu Dongdong, ranks second among 80 similar funds over the past year [6] Market Outlook - The A-share market remains active, with margin trading balances returning to 2 trillion yuan, further strengthening market bullish sentiment [6] - Fortune Fund aims to enhance its core investment capabilities and continue delivering excellent long-term performance for investors [6]