1. Report Industry Investment Ratings No industry investment ratings are provided in the reports. 2. Core Views of the Reports Copper - Copper prices were volatile yesterday. High prices are suppressing demand, but terminal demand remains resilient. The supply shortage of copper ore supports the price bottom. It is expected that the domestic refined copper production in October may decline month - on - month. Attention should be paid to the marginal changes in demand and the Sino - US tariff negotiations. The main contract is expected to find support between 84,000 - 85,000 yuan/ton [1]. Aluminum - The alumina market is weak, with supply pressure and weak demand. It is expected that the spot price of alumina will continue to be under pressure in the short term, with the main contract oscillating between 2,750 - 2,950 yuan/ton. Aluminum prices were slightly stronger yesterday. The supply is stable, and the demand shows resilience in the peak season. It is expected that Shanghai aluminum will maintain a high - level oscillation in the short term, with the main contract in the range of 20,700 - 21,300 yuan/ton [3]. Aluminum Alloy - Casting aluminum alloy prices were slightly stronger, with cost support. The supply is restricted by raw materials and policies, and the demand is moderately recovering. The inventory has started to decline slowly. It is expected that the ADC12 price will maintain a slightly stronger oscillation in the short term, with the main contract in the range of 20,200 - 20,800 yuan/ton [5]. Zinc - Due to concerns about a short squeeze in the LME zinc market, the Shanghai zinc price rebounded after hitting the bottom. The supply is abundant, but the increase in domestic zinc smelters in the second half of the year may be limited. The macro - economic environment with high probability of interest rate cuts supports the zinc price. The demand is not exceeding expectations. It is expected that Shanghai zinc will maintain an oscillation in the short term, with the main contract in the range of 21,800 - 22,800 yuan/ton [9]. Tin - The supply of tin ore is tight, and the supply side is strong. The demand is weak, and the new demand cannot make up for the decline in traditional consumption. The tin price continues to oscillate at a high level. Attention should be paid to the macro - economic changes and the supply recovery in Myanmar in the fourth quarter [11]. Nickel - The Shanghai nickel market had a narrow - range oscillation. The macro - economic risk has increased, and the ore end has some positive factors. The refined nickel production remains high, and the inventory is accumulating. It is expected that the market will oscillate in the short term, with the main contract in the range of 120,000 - 126,000 yuan/ton [13]. Stainless Steel - The stainless - steel market had a narrow - range oscillation. The macro - economic environment has some positive factors, but the nickel - iron price is under pressure, and the demand in the peak season is not strongly boosted. It is expected that the market will oscillate weakly in the short term, with the main contract in the range of 12,400 - 12,800 yuan/ton [16]. Lithium Carbonate - The lithium carbonate futures market was strong. The supply - demand gap remains after entering the peak season. The downstream demand is optimistic. The inventory is declining. It is expected that the market will run strongly in the short term, with the main contract in the range of 76,000 - 80,000 yuan/ton [18][20]. 3. Summaries According to Relevant Catalogs Copper - **Price and Basis**: SMM 1 electrolytic copper was at 84,955 yuan/ton, down 0.90% from the previous day. The refined - scrap price difference decreased by 6.66% to 3,145 yuan/ton [1]. - **Monthly Spread**: The 2511 - 2512 spread was - 40 yuan/ton, down 20 yuan/ton from the previous day [1]. - **Fundamental Data**: In September, the electrolytic copper production was 112.10 million tons, down 4.31% month - on - month; the import volume was 33.43 million tons, up 26.50% month - on - month [1]. Aluminum - **Price and Spread**: SMM A00 aluminum was at 20,980 yuan/ton, up 0.05% from the previous day. The average price of alumina in Shandong was 2,820 yuan/ton, down 0.35% [3]. - **Monthly Spread**: The 2511 - 2512 spread was - 5 yuan/ton, up 5 yuan/ton from the previous day [3]. - **Fundamental Data**: In September, the alumina production was 760.37 million tons, down 1.74% month - on - month; the electrolytic aluminum production was 361.48 million tons, down 3.16% month - on - month [3]. Aluminum Alloy - **Price and Spread**: SMM aluminum alloy ADC12 was at 21,100 yuan/ton, unchanged from the previous day. The refined - scrap price difference in Foshan for broken primary aluminum increased by 1.12% to 1,809 yuan/ton [5]. - **Monthly Spread**: The 2511 - 2512 spread was - 90 yuan/ton, unchanged from the previous day [5]. - **Fundamental Data**: In September, the regenerated aluminum alloy ingot production was 66.10 million tons, up 7.48% month - on - month; the primary aluminum alloy ingot production was 28.30 million tons, up 4.43% month - on - month [5]. Zinc - **Price and Basis**: SMM 0 zinc ingot was at 21,900 yuan/ton, down 0.18% from the previous day. The import loss was - 6,123 yuan/ton, down 760.42 yuan/ton from the previous day [9]. - **Monthly Spread**: The 2511 - 2512 spread was - 15 yuan/ton, down 10 yuan/ton from the previous day [9]. - **Fundamental Data**: In September, the refined zinc production was 60.01 million tons, down 4.17% month - on - month; the import volume was 2.27 million tons, down 11.61% month - on - month [9]. Tin - **Spot Price and Basis**: SMM 1 tin was at 281,000 yuan/ton, down 0.11% from the previous day. The LME 0 - 3 spread was - 56.00 US dollars/ton, up 50.00% from the previous day [11]. - **Monthly Spread**: The 2511 - 2512 spread was - 370 yuan/ton, up 11.90% from the previous day [11]. - **Fundamental Data**: In September, the tin ore import was 8,714 tons, down 15.13% month - on - month; the SMM refined tin production was 10,510 tons, down 31.71% month - on - month [11]. Nickel - **Price and Basis**: SMM 1 electrolytic nickel was at 122,100 yuan/ton, down 0.33% from the previous day. The 1 Jinchuan nickel premium was 2,500 yuan/ton, up 2.04% from the previous day [13]. - **Monthly Spread**: The 2512 - 2601 spread was - 180 yuan/ton, down 30 yuan/ton from the previous day [13]. - **Supply - Demand and Inventory**: In September, the Chinese refined nickel production was 32,200 tons, up 1.26% month - on - month; the import volume was 17,010 tons, down 3.00% month - on - month [13]. Stainless Steel - **Price and Basis**: SMM 304/2B (Wuxi Hongwang 2.0 coil) was at 13,000 yuan/ton, unchanged from the previous day. The Philippine laterite nickel ore 1.5% (CIF) average price was 58 US dollars/wet ton, up 1.75% from the previous day [16]. - **Monthly Spread**: The 2512 - 2601 spread was - 30 yuan/ton, up 45 yuan/ton from the previous day [16]. - **Fundamental Data**: In September, the Chinese 300 - series stainless - steel crude steel production was 182.17 million tons, up 0.38% month - on - month; the import volume was 12.03 million tons, up 2.70% month - on - month [16]. Lithium Carbonate - **Price and Basis**: SMM battery - grade lithium carbonate average price was 74,350 yuan/ton, up 0.34% from the previous day. The lithium spodumene concentrate CIF average price was 857 US dollars/ton, up 0.35% from the previous day [18]. - **Monthly Spread**: The 2511 - 2512 spread was - 340 yuan/ton, down 160 yuan/ton from the previous day [18]. - **Fundamental Data**: In September, the lithium carbonate production was 87,260 tons, up 2.37% month - on - month; the demand was 116,801 tons, up 12.28% month - on - month [18].

Market Overview - The Hong Kong stock market opened slightly lower on October 6, with the Hang Seng Index at 27,003 points, down 137 points, a decline of 0.50% [1] - The Hang Seng Technology Index reported 6,548.80 points, down 74.05 points, a decrease of 1.12% [4] New IPO - Xuan Bamboo Biotechnology-B (02575.HK) is conducting an IPO from October 6 to October 10, planning to globally offer 67.335 million shares, with 10% allocated for Hong Kong and 90% for international sales, plus a 15% over-allotment option, at a price of HKD 11.6 per share [3] - The stock is expected to start trading on the Hong Kong Stock Exchange on October 15 [3] - Xuan Bamboo is an innovative Chinese biopharmaceutical company with over ten drug assets in active development, targeting digestive diseases, tumors, and non-alcoholic fatty liver disease (NASH) [3] Sector Performance - Technology stocks generally declined, with NetEase opening down over 2% but later recovering; Bilibili, Lenovo, Alibaba, JD.com, and Baidu all fell over 1%, while Tencent saw a rise of over 1% [3] - Gold stocks experienced gains, with China Silver Group up over 10% and Zifeng Gold up over 5% [3] - Semiconductor stocks were active, with Hongguang Semiconductor rising over 1% [3] - Automotive stocks weakened, with Xpeng Motors down over 4% [3] Market Sentiment and Forecast - According to Industrial Securities, the current Hong Kong market is driven by three favorable factors: rising policy expectations, bottoming earnings recovery, and a loose liquidity environment, which may enhance market risk appetite [5] - The Federal Reserve has entered a rate-cutting cycle, with expectations for further cuts in October, creating a more favorable external environment for Hong Kong stocks [5] - Guosen Securities noted that the Fed's dovish stance improves overseas liquidity, and the unusual rise in Hong Kong stocks amid earnings downgrades in August and September indicates a systematic change in risk premium, opening up further upside potential for the market [5] - The weighted risk premium assessment has led to an upward revision of the 2025 Hang Seng Index target to 29,000 points [5]

Market Performance - On September 23, the market experienced a rebound after a significant drop, with the ChiNext index rising by 0.21% while the Shanghai Composite Index fell by 0.18% and the Shenzhen Component Index dropped by 0.29% [2] - Over 4,200 stocks declined in the market, with a total trading volume of 2.49 trillion yuan, an increase of 372.9 billion yuan compared to the previous trading day [2] - The market saw a brief moment where the number of declining stocks exceeded 5,000, indicating high volatility [2] Technical Indicators - The Wind data indicated that the market indices, including the Wind All A Index and average stock price, approached the 30-day moving average, suggesting a weakening trend for most stocks [4] - The recent strong indices, such as the Shenzhen and ChiNext, experienced downward breaks of their 5-day or 10-day moving averages before slightly recovering [2][4] Market Sentiment and Expectations - There is a belief that a rebound is likely following the significant drop, supported by historical patterns of recovery after sharp declines [5] - The upcoming anniversary of the "9·24" market event is seen as a potential catalyst for market recovery, which could boost investor confidence [10] Fund Flows and External Influences - There were signs of capital inflow towards the end of the trading day, indicating a possible anticipation of market recovery [11] - External factors, such as the performance of US tech stocks, have influenced the A-share market, with some domestic tech stocks opening high but closing lower [11] Market Dynamics and Risks - Analysts suggest that the market's recent downturn may be attributed to profit-taking behavior ahead of the long holiday, particularly among leveraged funds [12] - The current financing balance stands at 2.4 trillion yuan, which, while not excessively high relative to market capitalization, indicates a significant amount of capital that could be affected by risk factors [12] Future Outlook - According to research from Huajin Securities, the market may see stronger performance in October and December due to potential policy shifts and expectations of liquidity easing from the Federal Reserve [15][16]

Core Viewpoint - The A-share market has experienced adjustments after reaching new highs, but it remains in a consolidation phase since September, with a positive outlook on liquidity and market sustainability [1] Market Analysis - The current market's sustainability is heavily influenced by the liquidity situation, which appears to be positive [1] - There is a focus on the direction of market profitability moving forward, with ongoing improvements in overseas liquidity and geopolitical issues [1] - The domestic economic fundamentals are showing upward momentum, supporting a mid-term bullish outlook for the market [1] Investment Strategy - It is recommended to maintain a high position in the market, with an emphasis on balanced sector selection [1] - Attention should be given to the continuation of the positive trends indicated in the third-quarter reports [1] - Specific sectors to focus on include domestic computing power chains, innovative pharmaceuticals, robotics, chemicals, batteries, and leading consumer goods companies [1]

Core Viewpoint - The report from Huatai Securities indicates that after reaching a new high, the A-share market has experienced some adjustments but remains in a consolidation phase since September. The sustainability of the current market trend is largely dependent on the positive feedback from the liquidity situation [1] Market Conditions - The current liquidity environment is viewed as positive, with ongoing improvements in overseas liquidity and geopolitical issues. The domestic economic fundamentals are also showing upward momentum, supporting the mid-term outlook for the market [1] Investment Strategy - The company recommends maintaining a high position in the market and emphasizes the importance of balanced sector selection. Attention should be paid to the continuation of profitability trends as reflected in the upcoming third-quarter reports [1] Sector Focus - Specific sectors to watch include: - Domestic computing power chain - Innovative pharmaceuticals - Robotics - Chemicals - Batteries - Leading consumer goods companies [1]

Group 1: Market Performance - In August, the Hong Kong stock market experienced an overall increase, with the Hang Seng Index and Hang Seng Tech rising by 25.0% and 27.0% respectively compared to the end of 2024 [1] - The monthly average daily turnover (ADT) for the Hong Kong Stock Exchange reached HKD 279.1 billion, reflecting a month-on-month increase of 6.2% and a year-on-year increase of 192.1% [1] - Northbound trading ADT was HKD 322.8 billion, with month-on-month and year-on-year increases of 45.2% and 204.9% respectively, while southbound trading ADT was HKD 155.2 billion, with increases of 7.4% and 448.3% [1] Group 2: Derivatives Market - In August, the average daily volume (ADV) for futures was 627,000 contracts, showing month-on-month and year-on-year increases of 9.6% and 5.3% respectively [1] - The ADV for options was 962,000 contracts, with month-on-month and year-on-year increases of 2.1% and 34.5% [1] - As of the end of August, the ADT for structured products such as bull and bear certificates and derivative warrants was HKD 17.5 billion, reflecting increases of 11.9% and 58.6% year-on-year [1] Group 3: Initial Public Offerings (IPOs) - In August, there were 6 new IPOs in Hong Kong, with a total scale of HKD 5.4 billion, representing a month-on-month decrease of 73% but a year-on-year increase of 189% [2] - The number of newly listed derivative warrants and bull and bear certificates was 941 and 2,386 respectively, with year-on-year increases of 75% and 40% [2] Group 4: Investment Income and Economic Environment - As of the end of August, the HIBOR rates for 6 months, 1 month, overnight, and the US overnight bank funding rate were 3.27%, 3.30%, 4.00%, and 4.33% respectively, with month-on-month increases across the board [2] - The domestic economic environment showed signs of recovery, with the manufacturing PMI at 49.40%, indicating a slight improvement [3] - The overseas economic outlook suggests a strengthening of interest rate cut expectations, with the Federal Reserve expected to cut rates by 25 basis points in September 2025 [3] Group 5: Valuation and Future Outlook - As of the end of August, the company's price-to-earnings (PE) ratio was 37.02x, positioned at the 52nd percentile historically since 2016, indicating potential value for investors [4] - The company is expected to achieve revenues of HKD 30.3 billion, HKD 33.2 billion, and HKD 35.6 billion for the years 2025 to 2027, with corresponding net profits of HKD 19.4 billion, HKD 20.6 billion, and HKD 22.3 billion [4] - The projected PE ratios for 2025, 2026, and 2027 are 29.3x, 27.7x, and 25.4x respectively, suggesting a favorable investment opportunity [4]

Core Viewpoint - The Hong Kong stock market's technology sector is experiencing a divergence, with some companies like SMIC and Xiaopeng Motors performing well, while others like Xiaomi and Tencent are declining [1][2]. Company Performance - Xiaomi reported impressive Q2 results with revenue of 116 billion RMB, a year-on-year increase of 30.5%, and an adjusted net profit of 10.83 billion RMB, up 75.4% year-on-year, marking a historical high [2]. - Tencent's Q2 revenue grew by 15% and net profit increased by 17%, indicating strong performance among leading tech companies [3]. Market Trends - Despite recent market weaknesses attributed to concerns over e-commerce price wars and economic recovery, there is a significant influx of capital into Hong Kong stocks, particularly in the technology sector, with net purchases exceeding 940 billion HKD this year [3][9]. - The Hong Kong Technology 50 ETF has seen a net inflow of over 180 million RMB in the past 14 trading days, indicating strong investor interest [3]. Valuation Insights - The current valuation of the Hong Kong technology index is at a historical low, with a price-to-earnings ratio of 22.48, suggesting a high safety margin for investors [7]. - The ETF covering major tech companies like Alibaba, Tencent, and Xiaomi accounts for over 30% of its holdings, providing comprehensive exposure to the sector [6]. Future Outlook - The technology sector in Hong Kong is expected to perform even better in the second half of the year, driven by performance expectations and valuation restructuring [9].

Core Viewpoint - The Hong Kong stock market showed strong performance in April, with active trading and positive expectations for continued growth in the exchange's performance [1][2]. Market Segments Cash Market - The Hang Seng Index and Hang Seng Tech Index increased by 10% and 14% respectively compared to the end of 2024. The monthly average daily turnover (ADT) for the Hong Kong Stock Exchange was HKD 274.7 billion, showing a month-on-month decrease of 2.0% but a year-on-year increase of 144.7% [1]. - Northbound capital's monthly ADT was HKD 973.2 billion, with a month-on-month decrease of 20% and a year-on-year increase of 20%. Southbound capital's monthly ADT was HKD 191.1 billion, with a month-on-month decrease of 3% and a year-on-year increase of 145% [1]. Derivatives Market - Futures trading volume increased month-on-month, while options trading volume decreased. The average daily volume (ADV) for futures was 841,000 contracts, reflecting a month-on-month increase of 5.6% and a year-on-year increase of 23.2%. The ADV for options was 1,003,000 contracts, showing a month-on-month decrease of 6.0% but a year-on-year increase of 14.0% [1]. Commodity Market - The London Metal Exchange (LME) saw an increase in trading volume both month-on-month and year-on-year, with an average daily trading volume of 880,000 contracts, up 10.6% month-on-month and 2.7% year-on-year [2]. Primary Market - The IPO scale in the Hong Kong stock market decreased both month-on-month and year-on-year, with two new stocks listed in April, totaling HKD 2.9 billion, down 73% month-on-month and 6% year-on-year [2]. Investment Income - Investment income rates related to the Hong Kong Stock Exchange increased month-on-month but decreased year-on-year. As of the end of April, the 6-month HIBOR was 4.03%, the 1-month HIBOR was 3.95%, the overnight HIBOR was 4.50%, and the US overnight bank funding rate was 4.33% [2]. Macroeconomic Environment Domestic Factors - The overall economic sentiment in China declined, with both supply and demand weakening. The manufacturing PMI for April was 49.0%, down 1.50 percentage points month-on-month. New orders and new export orders indices were 49.2% and 44.7%, down 2.60 and 4.30 percentage points respectively [3]. International Factors - The pause in interest rate cuts has led to tightening liquidity overseas, with the Federal Reserve maintaining the federal funds rate at 4.25%-4.50%. The market expects no rate cuts until June 2025, with a projected 25 basis point cut in September 2025 and a total of 50 basis points for the year [3]. Investment Recommendations - As of the end of April, the company's price-to-earnings (PE) ratio was 30.52x, indicating a high cost-performance ratio. The company is expected to see revenue and other income of HKD 29.1 billion, 30.6 billion, and 32.1 billion for 2025-2027, with net profit attributable to shareholders of HKD 17.3 billion, 18.2 billion, and 19.2 billion respectively, corresponding to PE valuations of 29.2x, 27.7x, and 26.2x [4].

Group 1 - The Federal Reserve has maintained the federal funds rate target range at 4.25% to 4.50%, marking the third consecutive time this year that rates have remained unchanged [1] - The performance of the Hong Kong stock market is closely linked to global liquidity, particularly U.S. dollar liquidity, influenced by the Federal Reserve's monetary policy, dollar exchange rates, and U.S. Treasury yields [1][2] Group 2 - Changes in U.S. Treasury yields significantly impact cross-border capital flows and the valuation of Hong Kong stocks, with rising yields leading to reduced investment in Hong Kong assets [3] - The monetary policy cycle of the Federal Reserve affects the Hong Kong stock market differently, with initial rate cuts improving liquidity and benefiting the market, while rate hikes can complicate market dynamics [5][4] Group 3 - The U.S. dollar index influences international capital allocation preferences, with a stronger dollar increasing the cost of holding non-dollar assets, thereby pressuring Hong Kong stocks [8][9] - Fluctuations in the exchange rate, particularly the USD/CNY rate, affect the earnings of Chinese companies listed in Hong Kong, indirectly impacting stock valuations [9][10] Group 4 - The Hong Kong-Macau interest rate differential directly affects local liquidity, with the Hong Kong Monetary Authority managing the exchange rate through an automatic interest rate adjustment mechanism [14][15] - Changes in the Libor-Hibor spread influence local liquidity conditions, with widening spreads leading to increased financing costs and pressure on high-valuation growth stocks [15][16] Group 5 - The overall impact of overseas liquidity on Hong Kong stocks can be summarized as follows: U.S. Treasury yields, U.S.-China interest rate differentials, and Hong Kong-Macau interest rate differentials drive style shifts through valuation and capital flow effects, while the dollar index and exchange rate fluctuations influence market preferences [19]