Core Viewpoint - The article discusses the current market trends, particularly focusing on the performance of growth and value styles, the recovery of the A-share market, and the potential for consumer sector recovery in the future. Group 1: Market Performance - The overall market opened low but closed higher, reaching a rating of 4.2 stars, close to 4.1 stars [1] - Growth style saw a significant increase today, while value style experienced a slight decline [2][7] - The ChiNext index experienced a correction of over 10% after reaching high valuations post the National Day holiday [3] - Recent earnings reports from leading companies in the ChiNext indicate good profit growth, contributing to the index's rise [4] Group 2: Style Rotation - The A-share market is characterized by style rotation, with growth style recently outperforming value style [5][6] - In the past few days, growth style had declined while value style was on the rise [6] Group 3: Consumer Sector Analysis - The current low performance in the consumer sector is attributed to a weak fundamental backdrop, similar to the period from 2013 to 2017 [10] - The consumer sector's valuation is at historical lows, comparable to the lowest levels seen in 2013 [12][13] - If the economic fundamentals improve and the consumer sector enters a growth cycle, profit growth for listed companies in this sector is expected to rise, leading to a potential recovery [32][35] Group 4: Future Outlook - The timing of a potential recovery in the consumer sector remains uncertain, with predictions ranging from this year to the next two years [34] - Investors looking at consumer stocks should be prepared for long-term investments, as the sector may experience significant volatility [36] Group 5: Hong Kong Market Insights - The Hong Kong stock market has also seen an overall increase, with technology stocks leading the gains [8] - The article provides a summary of the valuation of Hong Kong stock indices for reference [9][37]

Core Viewpoint - The coal, chemical, and energy sectors are showing strength against the market trend, with various ETFs in these sectors rising over 2% [1] Group 1: Market Performance - Coal ETFs, chemical ETFs, and petrochemical ETFs have all increased by more than 2%, while rare metals and energy ETFs have risen over 1.5% [1] - The strong performance in these sectors is attributed to a combination of seasonal demand and supply constraints due to weather and regulatory factors [1] Group 2: Supply and Demand Dynamics - A "rapid freeze" weather pattern is expected to impact the northern and southern regions of China, leading to increased winter storage and replenishment needs [1] - Continuous abnormal autumn rains in major coal-producing areas and deepening production restrictions are expected to tighten supply further [1] Group 3: Future Outlook - Pacific Securities anticipates that the strong performance of traditional sectors like coal will not be a short-lived phenomenon, predicting renewed market attention over the next quarter [1] - The report suggests that sectors such as coal, banking, photovoltaic, aquaculture, and nuclear power are expected to perform well in the fourth quarter [1] - The current high absorption rate in technology sectors indicates that chasing high returns may be challenging, reinforcing the potential for gains in undervalued sectors [1] Group 4: Market Sentiment - Zhongyin Securities believes that there is only a rotation of styles rather than a complete switch, indicating that the current market adjustments do not signal panic [2] - The anticipated "spring rally" in the A-share market may begin as early as December, contingent on sufficient prior adjustment space [2] - The report emphasizes that the current adjustments in the technology growth style are healthy and may create favorable conditions for future performance [2]

1. Report Industry Investment Rating - No industry investment rating information is provided in the report. 2. Core View of the Report - Since early September, both the equity and convertible bond markets have shown signs of "high - low switching", with the convertible bond market having more frequent style switches. The current market "high - low switching" may be a transition in the re - balancing process, and it is difficult to achieve a complete style switch. It is recommended to take profits on over - valued securities and wait for new opportunities from the internal rotation of the growth theme [8][15][17]. - The A - share market was weak this week, with major indices generally declining. Defensive sectors such as banks and coal performed well, while the technology growth sector continued to adjust. It is recommended to focus on the structural opportunities in defensive and pro - cyclical sectors [8]. - The convertible bond market declined following the equity market. Large - cap convertible bonds were more resilient, and the valuation structure was significantly differentiated. It is recommended to select sectors supported by the underlying stocks based on the rhythm of valuation compression and sector rotation [8]. - The supply in the primary market was stable this week, with 2 new bonds open for subscription and 9 companies updating their convertible bond issuance plans. Clause - related events were still frequent, and it is necessary to pay attention to the marginal impact of downward revision and redemption expectations on the valuation structure and trading rhythm [8]. 3. Summary by Relevant Catalogs 3.1 Style "High - Low Switch", Waiting for New Opportunities - Since early September, the "high - low switching" in the equity and convertible bond markets has been evident from the turnover ratio. The convertible bond market's "high - low switching" is more frequent, which may be related to the relatively high overall valuation and limited allocation cost - effectiveness [15][17]. - The "high - low switching" may be a transitional form in the re - balancing process, and it is difficult to achieve a complete style switch. It is recommended to take profits on over - valued individual bonds and industries and pay attention to new opportunities from the internal rotation of the growth theme [19][20]. 3.2 Market Theme Weekly Review - This week, the trading - related themes in the equity market were strong, but there was no clear main line. Defensive sectors such as banks and coal performed well, while the technology growth sector continued to decline [22]. 3.3 Market Weekly Tracking 3.3.1 Main Indices Generally Declined, Defensive Sectors More Resilient - This week, the main A - share indices generally declined, with the Shanghai Composite Index showing some resilience. The CSI 300 and CSI 2000 performed slightly better than the CSI 500 and STAR 50 [24]. - The net outflow of main funds was volatile, indicating increased market divergence. Trading was concentrated in sectors such as electronics and power equipment, but the risks of high congestion and high valuation cannot be ignored [8][26]. 3.3.2 Convertible Bond Market Declined Following the Equity Market, Large - Cap Convertible Bonds More Resilient - This week, the convertible bond market declined following the equity market. Large - cap convertible bonds were more resilient, and the valuation structure was significantly differentiated. The median market price fluctuated downward, and the implied volatility remained high but slightly declined [8][35]. - At the industry level, cyclical and defensive sectors performed well, and sectors such as power equipment and electronics had active trading. At the individual bond level, most bonds were weak, and some low - premium bonds had certain elasticity [8][44]. 3.4 Convertible Bond Issuance and Clause Tracking 3.4.1 New Bond Issuance - This week, 2 new convertible bonds, Funeng Convertible Bond and Jinlang Convertible Bond 02, were open for subscription, with issuance scales of 3.802 billion yuan and 1.677 billion yuan respectively [53]. 3.4.2 Update of Issuance Plans - This week, 9 listed companies updated their convertible bond issuance plans, including 2 at the approved - for - registration stage, 2 at the exchange - acceptance stage, 2 at the shareholders' - meeting - passed stage, and 3 at the board - proposal stage. The total disclosed scale of projects at the exchange - acceptance and later stages reached 64.74 billion yuan [54]. 3.4.3 Clause - Related Events - Downward Revision: This week, 6 convertible bonds announced that they were expected to trigger downward revision, and 9 announced that they would not revise downward [61]. - Redemption: This week, 4 convertible bonds announced that they were expected to trigger redemption, 6 announced that they would not redeem in advance, and 5 announced early redemption [67].

Report Investment Rating - The report gives a "★☆☆" rating to CITIC's five-style stability, indicating a slightly bullish view with limited operability in the market [5]. Core Viewpoints - In the week ending October 17, 2025, Tonglian All A (Shanghai, Shenzhen, Beijing), ChinaBond Composite Bond, and Nanhua Commodity Index had weekly returns of -3.39%, 0.21%, and -1.14% respectively. In the public fund market, equity long strategies retreated, pure bonds outperformed, neutral strategy products showed mixed performance, and among commodities, precious metal ETFs rose while non-ferrous metal ETFs declined, and energy chemical and soybean meal ETFs continued to weaken [5]. - Among CITIC's five styles, the financial style rose last week while others fell. The style rotation chart shows that the growth and consumption styles weakened marginally in terms of relative strength, and the financial style increased significantly in terms of indicator momentum. In the public fund pool, cyclical style funds had better excess performance in the past week, and other style funds underperformed the index on average. The product's deviation from cyclical and consumption styles increased marginally, and the overall market congestion indicator increased marginally this week, with the cyclical style currently in a historically high congestion range [5]. - In the neutral strategy, the stock index basis showed a marginal recovery trend last week. The IM contract rebounded from below the -2 standard deviation of the three - month average to within one standard deviation, and the premium rates of the corresponding spot index ETFs of IH and IF were in the top 20% quantile range of the past three months [5]. - Among Barra factors, the residual momentum factor had better performance in the past week with a weekly excess return of 2.49%, while the momentum and capital flow factors had excess drawdowns. The win - rates of the profitability and leverage factors improved. The cross - section rotation speed of factors increased significantly this week and is currently in a relatively high quantile range in the past year [5]. - According to the latest scoring results of the style timing model, the consumption and financial styles recovered marginally this week, the cyclical style declined, and the current signal favors the stable style. The return of the style timing strategy last week was 0.52%, with an excess return of 1.45% compared to the benchmark equal - weighted allocation [5]. Summary by Directory Fund Market Review - In the public fund market, equity long strategies had a drawdown in the past week, pure bonds had better returns, neutral strategy products showed mixed performance, precious metal ETFs in commodities had large increases, non - ferrous metal ETFs had a return correction, and energy chemical and soybean meal ETFs' net values continued to weaken [5]. - Among CITIC's five styles, the financial style rose last week while others fell. Cyclical style funds had better excess performance in the public fund pool, and other style funds underperformed the index on average. The product's deviation from cyclical and consumption styles increased marginally, and the overall market congestion indicator increased marginally this week, with the cyclical style in a historically high congestion range [5]. - In the neutral strategy, the stock index basis recovered marginally last week, and the premium rates of the corresponding spot index ETFs of IH and IF were in the top 20% quantile range of the past three months [5]. - Among Barra factors, the residual momentum factor had a weekly excess return of 2.49%, the momentum and capital flow factors had excess drawdowns, and the win - rates of the profitability and leverage factors improved. The factor cross - section rotation speed increased significantly and is in a relatively high quantile range in the past year [5]. - According to the style timing model, the consumption and financial styles recovered marginally this week, the cyclical style declined, and the style timing strategy had a return of 0.52% last week, with an excess return of 1.45% compared to the benchmark [5]. Recent Market Returns - The weekly, monthly, quarterly, and semi - annual returns of Tonglian All A (Shanghai, Shenzhen, Beijing), ChinaBond Composite Bond (net), and Nanhua Commodity are presented in the report, along with data on the establishment scale of public funds in the past year, the maximum drawdown of major public fund strategy indices in the past three months, and the weekly returns of major public fund strategy indices [7]. CITIC Style Index - The net value trends of CITIC's financial, cyclical, consumption, growth, and stable style indices are shown, as well as the relative rotation chart of these style indices, which reflects the relative strength and momentum of different styles in different time periods [8][9]. - The excess return performance of CITIC style - based fund style indices in different time periods (weekly, monthly, quarterly, semi - annual, annual) is presented, along with the congestion levels of different styles (excluding the stable style due to data limitations) [10][11]. Barra Factors - The preference levels of Barra single - factors (ranging from 0 - 1) are shown, indicating the degree of preference for different factors. The excess return performance of Barra single - factor style strategies in different time periods (weekly, monthly) is also presented, as well as the excess net value trends of Barra single - factor styles since this year [13][14][17].

1. Report Industry Investment Rating No information about the report industry investment rating is provided in the given content. 2. Core Views of the Report - Short - term, the convertible bond market experiences a shift from high - risk to low - risk sectors due to style rotation, mainly driven by risk - aversion sentiment after sudden events. Long - term, the trading momentum of the convertible bond market remains strong, and the current period may be a good time for investors to optimize their portfolio structures [1][2]. - After a phased adjustment, the technology sector becomes more cost - effective. It is expected that a temporary agreement will be reached before the tariff implementation on November 1st. After the major meeting later this month, there may be a new round of domestic growth - stabilizing policies, and the convertible bond market may have pulse - type opportunities with a potential continuation of the slow - bull market. If the macro - narrative changes, combined with better - than - expected quarterly revenues and continuous catalysis from theme industries, the technology sector may regain market focus and show more elasticity [2][14]. 3. Summary According to the Table of Contents 3.1 1. Convertible Bond Weekly Thinking - The convertible bond market shows a high - to - low shift in style rotation, mainly due to risk - aversion sentiment caused by unexpected tariff disturbances. Since October, the convertible bond market has undergone a structural adjustment, similar to the equity market in sector rotation. Short - term funds show obvious risk - aversion, and dividend - related sectors perform well. From October, the Wind Convertible Bond Weighted Index declined by 1.83%, with a more restrained adjustment compared to April. The style shifted from growth to defensive sectors like dividends, and the anti - decline property of convertible bonds is significant. In terms of industries, the Wind Convertible Bond Financial Index and Energy Index recorded 1.07% and 1.77% respectively since October, outperforming the Information Technology (-4.15%) and Consumption (-4.58%) indices [7]. - In terms of trading, the convertible bond market remains resilient, and there are still opportunities for structural market trends. This year, the convertible bond market has performed well, with the CSI Convertible Bond Index rising by 14.39% since 2025. However, in a high - valuation environment, the market is more sensitive to macro - environment changes, and the volatility of the technology growth sector and related products has increased significantly. In the short - term, due to a wait - and - see attitude, there is room for market adjustment, leading to a continuous correction of high - valuation products. Although the price center of convertible bonds has been fluctuating recently, except for high - price convertible bonds, the median price and the balance - weighted average price of the convertible bond market remain at the mid - September level. Except for the consumption sector, the overall turnover rate and trading volume of most industries are still above the 80th percentile of historical data. Long - term, the trading momentum of the convertible bond market remains, and it may be a good time for investors to optimize their portfolio structures. The defensive property of convertible bonds is still attractive [2][8]. 3.2 2. Convertible Bond Market Tracking 2.1 Convertible Bond Market Conditions - The performance of different convertible bond indices varies. For example, the Wind Convertible Bond Energy Index has different changes in different time periods: -0.06% in the recent week, 1.77% in the recent two weeks, etc. The Wind Convertible Bond Information Technology Index declined by 3.51% in the recent week and 4.15% in the recent two weeks [15]. 2.2 Convertible Bond Individual Securities No specific content about convertible bond individual securities is provided other than the mention of relevant charts (Figures 6 and 7 showing the top ten and bottom ten individual securities in terms of price changes in the recent week) [18]. 2.3 Convertible Bond Valuation No specific analysis content about convertible bond valuation is provided, but there are relevant charts (Figures 8 - 11) showing the valuation trends of bond - type, balanced, equity - type convertible bonds and the conversion premium rate valuation trends of convertible bonds with different parities [23][25]. 2.4 Convertible Bond Prices No specific analysis content about convertible bond prices is provided, but there are relevant charts (Figures 12 - 13) showing the proportion trend of high - price bonds and the median price of convertible bonds [30].

Quantitative Models and Construction Methods - **Model Name**: "百元转股溢价率" (Hundred Yuan Conversion Premium Rate) **Model Construction Idea**: This model compares convertible bond valuation with stock valuation by constructing a time-series comparable valuation indicator[4][13] **Model Construction Process**: At each time point, the relationship curve between conversion premium rate and conversion value is fitted in the cross-sectional space. The conversion value of 100 is substituted into the fitting formula to obtain the "百元转股溢价率". The specific fitting formula is: $$ y_{i}=\alpha_{0}+\,\alpha_{1}\cdot\,{\frac{1}{x_{i}}}+\epsilon_{i} $$ In the formula, \( y_{i} \) represents the conversion premium rate of the \( i \)-th bond, \( x_{i} \) represents the conversion value of the \( i \)-th bond[42] **Model Evaluation**: The model provides a relative valuation perspective for convertible bonds and stocks[4][13] - **Model Name**: "修正 YTM – 信用债 YTM"中位数 (Adjusted YTM - Credit Bond YTM Median) **Model Construction Idea**: This model isolates the impact of conversion clauses on convertible bond YTM to compare the relative valuation of debt-oriented convertible bonds and credit bonds[5][13] **Model Construction Process**: $$ 修正 YTM = 转债 YTM ×（1–转股概率）+ 预期转股的到期年化收益率×转股概率 $$ Using the BS model, the conversion probability \( N(d2) \) is calculated by substituting stock closing price, option exercise price, stock volatility, remaining term, and discount rate. Then, the adjusted YTM for each debt-oriented convertible bond is calculated. The median of the difference between adjusted YTM and credit bond YTM is expressed as: $$ "修正 YTM – 信用债 YTM"中位数 = median{X1, X2, ... , Xn} $$ Where \( X_{i} \) represents the difference between the adjusted YTM of the \( i \)-th convertible bond and the YTM of a credit bond with the same rating and term[43] **Model Evaluation**: The model effectively evaluates the relative cost-effectiveness of debt-oriented convertible bonds compared to credit bonds[5][13] Model Backtesting Results - **"百元转股溢价率" Model**: Rolling three-year percentile is 98.70%, rolling five-year percentile is 94.90%[4][14] - **"修正 YTM – 信用债 YTM" Model**: Current median value is -2.96%, indicating low cost-effectiveness for debt-oriented convertible bonds[5][14] Quantitative Factors and Construction Methods - **Factor Name**: 转股溢价率偏离度 (Conversion Premium Rate Deviation) **Factor Construction Idea**: Measures the deviation of the conversion premium rate relative to the fitted value, making different parities comparable[19] **Factor Construction Process**: $$ 转股溢价率偏离度 = 转股溢价率 − 拟合转股溢价率 $$ The number of convertible bonds determines the fitting quality[19] **Factor Evaluation**: Provides a systematic enhancement perspective for convertible bond valuation[18][19] - **Factor Name**: 理论价值偏离度 (Theoretical Value Deviation - Monte Carlo Model) **Factor Construction Idea**: Measures the price expectation difference using Monte Carlo simulation, fully considering convertible bond clauses such as conversion, redemption, downward revision, and repurchase[19] **Factor Construction Process**: $$ 理论价值偏离度 = 转债收盘价 / 理论价值 - 1 $$ At each time point, 10,000 paths are simulated using the same credit term limit rate as the discount rate to calculate the theoretical value of the convertible bond[19] **Factor Evaluation**: Performs well in evaluating convertible bonds, especially equity-oriented ones[18][19] - **Factor Name**: 转债综合估值因子 (Convertible Bond Comprehensive Valuation Factor) **Factor Construction Idea**: Combines the above two factors to enhance valuation across all domains and subdomains (equity-oriented, balanced, debt-oriented)[18][19] **Factor Construction Process**: $$ 转债综合估值因子 = Rank（转股溢价率偏离度）+ Rank（理论价值偏离度（蒙特卡洛模拟）） $$ **Factor Evaluation**: Demonstrates superior performance in valuation enhancement across all domains[18][19] Factor Backtesting Results - **Conversion Premium Rate Deviation Factor**: Near-term enhancement excess returns for equity-oriented, balanced, and debt-oriented convertible bonds are -3.01%, -0.34%, and -0.02%, respectively[6][21] - **Theoretical Value Deviation Factor**: Performs best in equity-oriented convertible bonds[18][19] - **Convertible Bond Comprehensive Valuation Factor**: - Equity-oriented low valuation index: IR = 1.24, annualized return = 25.45%, annualized volatility = 20.54%, maximum drawdown = -22.94%, Calmar ratio = 1.11, monthly win rate = 61.96%[22] - Balanced low valuation index: IR = 1.26, annualized return = 14.90%, annualized volatility = 11.85%, maximum drawdown = -15.95%, Calmar ratio = 0.93, monthly win rate = 63.04%[22] - Debt-oriented low valuation index: IR = 1.40, annualized return = 13.28%, annualized volatility = 9.48%, maximum drawdown = -17.78%, Calmar ratio = 0.75, monthly win rate = 58.70%[22] Convertible Bond Style Rotation and Construction Methods - **Rotation Method**: **Idea**: Uses market sentiment indicators (convertible bond momentum and volatility deviation) to construct a convertible bond style rotation portfolio[7][26] **Process**: $$ 转债风格市场情绪捕捉指标 = Rank（转债 20 日动量）+ Rank（波动率偏离度） $$ Based on the ranking of sentiment indicators, the style index with the lowest ranking is selected for allocation. If rankings are equal, equal allocation is applied. If all three styles are selected, 100% allocation is made to the balanced low valuation style. Adjustments are made bi-weekly[27][28] **Evaluation**: Demonstrates stable excess returns compared to the convertible bond equal-weight index[30][33] Style Rotation Backtesting Results - **Convertible Bond Style Rotation**: - IR = 1.45, annualized return = 24.14%, annualized volatility = 16.70%, maximum drawdown = -15.89%, Calmar ratio = 1.52, monthly win rate = 64.13%[32] - Convertible Bond Low Valuation Equal-Weight Index: IR = 1.33, annualized return = 14.68%, annualized volatility = 11.01%, maximum drawdown = -15.48%, Calmar ratio = 0.95, monthly win rate = 61.96%[32] - Convertible Bond Equal-Weight Index: IR = 0.85, annualized return = 9.95%, annualized volatility = 11.75%, maximum drawdown = -20.60%, Calmar ratio = 0.48, monthly win rate = 60.87%[32] - Recent 4-week style rotation return: 2.26%; return since 2025: 37.81%[28][29]

Index Performance - The CSI A500 Index decreased by 3.31% this week, closing at 5392.97 points on October 17 [5] - The average daily trading volume for the week was 8521.04 billion yuan, reflecting a 22.20% decrease compared to the previous week [5] Top Performers - The top ten gainers in the CSI A500 index included: 1. Shanghai Pudong Development Bank (600000.SH) with a gain of 12.50% 2. Agricultural Bank of China (601288.SH) with a gain of 11.57% 3. Huatian Technology (002185.SZ) with a gain of 10.02% 4. Shanghai Jahwa United Co., Ltd. (600315.SH) with a gain of 9.42% 5. Hainan Airport (600515.SH) with a gain of 8.96% 6. Shaanxi Coal and Chemical Industry (601225.SH) with a gain of 8.61% 7. Jiangsu Bank (600919.SH) with a gain of 8.60% 8. Tongwei Co., Ltd. (600438.SH) with a gain of 8.31% 9. Air China (601111.SH) with a gain of 7.63% 10. China Pacific Insurance (601319.SH) with a gain of 7.32% [2] Bottom Performers - The top ten losers in the CSI A500 index included: 1. Shengquan Group (605589.SH) with a loss of 18.04% 2. Wentai Technology (600745.SH) with a loss of 17.17% 3. Betta Pharmaceuticals (300558.SZ) with a loss of 16.98% 4. Leo Group (002131.SZ) with a loss of 16.55% 5. Jinlang Technology (300763.SZ) with a loss of 15.40% 6. Tongfu Microelectronics (002156.SZ) with a loss of 14.98% 7. Yake Technology (002409.SZ) with a loss of 14.35% 8. Lens Technology (300433.SZ) with a loss of 14.26% 9. Zhongding Sealing Parts (000887.SZ) with a loss of 13.99% 10. Robot Technology (300757.SZ) with a loss of 13.95% [2] Fund Performance - All 40 CSI A500 ETFs experienced declines, with notable drops in Huatai-PB's CSI A500 Enhanced ETF and Guolian's A500 Enhanced ETF, both falling over 4% [5] - The total scale of the CSI A500 ETFs fell below 200 billion yuan, with Huatai-PB's fund at 249.03 billion yuan, Guotai's at 226.56 billion yuan, and E Fund's at 221.29 billion yuan [5] Market Insights - Pacific Securities research team suggests a balanced allocation towards low-position sectors, particularly banks and insurance with dividend protection attributes, as well as coal and agriculture sectors benefiting from domestic demand recovery [6] - Guohai Securities research team indicates that uncertainties from trade frictions may lead to a rotation in market styles, with a shift from overvalued growth sectors to undervalued sectors [6]

Market Overview - The overall market experienced a decline, with a rating of 4.2 stars [1] - Large-cap stocks saw less decline compared to small and mid-cap stocks [2] - The market continues to exhibit style rotation, with significant drops in growth style stocks [3][4] - The ChiNext and STAR Market fell by 4% recently [5] Style Performance - Growth style stocks faced substantial declines, while value style stocks remained relatively stable [6] - Recently, previously underperforming "old economy stocks" have shown an overall increase [7] - Indices focusing on value, dividends, and free cash flow have seen overall gains [8] - The 300 Value Index has returned from undervaluation to normal levels [9] Investment Opportunities - There are still some undervalued sectors, particularly in consumer industries, that have started to gain traction [11][13] - The Hong Kong market reflects similar trends, with stable dividends and declines in technology growth stocks, which have not yet returned to undervaluation [14][16] - The volatility in the Hong Kong market has been greater than in the A-share market this year [17] Investment Strategies - The investment strategy includes a pause on regular investments in the index-enhanced advisory portfolio as it has returned to normal valuation, with plans to resume when it returns to undervaluation [20] - The active selection portfolio continues regular investments, while the monthly salary investment portfolio, which consists of 40% stocks and 60% bonds, is recommended for stable market participation [20] - The monthly salary portfolio features a "low buy high sell" strategy and a cash flow distribution function [20] Fund Performance - The performance of the China A500 and China Dividend indices has returned to normal valuation, with plans to pause investments until they reach undervaluation again [26] - The China A500 has achieved a profit of 22%, while the China Dividend index has seen a profit of approximately 6% [26] - The article emphasizes the importance of patience in long-term investments, highlighting that opportunities will continue to arise [33]

Overall Introduction - The book introduces market rules, asset allocation logic, and strategies for different asset classes, including stocks, bonds, and commodities, while addressing practical issues faced by investors [4]. Core Views - The book proposes three dimensions to assess the market: policy, economy, and inflation, which are used to determine market conditions [7]. - Economic cycles are divided into six stages, each with corresponding asset preferences, ranging from bonds in the early slowdown to cash and commodities in the stagflation phase [11][12][13][39]. - Effective asset allocation strategies include the Permanent Portfolio, All Weather Portfolio, and Global Market Portfolio, emphasizing diversification and risk management [14][15][16]. Current Situation - Current policies are characterized as accommodative, with indicators such as M1 growth increasing from 0.39% in January to 5.96% in August [33]. - Economic recovery is weak, with industrial value-added growth declining from 7.7% to 5.2% [37]. - The market is likely in a transition between the late slowdown phase and the early recovery phase, suggesting a preference for small-cap growth stocks [39][40]. Investment Insights - Long-term asset allocation is crucial for sustained success, with diversified strategies proven to provide stable returns [44]. - A balanced stock-bond allocation is suitable for most investors, allowing for flexibility in extreme market conditions [45]. - Simplifying investment approaches and focusing on fundamental market principles can lead to better outcomes [47][48].

Market Overview - In September, domestic stock market indices showed a comprehensive increase, with the ChiNext Index rising significantly by 12.04%, while the CSI 1000 had a smaller increase of 1.83%. Year-to-date, the ChiNext Index has performed strongly with a gain of 51.20%, compared to a weaker performance of the CSI 300 at 17.94% [1][4]. - In terms of market style, small-cap stocks outperformed large-cap stocks in September, and growth stocks outperformed value stocks. Year-to-date, the ChiNext Small Cap Index has increased by 28.12%, while the ChiNext Large Cap Index has only risen by 17.64%. The Guozheng Growth Index has shown a gain of 30.64%, while the Guozheng Value Index has only increased by 4.61% [1][5]. - The best-performing sectors in September were Power Equipment and New Energy (+18.64%), Nonferrous Metals (+12.44%), and Electronics (+10.28%). Conversely, the worst-performing sectors were Comprehensive Finance (-8.04%), Banking (-6.65%), and Defense and Military Industry (-6.62%) [1][10]. - In the bond market, the total wealth index for corporate bonds decreased by 0.04%, while the total wealth index for government bonds fell by 0.52%. Year-to-date, corporate bonds have performed better with a gain of 1.46%, compared to a loss of 0.42% for government bonds [1][5]. - In the commodity market, major domestic commodity indices showed mixed results in September, with the Nanhua Gold Index rising by 11.05% and the Nanhua Agricultural Products Index declining by 2.79%. Year-to-date, the Nanhua Gold Index has increased by 39.76%, while the Nanhua Energy and Chemical Index has decreased by 10.57% [1][5]. - In overseas markets, major stock indices showed mixed results in September, with the Hang Seng Technology Index rising by 13.95% and the German DAX Index declining by 0.09%. Year-to-date, the Hang Seng Technology Index has performed well with a gain of 44.71%, while the French CAC40 Index has shown a decline of 6.98% [1][7]. ETF Strategy Performance - As of September 30, 2025, the Style Rotation Portfolio has shown outstanding cumulative returns since inception at 118.04%, surpassing its benchmark by 76.98%. The 80/20 Rotation Portfolio has also performed well with a cumulative return of 56.82%, exceeding its benchmark by 16.30% [2][11]. - The Valuation Selection ETF has demonstrated strong performance this year with a cumulative return of 44.33%, exceeding its benchmark by 39.72%. The Global Allocation Portfolio has achieved a cumulative return of 23.66% this year, surpassing its benchmark by 10.01% [2][11]. - The Dynamic Duration Strategy has shown a cumulative return of 19.41% since inception, exceeding its benchmark by 4.01%. The Asset Rotation Strategy has performed well this year with a cumulative return of 25.44%, surpassing its benchmark by 19.87%. The Asset Rotation Strategy 2.0 has also shown a cumulative return of 23.21% this year, exceeding its benchmark by 17.64% [2][11].