Investment Rating - The industry investment rating is "Leading the Market - A" and the rating is maintained [5]. Core Viewpoints - The State Council emphasizes strengthening counter-cyclical adjustments, and new urban construction is expected to accelerate. Effective investment is to be expanded, enhancing market vitality and increasing quality supply [16][17]. - Infrastructure investment has maintained steady growth since the beginning of the year, but the growth rate has slightly declined. Q4 is typically a peak construction season for the industry, and with counter-cyclical adjustments, infrastructure investment is expected to accelerate in Q4 [16]. - The report suggests focusing on undervalued construction companies, especially as the fundamentals are expected to improve with policy catalysts and marginal improvements in the economic environment [16][10]. Summary by Sections Industry Dynamics Analysis - The State Council's meeting on October 14 highlighted the need for effective investment expansion and the promotion of new urban infrastructure construction, which is expected to drive growth in the construction sector [16][17]. Market Performance - The construction industry experienced a decline of 1.67%, underperforming the Shanghai Composite Index, but the decoration and renovation sector showed strong performance with a 2.88% increase [18][19]. - The overall industry P/E ratio is 11.88, and the P/B ratio is 0.85, indicating a relatively low valuation compared to other sectors [21]. Key Investment Targets - Recommended stocks include major state-owned enterprises such as China Railway, China Communications Construction, and China State Construction, which are expected to benefit from improved fundamentals and valuation recovery [10][12]. - The report also highlights the potential of companies involved in smart construction and infrastructure, such as those utilizing BIM technology [17][11]. Company Announcements - Recent major contract announcements include significant projects won by companies like Zhongyan Dadi and Shaanxi Construction, indicating ongoing demand in the sector [29][30].

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - This week, the transaction volume of new real - estate properties increased month - on - month but decreased year - on - year, while the transaction volume of second - hand properties increased month - on - month. Automobile consumption heated up, and movie box office decreased. The demand for consumption showed differentiation. [1][2] - In the production field, the operating rates showed differentiation. The PTA operating rate decreased, and the petroleum asphalt operating rate increased. [1][3] - In terms of investment, the apparent consumption of rebar recovered, but its price decreased. The cement price and inventory - to - capacity ratio were lower than the same period last year. [1][4] - Commodity futures prices fluctuated. Futures prices of non - ferrous metals such as lithium carbonate, polysilicon, and copper led the gains. [1][5] - The central government highly values the continuous pressure on the real - estate market. Recently, first - tier cities have relaxed purchase restrictions, and it is expected that the real - estate policy toolbox may be further opened, aiming for a soft - landing of the market. [1][11] 3. Summary According to the Directory 3.1 Demand - Real - estate: The transaction area of commercial housing in 20 cities increased month - on - month and decreased year - on - year. The transaction area of second - hand properties in key cities increased month - on - month. As of the week of October 17, the transaction area of commercial housing in 20 cities was 242.9 million square meters, up 166% month - on - month and down 22% year - on - year. [2][11] - Consumption: Automobile consumption heated up rapidly, with the daily average retail sales of passenger cars up 94.1% month - on - month and 6.7% year - on - year. Movie consumption decreased year - on - year, with the national movie box office down 78.3% month - on - month and 38.5% year - on - year. The national migration scale index continued to decline, and subway ridership in first - tier cities increased. [2][36] 3.2 Production - Mid - and upstream: The operating rate of Tangshan blast furnaces increased 1.1% month - on - month, the PTA operating rate decreased 1.6% month - on - month, the operating rate of polyester filament in the Jiangsu and Zhejiang regions remained flat, the rebar operating rate increased 1.3 pct to 41.3%, and the operating rate of petroleum asphalt plants increased 1.3 pct to 35.8%. [45] - Downstream: The operating rates of automobile tires recovered. The operating rate of all - steel tires increased 20.6% month - on - month, and that of semi - steel tires increased 26.2% month - on - month. [45] 3.3 Investment - Rebar: The apparent consumption of rebar increased 50.5% month - on - month to 219.8 million tons, and the price decreased 1.1% month - on - month to 3224.8 yuan/ton. The asphalt price decreased 3.9% month - on - month to 3231 yuan/ton. [64] - Cement: As of the week of October 17, the cement price index decreased 1.9% month - on - month to 102.8 points. As of the week of October 10, the cement shipping rate decreased 2.1 pct to 37.9%, and the cement inventory - to - capacity ratio increased 1.7 pct to 63.3%. [64] 3.4 Trade - Export: The container throughput of ports decreased 6.1% month - on - month and was higher than the same period last year. The CCFI composite index decreased 4.1% month - on - month. The freight rates of European, East - American, and West - American routes decreased month - on - month. The BDI index increased 5.9% month - on - month. [76] - Import: The CICFI composite index was 633.2 points, down 2.2% month - on - month. [76] 3.5 Price - CPI: The agricultural product wholesale price 200 index increased 0.4% month - on - month. The prices of pork and eggs decreased, while the prices of vegetables and fruits increased month - on - month. [5][89] - PPI: The Nanhua industrial product price index decreased 2.2% month - on - month. The spot price of Brent crude oil decreased 6.1% month - on - month, the COMEX gold futures price increased 5.0% month - on - month, and the LME copper spot price decreased 1.2% month - on - month. In the commodity futures market, lithium carbonate, polysilicon, and copper led the gains, while hot - rolled coils, asphalt, and glass led the losses. [5][96] 3.6 Interest - Bearing Bond Tracking - Next week (October 20 - 24), the planned issuance of interest - bearing bonds is 91.42 billion yuan, with a net financing of - 7.74 billion yuan. Among them, the issuance of national bonds is 63.3 billion yuan, with a net financing of - 3.25 billion yuan; the issuance of local bonds is 24.72 billion yuan, with a net financing of 16.58 billion yuan; the issuance of policy - financial bonds is 3.4 billion yuan, with a net financing of - 21.06 billion yuan. [6][113] - As of October 17, the cumulative issuance progress of replacement bonds this year reached 99.6%, the cumulative issuance progress of new general bonds was 84.0%, and the cumulative issuance progress of new special bonds was 84.0%. [6][115][117] 3.7 Policy Weekly Observation - High - level meetings: On October 14, Li Qiang presided over a symposium of economic experts and entrepreneurs, emphasizing the need to implement counter - cyclical adjustments. [124] - Monetary policy: On October 15, the central bank carried out a 60 - billion - yuan outright reverse repurchase operation for 6 months. [124] - Fiscal policy: The Ministry of Finance will continue to issue in advance the new local government debt limit for 2026. [124] - Macro data: In September, China's exports and imports denominated in US dollars increased year - on - year. The year - on - year decline of CPI narrowed to 0.3%, and the year - on - year decline of PPI narrowed to 2.3%. The M2 - M1 gap reached a new low this year. [124] - Overseas news: OPEC maintained its global economic growth forecast. Powell hinted at a possible interest - rate cut, and the Fed's Beige Book showed that the US economic activity changed little. [124][125] - Real - estate policy: Shanghai will implement urban renewal, Tianjin allowed the withdrawal of housing provident funds for elevator installation in existing residential buildings, and Chengdu implemented a new policy for converting commercial housing loans to provident fund loans. [125]

Group 1 - The core viewpoint emphasizes the importance of collective efforts to address short-term economic fluctuations, highlighting the resilience and vitality of the Chinese economy despite ongoing pressures [2] - The implementation of the 14th Five-Year Plan shows stable macro data, but there are concerns about underutilized capacity in certain industries, weak private investment, and increased external demand volatility, necessitating a long-term approach to tackle short-term economic challenges [3] - The movement of people, goods, information, and capital—referred to as the "four flows"—is crucial for stimulating the vitality of business entities, with the construction of a unified national market being essential for enhancing enterprise dynamism [4] Group 2 - The changing international landscape, characterized by both persistent and sudden shifts, poses challenges to China's economic resilience, particularly in light of ongoing trade disputes with the U.S. and their implications for global supply chains [5] - To effectively manage these challenges, it is essential to implement counter-cyclical adjustments, leverage policy resources, and foster a robust domestic circulation to create new growth points [6]

Domestic Macro - On October 11, the State Council Information Office held a press conference on "High-Quality Completion of the 14th Five-Year Plan" [5] - On October 12, the Ministry of Commerce stated that China's rare earth export controls do not constitute a ban on exports, and applications that meet the requirements will be permitted [5][6] - On October 14, Premier Li Qiang hosted a meeting with economic experts and entrepreneurs, emphasizing the need to enhance counter-cyclical adjustments [5][6] - On October 15, the central bank announced a 600 billion yuan six-month reverse repurchase operation, with a cumulative net injection of 400 billion yuan for the month [5][6] - On October 16, China expressed an open attitude regarding the possibility of new Sino-U.S. trade talks [5][6] Industry Policy - On October 10, the Ministry of Natural Resources released the "Guidelines for Revitalizing and Optimizing Urban Stock Space," indicating that revitalizing existing space will be a key task in future land use planning [6][18] - On October 10, the Financial Regulatory Authority issued a document to strengthen regulation of non-auto insurance businesses, focusing on issues such as irregular operations and irrational competition [6][18] - On October 11, the central bank solicited opinions on the "Management Measures for Identifying Beneficial Owners of Financial Institution Clients" [6][18] - On October 12, the Ministry of Industry and Information Technology and six other departments issued a plan to promote service-oriented manufacturing innovation [6][18] - On October 15, six departments, including the National Development and Reform Commission, issued a "Three-Year Doubling" action plan for electric vehicle charging facilities [6][18] Local Policy - On October 10, Shanghai adjusted the rules for the 2025 automobile trade-in subsidy program [7][21] - On October 11, the Shanghai Municipal Government released measures to accelerate the cultivation of future industries, focusing on six key areas [7][21] - On October 12, the Hainan Provincial Government announced that the "Hainan Free Trade Port Tourism Regulations" will take effect on December 1, 2025, gradually relaxing restrictions on foreign investment in tourism [7][21] - On October 15, the second batch of Shanghai Free Trade Zone innovation zone construction plans was released [7][21] Overseas Dynamics - On October 10, China announced countermeasures against U.S. restrictions on the shipbuilding industry, starting to charge special port fees for U.S. vessels from October 14 [8] - On October 11, the global cryptocurrency market experienced a "black swan" event, with over 19 billion USD in liquidations in a single day [8] - On October 12, Chinese semiconductor assets worth 14.7 billion USD were frozen by the Dutch government [8] - On October 15, China filed a complaint with the WTO against India's electric vehicle and battery subsidy measures [8]

Report Industry Investment Rating No relevant content provided. Core View of the Report - The domestic central bank is expected to continue implementing a moderately loose monetary policy, with possible reserve requirement ratio cuts, interest rate cuts, and treasury bond trading operations in the fourth quarter. Market liquidity is expected to return to a reasonably ample level, strongly supporting treasury bond futures prices. However, external tariff policy changes may cause downward pressure on exports [3]. Summary by Relevant Catalogs Futures Market - Treasury bond futures prices showed mixed performance. The T2512 contract rose 0.03%, and its trading volume increased. The IRR of the CTD bonds corresponding to the main contracts of each treasury bond futures was at a low level, with no arbitrage opportunities [2]. - The short - term market interest rates showed mixed trends. SHIBOR 7 - day and DR007 rates increased, while GC007 rate decreased [2]. Spot Market - The yields of key - term domestic treasury bonds showed mixed trends. The 10Y treasury bond yield rose 0.12bp to 1.84%, and the long - short (10 - 2) treasury bond yield spread was 34.77bp [2]. - In the overseas market, the US 10Y treasury bond yield decreased 6bp, the German 10Y treasury bond yield decreased 2bp, and the Japanese 10Y treasury bond yield increased 0.1bp [2]. Macro News - The central bank conducted 236 billion yuan of 7 - day reverse repurchase operations on October 16, with an operating rate of 1.40%. After 612 billion yuan of reverse repurchases matured, the net withdrawal on that day was 376 billion yuan [3]. - The Ministry of Commerce responded to multiple hot issues, including the attitude towards Sino - US economic and trade consultations, optimization of rare - earth export control procedures, and protection of the legitimate rights and interests of Chinese enterprises [3]. - The US Treasury Secretary mentioned possible extensions of tariff exemptions for China, and the Chinese Foreign Ministry spokesperson restated China's stance [3]. - The Bank of Japan may tighten monetary policy if the expected economic outlook is more certain, and some members believe inflation risks are rising [3]. - The China Federation of Logistics and Purchasing announced that the China E - commerce Logistics Index in September continued to rise, reaching a new high for the year [3]. - There were differences among Fed officials regarding the pace of interest rate cuts, with one advocating a cautious 25 - basis - point cut and the other a more aggressive 50 - basis - point cut [3]. Industry Information - Most money market interest rates showed mixed trends, with some rising and some falling. The 14 - day silver - deposit - pledged repurchase weighted average interest rate reached a new low since January 2023, and the 1 - month rate reached a new low in over a month [3]. - US Treasury yields collectively declined, with the 2 - year yield falling 8.14bp, the 3 - year falling 8.02bp, the 5 - year falling 7.63bp, the 10 - year falling 5.94bp, and the 30 - year falling 4.76bp [3]. - The yield of the 10 - year active treasury bond decreased to 1.755%. The central bank's open - market operations had a net withdrawal of 376 billion yuan and a net injection of 400 billion yuan through 6 - month outright reverse repurchases. The Fed may stop shrinking its balance sheet and cut interest rates again, narrowing the Sino - US interest rate spread and providing more space for the domestic central bank's monetary policy [3].

Group 1: CPI Analysis - In September 2025, the year-on-year decline in CPI narrowed, with a month-on-month increase driven primarily by rising food prices, particularly fresh vegetables and eggs, while pork prices continued to be a drag due to the ongoing "anti-involution" measures in the pig industry [2][3] - The month-on-month CPI increase was weaker than seasonal trends due to declines in service and energy prices, influenced by the end of summer and the timing of the Mid-Autumn Festival, as well as falling international oil prices [2] Group 2: PPI Analysis - In September 2025, the year-on-year decline in PPI narrowed, with month-on-month figures remaining flat. Domestic pricing in sectors like coal, black metals, and photovoltaics showed significant price improvements due to effective capacity management and ongoing market competition optimization [3][4] - The PPI for durable consumer goods remained negative, indicating a divergence from industrial consumer goods CPI performance, likely due to tightened subsidy conditions in some regions [3] Group 3: Market Overview - In the five trading days from October 10 to October 16, major indices experienced declines, with the Shanghai Composite Index down 0.45% and the ChiNext Index down 6.88%. The average daily trading volume increased to 2.29 trillion yuan, up by 43.77 billion yuan compared to the previous period [5][6] - September trade data showed an 8.3% year-on-year increase in exports, attributed to a low base from the previous year, but future export growth may face pressure due to rising bases in the fourth quarter [7] Group 4: Policy Insights - On October 14, a meeting emphasized the need for stronger counter-cyclical adjustments and expanding domestic demand, highlighting the importance of a robust domestic circulation in light of increasing external trade uncertainties [8] - The government aims to enhance industry standards to support high-quality development, indicating a clearer path for improving capacity and efficiency through standardization [8] Group 5: Investment Strategy - The report suggests that the market will increasingly be driven by domestic factors, which may help mitigate external shocks. The upcoming 20th Central Committee meeting is expected to catalyze market movements, particularly around the "14th Five-Year Plan" [8] - Investment opportunities are identified in sectors such as TMT, driven by advancements in artificial intelligence and domestic cloud computing, as well as in the power equipment industry due to high demand for energy storage and solid-state battery technologies [8]

Economic Growth and Forecasts - China's GDP growth in the first half of the year was 5.3%, exceeding expectations, with third-quarter GDP growth forecasted at 4.8% [1][2] - The International Monetary Fund (IMF) maintained its 4.8% growth forecast for China, despite global economic challenges [2] - Economic indicators suggest a potential slowdown in investment and consumption, with third-quarter GDP growth possibly declining to 4.9% [2] Industrial Production and Demand - Industrial production showed resilience in September, with a manufacturing PMI of 49.8%, indicating slight improvement [3] - Predictions for September's industrial value-added growth are around 5.1%, slightly lower than the previous month [3] - Some sectors, such as automotive, are experiencing production slowdowns, while others like coal consumption have shown declines [3] Consumer Spending Trends - The forecast for September's retail sales growth is 3.1%, down from 3.4% in the previous month, indicating a slowdown in consumer spending [4][5] - The "old-for-new" policy has positively impacted certain consumer goods, with significant sales growth in home appliances and smart home products [5][6] - The automotive sector remains a significant contributor to retail sales, with production and sales figures showing strong year-on-year growth [6] Investment and Infrastructure - Fixed asset investment growth is predicted to be flat at 0% for September, reflecting ongoing economic challenges [6] - Infrastructure investment remains supported by strong excavator sales, which increased by 25.4% year-on-year in September [7] - The government is expected to enhance fiscal policies to support infrastructure and manufacturing investments in the fourth quarter [8][10] Policy Measures and Economic Outlook - There is an increasing necessity for timely policy adjustments to sustain economic growth, particularly in light of rising risks in key economic indicators [8][9] - The government plans to issue more bonds and enhance fiscal support for various sectors, including technology and infrastructure [9][10] - The overall macroeconomic policy is expected to remain accommodative, with a focus on stabilizing expectations and boosting confidence in the economy [10]

Group 1 - The significant increase in M1 growth to 7.2% at the end of September reflects a trend towards the liquidity of deposits, marking a 7.1 percentage point rise from the low point earlier in the year [1][2] - The narrowing "scissors difference" between M1 and M2 indicates increased social investment and consumption activity, suggesting improved economic vitality [1][2] - Despite the rise in M1, the current weak domestic demand has not been reversed, and sustained high M1 growth will require enhanced policy support to stabilize and boost domestic demand [1][3] Group 2 - The increase in M1 growth is attributed to both a low base effect from last year and short-term funding factors, including the return of deposits from wealth management products and the impact of recent financial policies [2] - The transition of fixed-term deposits to demand deposits due to lower opportunity costs has contributed to the ongoing rise in M1, although this does not necessarily indicate increased stock market activity [2] - To shift funds from "idle accounts" to "market investment," improvements in market expectations and a substantial recovery in domestic demand are essential, supported by continuous policy efforts [3]

Core Viewpoint - The significant increase in M1 growth to 7.2% at the end of September indicates heightened liquidity and potential economic activity, although actual consumer and investment spending remains subdued and requires policy support for a sustainable recovery [1][2][3] Group 1: M1 Growth Dynamics - M1 growth has risen sharply, up 7.1 percentage points from its low in February, reflecting increased liquidity in the economy [1] - The rise in M1 is attributed to a low base effect from last year and short-term factors such as the return of funds from wealth management products and policy measures aimed at accelerating local government payments to businesses [2] - The transition of fixed-term deposits to demand deposits has also contributed to the M1 increase, as many high-interest fixed deposits have matured this year [2] Group 2: Market Implications - M1 growth is often viewed as an indicator of market liquidity, but the correlation with stock market activity may weaken as asset allocation channels diversify [2] - The reduction in opportunity costs for holding demand deposits and money market funds has led to an increase in non-bank deposits and M1, rather than direct inflows into the stock market [2] Group 3: Future Outlook - Sustained M1 growth reflects a trend towards more liquid deposits, but actual investment in the market depends on improved market expectations and a real recovery in domestic demand [3] - Continuous policy efforts to stimulate domestic demand and counter-cyclical adjustments are necessary to enhance economic momentum [3]

Group 1 - The significant increase in M1 growth to 7.2% at the end of September indicates a rise in social investment and consumption activity, reflecting improved economic vitality [1][2] - The M1 growth is influenced by a low base effect from the previous year and short-term funding factors, including the return of deposits from wealth management products and the impact of recent financial policies [2] - The ongoing rise in M1 growth reflects a trend towards the liquidity of deposits, but transitioning funds from accounts to market investments requires improved market expectations and substantial recovery in domestic demand [3] Group 2 - The narrowing "scissors gap" between M1 and M2 suggests a more active financial environment, although the current weak domestic demand has not yet been reversed [1][3] - The increase in M1 is partly due to the maturation of high-interest fixed deposits, which have shifted to demand deposits, contributing to the rise in M1 [2] - The correlation between M1 growth and stock market activity may weaken as asset allocation channels diversify, indicating that increases in M1 do not necessarily translate to stock market inflows [2]