Core Conclusion - The market is transitioning from TMT (Technology, Media, Telecommunications) to cyclical sectors such as resources, consumption, and manufacturing, marking a significant shift in investment strategy for the fourth quarter and the upcoming year [1][2]. Group 1: Reasons for the Transition - The Federal Reserve's interest rate hikes in recent years led to significant capital outflows from China, estimated to exceed 16 trillion yuan, while domestic production factors remained stagnant, causing a decline in factor prices [6][7]. - China's counter-cyclical monetary policy, including interest rate cuts, has spurred capital expenditure in manufacturing, enhancing global competitiveness despite a superficial appearance of deflation and a bearish A-share market [2][3]. - The recent shift in the Federal Reserve's policy to lower interest rates is expected to accelerate capital inflows back to China, creating opportunities in consumer markets and high-end manufacturing [5][6]. Group 2: Six Supporting Logics for the Transition - Capital inflows are anticipated to break the negative cycle of "deflation—export—re-deflation," ushering in a "re-inflation" era for Chinese assets [7]. - High-end manufacturing is transitioning from a focus on building barriers ("high walls") to enhancing cash flow and operational efficiency ("storing grain") [8][10]. - Consumer spending is expected to shift from a late-cycle to an early-cycle driver of economic growth, supported by improved consumer confidence and capital inflows [11]. - Signals for a style switch in the fourth quarter include extreme relative performance of the CSI 2000 index, high TMT holdings by public funds, and concentrated trading in a few companies [13]. - Investment focus is shifting towards sectors characterized as "have," "new," and "high," including precious metals, new consumer trends, and high-end manufacturing [12][14]. Group 3: Future Outlook - The anticipated capital inflows and re-inflation will support a recovery in consumer spending and manufacturing upgrades, positioning these sectors for growth [15].

Core Insights - The article highlights that the Consumer Price Index (CPI) remains low in September, but core inflation is showing signs of recovery, while the Producer Price Index (PPI) is experiencing a narrowing decline, indicating marginal improvement in industrial demand [1][2]. CPI Analysis - In September, the CPI increased by 0.1% month-on-month but decreased by 0.3% year-on-year. The core CPI, excluding food and energy, rose by 1.0% year-on-year, marking the fifth consecutive month of growth and the first time in 19 months that it has surpassed 1% [2][4]. - The decline in CPI is primarily driven by food prices, which fell by 4.4% year-on-year, with significant drops in pork, fresh vegetables, and eggs, down 17.0%, 13.7%, and 13.5% respectively [6][4]. - Analysts suggest that the high base effect will gradually diminish, and there is potential for the CPI to turn positive year-on-year within the year [7]. PPI Analysis - The PPI remained flat month-on-month and saw a year-on-year decline of 2.3%, with the rate of decline narrowing by 0.6 percentage points compared to the previous month [2][10]. - The improvement in PPI is attributed to the "anti-involution" policies that have led to price stabilization in several industries, including coal and steel, with coal processing prices rising by 3.8% month-on-month [9][10]. - The overall market environment is improving due to regulatory measures aimed at curbing disorderly competition, which is expected to enhance industrial capacity utilization and support a re-inflationary trend [11].

1. Report Industry Investment Rating - No information provided regarding the industry investment rating in the given content 2. Core View of the Report - In September 2025, the year - on - year declines of CPI and PPI narrowed, and inflation continued to recover. CPI was dragged down by food and energy sub - items, but the year - on - year growth of core CPI returned to 1%, and consumer goods prices recovered. PPI year - on - year continued to recover, with a slowdown in month - on - month growth, showing a characteristic that the upstream was better than the downstream. Overall, the price in September continued the recovery trend, and with the boost of policies in the fourth quarter, prices were expected to continue to recover. For the bond market, the internal "re - inflation" and policy trading logic would suppress the downward space of interest rates [5][6] 3. Summary According to Related Content CPI Analysis - Food and energy continued to drag down CPI year - on - year. The price drops of pork, fresh vegetables, eggs, and fresh fruits dragged down CPI year - on - year by 0.78pct, and the energy price drop dragged down CPI year - on - year by 0.2pct. The core CPI year - on - year accelerated its increase and returned to 1% after a year and a half. Service prices remained stable, with a year - on - year growth of 0.6%, the same as last month. In addition, the year - on - year decline of consumer goods prices in September narrowed by 0.2pct compared with last month, the first narrowing since June [2][3] PPI Analysis - PPI year - on - year continued to recover, and month - on - month growth slowed down, partly affected by imported factors such as crude oil, with the upstream performing better than the downstream. The year - on - year growth of ex - factory prices of production materials fully recovered. The year - on - year growth rates of mining, raw materials, and processing industries were - 9%, - 2.9%, and - 1.7% respectively, with growth rates increasing by 2.5pct, 1.2pct, and 0.5pct respectively compared with last month. The ex - factory prices of domestic coal, ferrous metals and other industries increased year - on - year continuously, while the ex - factory prices of domestic crude oil, chemical and other downstream industries were affected by the decline of international oil prices. The year - on - year growth of ex - factory prices of living materials remained stable, with the prices of daily necessities recovering and the prices of durable goods dragging down. In September, the year - on - year growth rates of food, clothing, daily necessities, and durable goods were - 1.7%, - 0.3%, 0.7%, and - 3.9% respectively, with growth rates remaining the same, decreasing by 0.3pct, increasing by 0.3pct, and decreasing by 0.2pct respectively compared with last month. The ex - factory prices of green and high - end industries increased year - on - year, such as aircraft manufacturing (1.4%), electronic special material manufacturing (1.2%), waste resource comprehensive utilization industry (0.9%), and wearable smart device manufacturing (0.1%) [4] Overall Outlook - In September, the price continued the recovery trend. Except for imported factors and the drag of some agricultural products, the internal "re - inflation" momentum was continuous and conductive. The market still had a strong expectation of "re - inflation" from the pricing of commodity futures contracts. With the boost of policies in the fourth quarter to the fundamentals and expectations, prices were expected to continue to recover. For the bond market, the internal "re - inflation" and policy trading logic would suppress the downward space of interest rates. Overseas risk events that were still undetermined recently had a short - term impact on the bond market. If returning to the internal narrative, if "re - inflation" was realized, the decline of real interest rates might have an "equivalent" effect of interest rate cuts, and the market should not have too high expectations for monetary easing [6]

Group 1: Report Investment Ratings - Investment rating for aluminum: Cautiously bullish [9] - Investment rating for alumina: Neutral [9] - Investment rating for aluminum alloy: Cautiously bullish [9] Group 2: Core Views - The escalation of the Sino - US tariff trade war has led to a decline in the absolute price of SHFE aluminum, increasing downstream purchasing enthusiasm, narrowing the spot discount, and rising overseas premiums. The tariff increase has little impact on the aluminum supply - demand fundamentals, with China's aluminum exports rising in September. Overseas macro - positive factors remain, and domestic consumption is steadily recovering [6]. - The domestic and overseas alumina spot markets have not improved, with stable supply and ongoing cost - side games. The supply of domestic ore in the north is tight, and there is production reduction in Shanxi. The alumina fundamentals show no signs of improvement, but the price is undervalued, and risks increase as the Guinea referendum approaches [7][8]. Group 3: Key Data Summaries Aluminum - Spot prices: On October 14, 2025, the price of East China A00 aluminum was 20,900 yuan/ton, with a change of 100 yuan/ton from the previous trading day; the price of Central Plains A00 aluminum was 20,840 yuan/ton; the price of Foshan A00 aluminum was 20,820 yuan/ton, with a change of 90 yuan/ton from the previous trading day [1]. - Futures prices: The main SHFE aluminum contract opened at 20,885 yuan/ton and closed at 20,860 yuan/ton on October 14, 2025, with no change from the previous trading day. The highest price was 21,035 yuan/ton, and the lowest was 20,845 yuan/ton. The trading volume was 126,426 lots, and the open interest was 159,179 lots [2]. - Inventory: As of October 14, 2025, the domestic social inventory of electrolytic aluminum ingots was 650,000 tons, with a change of 0.1 tons from the previous period; the warrant inventory was 63,176 tons, with a change of 25 tons from the previous trading day; the LME aluminum inventory was 503,950 tons, with a change of - 2,050 tons from the previous trading day [2]. Alumina - Spot prices: On October 14, 2025, the SMM alumina price in Shanxi was 2,905 yuan/ton, in Shandong was 2,870 yuan/ton, in Henan was 2,930 yuan/ton, in Guangxi was 3,120 yuan/ton, in Guizhou was 3,115 yuan/ton, and the FOB price of Australian alumina was 323 US dollars/ton [2]. - Futures prices: The main alumina contract opened at 2,817 yuan/ton and closed at 2,805 yuan/ton on October 14, 2025, with a change of - 20 yuan/ton (- 0.71%) from the previous trading day's closing price. The highest price was 2,829 yuan/ton, and the lowest was 2,791 yuan/ton. The trading volume was 233,289 lots, and the open interest was 356,373 lots [2]. Aluminum Alloy - Prices: On October 14, 2025, the procurement price of Baotai civil raw aluminum was 16,400 yuan/ton, and the procurement price of mechanical raw aluminum was 16,600 yuan/ton, with no change from the previous day. The Baotai quotation of ADC12 was 20,500 yuan/ton, with no change from the previous day [3]. - Inventory: The social inventory of aluminum alloy was 75,700 tons, and the in - factory inventory was 61,500 tons [4]. - Cost and profit: The theoretical total cost was 20,520 yuan/ton, and the theoretical profit was 180 yuan/ton [5]. Group 4: Strategies - Unilateral strategy: Bullish on aluminum with caution, neutral on alumina, and bullish on aluminum alloy with caution [9]. - Arbitrage strategy: Long - short spread trading on SHFE aluminum [9]

1. Report Industry Investment Rating - The rating for unilateral trading is cautiously bullish, and the rating for arbitrage is neutral [5] 2. Core View of the Report - LME inventory has slightly increased, but the absolute value remains below 40,000 tons, leading to a rapid increase in overseas premiums. The domestic supply pressure persists, but the opening of the export window has reversed the short - allocation logic. The linkage between domestic and overseas zinc prices will strengthen, and there's no need to be overly pessimistic about the long - term impact of tariffs [4] 3. Summary by Related Catalogs Important Data - **Spot**: LME zinc spot premium is $201.60 per ton. SMM Shanghai zinc spot price is 22,210 yuan per ton, with a premium of - 55 yuan per ton; SMM Guangdong zinc spot price is 22,210 yuan per ton, with a premium of - 55 yuan per ton; Tianjin zinc spot price is 22,220 yuan per ton, with a premium of - 45 yuan per ton [1] - **Futures**: On October 14, 2025, the main SHFE zinc contract opened at 22,330 yuan per ton, closed at 22,220 yuan per ton, down 65 yuan per ton from the previous trading day. The trading volume was 124,307 lots, and the position was 95,194 lots. The highest price was 22,335 yuan per ton, and the lowest was 22,210 yuan per ton [2] - **Inventory**: As of October 14, 2025, the total inventory of SMM seven - region zinc ingots was 163,100 tons, a change of 12,900 tons from the previous period. The LME zinc inventory was 38,600 tons, a change of 1,125 tons from the previous trading day [3] Market Analysis - LME inventory has a slight rebound, but the absolute value is still low, causing the overseas premium to quickly break through $200 per ton. The domestic smelting profit has narrowed, but the supply pressure remains. The opening of the export window has changed the short - allocation logic, and the linkage between domestic and overseas prices will strengthen. There's no need to be overly pessimistic about the long - term impact of tariffs [4] Strategy - Unilateral trading is recommended to be cautiously bullish, and arbitrage is neutral [5]

Core Viewpoint - The non-ferrous metal sector has shown strong performance, with a 4.44% increase in the week from October 3 to October 10, ranking first among all primary industries [1][2]. Industry Summary Non-Ferrous Metals Sector Performance - The non-ferrous metals sector's performance includes a 5.35% increase in the industrial metals segment, a 4.64% rise in the small metals segment, a 4.44% increase in the metal new materials segment, a 4.00% rise in the precious metals segment, and a 1.29% increase in the energy metals segment [1][2]. Industrial Metals - Industrial metal prices continued their upward trend from before the National Day holiday, but the "Tariff War 2.0" has raised concerns about potential downward pressure on prices in the short term [2][3]. - As of October 10, copper prices were reported at $10,374 per ton, down 3.05% week-on-week, while domestic copper prices were at 85,910 yuan per ton, up 3.37% week-on-week [3]. Aluminum - As of October 10, LME aluminum was priced at $2,746 per ton, up 1.63% week-on-week, and domestic aluminum was at 20,980 yuan per ton, up 1.45% week-on-week [4][5]. - The theoretical operating capacity of China's electrolytic aluminum industry decreased by 30,000 tons to 44.135 million tons due to maintenance in Shanxi [4]. Precious Metals - Gold prices reached $4,035.50 per ounce, up 3.15% week-on-week, while domestic gold was priced at 901.56 yuan per gram, up 5.48% week-on-week [6]. - The ongoing trend of declining real interest rates and rising concerns over fiscal pressures have contributed to increased demand for gold as a safe-haven asset [6].

Group 1: ETF Performance - Multiple sectors including rare earth, gold, non-ferrous metals, and technology chips saw significant ETF performance, with two rare earth ETFs rising over 7% in a single day [1][4] - As of October 13, three ETFs have more than doubled in value this year, specifically focusing on the gold industry [2] - On October 13, gold ETFs and non-ferrous metal ETFs increased by over 4%, while several technology chip ETFs rose by over 3% [6][7] Group 2: Capital Inflows - The technology sector experienced substantial capital inflows, with over 30 billion yuan net inflow into the Jiashi Shanghai Stock Exchange Technology Chip ETF from October 9 to 10 [3][8] - Other notable inflows included 27.66 billion yuan into the Huaxia Shanghai Stock Exchange Technology 50 ETF and 11.45 billion yuan into the E-Fund Shanghai Stock Exchange Technology 50 ETF during the same period [9] Group 3: Market Trends and Analysis - The Ministry of Commerce's announcement on October 9 regarding rare earth export controls has led to a supply-demand resonance in the rare earth sector, positioning it as a core resource for high-end manufacturing and strategic emerging industries [4] - Factors supporting gold price increases include rising risk aversion and a decline in global credit currency credibility, with expectations for gold prices being adjusted upward by overseas institutions [10]

Core Viewpoint - The precious metals sector is experiencing significant gains, with notable increases in stock prices for companies such as Western Gold, Xiaocheng Technology, Zhaojin Gold, and Chifeng Gold, driven by macroeconomic factors and expectations of continued monetary easing [1] Group 1: Market Performance - As of the morning of October 13, the precious metals sector is active and strong, with Western Gold rising over 7%, Xiaocheng Technology up over 6%, Zhaojin Gold increasing over 5%, and Chifeng Gold gaining over 2% [1] Group 2: Economic Analysis - Dongwu Securities highlights that following the key changes in the Federal Reserve's stance during the global central bank conference in August, the persistence of re-inflation and the decline in non-violent service sector inflation have become central to the current macroeconomic narrative [1] - The interplay between tariffs causing inflation to rise and the expectations of interest rate cuts leading to a decrease in nominal rates will continue to influence the market, indicating a period of rapidly declining real interest rates [1] - The outlook for precious metals remains positive, with expectations for continued strength in the sector [1]

1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - In September, most bond varieties saw corrections, with long - end interest - rate bonds and long - end Tier 2 and perpetual bonds (referred to as "Er Yong" bonds) leading the decline, which are the heavy - position bonds preferred by funds. The "killing of funds' heavy - position bonds" in this round has a more significant curve steepening compared to the adjustment in Q4 2022 [1][5]. - Although commodity demand has weakened, inflation expectations remain strong. If PPI is transmitted to core CPI, the year - on - year core CPI in March next year may reach 1.6%, and real interest rates may decline [1][20]. - In the fourth - quarter bond market, from the EVA comparison perspective, 30Y treasury bonds have a high comparison advantage over mortgage loans, while 10Y treasury bonds are relatively neutral. Despite weak fundamentals, the necessity of interest - rate cuts may not be high from the perspective of real interest rates. Currently, the IRS - implied interest - rate cut expectation is low. Insurance bond - allocation growth may be weaker than before, and banks may redeem funds in advance, which is unfavorable to the bond - market supply - demand structure. The impact of the new round of tariff turmoil on the bond market is smaller than that in April [1][23][34]. 3. Summary by Relevant Catalogs 3.1 9 - Month Institutional Behavior Pattern: Killing Funds' Heavy - Position Bonds - **Bond Market Correction in September**: Interest - rate bonds' long - end correction was greater than the short - end, with the curve steepening and long - end spreads widening, while the 5Y - 3Y spread narrowed. The long - end of "Er Yong" bonds led the decline, and the credit spreads of 5 - 7Y varieties widened rapidly [5]. - **Funds' Bond Preferences**: Since 2024, funds have preferred to net - buy 7 - 10Y interest - rate bonds, 20 - 30Y treasury bonds, 1 - 5Y medium - term notes, and 7 - 10Y "Er Yong" bonds, except for short - term financing bonds [8]. - **Comparison with Q4 2022**: Both rounds showed the characteristic of "Er Yong" bonds leading the decline, but in this round, the short - end decline was small, and the curve steepening was more significant [9]. - **Funds' Trading Behavior**: In September, funds mainly sold "Er Yong" bonds, 10Y old policy - bank bonds, and old ultra - long treasury bonds. They had a net - selling of 16 billion yuan of cash bonds in total, with 101.5 billion yuan of other bonds (including "Er Yong" bonds) mainly sold in the 7 - 10Y and over 30Y maturities, and 55.2 billion yuan of old 20 - 30Y treasury bonds sold. At the same time, they also bought new treasury bonds of the same maturities [13]. - **Funds' Selling Progress**: Fund selling has accelerated, but there is still a large clearing space, and funds can still be seen in ultra - long active bonds [16]. 3.2 Commodity Demand Weakens, but Inflation Expectations Remain Strong - **Commodity Market Situation**: The "Golden September and Silver October" in the commodity market was not as expected. After the pre - holiday inventory - replenishment narrative ended, commodities reached the lowest point after the Politburo meeting. There was a differentiation between upstream and downstream, with the downstream dominated by the "supply - demand logic" and the upstream by the "anti - involution" logic [18]. - **Inflation Expectations**: According to the monthly spread of coking coal, the year - on - year PPI in 2026 was priced at 1.2% on September 30th, and it may exceed 2% in April. If PPI is transmitted to core CPI, the year - on - year core CPI in March next year may be 1.6%, and real interest rates may decline, with the effect of re - inflation similar to the interest - rate cut in 2024 [18][20]. - **Travel and Consumption Improvement**: During the 8 - day National Day and Mid - Autumn Festival holiday this year, the number of tourist trips increased by 16.1% year - on - year, and domestic tourism spending increased by 13.5%. The daily average number of tourist trips increased by 1.6%, and consumption increased by 1%. Since 2022, the economic cycle has been in the recovery stage, and by October 2025, the number of tourist trips (+10.4%) and tourism revenue (+3.1%) have exceeded the 2019 levels [21]. 3.3 Fourth - Quarter Bond - Market Highlights: Comparison, Institutional Behavior, and Tariff Re - trading - **EVA Comparison Perspective**: As of the end of September, the after - tax EVA level of 30Y treasury bonds was 2.15%. Even considering the restoration of value - added tax on interest income, it had a high comparison advantage over the existing mortgage loan rate of 1.71%, with the spread reaching the 79% historical quantile since 2015. However, the EVA spread of 10Y treasury bonds compared to general loans only recovered to the 24% historical quantile, with a relatively neutral comparison advantage [23]. - **Fundamental Perspective**: Economic data from July to August was weak. Investment - end sub - items declined significantly, and the previously strong social retail sales also declined. Manufacturing growth turned negative, infrastructure investment declined, and real - estate investment continued to decline. Although this may lead to expectations of interest - rate cuts, from the perspective of real interest rates, the necessity of interest - rate cuts may not be high, and currently, the IRS - implied interest - rate cut expectation is low [26][30][32]. - **Institutional Behavior**: Currently, the market risk preference is high. Insurance bond - allocation growth may be weaker than before, and banks may redeem funds in advance, which is unfavorable to the bond - market supply - demand structure [34]. - **Tariff Turmoil**: The impact of the new round of tariff turmoil on the bond market was smaller than that in April. The decline in the A - share adjustment space on Monday may not be large. Compared with April, the increments in the A - share market include a strong AI industry trend, more familiarity with the "TACO" investment model, but also the risk of high valuations [36][37][38].

Economic Overview - The GDP deflator index has experienced negative growth for 9 consecutive quarters since Q2 2023, marking the longest period of decline since the Asian financial crisis and the global financial crisis, which lasted 6 and 3 quarters respectively[1][11][24]. - The current deflation is structurally different from past instances, lacking external shocks and characterized by prolonged duration and complex structural features[2][24]. Structural Causes of Weak Domestic Demand - The current deflation is not merely due to "insufficient demand," but is a result of a chain reaction involving real estate, debt, and fiscal policies, leading to weakened wealth effects and corporate profits[2][31]. - The decline in real estate prices and sales has adversely affected household wealth and corporate profits, further compressing credit supply and investment[2][31]. International Comparisons and Lessons - Japan's experience with deflation highlights the importance of timely policy responses and the risks of premature tightening, which can lead to a downward spiral in the "nominal-profit-credit" chain[3][48]. - The Eurozone's recovery from deflation relied on coordinated monetary and fiscal policies, emphasizing the need for a combination of measures rather than relying solely on price-driven tools[3][48]. Policy Recommendations - Short-term re-inflation pressures are significant, necessitating fiscal support, monetary easing, and structural reforms to stabilize nominal growth[4][30]. - The fiscal strategy should involve higher deficit rates and long-term bonds to support public investment, while monetary policy should focus on yield curve management and structural tools to enhance credit transmission[4][30].