Group 1 - The small-cap stocks have struggled in recent years compared to the S&P 500 and Nasdaq 100, but there are signs of a potential long-term bull market returning for these stocks as risk factors seem to be re-emerging [1][2] - The Russell 2000 index, a benchmark for small-cap stocks, last reached a historical high on November 8, 2021, and is currently only about 3% away from that level, marking the longest period without a new high since the dot-com bubble burst around 2000 [1][2] - Recent optimism in the market regarding potential interest rate cuts by the Federal Reserve has led to increased investment sentiment in small-cap stocks, which have outperformed the S&P 500 and Nasdaq in recent weeks [1][2] Group 2 - Bank of America indicates that recent economic data shows resilience in the U.S. economy, suggesting a "soft landing," and that small-cap stocks, particularly micro and small caps, are poised for structural opportunities [2][3] - The expectation of interest rate cuts is expected to benefit small-cap stocks significantly, as they are more sensitive to changes in the Fed's benchmark rates and rely heavily on floating-rate loans [2][3] Group 3 - The Russell 2000 index has risen 7.3% in August, leading the U.S. stock market, and is expected to gain further momentum with the anticipated interest rate cuts from the Federal Reserve [3][5] - Analysts believe that the potential for continued upward movement in small-cap stocks exists, especially as regional banks and small tech and industrial companies, which hold significant weight in the Russell 2000, may benefit from looser monetary policy [3][5] Group 4 - The iShares Russell 2000 ETF (IWM) is trading above $230, breaking a critical technical level, which is seen as a bullish signal for small-cap stocks [5][6] - There is a prevailing sentiment that small-cap stocks may outperform large-cap stocks and tech giants during the Fed's anticipated rate-cutting cycle, as many small-cap stocks remain undervalued compared to the high valuations of major tech companies [5][6] Group 5 - Despite the bullish outlook, some traders remain skeptical about the sustainability of the small-cap rally, with concerns that the performance of large tech stocks could influence the fate of small-cap stocks [7][8] - The market dynamics suggest that if large tech stocks maintain their upward trajectory, it could encourage a rotation of funds into small-cap stocks, but a decline in tech stock valuations could pose risks for small-cap performance [7][8] Group 6 - To capitalize on the potential breakout of the Russell 2000 index, professionals recommend buying call spreads on the IWM ETF, allowing investors to hedge while capturing some upside [8] - This strategy is seen as a way for cautious investors to engage with small-cap stocks without fully committing capital, especially after previous disappointments with false breakouts [8]

Core Viewpoint - The article discusses the current state of the A-share market, highlighting the structural bull market characteristics and the recent performance of various sectors, including the rotation between growth and value styles. Market Performance - The market continues to rise, currently at 4.3 stars, with a potential return to 3.x stars if the rapid increase continues for a few more days [1] - Both large and small-cap stocks are experiencing gains, with large-cap stocks recently outperforming small-cap stocks [1] - Growth style is strong, while value style shows slight increases [1] - The liquor index has rebounded, moving from a year-to-date decline to a slight increase [1] Sector Analysis - The real estate and consumer sectors have been underperforming this year, with many related stocks still undervalued [1] - The article emphasizes the importance of controlling investment proportions, suggesting a stable allocation of 15%-20% per sector [1] - Recent trends show a recovery in the consumer sector, which had been lagging [11] Structural Bull Market Characteristics - A-share market is characterized by structural bull markets, where only certain stocks perform well while others may decline [1] - Historical examples include the 2016-2017 bull market focused on large-cap value stocks and the 2019-2021 bull market dominated by large-cap growth stocks [2][6] - The article notes that in structural bull markets, some sectors may lag behind but could perform well in future cycles [1][12] Investment Strategy - The article suggests that the rotation of different styles allows for extended periods of holding undervalued stocks, avoiding situations where there are no undervalued options available [13] - It also highlights the opportunity for "buy low, sell high" strategies when some stocks are overvalued while others remain undervalued [14] - The current market favors growth styles, with some small-cap growth indices nearing overvaluation [16][17] Upcoming Events - A live session is scheduled to discuss common profit-taking strategies and case studies of "buy low, sell high" [19]

Core Viewpoint - The article discusses the current state of the A-share market, highlighting the recent upward trend and the potential investment strategies for different market conditions. Market Performance - The overall market has risen, returning to a rating of 4.3 stars [1] - Large, medium, and small-cap stocks have all increased, with large-cap stocks showing slightly more growth [2] - Growth style stocks are currently performing strongly [3] - The Science and Technology Innovation Board (科创50) has risen over 8%, while the ChiNext (创业板) has increased over 3% [4] - Both the Science and Technology Innovation Board and ChiNext were undervalued for a long time last year [5] - Since reaching a rating of 5.9 stars, the Science and Technology Innovation Board has nearly doubled in value [6] - Following today's surge, the Science and Technology Innovation Board is now considered overvalued [7] - Upcoming second-quarter reports may lead to a decrease in valuations if companies report profit growth [8] - As the market rises, the number of overvalued stocks is expected to increase [9] - There will be opportunities for profit-taking in certain portfolio segments as the market evolves [10] Investment Strategy - The A-share market often experiences structural trends [11] - This year has seen significant increases in small-cap and growth style stocks, with small-cap growth indices reaching overvalued levels first [12] - While growth styles are strong, value styles remain relatively weak, with only slight increases in value stocks today [13][14] - The A-share market exhibits clear style rotation, often on a daily basis [15] - Frequent trading in this environment can lead to missed opportunities, suggesting a need for patience [16] Hong Kong Market Insights - The Hong Kong stock market has also risen, led by technology stocks [17] - Recently, the Hong Kong market has outperformed the A-share market by over 10% this year [18] - However, recent fluctuations in overseas markets have affected the Hong Kong market, which has seen lower gains compared to A-shares this week [19][20] Valuation Overview - A summary of Hong Kong stock indices and their valuations is provided, including metrics such as P/E ratios, dividend yields, and ROE percentages [21] - The H-share index has a P/E ratio of 13.85, while the Hang Seng Index has a P/E ratio of 13.57 [21] - The Hong Kong small-cap index has a higher P/E ratio of 21.30, indicating a different valuation landscape [21] Investment Timing and Strategy - The article suggests that the best investment opportunities were during the 5-star rating periods, particularly from 2022 to 2024, which marked the longest bear market in the last decade [24] - Investors are advised to consider their investment horizon and risk tolerance when allocating funds, with a recommended stock allocation of "100 minus age" [26] - Current market conditions still present opportunities for investing in undervalued stocks, but full allocation is not recommended [34] - If the market rating drops to 3 stars, investing in stocks may become less suitable [36] Conclusion - The article emphasizes the importance of understanding market cycles and maintaining a disciplined investment strategy to navigate the current market conditions effectively [45]

Market Overview - The Shanghai Composite Index has reached 3700 points, leading to increased market divergence among investors regarding whether to take profits or chase high-growth stocks [1] - Short-term fluctuations and pullbacks after reaching new highs are normal, and investors are advised to set stop-loss and take-profit points based on technical indicators [1] Investment Strategy - Full allocation to high-growth stocks at this market level carries significant risk due to previous substantial gains and potential valuation deviations [1] - It is recommended to allocate part of the portfolio to defensive and stable dividend-paying stocks, which provide a safety net during market volatility [1] Fund Introduction - Guotai Dividend Smart Selection (A: 024354 C: 024355) is launched in this context, combining traditional dividend strategies with a dynamic, adaptive style rotation framework [3] - The fund aims to enhance dividend strategies, allowing investors to experience better performance by adjusting the portfolio between "value dividends" and "growth dividends" based on market conditions [4] Performance Metrics - The fund manager, Dr. Gao Chongnan, has a strong background in quantitative strategies, with a successful track record in managing similar products [4] - The fund is expected to maintain a balanced approach between growth and value dividend stocks, including some holdings in high-dividend Hong Kong stocks to capture cross-market opportunities [4] Historical Performance - The Guotai Quantitative Strategy has shown strong performance since its transformation into a quantitative long-only product, with a recent two-year return of 14.40%, outperforming the benchmark and the CSI 300 index [5] - The fund has consistently outperformed the CSI 300 index over the last five complete calendar years [5] Conclusion - Guotai Dividend Smart Selection is positioned as a quality dividend product suitable for various market conditions, providing both growth potential and risk mitigation [7]

Group 1 - The report focuses on constructing a style timing and rotation model from a micro perspective, utilizing micro data to enhance the strategy system [6][62] - The model is based on four style factors: valuation, market capitalization, volatility, and momentum, using 80 micro indicators to create a scoring system [7][62] - The backtesting period from January 1, 2014, to July 31, 2025, shows an annualized return of 20.90% with a volatility of 26.12% and a maximum drawdown of -40.57% [57][62] Group 2 - The model's out-of-sample performance has been stable since its development in March 2024, with a return of 55.36% for the entire year of 2024, outperforming the market benchmark by 35.72% [57][62] - The report highlights the construction of style labels based on specific broad indices to overcome limitations of using the entire A-share market for style timing [18][20] - The random forest model is selected for predicting the direction of style factors, enhancing the performance of the timing strategy [23][25] Group 3 - The performance metrics for the valuation factor before timing show an annualized return of 7.90% compared to the benchmark's 6.85%, with a maximum drawdown of -60.33% [30][32] - After applying the timing model, the valuation factor's annualized return improves to 15.19%, significantly outperforming the benchmark [38][40] - The momentum factor shows a pre-timing annualized return of 10.11%, which increases to 15.73% post-timing, indicating improved performance [42][47] Group 4 - The volatility factor's pre-timing performance indicates an annualized return of 10.93%, while post-timing performance shows an increase to 15.73% [48][53] - The equal-weighted composite factor, derived from the four style factors, achieves an annualized return of 20.05% with a maximum drawdown of -41.97% [52][55] - The scoring system for the style factors is based on historical prediction accuracy, further refining the composite factor's performance [56][59]

Group 1: Size Rotation Model Insights - The A-share market exhibits a size rotation effect, with small-cap stocks outperforming large-cap stocks in February, March, May, and August, while large-cap stocks dominate in January, April, and December[2] - The annualized excess return of the size rotation model during the backtest period (2013/12-2024/09) is 17.45% relative to benchmarks like CSI 300 and CSI 2000 Equal Weight[2] - The latest quantitative model signal as of the end of July is 0.5, indicating a continued preference for small-cap stocks in August[2] Group 2: Value vs. Growth Rotation Insights - The A-share market shows frequent value-growth rotation with a monthly effect, achieving an annualized excess return of 8.8% against benchmarks like the National Value and Growth Equal Weight indices[3] - The latest monthly quantitative model signal is -0.33, suggesting a shift towards value stocks for August, as historically, value stocks outperform in this month[3] - The annualized excess return of the weekly model, based on price-volume perspectives, is 7.19%[3] Group 3: Risk Considerations - The quantitative models are based on historical data, which may not always hold true, posing a risk of historical patterns failing to predict future performance[5]

Group 1 - The current market may be in the early stage of a bull market's main upward wave, supported by three main reasons: the market turnover rate is still significantly lower than the peak observed at the beginning of the bull market, the prevailing small-cap style suggests it is likely the early stage of the main upward wave, and the equity financing scale has not yet reached historical highs [1][12][16] Group 2 - During previous bull market main upward waves, the market turnover rate typically increased significantly, with historical examples showing turnover rates rising from around 1.5% to over 6% and from below 1% to above 4% [2][4] - The style of leading stocks often changes between the early and late stages of a bull market, with small-cap stocks leading in the early stage and large-cap stocks taking over in the later stage [7][11] Group 3 - The scale of equity financing tends to increase rapidly during the main upward wave of a bull market, with historical bull markets showing significant recoveries in financing levels, while the current recovery remains slow [12][19] - The market is expected to experience a bull market main upward wave in the second half of the year, with structural opportunities arising from various themes and a gradual increase in resident capital inflows [16][18] Group 4 - Recent market performance shows significant gains in major indices, with the ChiNext 50 and ChiNext Index leading the increases, while certain sectors like telecommunications and electronics have outperformed [21]

Quantitative Models and Construction Methods 1. Model Name: "Three-Dimensional Composite Timing Signal" - **Model Construction Idea**: This model integrates three key timing indicators—"Credit Impulse, Beta Dispersion, and Trading Volume"—to represent three core timing dimensions: economic fundamentals, overall sentiment, and structural risk. It aims to balance high probability and high payoff indicators for superior timing performance[5][12]. - **Model Construction Process**: - **Credit Impulse**: Measures the month-on-month change in credit balance percentile, reflecting economic fundamentals[5][15]. - **Beta Dispersion**: Captures the dispersion of stock betas, representing market sentiment and structural risk[5][12]. - **Trading Volume**: Quantifies market activity and liquidity, serving as a sentiment indicator[5][12]. - The composite signal combines these three indicators to generate timing signals, with historical backtesting showing strong in-sample and out-of-sample performance[12][14]. - **Model Evaluation**: The model demonstrates excellent timing performance in both in-sample and out-of-sample tests, effectively capturing market uptrends[12][14]. 2. Model Name: "Short-Term Timing Strategy" - **Model Construction Idea**: This model uses macroeconomic, valuation, sentiment, and liquidity indicators to generate weekly timing signals[20][23]. - **Model Construction Process**: - **Macroeconomic Indicators**: Includes PMI (>50 for optimism), credit impulse percentile (62.71%), and M1 growth rate percentile (96.61%)[20][23]. - **Valuation Indicators**: PE and PB percentiles (99.59% and 96.36%, respectively) are used to assess valuation levels[21][23]. - **Sentiment Indicators**: Beta dispersion (69.49%), trading volume sentiment (93.80%), and volatility (11.00%) are analyzed for market sentiment[21][23]. - **Liquidity Indicators**: Monetary rate (37.29%), exchange rate expectations (74.58%), and financing data (97.11%) are used to evaluate liquidity conditions[22][23]. - Signals are aggregated to determine overall market positioning[23]. - **Model Evaluation**: The strategy has consistently outperformed the benchmark, with significant annualized returns and lower drawdowns[22][23]. 3. Model Name: "Growth-Value Style Rotation Model" - **Model Construction Idea**: This model evaluates macroeconomic, valuation, and sentiment factors to determine the optimal allocation between growth and value styles[29][30]. - **Model Construction Process**: - **Macroeconomic Factors**: Profit cycle slope (4.17), interest rate cycle level (14.17), and credit cycle changes (-3.33) are analyzed[31]. - **Valuation Factors**: PE and PB valuation spreads (23.99% and 39.00%, respectively) are used to assess relative attractiveness[31]. - **Sentiment Factors**: Turnover and volatility spreads (38.13% and 19.97%, respectively) are considered for sentiment analysis[31]. - Signals are combined to recommend allocations between growth and value styles[31]. - **Model Evaluation**: The model has delivered significant excess returns over the benchmark since 2012, though it underperformed in 2025 YTD[30][32]. 4. Model Name: "Small-Cap vs. Large-Cap Style Rotation Model" - **Model Construction Idea**: This model evaluates macroeconomic, valuation, and sentiment factors to determine the optimal allocation between small-cap and large-cap styles[33][34]. - **Model Construction Process**: - **Macroeconomic Factors**: Profit cycle slope (4.17), interest rate cycle level (14.17), and credit cycle changes (-3.33) are analyzed[35]. - **Valuation Factors**: PE and PB valuation spreads (93.88% and 97.67%, respectively) are used to assess relative attractiveness[35]. - **Sentiment Factors**: Turnover and volatility spreads (81.01% and 51.58%, respectively) are considered for sentiment analysis[35]. - Signals are combined to recommend allocations between small-cap and large-cap styles[35]. - **Model Evaluation**: The model has consistently outperformed the benchmark since 2012, though it underperformed in 2025 YTD[34][36]. 5. Model Name: "Four-Style Rotation Model" - **Model Construction Idea**: This model integrates the conclusions of the growth-value and small-cap-large-cap rotation models to recommend allocations across four styles: small-cap growth, small-cap value, large-cap growth, and large-cap value[37]. - **Model Construction Process**: - Combines the signals from the growth-value and small-cap-large-cap models to allocate weights across the four styles[37]. - Current recommended allocation: small-cap growth (37.5%), small-cap value (12.5%), large-cap growth (37.5%), and large-cap value (12.5%)[37]. - **Model Evaluation**: The model has delivered significant excess returns over the benchmark since 2012, though it underperformed in 2025 YTD[37][38]. --- Model Backtesting Results 1. "Three-Dimensional Composite Timing Signal" - Annualized Return: 21.26% - Annualized Volatility: 14.46% - Maximum Drawdown: 12.80% - Sharpe Ratio: 1.2676 - Annualized Excess Return: 13.39%[14] 2. "Short-Term Timing Strategy" - Annualized Return: 17.83% - Annualized Volatility: 15.87% - Maximum Drawdown: 22.44% - Sharpe Ratio: 0.9874 - Annualized Excess Return: 13.24%[22][27] 3. "Growth-Value Style Rotation Model" - Annualized Return: 11.76% - Annualized Volatility: 20.77% - Maximum Drawdown: 43.07% - Sharpe Ratio: 0.5438 - Annualized Excess Return: 4.73%[30][32] 4. "Small-Cap vs. Large-Cap Style Rotation Model" - Annualized Return: 12.45% - Annualized Volatility: 22.65% - Maximum Drawdown: 50.65% - Sharpe Ratio: 0.5441 - Annualized Excess Return: 5.21%[34][36] 5. "Four-Style Rotation Model" - Annualized Return: 13.37% - Annualized Volatility: 21.51% - Maximum Drawdown: 47.91% - Sharpe Ratio: 0.5988 - Annualized Excess Return: 5.72%[37][38]

Quantitative Models and Construction Methods Model 1: Convertible Bond Valuation Model - **Model Name**: Convertible Bond Valuation Model - **Model Construction Idea**: The model aims to compare the valuation of convertible bonds with their underlying stocks using a time-series comparable valuation metric called "100 Yuan Conversion Premium Rate" and the median of "Adjusted YTM - Credit Bond YTM" to measure the relative allocation value between debt-biased convertible bonds and credit bonds[4][5][15] - **Model Construction Process**: - **100 Yuan Conversion Premium Rate**: Fit the relationship curve between the conversion premium rate and conversion value in the cross-sectional space at each time point, and substitute the conversion value = 100 into the fitting formula to obtain the "100 Yuan Conversion Premium Rate" - Formula: $$ y_{i}=\alpha_{0}+\,\alpha_{1}\cdot\,{\frac{1}{x_{i}}}+\epsilon_{i} $$ where \( y_{i} \) is the conversion premium rate of the i-th convertible bond, and \( x_{i} \) is the conversion value of the i-th convertible bond[43] - **Adjusted YTM - Credit Bond YTM**: Adjust the YTM of debt-biased convertible bonds by stripping out the impact of conversion terms - Formula: $$ \text{Adjusted YTM} = \text{Convertible Bond YTM} \times (1 - \text{Conversion Probability}) + \text{Expected Conversion Annualized Yield} \times \text{Conversion Probability} $$ The conversion probability is calculated using the BS model, substituting the closing price of the underlying stock, option exercise price, stock volatility, remaining term, and discount rate to calculate the conversion probability \( N(d2) \)[44] - **Model Evaluation**: The model provides a systematic approach to evaluate the relative allocation value of convertible bonds compared to their underlying stocks and credit bonds[15] Model 2: Convertible Bond Comprehensive Valuation Factor - **Model Name**: Convertible Bond Comprehensive Valuation Factor - **Model Construction Idea**: The model combines the deviation of the conversion premium rate and the theoretical value deviation (Monte Carlo model) to construct a comprehensive valuation factor for convertible bonds[6][19] - **Model Construction Process**: - **Conversion Premium Rate Deviation**: - Formula: $$ \text{Conversion Premium Rate Deviation} = \text{Conversion Premium Rate} - \text{Fitted Conversion Premium Rate} $$ - **Theoretical Value Deviation (Monte Carlo Model)**: - Formula: $$ \text{Theoretical Value Deviation} = \frac{\text{Convertible Bond Closing Price}}{\text{Theoretical Value}} - 1 $$ The Monte Carlo model fully considers the conversion, redemption, downward revision, and repurchase terms of convertible bonds, simulating 10,000 paths at each time point and using the same credit term interest rate as the discount rate to calculate the theoretical value of the convertible bond[20] - **Comprehensive Valuation Factor**: - Formula: $$ \text{Convertible Bond Comprehensive Valuation Factor} = \text{Rank}(\text{Conversion Premium Rate Deviation}) + \text{Rank}(\text{Theoretical Value Deviation (Monte Carlo Model)}) $$ - **Model Evaluation**: The comprehensive valuation factor performs well in the overall, balanced, and debt-biased convertible bonds, while the theoretical value deviation (Monte Carlo model) performs better in equity-biased convertible bonds[19][20] Model 3: Convertible Bond Style Rotation Model - **Model Name**: Convertible Bond Style Rotation Model - **Model Construction Idea**: The model uses convertible bond momentum and volatility deviation as market sentiment capture indicators to construct a convertible bond style rotation portfolio, with bi-weekly rebalancing[7][26] - **Model Construction Process**: - **Market Sentiment Capture Indicators**: - Formula: $$ \text{Convertible Bond Style Market Sentiment Capture Indicator} = \text{Rank}(\text{Convertible Bond 20-Day Momentum}) + \text{Rank}(\text{Volatility Deviation}) $$ - **Style Rotation Position Calculation**: - Example Calculation: | | Convertible Bond Equity-Biased Low Valuation | Convertible Bond Balanced Low Valuation | Convertible Bond Debt-Biased Low Valuation | | --- | --- | --- | --- | | Equal Weight Index | 1 | 2 | 3 | | Volatility Deviation Ranking | 2 | 1 | 3 | | Market Sentiment Capture Indicator | 3 | 3 | 6 | | Style Rotation Position | 50% | 50% | 0% | - **Model Evaluation**: The style rotation model effectively captures market sentiment and allocates positions accordingly, showing superior performance compared to the equal-weight index[26][27][28] Model Backtesting Results Convertible Bond Valuation Model - **100 Yuan Conversion Premium Rate**: Rolling three-year percentile at 98.70%, rolling five-year percentile at 94.90%[4][15] - **Adjusted YTM - Credit Bond YTM**: Current median at -2.36%[5][15] Convertible Bond Comprehensive Valuation Factor - **Equity-Biased Convertible Bond Low Valuation Index**: - Annualized Return: 26.10% - Annualized Volatility: 20.55% - Maximum Drawdown: -22.94% - IR: 1.27 - Calmar Ratio: 1.14 - Monthly Win Rate: 62.22%[23] - **Balanced Convertible Bond Low Valuation Index**: - Annualized Return: 14.80% - Annualized Volatility: 11.82% - Maximum Drawdown: -15.95% - IR: 1.25 - Calmar Ratio: 0.93 - Monthly Win Rate: 62.22%[23] - **Debt-Biased Convertible Bond Low Valuation Index**: - Annualized Return: 13.37% - Annualized Volatility: 9.43% - Maximum Drawdown: -17.78% - IR: 1.42 - Calmar Ratio: 0.75 - Monthly Win Rate: 57.78%[23] Convertible Bond Style Rotation Model - **Convertible Bond Style Rotation**: - Annualized Return: 25.27% - Annualized Volatility: 16.68% - Maximum Drawdown: -15.89% - IR: 1.51 - Calmar Ratio: 1.59 - Monthly Win Rate: 65.56%[32] - **Convertible Bond Low Valuation Equal Weight Index**: - Annualized Return: 14.71% - Annualized Volatility: 10.97% - Maximum Drawdown: -15.48% - IR: 1.34 - Calmar Ratio: 0.95 - Monthly Win Rate: 61.11%[32] - **Convertible Bond Equal Weight Index**: - Annualized Return: 9.75% - Annualized Volatility: 11.66% - Maximum Drawdown: -20.60% - IR: 0.84 - Calmar Ratio: 0.47 - Monthly Win Rate: 60.00%[32]

Core Viewpoint - The A-share and Hong Kong stock markets are experiencing strong upward momentum, with significant increases in various indices, particularly in growth-oriented sectors, while value stocks remain relatively subdued [1][3][6][8]. Market Performance - A-shares and Hong Kong stocks continue to rise, with the overall market returning to a rating of 4.5 stars [2]. - Major indices, including the CSI All Share Index, have surpassed their highest points from October 1 of the previous year [3]. - Both large-cap and small-cap stocks are on the rise, with small-cap stocks showing slightly higher gains [4][5]. - Growth style indices, such as the ChiNext, have seen substantial increases, while value style indices have lagged behind [6][7][8]. Economic Indicators - Recent U.S. economic data, including a lower-than-expected non-farm employment increase of 73,000 jobs in July, suggests potential signs of economic recession [16][17][20]. - The U.S. Consumer Price Index (CPI) for July rose by 2.7% year-on-year, which is below market expectations [21][22]. - The postponement of a 24% tariff between China and the U.S. for 90 days may help lower inflation rates [23][24]. - These economic indicators have increased the likelihood of a Federal Reserve interest rate cut in September [25]. Investment Implications - A decrease in interest rates is expected to positively impact asset prices, particularly benefiting bonds directly and stocks indirectly due to increased liquidity and lower funding costs [26][29]. - Non-dollar assets are likely to benefit even more during a U.S. interest rate cut cycle, as the dollar typically depreciates against other currencies [30][31]. - Historical trends indicate that the last bull market in Hong Kong stocks occurred during the 2020-2021 U.S. interest rate cut cycle [33]. - The current valuation levels of A-shares and Hong Kong stocks are significantly higher than during the last rate cut cycle, which may reduce the extent of future benefits from rate cuts [38]. Interest Rate Context - Historically, the average yield on 10-year U.S. Treasury bonds has been between 2-3%, with recent rates hovering just above 4% [40][43]. - Interest rate fluctuations are a short- to medium-term factor affecting market dynamics, providing opportunities for buying low and selling high, but having less impact on long-term investment returns [45][48]. Additional Features - A new feature in the "Today’s Star" app allows users to access real-time ETF valuation data and identify undervalued ETFs [49][50].