Core Viewpoint - The article emphasizes the importance of understanding the "14th Five-Year Plan" before making investment decisions, highlighting that a deep comprehension of this strategic framework is crucial for long-term investment strategies [1] Market Review - The "barbell strategy" remains effective, with technology growth and gold showing inverse performance, indicating a shift in market dynamics [2] - The performance of the A-share market reflects a transition from a defensive to a more aggressive investment approach, with concerns about economic transformation and potential tech bubbles [2] Demand Shortage - The "14th Five-Year Plan" addresses the current economic challenges, particularly the insufficient domestic demand, which is evident in investment, consumption, and real estate sectors [5] - Fixed asset investment decreased by 0.5% year-on-year in the first three quarters of 2025, with manufacturing investment growth slowing to 4.0% [5] - Social retail sales grew by only 4.5% year-on-year, below GDP growth, indicating weak consumer momentum [5] - Real estate investment fell by 13.9% year-on-year, with a significant amount of unsold housing inventory [5][6] Structural Rewards - Emerging industries are experiencing a rebound in profitability, with industrial enterprise profit growth reaching 21.6% in September 2025 [7] - Factors driving this growth include easing price pressures, demand recovery in key sectors like automotive and computing, and favorable policy measures [8] - High-tech manufacturing profits grew by 26.8%, indicating a shift towards more advanced production capabilities [9] Opportunities in Traditional Industries - The "14th Five-Year Plan" redefines traditional industries as foundational to the manufacturing sector, emphasizing quality improvement and reasonable growth [10] - Traditional industries are encouraged to undergo transformation through digitalization, green initiatives, and cluster development [10] Investment Strategy - The distinction between new and old industries is less relevant than the value proposition, with traditional industries offering attractive price points [11] - Recent market adjustments suggest a shift towards balanced allocations between new and traditional sectors, indicating a potential for recovery in traditional industries [11][12]

Group 1: Economic Overview - The overall economic operation in China has been stable this year, with notable highlights in both production and demand, but there is a clear weakness in consumption and investment since the third quarter, indicating insufficient endogenous growth momentum [1][2] - The actual GDP growth for the first three quarters is 5.2%, which is 0.4 percentage points higher than the same period last year, laying a solid foundation for achieving the annual growth target of around 5% [2] - The industrial sector has shown improvement, with the industrial added value for large enterprises growing by 6.2% year-on-year in the first three quarters, and high-tech manufacturing growing by 9.6% [2] Group 2: External Trade and Policy Response - China's external trade has demonstrated resilience despite external pressures, with a 6.1% increase in overall exports year-on-year in the first three quarters, even as exports to the U.S. fell by 16.9% [3] - The broad deficit rate for the first three quarters is 8.7%, up 1.7 percentage points year-on-year, indicating a proactive fiscal policy response to external economic challenges [3] Group 3: Consumption and Investment Trends - Social retail sales increased by 4.5% year-on-year in the first three quarters, with significant growth in categories like home appliances and furniture, but the growth rate has slowed down recently due to reduced government support [4][7] - Fixed asset investment has shown a downward trend, with a cumulative year-on-year decline of 0.5% in September, marking the first negative growth since September 2020 [8] - The real estate market remains sluggish, with a 10.5% year-on-year decline in sales area in September, although the rate of decline has narrowed compared to previous months [9] Group 4: Policy Measures and Future Outlook - The government is expected to implement more proactive fiscal and monetary policies to stimulate domestic demand, especially in light of the upcoming traditional consumption peak in the fourth quarter [11][12] - The recent Central Committee meeting emphasized the need for sustained macroeconomic policy efforts to stabilize employment, businesses, and market expectations, indicating a focus on maintaining economic recovery momentum [12][13]

Market Performance - The Hang Seng Index (HSI) closed at 25,859, up 2.4% for the day and 28.9% year-to-date[2] - The KOSPI index showed significant growth, closing at 3,815, with a 1.8% increase for the day and a remarkable 59.0% year-to-date[2] - The MSCI China index increased by 2.3% for the day and 33.2% year-to-date, indicating strong market performance[2] Commodity Prices - Gold prices rose to $4,356 per ounce, reflecting a 2.5% increase for the day and a substantial 66.0% increase year-to-date[3] - Brent Crude oil prices decreased to $61 per barrel, down 0.6% for the day and down 15.1% year-to-date[3] - The Baltic Dry Index (BDI) surged to 2,046, showing a remarkable 105.2% increase year-to-date[3] Economic Indicators - China's GDP growth moderated to 4.8% year-on-year in Q3 2025, down from 5.2% in Q2 2025, with a required growth of 4.2-4.5% in Q4 to meet the annual target of 4.9-5%[6][7] - Retail sales growth in China slowed to 3.0% year-on-year in September, the lowest since November 2024, down from 3.4% in August[14] - The US Initial Jobless Claims for the week ending October 23 are expected to be 226,000, slightly higher than the consensus of 218,000[4] Corporate Updates - China Mobile reported a 1.4% year-on-year increase in Q3 earnings to RMB 31.1 billion, with service revenue rising by 0.8% to RMB 216.2 billion[10][11] - Akeso Inc. presented positive Phase III study results for its drug AK112, showing a progression-free survival hazard ratio of 0.60 in the treatment of sqNSCLC[26][29]

Economic Overview - Q3 2025 GDP growth is 4.8%, down from 5.2% in Q2, aligning with market expectations[1] - Industrial output in September increased by 6.5%, up from 5.2% in the previous month[1] - Retail sales growth in September is 3.0%, a decline from 3.4% in August[1] Investment Trends - Fixed asset investment from January to September decreased by 0.5%, down from a previous growth of 0.5%[1] - Real estate investment fell by 13.9% year-on-year, worsening from a decline of 12.9%[1] - Broad infrastructure investment grew by 3.3%, down from 5.4%[1] Consumption Insights - Retail sales in September showed a continuous decline, marking the fourth consecutive month of decrease[5] - The impact of the "trade-in" policy is diminishing, contributing to lower consumer spending[5] - September's retail sales growth was below market expectations of 3.1%[5] Future Outlook - To achieve the annual GDP target of 5%, Q4 growth needs to reach at least 4.4%[4] - Short-term policies may increase but are expected to be more supportive rather than transformative[4] - Key areas to monitor include central bank actions, fiscal policy effectiveness, and export performance[4]

Economic Overview - In the first three quarters, China's GDP reached 10,150.36 billion yuan, growing by 5.2% year-on-year, with a quarterly decline in growth rate from 5.4% in Q1 to 4.8% in Q3 [3][5] - The slowdown in GDP growth is attributed to weakening consumption, investment, and real estate market data [3][5] Consumption and Investment Trends - From January to September, the total retail sales of consumer goods amounted to 3,658.77 billion yuan, increasing by 4.5%, a decline from 5.0% in the first half of the year [3][7] - Fixed asset investment (excluding rural households) decreased by 0.5% year-on-year, marking the first negative growth this year, with significant declines in real estate investment by 13.9% [3][19] - Private fixed asset investment also saw a decline of 3.1%, reflecting ongoing issues with private sector confidence [19][20] Industrial Performance - The industrial added value for large-scale enterprises grew by 6.2% year-on-year from January to September, with a slight increase to 6.5% in September compared to August [4] - The construction activity index for the building industry remained below the threshold, indicating weak growth in investment-related activities [14] Real Estate Sector - Real estate development investment fell by 13.9% from January to September, with new construction areas declining significantly [18] - The sales area of new commercial housing decreased by 5.5%, indicating ongoing challenges in the real estate market [18] Policy Outlook - The fourth quarter is seen as a critical period for policy intervention, with expectations for increased fiscal and monetary support to stimulate demand and stabilize the economy [21][22] - Recommendations include enhancing consumer demand through various policies, supporting the real estate market, and maintaining a stable monetary policy [22][23]

Group 1 - The current economic situation in China shows a divergence between strong external demand and weak internal demand, with macroeconomic data showing marginal slowdown in July and August, and the GDP growth rate for the third quarter declining compared to July [1] - Consumer employment index is at a low level since the second half of 2024, leading to weak income and consumption willingness; the "old-for-new" policy has generated approximately 1.9 trillion yuan in sales with subsidy funds consumed nearing 264 billion yuan, indicating a need for additional subsidies in the fourth quarter to sustain consumption recovery [1] - Fixed asset investment in August only grew by 0.5% year-on-year, down 1.1 percentage points from the previous month, with all three investment categories facing downward pressure, making effective support unlikely in the short term [1] Group 2 - The capital market is showing signs of stabilization and recovery due to multiple supporting factors, although the funding structure and risk points still require vigilance; since the third quarter, market liquidity has been ample, with non-bank financial institutions' deposits increasing by 194 billion yuan year-on-year [2] - External risks are easing, with extended US-China tariff negotiations and a 25 basis point rate cut by the Federal Reserve in September, which may lead to an additional 50 basis points cut within the year, improving international capital liquidity [2] - The funding structure indicates that private equity, speculative funds, and leveraged funds are the main sources of new capital, with private equity securities investment fund registrations in July increasing 22 times compared to the low point in 2024, while resident willingness to invest directly in the market remains weak [2]

Group 1 - The overall valuation of A-shares is currently within a reasonable range, with long-term bull markets relying on continuous growth in listed company performance [1] - The core driver of A-share growth this year has been the decline in interest rates and the influx of external funds into the market, with household deposits exceeding 160 trillion yuan [1][2] - The current market heat is at a moderate level, with no significant bubbles observed, as the price-to-earnings ratios of major indices are near historical averages [2] Group 2 - The growth potential of listed companies is crucial for the long-term market trend, with China's manufacturing sector holding nearly one-third of the global market share [2] - There is a structural disparity in the A-share market, with the ChiNext index showing a price-to-earnings ratio exceeding 170, indicating potential valuation risks [2] - The current economic environment necessitates increased fiscal and monetary policy efforts to stimulate demand, particularly in light of the ongoing real estate downturn and demographic challenges [3] Group 3 - The call for balanced IPO advancement and investor interests is essential for enhancing market inclusivity and attractiveness, while also improving corporate governance [3] - The policy toolbox remains sufficiently equipped to maintain cautious optimism in the market, focusing on sectors with genuine growth potential [3]

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].

Group 1: Investment Ratings - No industry investment ratings are provided in the report. Group 2: Core Views - The stock index is expected to rise in the long - term, but the probability of a unilateral upward trend before the National Day holiday is low. It is recommended to control positions [1]. - Asset shortage and weak economy are favorable for bond futures, but the central bank's short - term interest rate risk warning suppresses the upward trend [1]. - After the interest rate cut, the gold price is expected to fluctuate at a high level in the short - term, but there is still room for growth in the long - term [1]. Group 3: Summary by Variety Macro - Financial - **Stock Index**: Long - term bullish, but low probability of unilateral rise before National Day, control positions [1]. - **Treasury Bonds**: Asset shortage and weak economy are favorable, but short - term rate risk warning by central bank suppresses rise [1]. Precious Metals - **Gold**: Short - term high - level oscillation, long - term upward potential [1]. - **Silver**: Short - term strong due to market sentiment [1]. Base Metals - **Copper**: Pressured by profit - taking after Fed rate cut, but expected to stabilize and rise with overseas easing and domestic demand [1]. - **Aluminum**: Pressured by profit - taking, but limited downside in consumption season [1]. - **Alumina**: Weak fundamentals but limited downside as price nears cost line [1]. - **Zinc**: Social inventory increase pressures price, but Sino - US relations may boost sentiment [1]. - **Nickel**: Short - term macro - dominated, may be strong, pay attention to supply and macro changes [1]. - **Stainless Steel**: Short - term oscillation, Sino - US relations may boost sentiment, pay attention to production [1]. - **Tin**: Potential low - buying opportunities in demand season [1]. - **Industrial Silicon**: Influenced by supply and market sentiment factors [1]. Energy - **Crude Oil**: Affected by US inventory, OPEC+ production plan, and Fed rate cut [1]. - **Fuel Oil**: Short - term follows crude oil, supply of raw material is sufficient [1]. Chemicals - **PTA**: Output increases, basis falls, downstream profit recovers [1]. - **Ethylene Glycol**: Basis strengthens, but new device and hedging pressure exist [1]. - **Short - fiber**: Factory devices return, delivery willingness weakens [1]. - **Benzene and Styrene**: Supply increases, import pressure rises [1]. - **Urea**: Limited upside due to weak demand, supported by cost [1]. - **PE**: Price oscillates weakly due to demand and maintenance [1]. - **PVC**: Oscillates weakly with supply pressure and high near - month warehouse receipts [1]. - **LPG**: Upward momentum is suppressed by OPEC production and inventory [1]. Agricultural Products - **Palm Oil**: May break through oscillation range due to supply disruption [1]. - **Soybean Oil**: Long - term bullish with de - stocking expectation, pay attention to Sino - US talks [1]. - **Rapeseed Oil**: Recommend 11 - 1 calendar spread strategy [1]. - **Cotton**: New crop is expected to be abundant, short - term supply may be tight [1]. - **Sugar**: Expected to oscillate weakly with limited downside [1]. - **Corn**: Expected to oscillate at the bottom, focus on new - crop price [1]. - **Soybean Meal**: Buy on dips, pay attention to Sino - US policy [1]. Others - **Paper Pulp**: Oscillates, focus on warehouse receipt cancellation after September delivery [1]. - **Logs**: Oscillates with stable spot price and falling foreign quotes [1]. - **Live Pigs**: Weak due to supply increase and limited downstream demand [1]. - **Shipping (Container Shipping to Europe)**: Freight rates are falling faster than expected [1].

Report Industry Investment Rating - No information provided Core View of the Report - Urea domestic demand is weak, and exports support the upward movement of the futures price. It is expected to fluctuate in the short - term, and the market is waiting for new drivers. Attention should be paid to news - related disturbances [1][11] Summary by Related Catalogs Strategy Analysis - Urea futures opened high and moved high today, with a slight decline in the afternoon and a small gain. Upstream factories lowered prices to attract orders, and downstream buyers replenished at low prices, resulting in good market transactions. This week's urea production declined, but next week, most factories will resume production, and production will increase month - on - month. Northern agricultural demand is near the end, with sporadic purchases. After compound fertilizer factories started autumn fertilizer production, the operating load increased slightly. Currently, compound fertilizer factories have taken 30% of nitrogen fertilizer, and there is still an expectation of further purchases. However, due to the dominance of advance payments, the finished - product inventory in factories has increased, and the demand for urea has strong elasticity and limited support. Inventory continued to decline this period, mainly due to regional agricultural demand and export orders, but the decline rate has slowed down [1][11] Futures Market - The main 2509 contract of urea opened at 1750 yuan/ton, fluctuated strongly during the day, and finally closed at 1745 yuan/ton, up 0.29%. The trading volume was 188,727 lots, a decrease of 9,285 lots. Among the top 20 main positions, long positions decreased by 3,019 lots, and short positions decreased by 2,273 lots. Qisheng Futures' net long positions increased by 1,437 lots, and Zheshang Futures' net long positions decreased by 519 lots. CITIC Futures' net short positions increased by 1,642 lots, and Dongzheng Futures' net short positions increased by 3,271 lots. On July 18, 2025, the number of urea warehouse receipts was 2,523, a decrease of 107 from the previous trading day, all from Anhui Zhongneng [2] Spot Market - After downstream buyers purchased at low prices and factories lowered prices to attract orders, the order - receiving situation was fair. The ex - factory price of small - particle urea in Shandong, Henan, and Hebei was mostly in the range of 1730 - 1770 yuan/ton, with a few factories quoting slightly higher [3] Fundamental Tracking - In terms of basis, today's mainstream spot market quotes were stable, and the futures closing price increased. Based on Shandong, the basis strengthened compared with the previous trading day, and the basis of the September contract was 65 yuan/ton, an increase of 8 yuan/ton. On July 18, 2025, the national daily urea production was 197,400 tons, unchanged from yesterday, and the operating rate was 84.03% [7][10]