Core Viewpoint - The offshore RMB has strengthened against the USD, breaking the 6.97 mark, continuing the appreciation trend since the end of 2025, with expectations for RMB to return to the "6" range by 2026 [1] Group 1: Supporting Factors for RMB Strength - The US faces high debt pressure, making it difficult for the Federal Reserve to tighten policies, which has led to a continuous weakening of the USD index, creating favorable external conditions for RMB appreciation [1] - The domestic economic fundamentals are continuously improving, coupled with the release of policy dividends from the "14th Five-Year Plan," significantly enhancing market confidence in RMB assets [1] Group 2: Trade Surplus and Its Impact - Approximately $900 billion in unconverted trade surplus accumulated over the past three years is showing signs of returning, providing strong support for the RMB exchange rate [1]

Core Viewpoint - The recent adjustment in the A-share market is attributed to multiple factors, but the downward space is considered limited, with a favorable policy window expected in late October, presenting a potential opportunity for positioning [1][4][5]. Group 1: Reasons for Market Adjustment - The adjustment is driven by escalating US-China trade tensions, leading to concerns over global supply chain stability and foreign trade environment [2]. - Technical adjustment pressure exists due to significant gains in the A-share market since the beginning of the year, prompting profit-taking among investors [2][3]. - The complex and changing international geopolitical landscape has contributed to a cautious market sentiment [2][3]. Group 2: Market Outlook - The market is expected to have limited downward space, with a favorable policy window in late October that could boost market sentiment [4][5]. - The upcoming 20th National Congress of the Communist Party is anticipated to provide clarity on economic development strategies, which may create investment opportunities [4]. - The Federal Reserve's expected interest rate cut at the end of October is likely to improve liquidity conditions for the A-share market and attract foreign capital [4]. Group 3: Long-term Market Sentiment - Fund companies maintain a positive long-term outlook for the A-share market, emphasizing that the foundation for a bull market remains solid [6]. - The focus is expected to shift towards internal drivers, with attention on policy benefits from the 14th Five-Year Plan and the certainty of third-quarter earnings [6]. - Investment strategies may include a balanced approach, focusing on sectors benefiting from domestic policies and those with improving fundamentals at relatively low valuations [6].

Market Performance - On October 14, the A-share market experienced a correction, with the ChiNext index falling nearly 4% [1][2]. Analysis of Market Movements - The recent escalation of China-U.S. trade tensions has raised concerns about the stability of global supply chains and the foreign trade environment, particularly in areas such as shipping costs, rare earth controls, and tariff threats [2]. - Technical adjustment pressures within the market have also contributed to the volatility, as the A-share market has accumulated significant gains since the beginning of the year, prompting some profit-taking amid external disturbances [2]. - The complex and changing international geopolitical landscape, including uncertainties in the policy directions of major economies like France and Japan, has led to a cautious market sentiment [2]. Impact of Trade Tensions - The recent escalation in China-U.S. trade tensions has implications beyond traditional trade, with China's export controls on rare earths and related technologies targeting the core supply chains of the global high-tech industry [2]. - The U.S. has threatened higher tariffs, which exacerbates tensions in the global trade system, creating uncertainty and risk aversion in the market, particularly affecting industries reliant on China-U.S. trade and those closely tied to globalization in high-tech and manufacturing sectors [2]. Market Outlook - Short-term volatility in the A-share market may increase, but there is no need for excessive pessimism in the medium term [3]. - The evolution of China-U.S. relations, especially with key events like the upcoming APEC summit, will be critical observation points for the market [3]. - The market focus is expected to shift towards internal drivers, particularly the policy dividends from the "14th Five-Year Plan" and the certainty of third-quarter earnings [3]. - In terms of asset allocation, a balanced strategy is recommended, focusing on sectors that highlight strategic value and benefit from domestic industrial policy support, such as technology and new energy [3]. - Additionally, sectors with relatively low valuations and improving fundamentals may also present investment opportunities [3]. - Continuous monitoring of incremental capital movements and changes in the external environment is advised for flexible portfolio adjustments [3].