Report Industry Investment Rating There is no specific industry investment rating provided in the report. Core Viewpoints - Amid repeated trade frictions, the convertible bond market may show strong resilience. Compared with the previous "tariff shock," the current market is in an upward - trending phase with higher trading activity. Although the current valuation is higher, the conversion premium rate is lower, and the implied volatility is higher, weakening the bond - like protection slightly, a market correction may present a layout opportunity [2][6][10]. - In the A - share market, cyclical sectors are relatively dominant, while the technology growth direction faces adjustment pressure. Investors should seize structural opportunities in pro - cyclical varieties and pay attention to the phased adjustment risks in the growth direction [10]. - The convertible bond market shows a slight upward trend, with both large - cap and small - cap bonds performing well. The market continues the structural repair trend, with cyclical and manufacturing sectors presenting more opportunities [10]. - The primary market supply is stable, and clause - based gaming is active. Attention should be paid to the marginal impact of downward adjustment and redemption expectations on the valuation structure and trading rhythm [10]. Summary by Directory Trade Frictions and the Evolution of the Convertible Bond Market - The previous "tariff shock" was an "amplifier" in the downward trend. Currently, the market is in an upward - trending phase, and the potential impact of repeated trade frictions may be more limited. The recent trading activity in the convertible bond market is higher, with an average trading volume of 723.9 billion yuan in the past 5 trading days, compared to 587.0 billion yuan in the previous period [17]. - The current market valuation is higher, the conversion premium rate is lower, and the implied volatility is higher than in the previous period. However, the potential downward space may be restricted by the loose liquidity environment [20]. - The previous "tariff shock" had a greater impact on high - price and small - cap convertible bonds, but they recovered faster. Different industries also showed different performances [33][38]. - Overall, the impact of recent trade frictions on the convertible bond market may be controllable. A significant market adjustment may provide a good buying opportunity [41]. Market Theme Weekly Review - In the week from October 9 to 11, 2025, themes related to non - ferrous metals in the equity market were strong, while technology - growth themes were weak. Indexes related to nickel mines, copper industries, and cobalt mines led the gains, while themes such as automobiles and electronics had significant pullbacks [42]. Market Weekly Tracking Main Stock Indexes and Cyclical Sectors - The A - share main stock indexes were differentiated. Only the Shanghai Composite Index rose, and the ChiNext Index was relatively weak. The CSI 2000 and CSI 500 performed better than the SSE 50 and STAR 50. The net outflow of main funds increased, reflecting the profit - taking and risk - aversion needs of some funds [45]. - Cyclical sectors such as non - ferrous metals, steel, coal, and public utilities were strong, while communication and media sectors were weak. Trading was concentrated in electronics, power equipment, and non - ferrous metals, indicating a divergence in market attention between technology and cyclical sectors [48]. - The market congestion was significantly differentiated. Sectors such as electronics, communication, and machinery had a high historical quantile of trading volume and PB, while sectors such as food and beverage, agriculture, forestry, animal husbandry, and beauty care had relatively low congestion [51]. Convertible Bond Market - The convertible bond market showed a slight upward trend. The CSI Convertible Bond Index was basically flat compared to the previous week. Large - cap and small - cap convertible bonds performed well, but the average daily trading volume decreased slightly [54]. - The valuation structure was differentiated. The median market price fluctuated downward but remained at a high level. The implied volatility increased slightly, indicating differences between bulls and bears [60]. - Cyclical sectors were strong, with non - ferrous metals, coal, and steel leading the gains. Trading was concentrated in power equipment, electronics, and basic chemicals [63]. - Most individual bonds showed an upward trend. Among the convertible bonds in the conversion period, the top five gainers were Guanzhong Convertible Bond, Zhonghuan Convertible Bond 2, Jize Convertible Bond, Haomei Convertible Bond, and Zhenhua Convertible Bond. The top five losers were Hengshuai Convertible Bond, Zhongqi Convertible Bond, Sheng 24 Convertible Bond, Tongguang Convertible Bond, and Huicheng Convertible Bond [65]. Convertible Bond Issuance and Clause Tracking Primary Market Issuance - No new convertible bonds were listed in the week from October 9 to 11, 2025. Six listed companies updated their convertible bond issuance plans, with a total scale of over 60 billion yuan in projects at the exchange - acceptance stage and later [10][70][71]. Clause - Based Events - Five convertible bonds announced potential downward adjustments, two announced no downward adjustments, one announced a potential redemption, and two announced early redemptions. Attention should be paid to the impact of these events on the valuation structure and trading rhythm [10].

Overall Market Outlook - The A-share market may continue its upward trend into the fourth quarter of 2025, but the momentum is expected to weaken, leading to increased volatility and a gradual rise within a wide range [1][13][14] - The investment style in the fourth quarter is likely to be more balanced compared to the third quarter, with a focus on technology growth, cyclical sectors, domestic consumption, dividend stocks, and sectors with improving economic conditions [1][14] Technology Sector Insights - The technology sector remains a key focus, particularly in areas such as semiconductors, AI, robotics, digital economy, communication equipment, and defense industries [2][15] - There is an expectation of internal differentiation within the technology sector, with a need for investors to be cautious and prepared for potential risks associated with crowded trades [2][15] - Performance factors will be crucial for capital allocation, with a preference for technology stocks that demonstrate structural performance highlights or growth expectations [2][15] Cyclical and Consumption Sectors - The cyclical sectors are expected to benefit from policy support and improving economic conditions, particularly in areas like construction materials, coal, and metals [8][15] - Domestic consumption is highlighted as a potential area for investment, especially in sectors catering to the aging population and younger consumers [15] - High-dividend stocks may see renewed interest as their yield becomes attractive again, making the fourth quarter a potential window for positioning in dividend-paying assets [8][15] Market Dynamics and Investment Strategy - The report emphasizes a cautious and conservative investment approach, suggesting that investors should take profits when appropriate and avoid chasing high prices [3][14] - Structural opportunities should be prioritized, with a focus on stocks that have actual performance or future earnings support, while avoiding purely speculative stocks [3][15] - The overall market sentiment is expected to be influenced by macroeconomic factors, including U.S. tariff policies and domestic economic recovery efforts [12][13]

Group 1: Report's Core View - The short - term A - share market may continue to fluctuate upwards, but short - term volatility should be watched out for. The style may become more balanced in the future, and a defensive allocation is recommended, focusing on opportunities in technology sector rotation, high - dividend, and cyclical sectors. The bond market is expected to be volatile and bearish [6]. - The "watch - the - stock - to - trade - bonds" principle dominates short - term trading, and the bond market is difficult to decline significantly before the stock market cools down [8]. Group 2: Stock Index Strategy Stock Index Trend Review - Last week, the A - share market showed a significant divergence. The Shanghai Composite Index representing large - cap blue - chips fell, while the Shenzhen Component Index, ChiNext Index, and STAR Market Index rose. The weakness of financial and real - estate sectors dragged down the Shanghai - related indices, while the growth - style sectors provided support for relevant indices [6]. Technical Analysis - The market maintained a differentiated pattern last week. The ChiNext and STAR Market indices were strong, while the SSE 50 was weak. After a ground - volume rebound on a certain day in August, there was a significant volume decline on Thursday, forming a divergence with the previous up - volume. The short - term profit - taking pressure was prominent [6]. Strategy Outlook - Reasonably control positions and pay attention to policies and sector rotation rhythms [6]. Group 3: Treasury Bond Strategy Treasury Bond Trend Review - The bond market oscillated last week. Although the central bank made a net injection, liquidity did not loosen significantly due to tax - period disturbances. Rumors of the central bank's bond - buying operation and the Fed's interest - rate cut provided some support [9]. Technical Analysis - The T - contract K - line oscillated upwards, with the MACD yellow and white lines intertwined, and the BOLL lines still opening downwards [9]. Strategy Outlook - The bond market is expected to be volatile and bearish. It is recommended to reduce positions in a timely manner [9]. Group 4: Key Data Tracking PMI - In July, the manufacturing PMI dropped to 49.3%, weaker than market expectations and seasonal trends. Both supply and demand sides weakened, with external demand falling more significantly on the demand side and production slowing on the supply side. Upstream non - ferrous and steel industries improved, while downstream export - oriented industries were suppressed [13]. Inflation - In a certain month, the year - on - year CPI was flat, and the month - on - month CPI rose by 0.4%. The year - on - year PPI decreased by 3.6%, and the month - on - month PPI decreased by 0.2%. There were positive changes in prices, but the year - on - year CPI and PPI remained sluggish [16]. Industrial Added Value - The year - on - year growth rate of industrial added value in a certain month dropped to 5.7%, and the growth rate of the service production index dropped to 5.8%. The decline in industrial added value was mainly due to the export - oriented industries such as automobiles, electronics, textiles, and electrical machinery [19]. Fixed - Asset Investment - The estimated year - on - year growth rate of fixed - asset investment in a certain month turned negative to - 5.2%. The reasons were complex, including short - term factors like extreme weather and statistical method issues, medium - term factors such as export - expectation decline and policy implementation, and long - term factors like the shrinking real - estate investment [22]. Social Retail Sales - The year - on - year growth rate of social retail sales in a certain month dropped to 3.7%, and that of above - quota retail sales dropped to 2.8%. The decline was mainly reflected in low - level fluctuations in catering revenue, weak sales of state - subsidized products, and a decline in real - estate - related consumption [25]. Social Financing - In a certain month, new social financing was 1.2 trillion yuan, and new RMB loans were negative. At the end of the month, the year - on - year growth rate of social financing stock was 9.0%, and that of M2 was 8.8%. Although the credit growth was negative, the growth rates of social financing, M1, and M2 improved. In the future, the social financing growth rate may peak and decline, and policies may be adjusted according to the situation [28]. Import and Export - In a certain month, China's exports were $3217.8 billion, imports were $2235.4 billion, and the trade surplus was $982.4 billion. The import and export performance was stronger than expected, mainly due to the "rush" behavior under the threat of US tariffs on semiconductors and pharmaceuticals [31]. Group 5: Weekly Focus - The report lists a series of US economic indicators to be focused on, including the second - quarter core PCE price index, personal consumption expenditure, real GDP, and initial jobless claims [33].

Key Points Summary Group 1: Important Events Review - The State Council issued an opinion on August 5 to gradually promote free preschool education, stating that from the autumn semester of 2025, public kindergartens will waive the care and education fees for children in their final year [2] - The 2025 World Robot Conference opened on August 8, featuring over 1,500 exhibits from more than 200 domestic and international robotics companies, including more than 100 new products, which is approximately double the number from last year [2] - On August 8, China National Railway Group announced the establishment of a new company for the Xinjiang-Tibet Railway with a registered capital of 95 billion RMB, marking a significant step in the construction of this strategic transportation artery [2] Group 2: Market Performance - The bond market showed signs of recovery as funding rates fell, and the adjustment of VAT policy stimulated banks' willingness to allocate to older bonds, with no unexpected disturbances from local government bond issuances [4] - The A-share market rebounded and reached a new high for the year, with strong market sentiment and a shift from growth sectors like technology and pharmaceuticals back to cyclical sectors influenced by expectations surrounding the Xinjiang-Tibet Railway [5] - The Hong Kong stock market also rebounded, but the momentum was generally weaker compared to the A-share market [6] - The US stock market demonstrated strong resilience, quickly rebounding after a previous week's decline, with the Nasdaq reaching a new high despite disappointing non-farm payroll data [7] Group 3: Market Dynamics - The bond market pressure eased, with short-term focus on trading opportunities, as the negative impact of the stock-bond relationship weakened [8] - The stock market saw margin trading surpassing 2 trillion, indicating strong sentiment, although there are rising risks of overheating, suggesting caution against chasing high prices [9] - The uncertainty surrounding tariffs has decreased, but the market lacks marginal positive news, leading to a potentially volatile short-term outlook [10][11]

Market Overview - The market sentiment remains strong, focusing on "rotation and supplementary gains," with growth expected to follow the cyclical trends. Market transactions have further increased, and the sentiment is still heated, making it easier for indices to rise while the downside risk is limited [2][4] - The market rotation characteristics have continued, shifting from a "barbell contraction" to an "expansion," although chasing gains remains challenging. It is recommended to reduce operations and select relatively low-position thematic directions for layout and holding, waiting for opportunities for "rotation and supplementary gains" [2][4] Stock Market Factors - In the past week, the small-cap growth style outperformed, while the volatility of large and small-cap styles remained at a near one-year low. The volatility of value and growth styles has increased [6] - The excess return dispersion of industry indices remained at a near one-year low, with the speed of industry rotation oscillating upward and the proportion of rising constituent stocks increasing. The trading concentration of the top 100 stocks and the top 5 industries has slightly decreased [6] Commodity Market Factors - In the commodity market, the trend strength of the precious metals sector remains at a near one-year high, while the trend strength of the black sector has rapidly increased. The basis momentum of the precious metals sector is rising, while other sectors show oscillating downward trends [15] Options Market Factors - The implied volatility levels of the SSE 50 and CSI 1000 have shown an upward trend, with the skew of call options maintaining previous levels while the skew of put options has significantly decreased. The market is generally optimistic due to policy-driven and sentiment-driven factors [21] Convertible Bond Market Factors - In the convertible bond market, the premium rate for conversion at 100 yuan remains resilient, continuing to rise slightly, with less than 10 basis points difference from the peak in May. The proportion of low premium rate convertible bonds has shown signs of weakening, especially those below 5%, while the trading volume in the convertible bond market has increased alongside the heat in the equity market [26]

Summary of Conference Call Company/Industry Involved - The conference call primarily discusses the A-share market, focusing on various sectors including technology, real estate, construction materials, and chemicals. Core Points and Arguments 1. **Market Adjustment**: The A-share market experienced a noticeable adjustment last week, attributed to the exposure of domestic economic data and upcoming corporate earnings reports in April, marking a verification period for economic performance [2][3][8]. 2. **Performance Correlation**: There is a strong positive correlation between stock performance and earnings reports in April, indicating that investors should focus on fundamental data rather than optimistic narratives [3][10]. 3. **Market Sentiment Indicators**: Indicators of market sentiment, such as style differentiation and turnover rates, suggest an overheated market, particularly in technology stocks, which have yet to show earnings realization [4][5]. 4. **Overseas Risks**: The call emphasizes the importance of overseas risks, particularly the impact of U.S.-China trade investigations and tariffs, which could significantly affect A-share market sentiment [6][8]. 5. **Sector Opportunities**: Despite macroeconomic uncertainties, certain sectors like construction machinery, non-ferrous metals, chemicals, and military industries are expected to show strong performance in upcoming earnings reports [10][11]. 6. **Real Estate Market Dynamics**: The real estate sector is experiencing a unique year, with cash reserves increasing compared to last year, but the potential for a full cycle restart remains challenging due to limited tools available for expansion [12][13]. 7. **Building Materials Sector**: The building materials sector is seeing strong demand, particularly in northern regions, driven by large-scale infrastructure projects, with significant growth in cement sales [18][19]. 8. **Chemical Industry Outlook**: The chemical sector is expected to see price increases for certain products, driven by strong demand and improved supply dynamics, particularly in refrigerants and fertilizers [22][24]. 9. **Steel Industry Confidence**: The steel sector is witnessing a recovery in demand, with low inventory levels and a shift in the demand structure away from real estate, indicating a potential bottoming out of the cycle [34][35][36]. 10. **Coal Market Trends**: The coal market is expected to rebound as demand from construction and infrastructure projects increases, despite recent price declines due to seasonal factors [47][50][51]. Other Important but Possibly Overlooked Content 1. **Investment Strategy Shifts**: The focus of market speculation is shifting towards high dividend-yielding stocks as companies are required to disclose management plans and dividend strategies in their annual reports [28][29]. 2. **Technological and Industrial Innovations**: The call highlights the potential of deep-sea technology and marine engineering as significant growth areas, with companies like China Communications Construction Company being identified as undervalued [31][32]. 3. **Long-term Trends in Commodities**: The chemical and materials sectors are expected to benefit from long-term trends in pricing and demand, particularly in the context of global supply chain adjustments [24][25][46]. 4. **Regulatory Environment**: The impact of regulatory changes on the real estate and construction sectors is noted, with a focus on how these changes could influence market dynamics and investment opportunities [27][28]. This summary encapsulates the key insights and discussions from the conference call, providing a comprehensive overview of the current market landscape and future outlook across various sectors.