Core Insights - The A-share market has seen effective "barbell" asset allocation strategies, focusing on both dividend-yielding assets and high-growth assets, largely influenced by changes in China's macroeconomic environment [1] Economic Environment and Asset Allocation - The economic cycle can be analyzed using the "Merrill Lynch Investment Clock," which links economic growth and inflation to asset allocation choices, suggesting that in a rising GDP and CPI environment, commodities outperform stocks, cash, and bonds, while in a declining GDP and CPI environment, bonds outperform cash, stocks, and commodities [2] - The performance of core assets in the A-share market has significantly declined over the past two years, with the Producer Price Index (PPI) showing a notable drop from a high of 13.5% in October 2021 to -1.3% in October 2022, remaining negative for 37 consecutive months [2] Industry Performance - From October 2021 to October 2025, the communication sector has increased by 149.5%, while the media sector has risen by 35.8%. In contrast, the beauty and personal care sector has decreased by 41.8%, and the food and beverage sector has fallen by 32.6% [2] - Recent data indicates that the PPI turned positive at 0.1% in October 2025, leading to noticeable increases in the chemical and food and beverage sectors [3] Investment Strategies - The importance of top-down analysis in investment decisions is increasing, as global macroeconomic changes and the growth of passive, style, and quantitative funds amplify this impact [4] - The combination of top-down and bottom-up approaches in investment practices is emphasized for a more comprehensive strategy [4] Future Considerations - The ongoing negative PPI trend necessitates close monitoring of potential changes and their implications for asset allocation strategies, particularly regarding the performance of "middle assets" over the next two years [5] - The complexity of macroeconomic operations suggests that factors such as confidence and expectations play significant roles, with "anti-involution" being identified as a potential positive trigger for changes in the domestic PPI [5]

Market Overview - After the National Day holiday, the A-share market experienced a pullback, with the three major indices retreating, particularly in the technology sector where some funds saw declines exceeding 14% [1][2] - As of October 20, the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index fell by 0.49%, 5.27%, and 7.56% respectively, with the technology sector showing significant declines [2] Technology Sector Analysis - The recent adjustment in the technology sector is attributed to external uncertainties leading to risk aversion and profit-taking from previous gains, although the underlying logic supporting the sector remains intact [3] - The performance of technology-focused funds has been adversely affected, with an average decline of over 9% since the beginning of October, and only 8 out of over 1700 technology-themed funds achieving positive returns [2][4] Investment Strategies - Analysts suggest that a balanced asset allocation strategy, such as a barbell strategy, is advisable for investors, combining high-dividend assets for stability with growth-oriented technology investments [1][7] - The focus for future investments should include sectors like AI applications, semiconductor manufacturing, and storage, which are expected to drive long-term growth [1][5] Fund Performance - In the first three quarters of the year, equity funds that heavily invested in technology sectors, such as AI and robotics, performed exceptionally well, with some funds reporting returns exceeding 194% [4] - The semiconductor and AI industry indices reported gains of over 20% and 16% respectively in the third quarter, reflecting strong market optimism [4] Future Outlook - The "technology bull" market is expected to continue, with upcoming government plans likely to support key areas such as humanoid robots and semiconductor technology [5] - The market is entering a phase of intensive earnings disclosures, which will be crucial for assessing the sustainability of growth in previously high-performing sectors [5][6]

Market Overview - After the National Day holiday, the A-share market experienced a pullback, with the three major indices showing declines. The Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index fell by 0.49%, 5.27%, and 7.56% respectively as of October 20 [3] - The technology sector faced significant declines, with the STAR 50, STAR Composite Index, and STAR 100 all dropping over 8%. The semiconductor and CPO (Co-Packaged Optics) sectors notably dragged down the overall performance of the technology industry [3][4] Fund Performance - The average decline for technology-themed funds exceeded 9% since October, with the largest drop recorded by the Fortune Information Technology Mixed Fund C at 14.16%. Out of over 1700 technology-themed funds, only 8 achieved positive returns, while more than 550 funds fell over 10% [3][4] Investment Sentiment - Analysts attribute the recent adjustments in the technology sector to external uncertainties leading to risk aversion and profit-taking from previous gains. However, the underlying logic supporting the technology sector remains intact, with a focus on policy benefits and structural data verification [4][6] - The "technology bull" market is expected to continue, with key areas of focus including humanoid robots, solid-state batteries, semiconductor chips, computing algorithms, and low-altitude economy, which are anticipated to be highlighted in the upcoming "14th Five-Year Plan" [6][7] Future Outlook - The fourth quarter is expected to maintain technology as the main investment theme, with significant performance from equity funds heavily invested in technology sectors such as artificial intelligence and computing power. The Yongying Technology Select Mixed Fund achieved returns of 194.49% and 193.09% [5][6] - The semiconductor industry index rose over 20% and the artificial intelligence industry index increased over 16% in the third quarter, reflecting strong market optimism towards the technology sector [5] Investment Strategy - A barbell asset allocation strategy is recommended, balancing between "China Special Valuation" and dividend assets (e.g., banks, public utilities) on one end, and high-growth technology sectors like AI on the other. This strategy aims to mitigate portfolio volatility while positioning for future growth [7][8] - For investors with varying risk tolerances, a more conservative portfolio can increase the proportion of dividend assets, while maintaining exposure to high-volatility, high-elasticity investments in technology sectors [8]