Core Viewpoint - The article presents a "Bull Market Risk Signal System" designed to assess the risk levels of the stock markets in China and Hong Kong, indicating a mixed outlook with several indicators showing signs of overheating and potential risks [1]. Group 1: Valuation Levels - As of September 30, 2025, the price-to-earnings (P/E) ratio for the CSI 300 Index is 14.22 times, and for the Hang Seng Index, it is 13.66 times, suggesting that the markets are not overheated, thus receiving a green light [1]. Group 2: Market Sentiment and Behavior - In August 2025, 2.65 million new accounts were opened in the A-share market, a year-on-year increase of 165%, indicating a significant influx of retail investors, which is a typical sign of overheating, thus receiving a red light [1]. - The emergence of "stock gods" and high-return internet influencers has been noted, with several cases on platforms like Xueqiu, which also indicates overheating, thus receiving a red light [1]. - A strong speculative atmosphere is present, with short-term trading becoming prevalent and value investing being ridiculed, leading to a red light [1]. - Increased inquiries about stocks from relatives and friends suggest a heightened public interest, contributing to a red light [1]. Group 3: Market Dynamics - There are evident local asset bubbles in sectors with significant price increases, such as the Sci-Tech Innovation Board, Growth Enterprise Market, and semiconductor sectors, which receive a red light [1]. - Trading volumes have surged, with the Shanghai Stock Exchange recording a trading volume of 0.97 trillion and the Shenzhen Stock Exchange 1.21 trillion as of September 30, 2025, indicating excessive trading activity and receiving a red light [1]. - The financing balance in the A-share market has rapidly increased, with the total financing balance across the Shanghai, Shenzhen, and Beijing markets exceeding 2.4 trillion, indicating excessive leverage and receiving a red light [1]. Group 4: Regulatory and Foreign Investment Insights - Ongoing monitoring of regulatory actions is necessary, as the regulatory environment is currently assessed as neutral, receiving a yellow light [1]. - According to Morgan Stanley, the net inflow of foreign capital into Hong Kong and mainland stocks has slowed, with only 900 million USD in August, down from 2.7 billion USD in July, which is also assessed as a yellow light [1].