Investment Rating - The report maintains an "Overweight" rating for the construction materials industry [1] Core Views - Employment data shows improvement, and there are expectations for policy support [1] - The construction materials sector has shown resilience with a weekly increase of 0.97%, outperforming the Shanghai and Shenzhen 300 Index by 2.05% [3] - The cement market is experiencing a slight recovery in demand, particularly in southern regions, while prices are expected to remain stable [5][10] - The glass market is under pressure with high inventory levels and weak demand, but medium-term supply-side adjustments are anticipated [41][43] - The fiberglass sector is expected to see improved profitability due to supply constraints and increasing demand from new applications [5] Summary by Sections 1. Bulk Construction Materials Fundamentals and High-Frequency Data - **Cement**: The national average price for high-standard cement is 352.3 RMB/ton, up 1.2 RMB/ton from last week but down 74.8 RMB/ton from the same period last year. The average cement inventory level is 69.8%, with an average shipment rate of 46.2% [11][18] - **Glass**: The average price for float glass is 1195.4 RMB/ton, down 1.9 RMB/ton from last week and down 258.4 RMB/ton year-on-year. Inventory levels are at 5962 million heavy boxes, a decrease of 54 million from last week [43][45] - **Fiberglass**: Prices for fiberglass remain stable, with a focus on high-end products. The market is expected to see improved profitability as supply constraints persist [5] 2. Industry Dynamics Tracking - The construction materials sector is expected to benefit from policy support and improving economic indicators, with a focus on companies involved in the export supply chain and home renovation [3][5] - The report highlights the importance of technological advancements and domestic semiconductor development, recommending companies in the cleanroom engineering sector [5] 3. Weekly Market Review and Sector Valuation - The construction materials sector has shown a positive trend compared to broader market indices, indicating potential for further growth [3] - The report suggests that the cement industry is at a historical low in terms of price-to-book ratios, presenting opportunities for investment as policies are expected to support recovery [5][10]

Core Viewpoint - The article discusses the initiation of a new preventive interest rate cut cycle by the Federal Reserve, predicting a further decline in U.S. Treasury yields, continued support for U.S. equities, particularly in technology and interest-sensitive sectors, a potential upward trend in the U.S. dollar index, and the ongoing long-term bull market for gold [2][3]. Group 1: Federal Reserve's Interest Rate Policy - The Federal Reserve has begun a new preventive interest rate cut cycle, with a 25 basis point cut in September and October 2025, indicating a shift in monetary policy focus towards employment risks over inflation risks [3][5]. - The Fed's adjustment of its monetary policy framework at the Jackson Hole meeting in August 2025 allows for a more flexible approach to inflation, suggesting that past high inflation levels will not heavily influence future policy decisions [5]. - The Fed's baseline assumption is that tariff-induced inflation is "one-time," which implies that even if inflation data rises in the coming months, the Fed will prioritize employment and economic stability over immediate inflation concerns [5][6]. Group 2: Economic Forecasts and Inflation - The Fed's updated economic forecasts indicate a slight increase in the Personal Consumption Expenditures (PCE) index for 2025 and 2026, reflecting ongoing inflationary pressures primarily driven by tariffs [6]. - The Fed anticipates three interest rate cuts in 2025, an increase from previous forecasts, but expects only one cut in 2026 and 2027, indicating a slow overall pace of rate reductions under the preventive cut framework [6]. Group 3: Historical Context of Rate Cuts - The article categorizes the Federal Reserve's rate cut cycles since the 1990s into two types: emergency cuts and preventive cuts, with the latter characterized by slower and smaller reductions in response to marginal economic declines [8][10]. - Historical examples of preventive cuts include the 1995-1996 cycle to address economic slowdown, the 1998 cycle to mitigate risks from the Asian financial crisis, and the 2019 cycle to counteract trade war impacts [10][11]. Group 4: Asset Price Reactions - U.S. Treasury yields typically decline significantly before the first rate cut, with a more pronounced drop in yields during preventive cut cycles compared to emergency cuts, as market expectations adjust ahead of official policy changes [13]. - U.S. equities tend to perform well during preventive cut cycles due to improved economic fundamentals and increased investor risk appetite, contrasting with the poorer performance seen during emergency cut cycles where economic conditions are more dire [14].

1. Report Industry Investment Ratings - **Equity Index**: Bullish [1] - **Treasury Bonds**: Bearish [1] - **Gold**: Bullish [4] - **Silver**: Bullish [4] - **Copper**: Bullish [4] - **Aluminum**: Bullish, Alumina: Bearish [4] - **Nickel**: Sideways [4] - **Lithium Carbonate**: Sideways [5] - **Industrial Silicon**: Sideways [5] - **Steel (Rebar, Hot Rolled Coil, Iron Ore)**: Cautiously Bearish [5][6] - **Coking Coal and Coke**: Cautiously Bearish [6] - **Soda Ash**: Cautiously Bearish, Glass: Sideways [6] - **Crude Oil**: Sideways [8] - **Methanol**: Bullish [2][8] - **Polyolefins**: Bearish [8] - **Cotton**: Bearish [8] - **Natural Rubber**: Sideways [8] 2. Core Views of the Report - **Equity Index**: Despite pre - holiday caution, the upward drive remains unchanged due to domestic economic recovery and the attractiveness of A - shares in global asset allocation [1] - **Treasury Bonds**: Market concerns persist, and the risk of long - end adjustment has not subsided, affected by the relatively optimistic outlook for the equity market [1] - **Precious Metals**: The US economic resilience and potential Fed rate cuts support the bullish outlook for gold and silver, although there are risks such as government shutdown and geopolitical issues [4] - **Non - ferrous Metals**: Supply - side constraints and policy factors influence the price trends of copper, aluminum, and nickel, with different outlooks for each metal [4] - **Mineral Resources**: The supply - demand balance, production capacity, and policy factors determine the price trends of lithium carbonate, industrial silicon, steel, coking coal, coke, soda ash, and glass [5][6] - **Energy**: The supply - demand relationship, geopolitical factors, and production trends affect the price trends of crude oil, methanol, and polyolefins [8] - **Agricultural Products**: Supply pressure and demand recovery speed impact the price trends of cotton, while supply and demand factors support the price of natural rubber [8] 3. Summary by Related Catalogs 3.1 Stock Index and Bonds - **Equity Index**: Last week, the A - share market was volatile at a high level, with the ChiNext Plate remaining hot. The trading volume decreased to about 2.17 trillion yuan. Domestically, industrial profits improved, and overseas, the Fed's rate - cut uncertainty increased. The equity index is expected to maintain a long - term bullish trend [1] - **Treasury Bonds**: The bond market was weak in the first half of last week and stabilized in the second half. Market concerns remain, and the long - end adjustment risk is still significant due to the relatively optimistic equity market outlook [1] 3.2 Metals - **Precious Metals**: Gold's long - term bullish logic remains clear, and silver prices are accelerating upward due to better - than - expected US economic data and increased lease rates [4] - **Non - ferrous Metals**: Copper prices are expected to rise due to supply constraints, while aluminum has support from supply constraints, and alumina is bearish due to supply surplus. Nickel prices have support at the bottom [4] 3.3 Mineral Resources - **Lithium Carbonate**: The supply - demand is strong, and the price is expected to remain sideways before the National Day due to potential resource - end disturbances [5] - **Industrial Silicon**: The supply - demand is loose, and the price is expected to be weak and sideways [5] - **Steel**: Rebar, hot - rolled coil, and iron ore prices are expected to be weak due to weak demand and potential inventory accumulation during the holiday [5][6] - **Coking Coal and Coke**: The prices are under pressure due to the weakening of downstream procurement demand [6] - **Soda Ash and Glass**: Soda ash supply is likely to increase, and the price is expected to be bearish. Glass supply - demand is balanced, and the price is sensitive to policy [6] 3.4 Energy - **Crude Oil**: The fundamental driving force is weak, and there are opportunities for short - selling at high prices due to OPEC+ production increase and weak demand [8] - **Methanol**: New long positions can be entered due to the significant decrease in overseas plant operating rates [2][8] - **Polyolefins**: The supply pressure will increase significantly in the fourth quarter, and the price is expected to fall [8] 3.5 Agricultural Products - **Cotton**: The price is under pressure due to strong supply expectations and insufficient demand recovery [8] - **Natural Rubber**: The supply disturbance weakens, and the demand remains stable, with support at the bottom [8] 3.6 Specific Strategies - Sell the put option NI2512P120000 on Shanghai Nickel and hold it [2] - Hold the previous short position on Industrial Silicon SI2511 [2] - Enter new long positions on Methanol MA601 [2]

Core Viewpoint - Short-term uncertainties in international trade may lead to market volatility, impacting crude oil prices [1] Group 1: Macroeconomic Factors - The global economy is experiencing a weak recovery but has not entered a recession [1] - The Federal Reserve's preemptive interest rate cuts provide some liquidity support for crude oil, but are unlikely to reverse the bearish fundamentals in the oil market [1] Group 2: Geopolitical Factors - The ceasefire agreement in Gaza has reduced geopolitical risk support for oil prices [1] - OPEC+ continues to push for increased oil production, adding pressure on the supply side [1] Group 3: Supply and Demand Dynamics - There is an emerging situation of oversupply in the crude oil market, with seasonal demand decline contributing to this trend [1] - The balance of supply and demand is shifting towards excess supply, which will exert downward pressure on oil prices in the medium to long term [1]

Core Viewpoint - The international oil market has experienced significant declines in October, with Brent crude futures dropping to a low of $61.5 per barrel and WTI crude futures falling below $58 per barrel, marking a decline of over 5% for the month [1][2]. Market Dynamics - The uncertainty in international trade is causing fluctuations in market sentiment, impacting oil prices negatively [1][3]. - The global economy is showing signs of weak recovery without entering a recession, and the Federal Reserve's preventive rate cuts provide some liquidity support but do not change the bearish fundamentals for oil [1][4]. - Geopolitical factors, such as the recent ceasefire agreement in Gaza, have reduced the geopolitical risk premium that previously supported oil prices [5]. Supply and Demand Factors - The oil market is facing increasing pressure from both supply and demand sides, with seasonal demand decline and ongoing production increases from OPEC+ [5][8]. - The market is currently in a state of oversupply, which is expected to exert downward pressure on oil prices in the medium to long term [1][5]. Price Support Levels - Analysts suggest that Brent crude futures may find support around the $60 per barrel mark, which corresponds to the marginal cost of U.S. shale oil production [7][8]. - The potential for a significant price increase exists if geopolitical tensions escalate, particularly in the context of winter conditions in Europe and renewed conflicts in the Middle East [7][8].

Investment Rating - The report maintains an "Accumulate" rating for the building materials industry [1] Core Views - The implementation of stable growth policies in the building materials sector is expected to strengthen anti-involution efforts, leading to potential growth opportunities [1][4] - The report highlights a rebound in industrial profits and improvements in the Producer Price Index (PPI), driven by anti-involution measures [4] - The report recommends several companies, including Huaxin Cement, Conch Cement, and Qibin Group, as well as consumer building materials firms like Oppein Home and Arrow Bathroom, indicating a positive outlook for these stocks [4][6] Summary by Sections 1. Industry Trends - The building materials sector experienced a decline of 2.11% this week, underperforming the CSI 300 and Wind All A indices, which gained 1.07% and 0.25% respectively [4] - The average price of high-standard cement nationwide is reported at 351.0 CNY/ton, with a week-on-week increase of 5.3 CNY/ton but a year-on-year decrease of 35.0 CNY/ton [4][18] - The average cement inventory ratio is 65.7%, up 0.9 percentage points from last week [25] 2. Cement Market - The report notes a slight decrease in cement demand due to weather conditions, with an average shipment rate of 46.5%, down 1.9 percentage points from last week [25] - The report anticipates that cement companies will continue to push for price increases as the fourth quarter approaches, with expectations for a rebound in prices [4][11] - Recommendations include leading companies such as Huaxin Cement and Conch Cement, which are expected to benefit from industry consolidation and improved profitability [11] 3. Glass Market - The average price of float glass is reported at 1224.7 CNY/ton, reflecting a week-on-week increase of 16.8 CNY/ton and a year-on-year increase of 47.6% [4] - The report suggests that the glass industry is currently facing a supply-demand stalemate, but mid-term supply-side adjustments are expected to improve pricing dynamics [13] - Flagship companies like Qibin Group are recommended due to their competitive advantages in resource access and potential profit growth from diversified business lines [13] 4. Fiberglass Market - The report indicates that the profitability of fiberglass is expected to improve in the medium term, with a focus on high-end products [12] - The report highlights that the industry is experiencing a gradual reduction in supply pressure, which is likely to stabilize prices [12][13] - Companies such as China Jushi are recommended for their strong market position and growth potential in emerging applications [12][13] 5. Consumer Building Materials - The report emphasizes the positive impact of government policies on consumer demand for building materials, with expectations for continued growth in the sector [14] - Companies like Oppein Home and Arrow Bathroom are highlighted for their strong market positions and potential for recovery in consumer spending [14] - The report suggests that the competitive landscape is improving, with many companies showing signs of profit recovery and growth strategies [14]

Core Viewpoint - The Federal Reserve's "preventive" interest rate cuts are beneficial for the healthy operation of the U.S. economy and enhance global macro liquidity [1][2] Group 1: U.S. Equity Market - The U.S. economy shows resilience despite marginal convergence, and the AI industry has vast development potential, supporting a positive outlook for U.S. equities [2] - The Federal Reserve's preventive monetary policy adjustments help maintain a healthy economic trend and avoid inflation and employment risks, ensuring liquidity stability in the U.S. stock market [2] - The U.S. stock market is considered to have a high risk-return ratio and tactical allocation value in the current phase [2] Group 2: U.S. Treasury Bonds - The internal inflation stickiness and the potential for a mild decline in real interest rates lead to a neutral stance on U.S. Treasury bonds [2] - The Federal Reserve's preventive rate cuts are expected to improve global macro liquidity, which may help suppress internal inflation stickiness and real interest rates [2] - U.S. Treasury bonds are viewed as having a moderate risk-return ratio and tactical allocation value [2] Group 3: Commodities - The improvement in global macro liquidity and the decline in real interest rates are expected to support gold performance [2] - The Federal Reserve's rate cuts will lower the holding costs of gold, positively impacting gold prices [2] - Gold is considered to have a moderate risk-return ratio and tactical allocation value [2] Group 4: Currency Market - The resilience of the Chinese economy and the decrease in extreme geopolitical conflict risks support the stability of the RMB exchange rate [3] - The Chinese economy is showing stable growth, with strong growth momentum compared to other major economies, which is expected to support the RMB's appreciation [3] - The RMB exchange rate is anticipated to exhibit a two-way fluctuation trend, with a central tendency of gradual appreciation [3]

Core Viewpoint - The report from招商策略 indicates that the Federal Reserve's interest rate cuts can be categorized into preventive and crisis-related cuts, which have different impacts on asset performance [1] Group 1: Interest Rate Cuts - The anticipated interest rate cut in September 2025 aligns more with preventive measures, as the market has already priced in the rate cut, leading to profit-taking and market volatility post-announcement [1] - Historical data suggests that A-shares and Hong Kong stocks typically benefit from improved dollar liquidity following preventive rate cuts [1] Group 2: Market Conditions - The driving factors behind the current second phase of the A-share bull market remain unchanged, although the rate of growth may have slowed compared to earlier periods [1]

Group 1 - The Federal Reserve is expected to initiate a new round of "preventive" interest rate cuts in September 2024, influenced by concerns over inflation due to tariffs, although the rate cuts may face temporary pauses [1][19] - Recent data shows that July's non-farm employment figures were weaker than expected, and the core inflation rate for July has shown a decline in prices for core goods heavily reliant on imports, indicating manageable inflation pressure [1][19] - The market anticipates a 92.1% probability of a 25 basis point rate cut in September, reflecting expectations of a shift in monetary policy [21] Group 2 - Historical analysis indicates that during previous rounds of preventive rate cuts, U.S. equity markets performed well, with a general recovery in market fundamentals [2][19] - The current global capital rebalancing is driven by a weakening U.S. economy and dollar, leading to a shift of funds towards non-U.S. assets, particularly those with stronger short-term economic prospects [6][26] - Assets such as gold and cryptocurrencies are expected to attract capital due to their status as safe-haven alternatives to the dollar [28][29] Group 3 - A-shares are positioned to attract foreign investment due to their strong performance since July, despite the absence of significant changes in domestic fundamentals [8][36] - The narrowing interest rate differential between China and the U.S. following Fed rate cuts is likely to encourage capital inflows into China, providing additional monetary policy space [38][41] - The anticipated marginal changes in domestic fundamentals and policies in the second half of the year are expected to enhance foreign investor confidence in A-shares [41][42] Group 4 - Foreign investment preferences indicate a focus on local, competitive assets, with a tendency to favor industries that align with the current economic landscape [10][12] - Historical trends show that foreign investors favor core competitive industries and are willing to tolerate higher valuations, prioritizing stable and sustainable earnings [12][45] - The analysis of foreign investment in Taiwan's stock market reveals a preference for large-cap, high-ROE industry leaders, with a significant focus on the electronics sector [43][45]