Group 1 - The report highlights a strong breakout in A-shares, with major indices rising, particularly the ChiNext Index which increased by 2.36%, and the Shanghai Composite Index stabilizing above 3500 points, driven by policy support and improved manufacturing expectations [4][10] - The report notes a technical adjustment in the bond market, with 30-year and 10-year government bonds declining by 0.49% and 0.26% respectively, attributed to the risk appetite shift towards equities and tightening liquidity post-quarter-end [4][10] - The report indicates that the U.S. stock market is experiencing a high-level correction, with major indices declining under the pressure of the Federal Reserve's "higher for longer" interest rate expectations, while the dollar rebounded by 0.93% this week [4][10] Group 2 - The report suggests a diversified asset allocation strategy, recommending a focus on the bond market due to supportive liquidity and optimistic sentiment, while also monitoring the scale of MLF renewals and fiscal-monetary policy coordination [5] - For overseas equities, the report advises overweighting non-U.S. markets, particularly in the Asia-Pacific region, to capitalize on structural opportunities amid a weakening dollar and resilient fundamentals [5] - The report emphasizes the importance of monitoring commodity prices, which are rebounding due to policy stimulus and cost support, while also noting that the effectiveness of future measures needs to be tracked [4][5] Group 3 - The report identifies that the A-share market is currently in a small-cap, high-growth style cycle, with liquidity supporting a continued influx of funds into smaller stocks, despite a negative return of -8.54% for the market capitalization factor year-to-date [34] - The report highlights that the current valuation levels of A-shares are approaching historical averages, with the price-to-earnings ratio of the CSI 800 at the 50th percentile of the rolling three-year range, reflecting a cautiously optimistic market sentiment [67] - The report notes that while earnings expectations have slightly improved, they remain below historical averages, indicating ongoing concerns about the profitability of A-share listed companies, with a projected rolling one-year earnings growth rate of 10.4% [67]

Market Overview - A-shares reached a new high for the year, driven by domestic policy initiatives and liquidity easing, with net purchases in margin trading hitting 18.9 billion CNY, a three-month high[4] - The Shanghai Composite Index approached 3500 points, led by bank stocks, reflecting effective growth stabilization policies and valuation recovery logic[4] - The Nasdaq index rose, driven by technology giants like Nvidia, despite weakened interest rate cut expectations and ongoing trade tensions[4] Commodity Performance - Structural rebound in commodities, with black metals (coking coal +3.76%, rebar +1.45%) and gold (+1.79%) leading gains, indicating improved domestic demand expectations[4] - However, the overall supply-demand balance remains weak, with futures market strategies under pressure (momentum -1.51%) due to a lack of fundamental support[4] Asset Allocation Recommendations - Bonds (score 6): Supported by liquidity easing and optimistic sentiment, focus on MLF renewal scale and seasonal recovery of wealth management products[5] - Overseas equities (score 6): Overweight non-US markets (e.g., Hong Kong, South Korea) to capitalize on a weaker dollar and resilient fundamentals[5] - Gold (score 5): Strengthened safe-haven appeal due to geopolitical conflicts and growth slowdown, though short-term performance may be suppressed by rising risk appetite[5] - A-shares (score 5): Valuation recovery supported by high dividend defensive attributes, while avoiding sectors with declining profit expectations[5] - Commodities (score 4): Overall underweight due to weak supply-demand dynamics[5] Risk Factors - Policy adjustment risks; market volatility risks; geopolitical shocks; economic data validation risks; liquidity transmission risks[6]