- The report discusses the **ETF Risk Appetite Index**, which has been declining since September 19, indicating a contraction in market risk appetite. This is evidenced by the outperformance of low-valuation stocks over high-valuation stocks and a gradual decline in trading volume. However, the **Active Capital Indicator** shows that speculative funds remain active, particularly in technology-related ETFs like cloud computing, military, and science innovation, while defensive ETFs like dividend and consumption are underperforming. This suggests a fragile market balance where risk appetite is declining, but active funds are narrowing their focus within the technology sector[1][11] - The report highlights the **High-Frequency Trading Regulation Impact**, which aims to level the playing field by increasing transaction delays and removing exclusive equipment. The regulation primarily targets microsecond-level ultra-high-frequency trading strategies, which are mostly proprietary or market-making strategies. These strategies have minimal impact on the overall market due to their small scale, typically under 100 million RMB per product. The report concludes that the regulation has limited influence on the profitability of quantitative strategies, as their excess returns are driven by asset pricing rather than trading speed. The report also notes that market volatility recovery could further enhance quantitative excess returns[2][12] - The report analyzes the **Micro-Cap Stock Trends**, noting that short-term fluctuations are influenced by hedging products, while medium-term trends are supported by incremental funds from quantitative products. Since December, the issuance of quantitative products has remained robust, though the proportion of "air index enhancement" (quantitative stock selection) has decreased by 12%, while "1000 index enhancement" and other index enhancements have increased. This shift has slightly reduced the allocation to micro-cap stocks. Additionally, as market risk appetite declines, funds are concentrating on high-growth sectors, strengthening mid-cap stocks like CSI 500 and CSI 1000. Despite short-term adjustments, the report remains optimistic about medium-term inflows into micro-cap stocks[3][13]