Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Equity Market, specifically focusing on the Momentum factor within the MSCI China universe [2][32] Core Insights and Arguments - **Momentum Factor Correction**: The China Momentum factor has experienced a significant correction of approximately **10.5%** since January 29, 2026, following a **40%** gain in under three months, indicating a sharp reversal from historical extremes [3][10] - **Historical Context**: Historical patterns suggest that unwinds of similar intensity typically require at least **one month** to find a bottom, with average drawdowns of around **16.5%**. The current decline of **10.5%** has occurred over just **six days**, suggesting further downside is likely [4][23] - **Sector Impact**: The Materials sector is expected to face the most pressure, followed by the Information Technology sector. Conversely, the Value sector, which is net long Financials and net short IT/Materials, is well-positioned to benefit from the rotation out of Momentum [4][24][25] Additional Important Insights - **Market Sentiment vs. Fundamentals**: The current market movements are driven more by sentiment and flows rather than company fundamentals, making historical patterns particularly relevant for predicting future behavior [12] - **Potential Drawdown Scenarios**: In the best-case scenario, it may take nearly **one month** for the Momentum factor to regain upward traction, while in the worst-case scenario, it could take over **two months** with drawdowns exceeding **50%** [19] - **Sector Concentration**: The Momentum factor is heavily concentrated in the Materials and IT sectors, which together represent only about **13%** of the benchmark index. This concentration means that a sharp reversal in these sectors will have a limited impact on the overall benchmark index, which is primarily driven by Consumer Discretionary, Communication Services, and Financials [32][33] Conclusion - The analysis indicates that investors should be cautious about bottom fishing in the Momentum factor, as historical patterns suggest that further declines are likely before a recovery can be expected. The focus should shift towards sectors that are positioned to benefit from the current market dynamics, particularly within the Value sector [4][10][25]