Market Overview - On October 21, the A-share market rebounded, with the Shanghai Composite Index recovering the 3900-point mark, closing up 1.36% at 3916.33 points [1] - The Shenzhen Component Index rose by 2.06% to 13077.32 points, while the ChiNext Index increased by 3.02% to 3083.72 points [1] - The total trading volume of A-shares reached 1.89 trillion yuan, an increase of over 140 billion yuan compared to the previous trading day [1] Sector Performance - Over 4600 stocks in the market rose, with nearly 100 stocks hitting the daily limit [2] - The AI computing power sector saw strong gains, with the optical module index rising over 6% and the optical chip index increasing nearly 5% [2] - The Apple supply chain strengthened due to the overnight rise in Apple's stock price, with companies like Wentech Technology and Huanshu Electronics hitting the daily limit, and Industrial Fulian rising by 9.57% [2] - Conversely, the coal mining and lithium battery electrolyte indices fell by 1.30% and 1.59%, respectively [2] AI Sector Insights - Recent positive news in the AI sector includes Google Cloud's announcement of the commercial availability of Google Cloud G4 VMs and Alibaba Cloud's GPU pooling service achieving recognition at a top academic conference [6] - The explosive growth in the AI computing power sector is attributed to multiple core factors, including significant investments from global tech giants and supportive domestic policies [6] - Predictions suggest that AI inference demand could rise to 80% by 2030, indicating a deep penetration of computing power needs from training to application [6] Market Dynamics - The volatility in the AI sector has increased, driven by fierce capital competition and concerns over short-term economic conditions [7] - The A-share market has seen adjustments post-holidays, with a notable decline in trading volume [7] - Analysts suggest that the current market style may not see a significant shift, with a focus on rebalancing between technology and value styles [9] Future Outlook - There are differing opinions on whether a style shift will occur in the fourth quarter, with some expecting a rotation towards small-cap stocks or value sectors [9] - The market is anticipated to experience a stepwise upward trend, with a focus on low-valuation sectors and the sustainability of high-valuation sectors [10] - Investment strategies for the fourth quarter include focusing on sectors with real orders and cash flow improvements, while maintaining a balanced approach between technology and value stocks [11][12]

Core Viewpoint - The report highlights the strong performance of the Tongtai Digital Economy A fund, managed by Chen Zongchao, which achieved a quarterly return of 70.46% in Q3 2025, significantly outperforming its peers and benchmarks [1][3]. Performance Summary - The fund has delivered a one-year return of 67.61% and a two-year cumulative return of 99.18%, both of which exceed the performance benchmarks and the CSI 300 index [3]. - Since its inception on July 26, 2021, the fund has achieved a total return of 6.48% over 4.2 years, with an annualized return of 1.49% [1]. Holdings Overview - As of September 30, 2025, the top ten holdings of the fund are primarily concentrated in the AI computing power industry, with a total market value of 149 million yuan [4][6]. - Significant adjustments in holdings were made in Q3, including a reduction in positions for Zhongji Xuchuang by 23.27%, Xinyi Sheng by 28.96%, and Hudian Co. by 35.99%, while increasing the position in Cambricon by 18.47% [7]. Investment Strategy - The fund manager's strategy involves increasing exposure to domestic computing power while reducing exposure to overseas supply chains, focusing on leading companies in niche segments of the technology industry [7]. - Chen Zongchao expressed strong confidence in the Chinese AI industry, suggesting that the main battleground for AI will shift from the West to China, supported by favorable government policies [8]. Future Outlook - Four key areas of focus for future investments include the ongoing arms race in AI models and computing power, the anticipated benefits from the domestic computing power supply chain, breakthroughs in high-end chip manufacturing, and potential advancements in AI terminals [9]. - The fund's active management style is reflected in a high turnover rate of 1019.35% in the first half of 2025, indicating a proactive approach to portfolio management [10][11]. Fund Management - Chen Zongchao has been managing the Tongtai Digital Economy A fund since July 27, 2021, and currently oversees a total management scale of 245 million yuan across multiple funds [13]. Market Attention - As the fourth quarter unfolds, the market is keenly observing whether the Tongtai Digital Economy A fund can maintain its strong performance and continue to generate excess returns amid the domestic computing power wave [14].

Core Insights - Apple's COO Sabih Khan praised the problem-solving capabilities of Chinese suppliers, highlighting the strategic value of AAC Technologies as a core supplier in defining technology standards and advancing manufacturing processes [1] - AAC Technologies has been collaborating with Apple for 17 years, with a significant increase in product shipments from 2 million to 610 million units annually, indicating a deep strategic partnership [2] - The VC vapor chamber is becoming a standard for high-end devices, with AAC Technologies positioned as a key supplier, benefiting from the rising demand for efficient thermal management solutions in AI smartphones [3] Company Overview - AAC Technologies has achieved full automation in its production processes for VC vapor chambers, providing a competitive edge through complete control over the manufacturing chain [4] - The company has developed various production techniques for different materials used in VC chambers and has a planned monthly capacity of nearly 30 million units, ensuring robust support for large client orders [4] Strategic Transition - AAC Technologies is transitioning from a consumer electronics component supplier to a core hardware platform for AI computing, expanding its market reach into sectors like smart vehicles and AI servers [5] - The company's strategic shift is expected to enhance its valuation as it moves from traditional consumer electronics to high-growth AI infrastructure, supported by partnerships with leading global users [5][6] Market Dynamics - The focus of the market is shifting from short-term performance to the fundamental transformation of AAC Technologies' business model, which is expected to drive structural improvements in profit margins and valuation [6]

Group 1 - The Federal Reserve announced a 25 basis point interest rate cut, lowering the target range for the federal funds rate to 4.00-4.25% [1] - Following the rate cut, gold prices experienced significant volatility, with London spot gold reaching a historical high of $3,700 per ounce before dropping to around $3,654 per ounce [4] - The market behavior reflects a "buy the expectation, sell the fact" logic, as gold prices were driven up prior to the rate cut, leading to profit-taking afterward [5] Group 2 - The long-term support for gold remains intact, with over half of the Federal Reserve officials expecting two more rate cuts within the year, which may continue to lower the opportunity cost of holding gold [7] - Central bank demand for gold is strong, with the People's Bank of China increasing its reserves to 74.02 million ounces, and Deutsche Bank predicting gold prices could rise to $4,000 per ounce by 2026 [7] - In the stock market, the A-share and Hong Kong stock markets are showing divergence, with growth sectors outperforming, particularly in the tech sector following the Fed's rate cut [7][9] Group 3 - The response of the A-share market is complex, as it may attract northbound capital inflows for tech growth sectors, but is also heavily influenced by domestic economic fundamentals [9] - The recent CPI decline in China indicates that external benefits need to align with internal policies for effective market support [9] - Following the Fed's rate cut, domestic banks are adjusting their deposit rates, with HSBC lowering its one-year rate for USD deposits to 3.5% [10] Group 4 - Investment strategies need to be adjusted in light of the Fed's rate cut, with recommendations for a "laddered deposit" strategy to balance high interest rates and liquidity [13] - The impact of the Fed's rate cut extends beyond three asset classes, potentially lowering monthly payments for those with floating-rate mortgages and benefiting the import sector due to RMB appreciation [15] - The global easing cycle may lead to increased commodity prices, affecting domestic living costs for items like gasoline and plastic products [15]

Core Insights - The current market downturn in A-shares, particularly in the technology sector, is viewed as a potential opportunity rather than a disaster, suggesting that panic selling may lead to missed investment chances [1] Group 1: Market Signals - Signal One: Despite significant declines in technology stocks, the trading volume has shrunk, indicating that this is not a sign of institutional selling but rather a period of observation ahead of quarterly earnings reports [3] - Signal Two: Many quality technology stocks have adjusted to their 20-day and 30-day moving averages, which are classic rebound support levels, suggesting a favorable entry point for both short-term and long-term investors [5] - Signal Three: The long-term trend remains strong, with the current asset securitization rate at approximately 75%, indicating that discussions about the end of the bull market may be premature [7] Group 2: Investment Strategies - For investors who have already positioned themselves, it is advisable to maintain a calm approach and consider taking some profits as a risk buffer while holding onto quality stocks [9] - New entrants should manage their positions carefully, keeping cash reserves to gradually increase their stakes after further market adjustments, focusing on "hard technology" sectors aligned with national strategies [9] - Investors lacking confidence may consider technology index funds to diversify risks, while those who prefer stock selection should conduct thorough valuation comparisons to identify potential growth stocks [9]

Group 1 - The recent adjustment in the A-share market has caused significant declines, with major indices like the Shenzhen Component and ChiNext Index dropping over 3% [1] - The current market situation is viewed as nearing the end of the adjustment phase, with expectations for a recovery rally in late October [1][3] - The policy environment is supportive, with the Fourth Plenary Session emphasizing technology innovation, industrial chain security, and high-end manufacturing as key areas for investment [3] Group 2 - There is a notable shift in capital, with funds not leaving the market but rather reallocating; financing balances and ETF investments continue to flow in, indicating underlying strength [3] - The technical analysis shows that the Shanghai Composite Index has found support between 3800-3850 points, and a volume increase above the 5-day moving average could signal a rebound [3] - Two main investment themes are highlighted: 1. Technology growth sectors such as semiconductor equipment, AI computing power, and domestic substitution, which are supported by industry trends and policies [4] 2. Resource and low-valuation defensive sectors, including rare earths and gold, which are gaining value due to global liquidity and rising risk aversion [4] Group 3 - Recommendations for investment strategies include gradually building positions in key sectors while maintaining a cautious approach to avoid panic selling [4] - The market's volatility presents opportunities for long-term investors who can identify strong companies and sectors [4]

Core Viewpoint - The technology sector is experiencing a significant rally, with various related concepts seeing substantial gains, indicating a strong bullish trend that is expected to continue [2][3][8]. Group 1: Market Performance - The semiconductor and chip sectors have recently seen a surge, with net capital inflow exceeding 15 billion [4]. - The CPO optical module index rose by 10% last week, while AI computing and PCB concepts have also seen stocks hitting their daily limit [5]. - Human-shaped robots and consumer electronics, which have adopted technology concepts, have outperformed other sectors significantly [6]. Group 2: Historical Context - Historical data shows that every bull market in the A-share market has been driven by technology stocks [10][11]. - Notable examples include the 2005-2006 bull market, where stocks like Hengsheng Electronics and Dongsoft Co. saw increases of 1120% and 905%, respectively [12][13]. - The 2015 bull market was similarly led by technology, particularly internet-related stocks, with companies like Baofeng Technology rising by 1950% [14][15]. Group 3: Future Outlook - The current technology bull market is seen as essential for the future development of the technology industry, as it facilitates necessary funding and investment [18][22]. - The capital market plays a crucial role in supporting technology breakthroughs, as many tech companies currently lack profit to support their valuations [25][26]. - The expectation-driven nature of tech stock valuations is critical for attracting investment and fostering a positive feedback loop of growth and profitability [27][28]. Group 4: Market Dynamics - While the technology bull market is expected to continue, some stocks may experience short-term corrections, which should not be interpreted as the end of the rally [30][31]. - The market's recent performance indicates that technology stocks now account for a quarter of the total market capitalization in the A-share market, reflecting a significant achievement [33]. - Any potential adjustments in the technology sector could present buying opportunities for investors looking to enter the market [37].

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - In the short term, Sino-US frictions have deepened, which will affect the stock index trend, especially high - valuation technology stocks. The stock index is expected to undergo an adjustment, but the decline may be weaker than that in April, so there is no need to be overly pessimistic. In the long - term, the domestic market is driven by liquidity, with a continuous influx of incremental funds, so there is still upward momentum [3]. - The US is entering a new interest - rate cut cycle, which is beneficial for RMB appreciation and the return of foreign capital, bringing new incremental funds [9]. - Current policies to stabilize the capital market are positive, and the bottom line of the stock index is clear. New technologies and new consumption are promoting the stabilization and recovery of economic expectations [9]. - After the risk - free interest rate drops to a low level, the entry of medium - and long - term funds and residents into the market will enter a new cycle [9]. - In the future, attention should be paid to trading volume. If the trading volume of the two markets can remain above 2 trillion yuan, the market can still maintain relative strength. It is recommended to focus on semiconductor, AI computing power and other technology growth tracks with profit certainty, and also pay attention to the rotation allocation value of low - valuation defensive sectors such as finance, securities, and consumption [9]. Summary by Relevant Catalogs Market Performance - This week, domestic stock indices declined, with the ChiNext and STAR Market experiencing significant drops. For example, the STAR 50 index fell by 6.16%, and the ChiNext index fell by 5.71%. Among global indices, the NASDAQ index rose by 2.14%, and the Hang Seng Tech index fell by 7.98% [12][17]. - By industry, the trends of the 31 Shenwan primary industry indices were divergent this week. A few sectors such as coal, banking, and food and beverage rose, while sectors such as media, electronics, and telecommunications led the decline [17]. Liquidity - In September, government bonds supported social financing, the return of wealth management products promoted the recovery of M2, while M1 remained sluggish. The M1 balance decreased by 7.4% year - on - year, with the decline rate widening by 0.1 percentage points compared with the previous month, and it has been in negative growth for 7 consecutive months. The "gap" between M1 and M2 continued to narrow [15][16][18]. - The core support for the increase in social financing in September came from government bond issuance, while the weakness of RMB loans was the main drag, indicating that the recovery of real - economy financing demand still takes time. In September, the new social financing increment was 3.76 trillion yuan, a year - on - year decrease of 372.2 billion yuan. The balance of outstanding social financing was 402.19 trillion yuan, a year - on - year increase of 8.0%, with the growth rate slightly declining by 0.1 percentage points compared with the previous month [18]. - The funds rate (DR007) remained low, and 300 billion yuan of MLF was injected in September. The yield of 10 - year government bonds was around 1.7% [18]. Trading Data and Sentiment - This week, the trading volume of the two markets decreased, and high - priced stocks adjusted. The average daily trading volume (MA5) decreased to around 2 trillion yuan. Liquidity is an important factor supporting the current index and needs continuous monitoring [28]. - From January to August 2025, the number of new accounts opened showed fluctuations. For example, 1.57 million new accounts were opened in January, and 2.86 million in February [28]. Index Valuation - As of October 17, 2025, the absolute valuation of the index was at a low level. For major stock indices, the valuation quantiles were in the order of CSI 1000 > CSI 500 > SSE 300 > SSE 50 [36]. - The stock - bond cost - performance ratios and their quantiles of major stock indices such as SSE 50, CSI 500, CSI 1000, and SSE 300 were also presented, providing a reference for investment decisions [42]. Index Industry Weights - As of June 30, 2025, in the SSE 50 index, the weights of banking, non - banking finance, and food and beverage were relatively high, at 21.34%, 15.48%, and 13.88% respectively. The electronics industry became the fourth - largest weighted industry [45][46]. - In the SSE 300 index, the weights were more dispersed, and the top three weighted industries were banking, non - banking finance, and electronics [46]. - In the CSI 500 index, the top three weighted industries were electronics, pharmaceutical biology, and non - banking finance [46]. - In the CSI 1000 index, the top three weighted industries were electronics, pharmaceutical biology, and computer [46]. Other Overseas and Domestic Policy Tracking - Domestic policies: In 2025, the government work report and the Two Sessions in March set an economic growth target of 3% and a CPI increase target of around 2%. A moderately loose monetary policy and a more proactive fiscal policy were implemented, with a planned deficit rate of around 4% and the issuance of 1.8 trillion yuan of ultra - long - term special treasury bonds. In May, the deposit reserve ratio was reduced by 0.5 percentage points, the policy interest rate was lowered by 0.1 percentage points, and the provident fund interest rate was lowered by 0.35 percentage points. A 500 - billion - yuan loan for service consumption and elderly care was established. In September, the achievements of the financial industry during the 14th Five - Year Plan were summarized, and further reforms in the capital market were promoted [51][52]. - US Federal Reserve policy: The US is about to enter a new interest - rate cut cycle, with a 25 - basis - point cut in September. As of October 19, the probability of another rate cut in October exceeded 30%, and there are still two expected rate cuts within the year [53]. - Sino - US relations: China's implementation of "long - arm jurisdiction" and strengthened rare - earth control exceeded US expectations, and Trump countered by imposing additional tariffs. A video call was held between China and the US on October 18, which may affect market risk appetite in the short term [54].

Core Insights - Computing power is a new productive force in the digital economy era, becoming a core driving force for digital economic development and a solid foundation for supporting technological progress and industry digital transformation [5][8] - The demand for AI computing power is experiencing explosive growth due to the rapid development of AI large models, with the total computing power scale expected to reach 280 EFLOPS in 2024 and exceed 300 EFLOPS in 2025 [5][12] AI Computing Power Industry Definition and Classification - Computing power refers to the ability to perform calculations and data processing, integrating information computing power, network transmission capacity, and data storage capacity [5] - AI computing power is the computational resources and processing capabilities required to execute AI algorithms, serving as a key indicator of performance in handling AI tasks [5][3] AI Computing Power Industry Development Status - The AI computing power industry is characterized by rapid growth, with significant increases in total computing power driven by the demand from AI applications [5][12] AI Computing Power Industry Value Chain - The industry presents a clear chain from upstream core technology to midstream manufacturing and downstream service scenarios, relying on a complete chain of chips, servers, data centers, and connection components [6][10] AI Computing Power Industry Development Environment - Related Policies - The government has introduced various policies to support the development of computing power as a core productive force, including initiatives for building a national integrated big data center and high-quality development of computing infrastructure [8][10] AI Computing Power Industry Competitive Landscape - Major global competitors in the AI computing power market include Microsoft, Google, Intel, NVIDIA, AMD, and Amazon, while domestic companies like Alibaba, Baidu, Tencent, and Huawei also hold competitive positions [10][11] AI Computing Power Industry Development Trends - The industry is transitioning from rapid growth focused on scale to a more quality and efficiency-oriented growth model, with an increasing emphasis on intelligent computing power and the establishment of large-scale computing clusters [12][13]

Core Viewpoint - Wall Street analysts are increasingly optimistic about U.S. corporate profit outlooks, driven by strong performance from major tech companies and AI infrastructure leaders, despite concerns over macroeconomic instability and government shutdowns [1][2][3] Group 1: Market Sentiment and Performance - The ongoing AI investment boom is still in its early stages, with significant productivity and operational efficiency improvements expected from AI applications [2] - The S&P 500 index and global stock indices have seen substantial gains, with the S&P 500 reaching new historical highs since April [6] - Approximately 82% of U.S. companies that have reported earnings exceeded Wall Street expectations, slightly above the long-term average [8] Group 2: Earnings Expectations - Analysts have raised profit expectations for U.S. companies, particularly in the AI and tech sectors, leading to the highest net upward revisions in four years [2][3] - The net earnings revision index (NERI) for the S&P 500 has increased by 0.6 percentage points in October, marking a significant recovery from a low of -7.8% in May [2][3] - The technology sector is projected to grow by 21%, significantly supporting overall earnings data, while five of the eleven sectors are expected to see profit contractions [7][8] Group 3: Future Projections - Analysts predict double-digit earnings growth in the coming quarters, primarily driven by tech giants, supported by economic growth expectations and unprecedented AI infrastructure investments [4][9] - Deutsche Bank analysts have raised their year-end target for the S&P 500 to 7,000 points, with other banks also adjusting their forecasts upward [9] - Long-term projections suggest the S&P 500 could reach 7,750 points by the end of 2026, with potential for even higher valuations if an AI-driven asset bubble occurs [10]