Core Insights - The Hong Kong stock market experienced a significant trading volume of HKD 490.37 billion on October 13, 2025, with net inflows from southbound funds amounting to HKD 19.804 billion. Major indices in the Hong Kong market saw a general decline, primarily influenced by geopolitical tensions following Trump's announcement of 100% tariffs and export controls on China, despite subsequent easing statements from Trump and Vance, which left market sentiment affected [10][10]. Market Performance - The Hang Seng Index fell by 1.52% to 25,889.48, while the Hang Seng Tech Index decreased by 1.82% to 6,145.51. The Hang Seng China Enterprises Index dropped by 1.45% to 9,222.54, and the Hang Seng High Dividend Yield Index saw a slight decline of 0.18%. In the A-share market, the Shanghai Composite Index fell by 0.19%, the CSI 300 decreased by 0.50%, and the Wind All A Index dropped by 0.35%, with the Dividend Index slightly up by 0.02% [6][10]. Sector Analysis - In terms of sector performance, the non-ferrous metals sector led gains with an increase of 2.28%, followed by light industry manufacturing and basic chemicals, both up by 0.60%. Conversely, the electronics sector fell by 2.66%, the home appliances sector decreased by 2.37%, and non-bank financials dropped by 2.08%. Among concepts, the local brokerage index surged by 17.08%, the financial IC index rose by 7.96%, and the software outsourcing index increased by 5.18%, while the Foxconn index fell by 6.47%, the smart home index decreased by 5.70%, and the smart terminal index dropped by 5.50% [6][10]. Future Outlook - The report suggests that the ongoing trade tensions will not alter the slow bull market trend in Hong Kong stocks. Potential avenues for future growth include: 1) AI technology and new consumption sectors, which are expected to have significant growth potential; 2) Continued inflows from southbound funds, enhancing marginal pricing power; and 3) The transmission from loose monetary policy to loose credit in China, alongside potential US interest rate cuts, which could improve global liquidity and support further gains in the Hong Kong market [10].

Core Viewpoint - The Bank of England Governor Andrew Bailey emphasizes the need for a global policy response to emerging threats posed by the increasing use of private finance and stablecoins, as stated in his recent speech to the G20 [1]. Group 1: Global Financial Stability Committee (FSB) - The FSB, established by the G20 in June 2009, aims to enhance global financial regulation and stability, with its current chair being Andrew Bailey [1]. - Bailey committed to reforming FSB's monitoring policies to be more flexible and responsive to emerging vulnerabilities and financial gaps [1]. - The FSB plans to engage in open discussions among member countries regarding next steps and strengthen ties with the private sector to leverage their expertise on risks and market vulnerabilities [1][3]. Group 2: Rise of Stablecoins - Stablecoins, a form of digital currency backed by traditional assets like the US dollar, have seen rapid growth, particularly in the US market, with some analysts predicting their scale could reach $2 trillion [2]. - These digital currencies aim to maintain a stable value, typically pegged 1:1 to the US dollar, and have gained traction in crypto trading and cross-border financial services [2]. - The European financial stability regulators are pushing to ban the issuance of stablecoins in conjunction with other jurisdictions due to concerns about unpredictable cross-border risks [2]. Group 3: Regulatory Challenges - Bailey highlighted significant gaps in addressing financial stability risks, noting that few jurisdictions have established comprehensive regulatory frameworks for global stablecoins, raising concerns about regulatory arbitrage [3]. - The FSB has prioritized non-bank financial entities but has struggled to collect comprehensive risk data from this rapidly growing market [3]. - There is a growing concern that the trend towards deregulation may weaken reform efforts, as evidenced by delays in implementing post-crisis banking reforms [3][4].

- The report introduces the **Diffusion Index Model** for industry rotation, which has been tracked for four years. The model is based on momentum strategies to capture industry trends. It showed strong performance in 2021 with excess returns exceeding 25% before experiencing a significant drawdown due to cyclical stock adjustments. In 2022, the strategy delivered stable returns with an annual excess return of 6.12%. However, in 2023 and 2024, the model faced challenges, with annual excess returns of -4.58% and -5.82%, respectively. For October 2025, the model suggests allocating to industries such as non-ferrous metals, banking, communication, steel, electronics, and automobiles[26][30] - The **Diffusion Index Model** is constructed by ranking industries based on their diffusion index values, which reflect upward trends. The top six industries as of October 10, 2025, are non-ferrous metals (0.98), banking (0.951), communication (0.909), steel (0.877), electronics (0.823), and automobiles (0.813). The bottom six industries are food and beverage (0.137), consumer services (0.297), real estate (0.407), coal (0.445), transportation (0.457), and construction (0.489)[27][28][29] - The **Diffusion Index Model** achieved an average weekly return of 2.59%, exceeding the equal-weighted return of the CSI First-Level Industry Index by 0.70%. For October, the model's excess return is -0.37%, while the year-to-date excess return is 4.60%[30] - The report also discusses the **GRU Factor Model** for industry rotation, which utilizes minute-level price and volume data processed through a GRU deep learning network. The model has shown strong adaptability in short cycles but struggles in long cycles and extreme market conditions. Since February 2025, the model has focused on growth industries but has faced difficulties in capturing excess returns due to concentrated market themes[32][38] - The **GRU Factor Model** ranks industries based on GRU factor values. As of October 10, 2025, the top six industries are comprehensive (6.64), building materials (5.21), construction (3.55), textile and apparel (3.31), transportation (2.99), and steel (2.88). The bottom six industries are computing (-41.87), food and beverage (-35.34), electronics (-34.87), non-ferrous metals (-28.25), power equipment and new energy (-26.61), and communication (-22.71)[33][36] - The **GRU Factor Model** achieved an average weekly return of 2.88%, exceeding the equal-weighted return of the CSI First-Level Industry Index by 1.01%. For October, the model's excess return is 1.67%, while the year-to-date excess return is -6.55%[36]

- The report does not contain any specific quantitative models or factors for analysis. It primarily focuses on market trends, fund flows, and sector allocations without detailing quantitative methodologies or factor construction. [2][3][4]

Core Viewpoint - The Hong Kong Stock Connect Non-Bank ETF (513750) experienced a stable performance with a 0.00% increase on October 9, 2023, and a trading volume of 1.2 billion yuan, indicating steady investor interest in the fund [1] Group 1: Fund Performance - The latest net asset value of the Hong Kong Stock Connect Non-Bank ETF is 19.838 billion yuan [1] - The fund's share count decreased by 9 million to a total of 11.963 billion shares, while it saw an increase of 86.5 million shares over the past 20 trading days [1] - Since its inception on November 10, 2023, the fund has achieved a return of 65.79%, although it has experienced a decline of 2.00% over the past month [1] Group 2: Management and Benchmark - The fund is managed by GF Fund Management Co., Ltd., with fund managers Luo Guoqing and Cao Shiyu overseeing its operations [1] - The performance benchmark for the fund is the yield of the CSI Hong Kong Stock Connect Non-Bank Financial Theme Index, calculated using the valuation exchange rate [1]

Core Insights - The report presents two industry rotation models: one based on similar expected return differentials and another based on changes in analyst expectations, both aimed at identifying investment opportunities in various sectors [11][22]. Group 1: Similar Expected Return Differential Model - The latest configuration suggests focusing on sectors such as coal, communication, basic chemicals, automotive, real estate, and machinery [21]. - In September 2025, the model achieved a monthly return of +4.56%, outperforming the equal-weighted industry index by +3.66% [21]. - The historical backtest from December 2016 to September 2025 shows that the model has a mean Information Coefficient (IC) of 0.09, indicating strong selection ability [14][15]. Group 2: Analyst Expectation Change Model - The latest configuration highlights sectors including non-bank financials, non-ferrous metals, agriculture, communication, steel, and computers [33]. - In September 2025, the model recorded a monthly return of +1.03%, with an excess return of +0.13% over the equal-weighted industry index [33]. - The historical backtest from December 2016 to September 2025 indicates a mean IC of 0.06, demonstrating significant industry selection capability [23][24]. Group 3: ETF Portfolio Construction - The recommended ETF portfolio for October 2025 includes sectors such as non-bank financials, non-ferrous metals, communication, basic chemicals, and automotive [35]. - Specific ETFs listed include the Huabao CSI All-Share Securities Company ETF and the Southern CSI Non-Ferrous Metals ETF, among others, with significant fund shares [35].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies [20]. Core Insights - The asset tokenization market in Hong Kong is expected to focus on standardized securities assets, with a gradual expansion of product offerings, particularly in money market funds [2][8]. - The regulatory framework for securities asset tokenization in Hong Kong is clear, distinguishing it from virtual assets, and providing a stable foundation for business implementation [7]. - The core advantages of asset tokenization include automated transaction execution and settlement through smart contracts, which shortens transaction cycles and enhances transparency [9][10]. Summary by Sections Event - On September 26, 2025, Haitong International hosted a seminar on asset tokenization, featuring insights from Bridget Li, CEO of Asseto Fintech, focusing on the issuance process and future industry directions [1][6]. Regulatory Framework - Securities asset tokenization involves mapping real-world securities onto a blockchain to create digital tokens, governed by a distinct regulatory framework in Hong Kong [7]. Market Outlook - The future of Hong Kong's asset tokenization market will likely see an increased focus on standardized financial assets, with money market funds leading the way [2][8]. Core Advantages - Asset tokenization leverages blockchain technology for automatic transaction execution, improving transaction cycles and ownership transparency [9]. Market Misconceptions - There is a misconception that asset tokenization can bypass fundraising restrictions; however, compliant tokenization products are based on traditional assets and do not circumvent existing regulations [10]. Tokenization Process - The asset tokenization process is compliance-driven, encompassing project design, legal due diligence, technology development, and investor compliance management [3][11].

Core Viewpoint - UBS predicts that the Federal Reserve will further cut interest rates in the coming months, which will boost Asian currencies and U.S. stocks, particularly favoring Chinese technology companies [1] Group 1: Federal Reserve and Market Impact - UBS forecasts a total of 75 basis points in rate cuts by the end of Q1 2026, following the first rate cut of the year last week [1] - The firm expects that the U.S. economy will not enter a recession, with U.S. stocks projected to achieve mid-single-digit percentage gains by mid-2026 [1] Group 2: Chinese Market Outlook - UBS maintains an "overweight" rating on Chinese stocks, anticipating further upward movement in the Chinese stock market as household savings flow into the market [1] - The report indicates that the average appreciation of Asian currencies against the U.S. dollar is expected to be 4% over the next 12 months [1] Group 3: Company Performance and Sector Analysis - Companies included in the MSCI China Index are projected to see a 3% year-on-year increase in earnings by Q2 2025, with stable revenue growth [1] - Non-bank financial, technology, and healthcare sectors are expected to perform well, with internet companies showing double-digit growth in quarterly earnings [1] - Chinese companies are optimistic about their operational conditions, emphasizing cost control and pricing strategies [1]

Core Viewpoint - Tongrun Equipment has approved a financial service agreement with Zhengtai Financial Company, which requires shareholder approval, indicating a strategic move to enhance financial management and resource utilization [1] Group 1: Agreement Details - The agreement is set to be effective from 2026 to 2028, with a total credit and maximum deposit balance not exceeding 500 million yuan [1] - Zhengtai Financial Company will provide credit, deposits, and fund settlement services to Tongrun Equipment and its subsidiaries, with pricing based on market principles [1] Group 2: Financial Position - Currently, Tongrun Equipment and its subsidiaries have a deposit balance of 0 yuan and a loan balance of 10.01 million yuan [1] Group 3: Risk Management - The company believes the transaction risks are controllable and has developed a risk disposal plan, which suggests a proactive approach to managing potential financial risks [1]

Group 1 - The military and aerospace industries have long project cycles and require significant upfront funding, making the matching of financial resources, especially credit resources, crucial for support [1] - The company, as a non-bank financial institution, creates specialized loan products to support the development of military entities and provides comprehensive funding solutions by integrating internal and external resources [1][2] - The company prioritizes funding support for military projects that have not yet received state funding, ensuring compliance while facilitating research, production, sales, and project construction [1] Group 2 - The company implements a client manager system to establish stable financial service relationships with member enterprises, tailoring service plans based on annual production and financial changes [2] - The company focuses on addressing member units' needs for resource assurance, cost reduction, efficiency improvement, and risk prevention, providing customized financial solutions [2] - The company enhances overall fund utilization efficiency and risk prevention through a well-structured treasury system and by leveraging differentiated, specialized, and targeted funding support [2] Group 3 - The treasury system aims to improve fund operation efficiency, reduce costs, and prevent risks by monitoring and coordinating financial resources in real-time [3] - The company is incorporating intelligent technology to strengthen risk prevention capabilities, developing a dynamic risk control system that includes monitoring, early warning, and response mechanisms [3] - The company is focused on extracting data value to build a risk matrix model and identify potential risks such as false trade [3] Group 4 - The company's initiatives support the establishment and implementation of a comprehensive regulatory system across all levels of the group [4]