Report Title - "Technology in the Big Era - 3Q25 Fund Position Analysis" [2] Report Core Viewpoints - Market performance rebounded in Q3, leading to a turning point in fund issuance. The net value of active funds generally recovered, driving the recovery of fund issuance. Historically, when the proportion of active funds with a net value >1 rises above 80%, fund issuance is expected to accelerate, boosting the performance of heavily - held stocks by funds [3]. - The equity position of active funds reached a historical high. In 3Q25, the stock - holding ratio of active equity - biased funds increased by 1.4 pct to 85.6%, and the equity and convertible bond positions of "fixed - income +" funds changed by +2.5 pct and - 1.0 pct to 10% and 7% respectively [3]. - Funds increased their allocation to technology and cyclical sectors while reducing their allocation to consumption, manufacturing, and high - dividend sectors. In terms of overweight ratios, active funds significantly increased their positions in communication and electronics in the TMT sector, as well as non - ferrous metals and petroleum and petrochemicals in the cyclical sector. They reduced their positions in home appliances and food and beverage in the consumption sector, as well as military and automotive in the manufacturing sector, and banks and transportation in the high - dividend sector [3]. - The TMT position ratio reached a historical high, facing downward pressure. In Q3, the concentration of the top 20 heavily - held A - share stocks by funds increased to 33%, the highest since Q3 2022. Historically, the position ratio of around 30% has been a critical point for active fund clustering. In this technological wave, the TMT position ratio has reached 40%. After the breakdown of previous clustering, the position ratio generally declined to below 20% [4]. - Active funds have strong pricing power in the TMT sector. In terms of the position as a proportion of the industry's free - float market capitalization, active funds currently have relatively higher pricing power in the TMT sector than passive funds and foreign capital, and also have a slight advantage in the manufacturing (machinery and military) sector [4]. - Regarding the adjustment of five types of industry funds: TMT funds increased their positions in CPO and PCB while reducing semiconductor and computer software; consumer funds increased their positions in e - commerce and hotels while reducing chemicals and white goods; new energy funds increased their positions in small metals while reducing vehicle manufacturing and electrical equipment; pharmaceutical funds increased their positions in biopharmaceuticals while reducing chemical drugs; cyclical funds increased their positions in small metals and precious metals while reducing industrial metals and rubber [4]. - Funds continued to increase their positions in Hong Kong - listed internet, semiconductor, and non - banking sectors. Internet platforms such as Alibaba and Tencent, which benefit from the AI wave, semiconductor companies like SMIC and Huahong, and insurance companies in the non - banking sector, which benefit from the improvement of asset quality in a bull market, all received increased allocations from funds [4]. - A selected portfolio of heavily - held stocks by funds was screened for stocks with a CAGR of profit expectations >30% and a profit forecast upward revision of more than 5% since October, which are expected to benefit from the incremental liquidity brought by the recovery of fund issuance [5]. Report Industry Investment Rating - Not provided in the report Summary by Directory Public Offering - Market performance in Q3 was strong, and the net value of active funds generally recovered, driving the recovery of fund issuance. Historically, when the proportion of active funds with a net value >1 rises above 80%, fund issuance is expected to accelerate, boosting the performance of heavily - held stocks by funds [6]. Equity Allocation - In 3Q25, due to the technology and manufacturing market, the equity position of active funds reached a historical high, and "fixed - income +" funds also increased their equity allocation. The stock - holding ratio of active equity - biased funds increased by 1.4 pct to 85.6%, and the equity and convertible bond positions of "fixed - income +" funds changed by +2.5 pct and - 1.0 pct to 10% and 7% respectively [11]. Industry Allocation - In terms of overweight ratios, in Q3, active funds significantly increased their positions in communication (+3.5 pct), electronics (+2.4 pct) in the TMT sector, and non - ferrous metals (+0.6 pct) and petroleum and petrochemicals (+0.5 pct) in the cyclical sector. They reduced their positions in home appliances (-1.6 pct), food and beverage (-1.2 pct) in the consumption sector, as well as automotive (-1.1 pct), military (-1.0 pct) in the manufacturing sector, and banks (-0.5 pct), utilities (-0.4 pct), and transportation (-0.4 pct) in the high - dividend sector [13]. - In terms of sub - sectors, hardware such as CPO and PCB were the main sectors for increased positions. The sectors for reduced positions were mainly the weak - performing consumption, innovative drugs, and urban and rural commercial banks [16]. - In Q3, there was a consensus between north - bound funds and active funds in increasing allocations to technology and cyclical sectors such as electronics, media, non - ferrous metals, and petrochemicals. North - bound funds also significantly increased their positions in new energy. In terms of reduced positions, both significantly reduced their allocations to consumption sectors such as food and beverage and home appliances, as well as high - dividend - related banks, utilities, and transportation [18]. Concentration of Heavily - Held Stocks - In Q3, the concentration of the top 20 heavily - held A - share stocks by funds increased to 33%, the highest since Q3 2022, corresponding to the style where small - cap stocks outperformed large - cap stocks [21]. Sector Concentration - Since 2009, the position ratio of around 30% has been a critical point for previous rounds of active fund clustering. In this technological wave, the TMT position ratio has reached 40%. After the breakdown of previous clustering, except for the relatively slow decline in the position ratio of pharmaceuticals + food and beverage from 2020 in the following three years, the position ratio generally declined to below 20% [25]. Relative Pricing Power - In terms of the position as a proportion of the industry's free - float market capitalization, active funds currently have relatively higher pricing power in the TMT sector than passive funds and foreign capital, and also have a slight advantage in the manufacturing (machinery and military) sector [27]. Industry Funds - TMT funds increased their positions in CPO and PCB while reducing semiconductor and computer software; consumer funds increased their positions in e - commerce and hotels while reducing chemicals and white goods; new energy funds increased their positions in small metals while reducing vehicle manufacturing and electrical equipment; pharmaceutical funds increased their positions in biopharmaceuticals while reducing chemical drugs; cyclical funds increased their positions in small metals and precious metals while reducing industrial metals and rubber [30]. Heavily - Held Stocks - AI hardware - related companies such as Industrial and Commercial Bank of China, Cambricon, Dongshan Precision, and Tianfu Communication entered the top 20 heavily - held stocks by funds, while financial and consumer stocks such as China Merchants Bank, Wuliangye, Haid Group, and Gree Electric Appliance exited the top 20 [33]. A - Share Individual Stock Allocation - Funds increased their positions in stocks such as Tonglian Precision and Xiangyou Pump. The median excess return of the top 20 stocks with increased fund pricing power in Q3 2025 relative to the CSI 300 was 61%, but most of them underperformed in Q4. The median excess return of the top 20 stocks with reduced positions by funds in Q3 was relatively low, only 7% [36][40]. Hong Kong Stock Allocation - In 3Q25, funds continued to increase their positions in Hong Kong - listed internet, semiconductor, and non - banking sectors. Internet platforms such as Alibaba and Tencent, semiconductor companies like SMIC and Huahong, and insurance companies in the non - banking sector all received increased allocations [41]. Selected Portfolio of Heavily - Held Stocks by Funds - Stocks were screened from heavily - held stocks by funds with a CAGR of profit expectations >30% and a profit forecast upward revision of more than 5% since October, which are expected to benefit from the incremental liquidity brought by the recovery of fund issuance [5].

Core Viewpoint - The A-share market is showing a steady upward trend, with the Shanghai Composite Index rising by 0.70% to 4016.33 points, and the Shenzhen Component Index increasing by 1.95% [1] Market Performance - The trading volume in the Shanghai and Shenzhen markets reached approximately 22560.3 billion yuan, an increase of about 1081.7 billion yuan compared to the previous trading day [1] - The market sentiment appears relatively positive in the short term, with 2672 stocks rising and 2621 stocks falling, indicating a balanced performance [1] Sector Analysis - Strong performance is noted in sectors related to anti-involution, such as photovoltaic, carbon neutrality, and new energy vehicles, while traditional sectors like consumer goods are underperforming [1][2] - The TMT sector is shifting focus from light modules and PCBs to domestic computing and consumer electronics, indicating a rotation of funds within sectors [2] Economic Outlook - The macroeconomic environment is characterized by pressure on total demand, with weak consumption and investment, and a decline in government spending expected in the fourth quarter [2][12] - Financial data shows that social financing is primarily supported by government bonds, while internal credit growth remains weak, indicating a potential "double weakness" in government and market credit [2][12] Investment Strategy - The current investment strategy suggests focusing on sectors with high growth potential, such as photovoltaic and new energy vehicles, while being cautious about traditional consumer sectors that are not showing signs of recovery [2][8] - Institutional investors are increasingly favoring technology and growth sectors, with a notable shift away from traditional consumer sectors like food and beverage [8][9] Policy Implications - The "14th Five-Year Plan" emphasizes expanding domestic demand and enhancing profits in mature industries, which aligns with the current market focus on technology and growth sectors [8] - The People's Bank of China has resumed government bond trading, which may signal a more accommodative monetary policy moving forward [12]

Core Insights - The article discusses the historical context of the A-share market's performance after breaking the 4000-point mark, highlighting past instances and their outcomes [1][4]. Historical Performance Analysis - In the history of A-shares, there have been 16 instances of breaking the 4000-point threshold, with seven instances based on closing prices. Notably, in 2007, there were five instances, while in 2015, there were two [1][2]. - The maximum increase after breaking 4000 points in 2007 was 51.8%, taking 160 days, while in 2015, the maximum increase was 28.06%, achieved in just 63 days [2][6]. Market Characteristics in 2007 and 2015 - The 2007 bull market was driven by resources and financial real estate, with significant gains in various sectors: non-ferrous metals (250%), coal (220%), and financials (190%) [5][6]. - The macroeconomic environment in 2007 supported the bull market, with GDP growth at 11.4%, fixed asset investment growth at 24.8%, and a significant increase in M2 money supply [5][6]. - The 2015 bull market was characterized by excessive leverage and speculative investments, with a peak in margin financing reaching 2.27 trillion yuan [6][7]. Current Market Context - The current A-share market exhibits characteristics of a "water bull," with structural features in both the economy and capital markets. Emerging industries are now based on tangible technological advancements rather than mere speculation [7]. - Despite a still-weak economic backdrop, there is a shift in fiscal spending towards more sustainable projects, indicating a potential for long-term growth [7]. - The article suggests that while the market may be influenced by policies, the underlying trend is expected to remain stable and progressive, indicating a more cautious and sustainable approach moving forward [7].

Core Viewpoint - Beijing's recent policy aims to stimulate mergers and acquisitions (M&A) to enhance the quality of listed companies and promote economic development towards new productive forces [1][2][3] Group 1: Policy Objectives - The policy encourages resource allocation towards strategic emerging industries and future industries, including AI, healthcare, integrated circuits, and more [2][3] - It aims to accelerate industrial integration and upgrade traditional industries to enhance competitiveness and reduce excessive competition [2][3] - The government seeks to support the establishment of a modern industrial system in Beijing through M&A activities [2][3] Group 2: Market Dynamics - Since the introduction of the "M&A Six Guidelines," there has been a notable increase in M&A activities in Beijing, with 18 major asset restructuring plans disclosed from September last year to July 2025 [3] - A significant portion of these transactions (16 out of 18) is focused on strengthening core business operations and promoting industry chain integration [3] - The current M&A wave is characterized by a shift towards high-value-added sectors, indicating a rapid acceleration of industrial upgrades [3] Group 3: Government and Market Collaboration - The policy emphasizes the collaboration between government and market forces, allowing for market-driven decision-making while providing government support [4][5] - It encourages various stakeholders, including state-owned and private enterprises, to engage in M&A activities that align with their development needs [4][5] - The establishment of a service platform for M&A is proposed to facilitate connections between listed companies and potential targets [5] Group 4: Risk Management - The policy outlines a framework for enhancing regulatory oversight of M&A activities, focusing on compliance and risk prevention [7] - It aims to balance market activity with regulatory measures to prevent potential risks associated with M&A transactions [7] - The emphasis is placed on maintaining transparency and protecting the rights of minority investors [7] Group 5: Future Outlook - Market participants anticipate that the policy will lead to a more vibrant M&A landscape in Beijing, with innovative cases expected to emerge [10] - The optimization of M&A regulations is likely to facilitate cross-industry mergers and the introduction of new transaction methods [10]

Core Viewpoint - The article discusses the historical context and implications of the A-share market breaking through the 4000-point mark, analyzing past bull markets in 2007 and 2015 to draw insights for the current market situation [2][4][9]. Historical Analysis - In the history of A-shares, there have been 16 instances of breaking through 4000 points, with seven instances based on closing prices, notably five times in 2007 and two times in 2015 [2][3]. - The maximum increase after breaking 4000 points in 2007 was 51.8%, taking 160 days, while in 2015, the maximum increase was 28.06%, occurring in just 63 days [4][6]. 2007 Bull Market - The 2007 bull market was driven by resource and financial real estate sectors, with significant gains in non-ferrous metals (250%), coal (220%), and financial sectors (190%) [6]. - Macroeconomic indicators supported this bull market, including a GDP growth rate of 11.4%, fixed asset investment growth of 24.8%, and a trade surplus of $262.2 billion [6]. 2015 Bull Market - The 2015 bull market was characterized by the "Internet+" policy and the rise of new industries, with notable stock performances from companies like Dongfang Finance (600% increase) and China CNR (500% increase) [7][8]. - However, this market was marked by excessive leverage and regulatory shortcomings, leading to a peak in margin financing of 2.27 trillion yuan in June 2015 [8]. Current Market Context - The current A-share market exhibits characteristics of a "water bull," with structural features in both the economy and capital markets, indicating a shift towards high-end manufacturing [9]. - Despite economic challenges, there is a noticeable change in fiscal spending towards long-term projects, suggesting a more sustainable growth trajectory compared to previous bull markets [9].

Group 1 - The "15th Five-Year Plan" has been officially released, providing a clearer path for domestic economic restructuring, which positively impacts market confidence [1] - The current phase of concentrated disclosure of third-quarter reports from listed companies will provide more micro-level information reflecting the state of the real economy, indicating a potential for market fluctuations as investors seek confirmation [1] - There are signs of improvement in the current market state compared to the past two weeks, with investor confidence beginning to recover [1] Group 2 - The market experienced a rebound last week, with the Shanghai Composite Index reaching a new high during this round of recovery, indicating a strong upward momentum [2] - The Shenzhen Component Index also accelerated its rebound, surpassing all short-term moving averages, reflecting a positive trend in growth sectors, particularly in TMT [2] - The average daily trading volume in both markets remained above 2.1 trillion yuan, indicating stable market activity [2]

Summary of Conference Call Notes Industry or Company Involved - The discussion primarily revolves around the performance of the Chinese stock market, particularly focusing on the 创业板 (ChiNext) and 科创 50 (STAR Market) indices, as well as the broader market represented by 上证指数 (Shanghai Composite Index) and 上证 50 (SSE 50) [1][2][3][4][6][10]. Core Points and Arguments 1. **Market Performance and Uncertainty** - Recent market volatility has been significant, with the Shanghai Composite Index and SSE 50 outperforming the 创业板 and 科创 50 indices, indicating market uncertainty and investor sentiment being easily influenced [1][2][3]. 2. **B Wave Rebound Expectations** - A judgment was made on October 17 that the adjustment phase was nearing its end, with expectations for a B wave rebound. The rebound has exceeded expectations but requires monitoring of trading volume and the separation of index performance from individual stocks [1][4][10]. 3. **Sector Performance** - Technology-related sectors, particularly TMT (Telecommunications, Media, Technology) and robotics, have shown strong performance, while dividend and consumer stocks have lagged [1][13]. 4. **Key Resistance Levels** - The Shanghai Composite Index is at a critical resistance level of 3,950 points, which is a sensitive position that could lead to either a breakout or a pullback [1][16]. 5. **Brokerage Sector Influence** - The brokerage sector is crucial for market direction. A strong performance from brokerages could lead to upward momentum in the market, while weakness could hinder progress [7][19]. 6. **Volume and New Capital Concerns** - Current market rebounds are characterized by insufficient trading volume and a lack of new capital inflow, raising concerns about the sustainability of price increases [9][12]. 7. **Future Market Outlook** - The future trajectory of the 创业板 remains uncertain, with potential for either continued upward movement or a C wave adjustment depending on market performance in the coming days [14][20]. 8. **Investment Strategy Recommendations** - A cautious approach is advised, with recommendations to maintain existing positions and avoid new investments in the current volatile environment. Focus should be on brokerage stocks, which are seen as pivotal for market direction [17][26]. Other Important but Possibly Overlooked Content 1. **Historical Context** - The current market situation is compared to historical patterns, suggesting that similar conditions in the past have led to significant adjustments before new highs were achieved [16][24]. 2. **Feedback Effects** - The positive feedback effect from leveraged trading and buyer incentives is noted as a factor contributing to the current bull market, although there are risks of negative feedback if volatility reaches extreme levels [27]. 3. **Balanced Sector Allocation** - There is no clear sector dominance; a balanced approach to sector allocation is recommended to mitigate risks associated with market fluctuations [28]. 4. **Potential for Market Correction** - The market may face corrections if key indices do not maintain upward momentum, with specific attention to the performance of the brokerage sector as a leading indicator [25]. This summary encapsulates the key insights and recommendations from the conference call, providing a comprehensive overview of the current market dynamics and future outlook.

Group 1 - A-shares have shown positive performance with the Shanghai Composite Index up 2.88%, Shenzhen Component Index up 4.73%, and ChiNext Index up 8.05% this week [1] - Huaxi Securities indicates a return to a "slow bull" trend, driven by a global technology AI market rally, with expectations for short-term risk appetite to improve [1] - The focus will be on the earnings reports of A-share companies and US tech giants next week, as the global AI arms race accelerates [1] Group 2 - Everbright Securities highlights that under liquidity-driven market conditions, the TMT (Technology, Media, and Telecommunications) sector is likely to become a mid-term focus, with catalysts such as the onset of the Federal Reserve's rate cut cycle and ongoing AI industry trends [2] - In case of market volatility, attention should shift to sectors with stagnant growth, such as high-dividend and consumer sectors [2] Group 3 - Huajin Securities maintains that the slow bull trend and technology as the main line remain unchanged, with expectations for risk appetite to rise and liquidity to remain loose [3] - The report suggests that after adjustments, technology and cyclical sectors may outperform, particularly those related to AI and rising commodity prices [3] - Recommendations include low-cost allocations in sectors benefiting from the "14th Five-Year Plan" and improved third-quarter earnings, such as telecommunications, electronics, media, machinery, and new energy [3]

Market Review - Recent positive developments in China-US trade negotiations, the Russia-Ukraine ceasefire, and the Fourth Plenary Session of the 20th Central Committee have boosted global risk appetite, leading to a rally in Chinese stocks. The Shanghai Composite Index surpassed 3950 points, marking a new high in this bull market, with significant gains in A and H shares in the technology growth sector. The Hang Seng Tech Index rose by 5.2%, while the ChiNext Index and the STAR 50 Index increased by 8.0% and 7.3% respectively. A-shares saw a trading volume rebound to around 2 trillion yuan, indicating a positive market sentiment driven by policy signals from the Fourth Plenary Session [1][2][4]. Market Outlook - The report anticipates a return to a "slow bull" trend, with a focus on the global technology and AI sectors. The Fourth Plenary Session solidified long-term policy expectations for investors, alongside expectations of US-China interactions at the APEC summit and potential interest rate cuts by the Federal Reserve. The A-share market is expected to maintain its "slow bull" trend, with "big technology" remaining a key focus for the medium to long term. Upcoming earnings reports from A-share companies and major US tech firms will be critical, particularly in the context of the accelerating global AI arms race [2][4]. Industry Focus - The report emphasizes the importance of focusing on "big technology" in industry allocation, particularly in areas such as AI computing and applications, robotics, high-end equipment manufacturing (including semiconductor supply chains, solid-state batteries, energy storage, and aerospace), new materials, and future industries. The theme of "mergers and acquisitions" is also highlighted as a point of interest [2][4]. Economic Policy Insights - The Fourth Plenary Session of the 20th Central Committee has incorporated "maintaining economic development as the central task" into the five-year plan, suggesting a target for medium-high economic growth during the 14th Five-Year Plan period. While no specific quantitative growth targets were set, the implicit goal is to achieve a growth rate of no less than 4.5%-5%. The meeting emphasized the need to achieve this year's economic and social development goals, indicating that the pressure to reach a 5% growth rate is manageable [4]. Technological Development Goals - The report indicates that the 14th Five-Year Plan will set higher requirements for technological self-sufficiency, with upcoming documents expected to provide more specific policy directions. The focus will be on breakthrough innovations in key core technologies, with priority given to emerging industries such as new energy, new materials, aerospace, and low-altitude economy, as well as future industries like quantum technology, biomanufacturing, hydrogen energy, and brain-computer interfaces [4].

Group 1 - The report indicates that the risks in the market have been alleviated, particularly regarding the U.S. service sector and regional bank concerns, which have contributed to a more stable investment environment [2][10][25] - The U.S. October PMI data showed service PMI at 55.2% and manufacturing PMI at 52.2%, both exceeding market expectations, which alleviated recession fears [10][25] - The TMT sector has seen a shift in trading logic, expanding beyond AI infrastructure to include domestic computing power and consumer electronics, indicating a rebalancing of investment styles [3][13][14] Group 2 - The report highlights the potential for global manufacturing recovery, which is expected to drive physical consumption expansion and create investment opportunities in key resources like copper and lithium [25][27] - China's position as a "seller of shovels" in the global manufacturing landscape is emphasized, particularly in the power sector, where it has advantages in renewable energy equipment exports [25][27] - The report suggests that the combination of effective markets and proactive government policies will be crucial for navigating deflationary pressures and stabilizing domestic prices [44][45] Group 3 - The report outlines a shift in investment focus towards physical assets, particularly in the context of a potential interest rate cut cycle, which could enhance manufacturing activity and resource demand [4][56] - The recommended investment sequence includes upstream resources and capital goods, reflecting China's role in the global supply chain and the expected recovery in domestic consumption [4][56] - The report notes that the market is currently in a phase of seeking new opportunities as risks have subsided, with a focus on sectors that show signs of recovery and growth potential [53][54]