Core Viewpoint - The performance of the Hong Kong stock market is influenced by the alignment of the economic cycles of the US and China, with the current situation indicating a "split" market response to the recent US interest rate cut [1][10]. Group 1: Interest Rate Cuts and Market Response - There are two types of interest rate cuts by the Federal Reserve: "preventive" and "recessionary," with historical data showing that Hong Kong stocks perform significantly better during preventive cuts [3][6]. - In the case of preventive cuts, such as in 2019, the Hong Kong stock market rose by 11%, with the Hang Seng Tech Index increasing by 20% due to cheaper financing for technology companies [6]. - Conversely, during recessionary cuts, like in 2008, the Hong Kong market plummeted by 40%, as investors favored stable sectors like utilities and consumer staples [8]. Group 2: Variables Affecting Hong Kong Stocks - The current economic cycle is misaligned between the US and China, with the US focusing on a "soft landing" while China is gradually recovering, introducing three unexpected variables that complicate the market outlook [10]. - The first variable is US political interference, particularly from figures like Trump, which could disrupt the Federal Reserve's interest rate strategy and create uncertainty in the market [10][11]. - The second variable is the impact of AI on technology stocks, which now must invest heavily in AI to remain competitive, potentially leading to a stronger performance in this sector if economic conditions are favorable [13]. - The third and most critical variable is the Chinese economic fundamentals, as many Hong Kong-listed companies rely on the mainland market for revenue; without improvement in China's economy, stock prices may struggle to rise despite US interest rate cuts [15]. Group 3: Future Market Scenarios - The Hong Kong stock market is expected to "split" in its performance based on various economic conditions: if the US continues to lower rates and China's economy shows moderate recovery, growth stocks in technology and healthcare may lead the market [17]. - If the US implements aggressive rate cuts and Chinese consumer data exceeds expectations, sectors like real estate and industrials could also benefit from lower financing costs [17]. - In a scenario where the US refrains from further cuts and China's economy shows no significant improvement, investors may need to focus on stable sectors like utilities and high-dividend stocks to mitigate risks [17]. Conclusion - The Hong Kong stock market is influenced by both US interest rate policies and Chinese economic fundamentals, with the potential for growth dependent on the strength of the underlying economic conditions in China [19].

Report Summary - The report presents the top ten convertible bonds for October 2025, along with an analysis of the issuing companies, including their business profiles, financial performance, and key attractions [13][23][35] Top Ten Convertible Bonds in October 2025 1. Zhongte Convertible Bond - Rating: AAA; 9 - month - end closing price: 112.896 yuan; Conversion premium rate: 85.92%; PE - TTM of the underlying stock: 13.22 [7][13] - Company: A globally leading specialized special - steel material manufacturer with a production capacity of about 20 million tons of special - steel materials per year. It has multiple production and raw - material bases, forming a strategic layout along the coast and rivers [13] - Financials: In 2024, revenue was 109.203 billion yuan (YoY - 4.22%), net profit attributable to shareholders was 5.126 billion yuan (YoY - 10.41%). In H1 2025, revenue was 54.715 billion yuan (YoY - 4.02%), net profit attributable to shareholders was 2.798 billion yuan (YoY + 2.67%) [13] - Key attractions: It is one of the world's most comprehensive special - steel enterprises in terms of variety and specification, with leading cost - control ability and potential for external expansion [14] 2. Shanlu Convertible Bond - Rating: AAA; 9 - month - end closing price: 119.346 yuan; Conversion premium rate: 48.74%; PE - TTM of the underlying stock: 4.08 [7][23] - Company: Mainly engaged in road and bridge construction and maintenance, and also expanding into other fields. It can provide one - stop comprehensive services [23] - Financials: In 2024, revenue was 71.348 billion yuan (YoY - 2.3%), net profit attributable to shareholders was 2.322 billion yuan (YoY + 1.47%). In H1 2025, revenue was 28.575 billion yuan (YoY + 0.26%), net profit attributable to shareholders was 1.029 billion yuan (YoY + 0.89%) [23] - Key attractions: It has the concept of "China - specific valuation", potential for improvement in various aspects under the debt - resolution background, and opportunities from regional infrastructure construction and the Belt and Road Initiative [24] 3. Hebang Convertible Bond - Rating: AA; 9 - month - end closing price: 126.41 yuan; Conversion premium rate: 21.55%; PE - TTM of the underlying stock: - 168.47 [7][35] - Company: With advantages in mineral resources and gas supply, it has completed a basic layout in the chemical, agricultural, and photovoltaic fields [35] - Financials: In 2024, revenue was 8.547 billion yuan (YoY - 3.13%), net profit attributable to shareholders was 31 million yuan (YoY - 97.55%). In H1 2025, revenue was 3.921 billion yuan (YoY - 19.13%), net profit attributable to shareholders was 52 million yuan (YoY - 73.07%) [35] - Key attractions: Its phosphate mines and salt mines have good profit - making potential, and the liquid methionine business is a major profit contributor [36] 4. Aima Convertible Bond - Rating: AA; 9 - month - end closing price: 128.513 yuan; Conversion premium rate: 38.62%; PE - TTM of the underlying stock: 13.41 [7][45] - Company: The leading enterprise in the electric two - wheeled vehicle industry, mainly engaged in R & D, production, and sales of electric two - wheeled vehicles [45] - Financials: In 2024, revenue was 21.606 billion yuan (YoY + 2.71%), net profit attributable to shareholders was 1.988 billion yuan (YoY + 5.68%). In H1 2025, revenue was 13.031 billion yuan (YoY + 23.04%), net profit attributable to shareholders was 1.213 billion yuan (YoY + 27.56%) [45] - Key attractions: It may benefit from government subsidies, new national standards, and potential improvement in gross margin [46] 5. Xingye Convertible Bond - Rating: AAA; 9 - month - end closing price: 120.859 yuan; Conversion premium rate: 29.02%; PE - TTM of the underlying stock: 5.43 [7][54] - Company: One of the first joint - stock commercial banks in China, evolving into a modern financial service group [54] - Financials: In 2024, revenue was 212.226 billion yuan (YoY + 0.66%), net profit attributable to shareholders was 77.205 billion yuan (YoY + 0.12%). In H1 2025, revenue was 110.458 billion yuan (YoY - 2.29%), net profit attributable to shareholders was 43.141 billion yuan (YoY + 0.21%) [54] - Key attractions: It has stable asset quality and scale growth [55] 6. Wentai Convertible Bond - Rating: AA -; 9 - month - end closing price: 128.918 yuan; Conversion premium rate: 20.93%; PE - TTM of the underlying stock: - 23.14 [7][66] - Company: A globally leading semiconductor enterprise adopting the IDM model, providing R & D, manufacturing, and testing services [66] - Financials: In 2024, revenue was 73.598 billion yuan (YoY + 20.23%), net profit attributable to shareholders was - 2.833 billion yuan (YoY - 339.83%). In H1 2025, revenue was 25.341 billion yuan (YoY - 24.56%), net profit attributable to shareholders was 474 million yuan (YoY + 237.36%) [66] - Key attractions: After focusing on the semiconductor business, it benefits from market recovery and has growth potential in the automotive and consumer electronics fields [67] 7. Chongyin Convertible Bond - Rating: AAA; 9 - month - end closing price: 121.778 yuan; Conversion premium rate: 31.87%; PE - TTM of the underlying stock: 5.88 [7][77] - Company: An early local joint - stock commercial bank in the upper reaches of the Yangtze River and Southwest China, with a wide range of business scopes [77] - Financials: In 2024, revenue was 13.679 billion yuan (YoY + 3.54%), net profit attributable to shareholders was 5.117 billion yuan (YoY + 3.8%). In H1 2025, revenue was 7.659 billion yuan (YoY + 7%), net profit attributable to shareholders was 3.19 billion yuan (YoY + 5.39%) [77] - Key attractions: It can benefit from the development of the Chengdu - Chongqing economic circle, has stable asset - scale growth, and effective risk - control strategies [78] 8. Tianye Convertible Bond - Rating: AA +; 9 - month - end closing price: 120.562 yuan; Conversion premium rate: 48.06%; PE - TTM of the underlying stock: 146.42 [7][89] - Company: A leading enterprise in the chlor - alkali chemical industry in Xinjiang, with an integrated circular economy industrial chain [89] - Financials: In 2024, revenue was 11.156 billion yuan (YoY - 2.7%), net profit attributable to shareholders was 68 million yuan (YoY + 108.83%). In H1 2025, revenue was 5.16 billion yuan (YoY - 0.98%), net profit attributable to shareholders was - 9 million yuan (YoY - 228.22%) [89] - Key attractions: It may benefit from the price change of caustic soda and has plans for dividend increase and coal - mine projects [90] 9. Aorui Convertible Bond - Rating: AA -; 9 - month - end closing price: 126.412 yuan; Conversion premium rate: 40.56%; PE - TTM of the underlying stock: 22.72 [7][100] - Company: A company focusing on the R & D, production, and sales of complex APIs and preparations, with leading positions in multiple fields [100] - Financials: In 2024, revenue was 1.476 billion yuan (YoY + 16.89%), net profit attributable to shareholders was 355 million yuan (YoY + 22.59%). In H1 2025, revenue was 822 million yuan (YoY + 12.5%), net profit attributable to shareholders was 235 million yuan (YoY + 24.55%) [100] - Key attractions: It has a growing dealer network, expanding preparation products, and high - quality customer resources [101] 10. Yushui Convertible Bond - Rating: AAA; 9 - month - end closing price: 125.081 yuan; Conversion premium rate: 30.74%; PE - TTM of the underlying stock: 26.93 [7][108] - Company: The largest integrated water supply and drainage enterprise in Chongqing, with a stable monopoly position [108] - Financials: In 2024, revenue was 6.999 billion yuan (YoY - 3.52%), net profit attributable to shareholders was 785 million yuan (YoY - 27.88%). In H1 2025, revenue was 3.519 billion yuan (YoY + 7.16%), net profit attributable to shareholders was 458 million yuan (YoY + 10.06%) [108] - Key attractions: It has a high market share, is expanding business externally, and has effective cost - control measures [109]

Core Viewpoint - The recent market rotation has raised concerns about the effectiveness of dividend strategies, but it may also present a new opportunity for investment in high-dividend assets [1]. Group 1: Institutional Preference for Dividend Assets - Dividend assets are being re-evaluated for their strategic value due to global liquidity easing and structural transformation [1]. - Insurance funds are increasingly investing in high-dividend assets to counteract the pressure of declining market interest rates and to address maturity mismatch risks [1]. - The maximum guaranteed interest rate for ordinary insurance products has dropped to 2%, making a 4% dividend return from long-term equity investments essential for meeting expected returns [1]. Group 2: Evolution of Public Fund Dividend Strategies - Public funds are evolving from simple high-dividend selection to a multi-factor comprehensive strategy, emphasizing both willingness and capability while considering corporate governance and operational quality [2]. Group 3: Hong Kong Dividend Assets as Institutional Favorites - Hong Kong dividend assets have become a priority for institutions, with the Hang Seng High Dividend Yield Index rising 21% year-to-date, outperforming the CSI Dividend Total Return Index by 18% [3]. - The Hang Seng High Dividend Index offers a dividend yield of 6.27%, significantly higher than the 4.66% yield of the CSI Dividend Index, even after accounting for a 20% dividend tax [4]. - There is a notable valuation gap, with leading companies in Hong Kong's financial and energy sectors trading at 20%-30% lower valuations compared to their A-share counterparts, providing a safety margin [7]. - Hong Kong's offshore characteristics and high foreign capital ratio make it a key beneficiary of foreign capital inflows during the Federal Reserve's rate-cutting cycle [9]. Group 4: Recent Decline in Dividend Assets - The recent decline in dividend assets can be attributed to market style rotation, with funds shifting towards growth sectors like semiconductors and AI since July [10]. - Fundamental disruptions, such as coal price fluctuations and concerns over bank net interest margins, have also impacted short-term performance [10]. - Changes in the overseas macro environment, including rising U.S. Treasury yields, have reduced the relative attractiveness of dividend yields [10]. - Structural changes in the funding landscape have increased volatility, with some funds choosing to take profits during the concentrated dividend payout period [10]. - Emotional and currency factors have amplified the volatility of dividend assets, with uncertainties around the National Day holiday prompting cautious behavior among investors [11]. Group 5: Long-term Value of Dividend Assets - Despite short-term pressures, the core logic supporting the long-term value of dividend assets remains intact, with stable cash flow assets offering 4%-6% returns being scarce [12]. - The current adjustment period presents a more favorable entry point for high-quality dividend assets [12]. Group 6: Investment Strategies - Investors are encouraged to focus on the high cost-performance advantage of Hong Kong dividend assets compared to A-shares, with several public funds offering yields above 6% and lower volatility [13]. - The "barbell strategy" is recommended to balance portfolios, combining dividend assets for stable income with high-growth sectors for potential higher returns [14]. - Specific public funds, such as the Wan Jia CSI Dividend ETF and Tianhong CSI Low Volatility 100 Fund, are highlighted for their focus on dividend strategies [14]. Group 7: Conclusion - The recent decline in dividend assets is primarily a result of market sentiment and fund rotation, rather than a fundamental breakdown of their defensive value [15]. - The current market environment offers a rare opportunity for long-term investors to accumulate dividend assets at lower prices, emphasizing the importance of maintaining a balanced investment approach [15].

恒生指数延续弱势，日线三连跌，截至收盘下跌0.48%。内房地跌幅居前，内银行、金融、国指ESG、 科技等紧随其后；恒生公用逆势收红。 内房地开盘后直线跳水，随后全天维持在低位弱势盘整，盘中一度大跌2.31%，截至收盘下跌1.33%。 其中龙湖集团大跌4.44%，中国海外发展下跌2.29%，华润万象生活、万物云、越秀地产、贝壳等多股 跌幅均在1%上方。 内银行延续弱势，截至收盘下跌0.8%。其中邮储银行大跌2.23%，工商银行、中国银行、农业银行、交 通银行、招商银行等股均小幅收跌；民生银行相对抗跌。 恒生公用探底回升，截至收盘微涨0.07%。其中香港中华煤气上涨0.44%，中电控股上涨0.23%，长江基 建集团上涨1%，新奥能源、华润电力、电能实业等股小幅收跌。 内容只是个人观点，仅供参考，不作为投资依据！欢迎关注交流，互相学习、共同探讨！ ...

Core Insights - A total of 23 companies have announced their performance forecasts for the first three quarters, with 20 companies expecting profit increases, representing 86.96% of the total [1] - Among the profit-increasing companies, four are expected to see net profit growth exceeding 100%, while another four are projected to have growth between 50% and 100% [1] Company Performance - Yinglian Co., Ltd. is expected to have the highest net profit growth, with a median increase of 1602.05% for the first three quarters [1] - Brother Technology and Yonghe Co., Ltd. are projected to have median net profit growth of 230.37% and 218.42%, ranking second and third respectively [1] Industry Analysis - The companies expecting to double their profits are primarily concentrated in the basic chemicals, electronics, and light manufacturing sectors, with 2, 1, and 1 companies respectively [1] - In terms of market segments, three companies are listed in the main board and one in the ChiNext board among those expected to double their profits [1] Stock Performance - Since July, the average increase for companies expecting to double their profits is 47.86%, outperforming the Shanghai Composite Index [1] - Changchuan Technology has seen the largest increase since July, with a cumulative rise of 122.32%, followed by Brother Technology and Yonghe Co., Ltd. with increases of 48.77% and 23.18% respectively [1]

Market Overview - On September 30, the Shanghai Composite Index rose by 0.52%, while the total margin balance in the market decreased to 239.42 billion yuan, a reduction of 34.60 billion yuan from the previous trading day [1] - The margin balance in the Shanghai Stock Exchange was 121.94 billion yuan, down by 15.11 billion yuan; in the Shenzhen Stock Exchange, it was 116.73 billion yuan, down by 19.29 billion yuan; and in the Beijing Stock Exchange, it was 7.42 billion yuan, down by 0.21 billion yuan [1] Industry Analysis - All industries under the Shenwan classification saw a decrease in margin balances, with the largest reductions in non-bank financials, telecommunications, and electrical equipment, which saw decreases of 3.74 billion yuan, 3.70 billion yuan, and 3.39 billion yuan respectively [1] Individual Stock Performance - Among the stocks with increased margin balances, 884 stocks saw growth, accounting for 23.74% of the total, with 166 stocks having an increase of over 5% [1] - The stock with the highest increase in margin balance was Fuan Energy, which had a latest margin balance of 257.41 million yuan, reflecting a 106.79% increase from the previous trading day, and its stock price rose by 4.59% [1] - Other notable stocks with significant margin balance increases included Wuxi Dingbang and Xun'an Technology, with increases of 60.10% and 58.60% respectively [1] Top Gainers and Losers - The top 20 stocks by margin balance increase averaged a rise of 3.95%, with notable gainers including Songyuan Safety, Pinming Technology, and Hezhuan Intelligent, which rose by 20.00%, 18.60%, and 10.02% respectively [2] - Conversely, the top losers included Jingyi Equipment, Donghua Technology, and Chengfa Environment, which fell by 6.21%, 5.19%, and 4.96% respectively [2] Margin Balance Decrease - A total of 2839 stocks experienced a decrease in margin balances, with 485 stocks seeing declines of over 5% [4] - The stock with the largest decrease in margin balance was C Haocreat, which saw a reduction of 33.54%, bringing its latest margin balance to 47.07 million yuan [5] - Other significant declines were noted in stocks such as Boxun Biology and Taipeng Intelligent, with decreases of 32.09% and 28.87% respectively [5]

Core Viewpoint - The current macroeconomic backdrop, including stagflation risks in the U.S. and the misalignment of economic cycles between China and the U.S., suggests that the Hong Kong stock market (HK stock market) is unlikely to replicate historical trends during the Federal Reserve's (Fed) interest rate cut cycle, leading to significant structural differentiation instead [1][3]. Summary by Sections 1. Impact of Fed Rate Cuts on HK Stock Market - Historical experience indicates that during Fed rate cut cycles, the HK stock market typically exhibits "preventive rate cut rallies" and "recessionary rate cut declines" [1]. - The performance of the HK stock market during these cycles shows distinct characteristics: preventive rate cuts generally lead to positive market performance, while recessionary cuts result in market pressure [7][11]. 2. Differentiation in Market Performance - The analysis reveals that aside from the Hang Seng Technology Index, other styles (such as large-cap and small-cap stocks, as well as dividend styles) have not shown independent trends during past rate cut cycles, indicating a high correlation with the Hang Seng Index [10]. - In recessionary rate cuts, defensive sectors like utilities and consumer staples tend to perform better due to reduced market risk appetite, while in preventive cuts, high-growth sectors like technology and pharmaceuticals are favored [11]. 3. Current Rate Cut Context - The current rate cut cycle is characterized by greater uncertainty regarding the Fed's path, influenced by political pressures and the ongoing AI revolution reshaping capital expenditure in the tech sector [2][49]. - The performance of the HK stock market in the coming quarters will be closely tied to the recovery of the Chinese economy, with a focus on liquidity-sensitive growth sectors as a core strategy under optimistic scenarios [2][50]. 4. Historical Rate Cut Analysis - The analysis categorizes Fed rate cut cycles since 1970 into "preventive" and "recessionary" based on whether the economy entered a recession during the cut period [4]. - Preventive rate cuts are generally shorter and involve smaller cuts, while recessionary cuts tend to last longer and involve larger reductions [4]. 5. Future Scenarios for HK Stock Market - Three potential scenarios for the HK stock market are outlined: 1. **Baseline Scenario**: Gradual Fed rate cuts with moderate recovery in the Chinese economy, leading to a valuation-driven market with growth sectors outperforming [51]. 2. **Optimistic Scenario**: More aggressive Fed cuts without triggering recession fears, resulting in a favorable liquidity environment for growth stocks [53]. 3. **Pessimistic Scenario**: Fed pauses or slows rate cuts due to persistent inflation, leading to a return to fundamentals driven by the Chinese economy's recovery [54]. 6. Strategic Focus - The strategic focus should be on liquidity-sensitive growth sectors in baseline and optimistic scenarios, while in pessimistic scenarios, the emphasis should shift to defensive assets and closely monitoring Chinese macroeconomic data [55].

Core Viewpoint - The recent Federal Reserve interest rate cut on September 18, 2024, is set against a complex macroeconomic backdrop, including risks of stagflation in the U.S. and misalignment in the economic cycles of China and the U.S., suggesting that the Hong Kong stock market may not replicate historical trends but instead exhibit significant structural differentiation [1][2]. Group 1: Historical Context and Market Behavior - Historical experience indicates that during Fed rate cut cycles, the Hong Kong stock market typically shows a "preventive rate cut rally" or a "recessionary rate cut decline" pattern [1]. - In terms of market style, the Hang Seng Technology Index has demonstrated a "high win rate and high return" characteristic during preventive rate cut cycles, while other styles have not shown independent trends [1][2]. - Industry-wise, defensive sectors like utilities and consumer staples tend to perform better during recessionary rate cuts, while high-growth sectors such as technology and pharmaceuticals excel during preventive rate cuts [1][2][3]. Group 2: Current Economic Landscape - The current macroeconomic environment is more complex than historical experiences, with the U.S. economy facing stagflation risks and ongoing misalignment with China's economic cycle, making it difficult for the Hong Kong market to follow a straightforward trend [2][3]. - The upcoming October monetary policy meeting is crucial for assessing the future pace and intensity of rate cuts, influenced by various structural variables, including political pressures and the ongoing AI industry revolution [3][4]. Group 3: Future Outlook and Scenarios - The performance of the Hong Kong stock market in the next one to two quarters will depend not only on the Fed's rate cut path but also on the recovery process of the Chinese economy [2][52]. - Three potential scenarios are outlined: 1. **Baseline Scenario**: Gradual Fed rate cuts with a moderate recovery in the Chinese economy, favoring growth-sensitive sectors [52][53]. 2. **Optimistic Scenario**: More aggressive Fed cuts without triggering recession fears, leading to a favorable liquidity environment for growth stocks [55]. 3. **Pessimistic Scenario**: Fed pauses or slows rate cuts due to persistent inflation, putting pressure on the Hong Kong market, which will depend heavily on the recovery of the Chinese economy [56]. Group 4: Structural Opportunities - The analysis indicates that different types of rate cut cycles lead to distinct long-term performances in the Hong Kong market, with preventive rate cuts generally resulting in positive returns for the Hang Seng Index [9][10]. - The Hang Seng Technology Index has shown superior performance during preventive rate cuts, benefiting from lower discount rates and improved financing conditions [12][13]. - Defensive sectors tend to outperform during recessionary rate cuts, while growth sectors thrive in preventive cut environments, highlighting the importance of sector selection in investment strategies [13][14].

Group 1 - The size of bonds related to artificial intelligence has reached $1.2 trillion, making it the largest segment in the investment-grade bond market [1] - The share of AI companies in the high-rated bond market has increased from 11.5% in 2020 to 14%, surpassing the largest segment in JPMorgan's U.S. Liquidity Index, which is the U.S. banking sector at 11.7% [1] - Analysts identified 75 companies closely related to AI across technology, utilities, and capital goods sectors, including Oracle Corp., Apple Inc., and Duke Energy Corp. [2] Group 2 - Many of these identified companies are significant bond issuers, particularly in the technology sector, characterized by ample cash and low net debt [2] - The trading spread of these companies' bonds is 74 basis points, which is 10 basis points tighter than the spread of JPMorgan's U.S. Liquidity Index [2] - Concerns among credit investors arise from the rapid rise of AI stocks, with fears that any potential downturn in the AI sector could impact the credit market [2]

Core Viewpoint - The Trump administration is considering the cancellation of approximately $12 billion in energy project funding, including support for hydrogen projects backed by major U.S. oil companies [1] Group 1: Hydrogen Projects - Several multi-billion dollar hydrogen projects are included in the proposed cuts, such as the Texas hydrogen center project supported by ExxonMobil (XOM.US) and Chevron (CVX.US) [1] - Another hydrogen project involves a collaboration between utility company Exelon (EXC.US) and reactor operator Constellation Energy Corp. (CEG.US) [1] Group 2: Automotive Funding - The funding list also includes a total of $1 billion allocated to automotive manufacturers Stellantis (STLA.US) and General Motors (GM.US) [1] Group 3: Recent Funding Cuts - This potential reduction follows recent announcements where the government canceled $7.6 billion in project funding, which also included hydrogen projects [1] - In May, the administration announced the termination of $3.7 billion in projects, including a direct air carbon capture project by Occidental Petroleum (OXY.US) [1] Group 4: Review of Previous Approvals - The Trump administration previously indicated it is reviewing approximately $15 billion in project funding approved during Biden's presidency [1]