Core Insights - The report from the Bank of China outlines the global asset allocation strategy for Q4 2025, emphasizing the contrasting trends of a "cold economy" and "hot assets" observed in the first three quarters of the year [1][10][12]. Market Performance Overview - The global economy has shown signs of weakness, while equity markets have performed strongly, particularly in China and Germany, with notable gains in the ChiNext Index, Hang Seng Tech Index, and DAX Index [1][10][20]. - The A-share market has entered a technical bull market, while Hong Kong stocks have consistently outperformed [1][10][23]. - In the bond market, U.S. Treasuries have shown strength, while Chinese bonds have exhibited a mixed performance, with long-term bonds declining and short-term bonds rising [1][36][39]. - The U.S. dollar has depreciated significantly, while the Chinese yuan has remained stable, with gold prices continuing to rise, reaching historical highs [1][10][54]. Economic Outlook - The global economic environment remains uncertain despite a loose monetary and fiscal policy backdrop. The Federal Reserve is expected to lower interest rates twice in Q4, while concerns about "stagflation" are rising due to the U.S. government's fiscal challenges [1][12][44]. - China's economy grew by 5.2% in the first three quarters, but the momentum from the "three drivers" is expected to slow down in Q4, although policy support remains strong [1][12][44]. Asset Class Perspectives - The report indicates a clear asset allocation strategy, favoring Chinese stocks (both A-shares and Hong Kong stocks), gold, and U.S. Treasuries, while suggesting a lower allocation to oil [2][36][57]. - The report highlights the importance of diversifying investments to mitigate risks associated with high valuations in popular assets, particularly in the AI sector [2][12][57]. Investment Recommendations - Q4 is identified as a window for increasing positions in high-dividend sectors and emerging technologies such as AI and robotics, while cautioning against zero allocation to Chinese equities and gold [2][12][57]. - The report suggests that investors with higher risk tolerance can increase their equity exposure to as much as 68% [2][12][57].