To The Moon

On October 28, all three major indices ended higher and most broad-based indices advanced, with turnover across the Shenzhen and Shanghai markets rising compared with the previous trading day. The Shanghai Composite Index gained 0.91% to 3,681 points, while the ChiNext Index surged 3.40%. Hong Kong indices moved in a narrow range today, with the Hang Seng Index up a modest 0.20% by the A-share close. Combined turnover in Shenzhen and Shanghai expanded to 1.64 trillion yuan. WIND data show that most of the 31 primary Shenwan industries closed higher. Telecommunications, electronics, machinery, and automobiles led gains, rising 5.01%, 3.97%, 3.66%, and 2.63%, respectively; food and beverage, agriculture, non-bank finance, and banking lagged, falling 1.46%, 0.76%, 0.63%, and 0.58%, respectively, indicating a clear recovery in market risk appetite. Of the more than 5,300 stocks in the market, 4,154 advanced, reflecting decent money-making effect. Overseas technology shares rallied overnight, and Asian markets, especially South Korea, were even stronger during today's session, with A-shares staging a low-level, resonance-driven rebound.

Today's A-share recovery rebound, with science and technology innovation and ChiNext indices showing greater elasticity, was mainly driven by the continued strength of overseas technology shares, which boosted sentiment in A-shares, combined with low-level repair momentum after growth sectors had undergone successive adjustments and a certain degree of chip clearing. Boosted by the recent recovery in U.S. AI sentiment and equity index rebounds, South Korean and Japanese markets have also seen some repair. South Korea's main stock index posted its largest single-day gain in three months today, with the KOSPI surging 6.63%. On the A-share side, technology sectors such as electronics and telecommunications had been under sustained profit-taking pressure earlier, and after a systemic pullback, short-term selling momentum has been largely released; combined with the continued recovery in the overseas AI and chip supply chains, risk appetite in domestic growth sectors has been rekindled. Market observations show that funds are flowing back first to the oversold technology mainline. Analysis of fund third-quarter reports shows that chip clearing in technology sectors was partially completed earlier, and the current sentiment repair in the overseas AI direction has helped drive the oversold rebound in A-shares.

Today's market displayed clear structural features: growth sectors led gains, dividend defensive sectors retreated, and funds rebalanced from safe-haven sectors toward high-elasticity tracks. Trading volume expanded compared with the previous day, and the money-making effect improved marginally. However, the pace of incremental funds entering the market in the short term may still be limited, and the stock-game pattern has not yet changed. Going forward, it remains necessary to observe the degree of sustained improvement in market risk appetite and whether trading volume can continue to expand. Global markets are currently at a critical time window with the Federal Reserve's October policy meeting and the concentrated disclosure of third-quarter earnings from U.S. technology leaders; these key external variables will affect the subsequent recovery of A-share growth sectors and risk appetite.

The core logic driving expectations that the Fed will pause rate hikes at its October meeting comes from a dense series of signals recently released by Fed officials between meetings, with the market expecting the Fed to keep rates unchanged this time. With U.S. midterm elections approaching, historically the Fed, which values "independence," tends to exercise restraint during such special periods. However, the focus of this meeting is not on whether to hike rates, but rather on the Fed chair's key remarks after the meeting and guidance on the December policy path. In addition, the market has not ruled out the possibility of another rate hike in December, and fluctuations in long-term U.S. Treasury yields and the dollar exchange rate will continue to affect global technology asset valuations.

Meanwhile, U.S. third-quarter earnings are entering a密集 disclosure period. The performance and capital expenditure guidance of AI computing and chip leaders will directly verify the prosperity of the global AI supply chain and serve as the core touchstone determining whether the overseas technology rally can continue. If the results of relevant major companies exceed expectations, it will further strengthen the resonance between domestic and overseas technology; if results or guidance fall short, it could easily trigger a pullback in overseas technology sectors. For A-shares, the uncertainty of the external window amplifies the speculative nature of the current rebound, and short-term market action may temporarily focus on oversold repair, while trend opportunities still need to wait for external risks to materialize. From this perspective, in addition to internal logic such as domestic profit trends and institutional position changes, overseas interest rate expectations and technology giant earnings constitute an important external observation mainline, and it will be necessary to continue tracking the Fed's rate decision statements, changes in U.S. Treasury yields, and overseas leaders' earnings guidance.

Returning to the A-share market view, we generally maintain our previous view. After the market's continued缩量 adjustment, major stock indices have shown some repair under the resonance of internal and external factors, which is an important sign that A-share investors' recent pessimistic sentiment has eased somewhat, but its sustainability still requires the resonance of earnings and funds. Recently, A-shares fluctuated and adjusted before bottoming out and rebounding, but the sustainability of market fund absorption and risk appetite recovery remains to be observed. Domestically, third-quarter GDP grew 4.5% year-on-year, up from the second quarter, with marginal improvement in production and consumption, but investment remains weak, and the breadth of profit repair is yet to be verified. The Financial Street Forum proposed establishing a liquidity support tool to address large redemptions by non-bank institutions and broadening channels for medium- and long-term funds to enter the market, which helps stabilize expectations. Overseas, U.S. cloud vendors have recently entered their third-quarter earnings disclosure window, and market attention to AI expansion costs and shareholder returns has further increased; at the same time, the Middle East situation remains clouded, inflation and interest rate constraints have not been lifted, and overseas technology volatility may still affect A-share technology growth sentiment.

Looking ahead, Friday's broad-based rally on expanded volume provided a positive signal for stock market repair, and short-term momentum may continue, but a significant trend reversal still needs to be validated by subsequent turnover, core technology absorption, and third-quarter earnings. In the short term, focus on the Fed's October meeting, overseas technology leaders' earnings and capex guidance, the密集 domestic third-quarter earnings disclosures, and October PMI data. In terms of sectors to watch, maintain a balanced approach over the medium term, emphasize earnings certainty and defensive attributes in the short term, and opportunistically look for technology repair opportunities where prosperity and valuation match. In the technology direction, Friday's A-share rebound improved short-term sentiment to some extent, but divergences over overseas AI financing and returns remain, and short-term valuation and chip divergences still need to be digested. Before the market reprices strong leads, emphasize the sustainability of order fulfillment, cash collection, and customer capital expenditure; consider focusing on overseas computing chain optical communications, PCB, AI servers, as well as domestic chain computing chips, advanced packaging, and semiconductor equipment, prioritizing core companies with clear conversion of orders into revenue and profits; for AI applications, focus on commercialization progress, continuously observe volume and absorption, and avoid chasing pure sentiment premiums. In the value direction, focus on banks, power, coal, and other varieties with strong cash flow and dividend support; in addition, focus on non-technology sectors such as non-bank finance and pharmaceuticals that still have room for valuation repair supported by prosperity, with repair catalysts coming from improved risk appetite in the market or technology sectors driving a rebound in turnover and investment returns, as well as companies in innovative drugs and CXO with support from product ramp-up, overseas cooperation, or order fulfillment.

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