Everbright Securities Company Limited recently published a research report outlining the prospects for A-share and H-share markets. The firm indicates that A-shares are expected to continue their upward trajectory following the holiday period, with TMT (Technology, Media, and Telecommunications) recommended as a key allocation focus. Regarding H-shares, the firm suggests attention to a "dumbbell" configuration strategy emphasizing technology growth and high-dividend yield stocks as the Federal Reserve's rate-cutting cycle commences.

**September A-Share and H-Share Markets Continue Upward Trend**

September witnessed mixed performance among major A-share indices, with notable sector differentiation. Influenced by improved market sentiment and industry trend catalysts, most major A-share indices posted gains through September 25th, with the ChiNext Index leading gains while the SSE 50 recorded the largest decline. Sector performance showed significant divergence in September. Driven by industry event catalysts and elevated market sentiment, power equipment, electronics, and media sectors demonstrated strong performance.

H-share markets experienced volatile upward movement in September. Supported by overseas rate cuts and recovering domestic risk appetite, H-share markets generally trended higher with volatility. As of September 25, 2025, the Hang Seng Tech Index, Hang Seng Composite Index, Hang Seng Index, Hang Seng China Enterprises Index, and Hang Seng Hong Kong 35 Index posted gains of 12.4%, 6.2%, 5.6%, 5.5%, and 0.7%, respectively.

**A-Share Outlook: Post-Holiday Markets Expected to Continue Rising**

Historical patterns suggest markets typically perform well following National Day holidays as trading activity rebounds. For the current market cycle, the fundamental logic supporting equity market advances remains unchanged, with current valuations appearing reasonable without obvious overextension. Post-holiday markets are expected to likely return to an upward trajectory.

Regarding allocation direction, TMT sectors warrant primary focus. In liquidity-driven market conditions, TMT sectors tend to emerge as medium-term leaders, a pattern likely to repeat in this cycle. TMT sectors currently benefit from multiple catalysts, including continued progress in industry trends and the Federal Reserve's rate-cutting cycle initiation, providing inherent upward momentum. Recent sector rotation patterns indicate TMT sectors have gained advantage, with this trend expected to continue.

**H-Share Outlook: Focus on "Dumbbell" Configuration Strategy**

As the Federal Reserve's rate-cutting cycle begins, H-shares may continue volatile upward movement. H-shares demonstrate relatively strong overall profitability while offering relatively scarce assets in internet, new consumption, and innovative pharmaceuticals sectors. Despite consecutive months of gains, H-share valuations remain generally low, maintaining attractive long-term allocation value propositions. Against the backdrop of sustained AI industry development and Federal Reserve rate cuts, H-share markets may continue their volatile upward trajectory.

The "dumbbell" strategy emphasizing technology growth and high-dividend yield stocks merits attention: 1) Focus on autonomous control, semiconductor, and high-end manufacturing concepts likely to benefit from sustained domestic supportive policies amid US-China strategic competition. 2) Monitor select internet technology companies with independent business cycles. 3) Continue emphasizing high-dividend, low-volatility strategies including telecommunications, utilities, and banking sectors. High-dividend strategies can serve as stable income foundation holdings.

**Risk Warnings:** Policy implementation below expectations; significant deterioration in US-China relations; occurrence of unexpected risk events.