**I. The ongoing small-scale adjustment wave in A-shares continues to validate our previous assessment. There is no downside risk in the medium term, and the current short-term adjustment is not a major correction. Following the adjustment, a "Red October" is highly probable: the long-term policy positioning period is approaching, technology catalysts continue to unfold, and short-term valuation adjustments may soon reach optimal levels.**

The adjustment is currently unfolding as anticipated. We emphasize that no major correction will occur in the short term, primarily because there are no genuine downside risks in the medium term.

The combination of 25H2 economic conditions awaiting improvement and policies requiring further stimulus will not impact the expected upward inflection point in supply-demand dynamics by mid-2026. While U.S. tariff disruptions have re-emerged, as long as the United States cannot establish trade friction barriers between China and its trading partners, the incremental impact of U.S. tariff disruptions on A-shares will remain limited. Additionally, the bull market narrative still has depth, and time remains an ally of the comprehensive bull market. We are currently in a phase where "bull markets are worth waiting for," as we are positioned at the bottom of a cycle characterized by retail investor equity allocation increases and cyclical fundamental improvements, with only two possibilities ahead: "continued bottoming" or "marginal improvement."

Following the adjustment, "Red October" is highly probable: 1. October represents another critical policy positioning window, and after the adjustment materializes, capital market expectations are more likely to remain stable with upward momentum. 2. Evaluating potential catalyst sources and dynamically considering market changes. We believe cyclical catalysts still require patience, with demand-side focus on the progression from a new round of "policy bottom" to "economic bottom" in 2026, and supply-side clearing by mid-2026. However, 25Q4 cyclical catalysts appear relatively limited. Technology industry catalysts remain on trend, with overseas AI industry trends continuing upward without reaching boundaries, while domestic AI industry trends similarly show continuous progress. We are currently in a cycle of increasing technology industry highlights, and since the September adjustment cycle, small-scale structural highlights have continued to emerge. The convergence of October industry highlights with long-term policy positioning may reignite structural momentum. 3. As short-term adjustment pace accelerates, valuation indicator declines also accelerate. Weekly-level adjustments may significantly improve overall short-term valuations, potentially setting the stage for "Red October" performance after initially addressing short-term valuation concerns.

**II. Medium-term market outlook: Before spring 2026, the pattern of technology industry catalysts significantly outnumbering cyclical catalysts remains unchanged. Simultaneously, technology growth may face medium-to-short-term valuation challenges, but still falls short of long-term valuation lows. Technology growth may continue trending, ultimately reaching long-term low-valuation territory.**

Spring 2026 may represent a cyclical high point (structural market high), when A-share markets may face three challenges: 1. The critical demand-side verification period arrives. After supply growth returns to low levels, supply-demand dynamics should improve, but weak demand could still delay (not invalidate, only postpone) the supply-demand inflection point. 2. New structural highlights may require additional time, as both decisive catalysts for domestic technology industry trends and anti-involution effect verification periods need time to develop. Spring 2026 may still lack new thematic directions. 3. Long-term valuations for technology industry trends may reach low levels (similar to ChiNext at end-2013 and food & beverage at end-2019), potentially leading to a medium-term consolidation period.

Spring 2026 may represent a cyclical high but likely not the full-year 2026 high, and certainly not the peak of this comprehensive bull market cycle. The bull market retains depth, and conditions for comprehensive bull market development will become increasingly favorable over time.

**III. Structural outlook: Technology growth maintains trend-based dominance, with high-low rotation within technology sectors outperforming high-low rotation between growth and value. Sectors with new catalysts and emerging growth trends will continue showing high elasticity. Technology sectors that have accumulated gains (overseas computing power, innovative pharmaceuticals, energy storage, solid-state batteries, Tesla robotics, lithography equipment) retain medium-term upside potential. Anti-involution represents a key structural element in the transition from structural to comprehensive bull markets, serving as an important medium-term structure (solar and chemicals). Hong Kong stock medium-term outlook remains unchanged, with Hong Kong stocks potentially continuing to benefit from strengthening "Trump rate cut call options" and new economy industry trend development, as Hong Kong stock leaders demonstrate strong representativeness.**

**Risk Warnings:** Overseas economic recession exceeding expectations, domestic economic recovery falling short of expectations.