Hello everyone, September trading is about to begin, and the last weekend of August brought nothing but positive news!

Let's review the major weekend developments and the latest insights from brokerage analysts!

Weekend Highlights: All Positive News

China-US Trade Negotiations Continue with High-Level Meetings

According to the Ministry of Commerce website, from August 27-29 local time, Li Chenggang, China's International Trade Representative and Vice Minister of Commerce, visited the United States and held talks with relevant officials from the U.S. Treasury Department, Commerce Department, and Trade Representative Office. Both sides engaged in exchanges and communications on China-US economic and trade relations and implementation of bilateral economic and trade consensus, based on the consensus reached by the two heads of state during their phone conversation. Li Chenggang emphasized that China and the United States should adhere to the principles of mutual respect, peaceful coexistence, and win-win cooperation, continue to leverage the China-US economic and trade consultation mechanism, manage differences and expand cooperation through equal dialogue and consultation, and jointly promote the healthy, stable, and sustainable development of China-US economic and trade relations.

During his visit to the United States, Li Chenggang also held talks and exchanges with representatives from the US-China Business Council, the US Chamber of Commerce, and relevant US companies.

CSRC Holds Expert Forum, Wu Qing: Continue to Consolidate Capital Market Recovery Momentum

Recently, Wu Qing, Party Secretary and Chairman of the China Securities Regulatory Commission (CSRC), held a special symposium in Beijing, engaging in in-depth exchanges with experts and scholars from universities and industry institutions, as well as members of the China Capital Market Institute, and fully listening to their opinions and suggestions. Wu Qing emphasized the need to continue consolidating the capital market's recovery momentum, accelerate the new round of capital market reform and opening-up with comprehensive investment and financing reform as the driving force, continuously enhance market attractiveness and inclusiveness, and actively advocate long-term investment, value investment, and rational investment concepts.

National Bureau of Statistics: August PMI at 49.4%, Up 0.1 Percentage Point from Previous Month

On August 31, the National Bureau of Statistics Service Industry Survey Center and the China Federation of Logistics and Purchasing released China's Purchasing Managers' Index. Data showed that in August, the Manufacturing Purchasing Managers' Index (PMI), Non-Manufacturing Business Activity Index, and Composite PMI Output Index were 49.4%, 50.3%, and 50.5% respectively, rising 0.1, 0.2, and 0.3 percentage points from the previous month. All three indices rebounded, indicating that China's overall economic prosperity continues to maintain expansion.

Alibaba Delivers Financial Results, AI Investment Reaches Historic High

Alibaba released its first quarter fiscal 2026 results (second quarter of natural year 2025) on August 29, showing that excluding the impact of divested businesses, overall group revenue grew steadily by 10% year-over-year, with net profit increasing 76% year-over-year. Alibaba is making firm investments around two strategic focuses: AI+Cloud and mass consumption. In late February, Alibaba announced a three-year investment of 380 billion yuan to build cloud and AI hardware infrastructure, launched instant retail business at the end of April, and announced a 50 billion yuan investment in the consumer sector in July.

Additionally, according to reports, Alibaba has developed a new AI chip to fill the gap left by NVIDIA in the Chinese market. Sources indicate that this new chip is currently being tested and is designed to serve broader artificial intelligence inference tasks while maintaining compatibility with NVIDIA. The new chip is no longer manufactured by TSMC but has switched to a domestic foundry.

Influenced by this news, Alibaba rose nearly 13% on August 29.

Chip Giant Major News! SMIC: Planning A-Share Issuance to Acquire Minority Stakes in Subsidiary SMIC Beijing, Stock Suspended

SMIC announced that due to planning the issuance of Renminbi ordinary shares (A-shares) to acquire minority stakes in its controlling subsidiary SMIC Beijing Integrated Circuit Manufacturing (Beijing) Co., Ltd., the company's stock will be suspended from trading starting September 1, 2025, with an expected suspension period not exceeding 10 trading days. This transaction is expected not to constitute a major asset restructuring or reverse merger but will constitute a related party transaction. The company has signed an "Asset Purchase Letter of Intent" with the main shareholders of SMIC Beijing's minority shareholders, but the specific transaction plan is still under discussion and demonstration, with uncertainties remaining.

Hua Hong Company: Plans to Issue Shares and Pay Cash to Acquire 97.5% Equity in Huali Microelectronics and Raise Supporting Funds, Stock Resumes Trading

Hua Hong Company announced that it plans to acquire 97.4988% equity in Shanghai Huali Microelectronics Co., Ltd. from four shareholders including Shanghai Huahong (Group) Co., Ltd., Shanghai Integrated Circuit Industry Investment Fund Co., Ltd., National Integrated Circuit Industry Investment Fund Phase II Co., Ltd., and Shanghai Guotou Pioneer Integrated Circuit Private Investment Fund Partnership (Limited Partnership) through share issuance and cash payment, while raising supporting funds. The company's stock will resume trading from the opening on September 1, 2025. This transaction still requires approval from the company's shareholders' meeting and approval, review, and registration by competent regulatory authorities before formal implementation, with significant uncertainties remaining.

Kweichow Moutai: Controlling Shareholder Plans to Increase Holdings by 3-3.3 Billion Yuan

Kweichow Moutai announced that its controlling shareholder, China Kweichow Moutai Distillery (Group) Co., Ltd., plans to increase its holdings of company shares through centralized bidding transactions within 6 months from the announcement of this increase plan, with a planned increase amount of no less than 3 billion yuan (inclusive) and no more than 3.3 billion yuan (inclusive). The increase is mainly based on recognition of the company's long-term value and confidence in future development, to further support the company's high-quality sustainable development.

Latest Research Views from Ten Major Brokerages

1. CITIC Securities: Several Configuration Themes for September

We have analyzed key events and configuration themes worth attention in September. First, potential Federal Reserve rate cuts may strengthen the weak dollar environment, which will provide new catalysts for commodities that have been continuously strong, especially precious metals and copper, potentially accelerating another round of non-ferrous metals market activity.

Second, with Apple and META's September launch events approaching, Apple's edge AI and META's AR glasses may bring a new round of more sustainable edge device and edge AI ecosystem industry trends, following the current hotly traded cloud AI, making consumer electronics sector, especially Apple supply chain, worth attention.

Third, we believe "anti-involution" will gradually reveal three threads: industries with high capital expenditure intensity over the past two years showing signs of marginal reduction; industries showing signs of self-discipline/policy implementation; industries that "anti-involution" on the supply side and seek profits externally on the demand side, continuously improving profit margins through quotas.

Fourth, military parade equipment displays may strengthen expectations for China's military trade exports. The military sector appears event-driven in the short term, but post-parade military trade progress is actually key to opening market expectation space.

Fifth, innovative drug catalysts are expected to increase significantly in September, and recent technology sector rotation has cleared short-term funds that were previously accumulated in the sector chasing trends, positioning innovative drugs for continued upward movement after this round of adjustment.

For allocation, we recommend continuing to focus on resources, innovative drugs, consumer electronics, chemicals, gaming, and military sectors in September.

2. Shenwan Hongyuan Strategy: Comparing Historical Growth Sector Upward Cycles, Discussing Current Technology Market Position and Rhythm

Comparing to the current situation, the fourth wave of artificial intelligence market from the April 9 low point has risen for nearly 100 trading days, with primary industry gains ranging from 50% to 100%. Among them, computer and media sectors both accumulated 51% gains, electronics rose 65%, and telecommunications gained 103% achieving index doubling, while optical module thematic index achieved 206% cumulative gains. The fourth wave of artificial intelligence market has been fully developed in both time and space, potentially approaching a staged high area. We remain optimistic about the fifth wave after consolidation. For short-term value propositions, we favor technology application areas such as autonomous driving, fintech, and robotics.

3. Guojin Strategy: Major Rotation, Ready to Trigger

Current domestic manufacturing enterprise operating conditions are improving, verified in both industrial enterprise operating data and semi-annual reports. Overseas inflation pressure is weakening, and future Federal Reserve rate cuts will support global manufacturing recovery. Overseas equipment investment is showing signs of switching from AI to traditional manufacturing. From a global supply-demand perspective, the past combination of Chinese commodity production expansion + overseas commodity demand contraction is transitioning to Chinese production "anti-involution" + overseas investment-driven commodity demand expansion. From monetary and Chinese production perspectives, the combination of global monetary policy tightening + Chinese production expansion is shifting toward global monetary expansion + Chinese production slowdown combination. Chinese re-inflation is ready to trigger.

4. Huaan Strategy: Clear Skies and Strong Winds Continue

Federal Reserve rate cut restart will open domestic monetary policy space. September domestic rate cut expectations are rising again. High risk appetite and further enhanced liquidity abundance will continue supporting market upward trends. For allocation, continue offensive high-elasticity directions: first, strong-get-stronger growth technology including pan-TMT, AI, computing power, robotics, military; second, sectors with business cycle support or performance exceeding expectations including rare earth permanent magnets, precious metals, construction machinery, motorcycles, and agricultural chemicals.

5. China Merchants Strategy: Incremental Funds Continue, Upward Trend Persists

Looking ahead to September, the market maintaining oscillating upward probability remains high, but the slope may moderate relative to August. Currently, the key driving force comes from continuous incremental fund inflows forming positive feedback after money-making effects accumulate. Currently, active equity funds, subjective long-only private funds, and index-enhanced quantitative private funds all have median year-to-date returns exceeding 20%. Equity fund money-making effects are obvious. Since July, active stock funds have returned to net subscriptions, margin balances have increased significantly, and private fund registrations have surged. Our predicted logic of forming incremental fund positive feedback after breaking above breakeven resistance levels continues to be validated.

Currently, retail investor market entry potential remains large, with indices having further upward space. However, after market rises, profit-taking investors are also increasing, and market upward slope may moderate periodically. Additionally, September has important events, the Fourth Plenum will convene in October, the Federal Reserve is expected to restart rate cuts, and continued RMB appreciation all help maintain risk appetite. Listed company interim report disclosures are complete, with overall earnings growth remaining stable, net operating cash flows increasing significantly, capital expenditures continuing to decline, and listed company free cash flows continuing to increase. Meanwhile, information technology sector earnings growth maintains double-digit positive growth, with local business cycle characteristics still obvious.

Therefore, overall, the probability of market maintaining upward trends remains high. Under current conditions, the market will continue expanding along low-penetration tracks. AI computing power, semiconductor self-reliance, solid-state batteries, commercial aerospace, controlled nuclear fusion, and innovative drugs remain current main battlefields. Additionally, prudent investors can continue responding with high-quality strategies, focusing on CSI 500 Quality Growth and CSI 300 Quality Growth indices.

6. Dongwu Strategy: Bull Market Second Phase, Focus on AI Application Odds Trading

From June to August, market mainlines revolved around artificial intelligence. Currently, market activity mainly concentrates on upstream infrastructure hardware, with overseas-linked optical modules and PCBs having highest business cycle certainty starting in June, while domestic computing power centered on Cambricon began catch-up in mid-August. With abundant market volume and no obvious flaws in industry logic, we don't believe the computing power market is about to end. However, for off-court cash holders, upstream hardware's strong money-making effects create restlessness, while objectively thickening profit-taking positions bring certain pressure, and subjectively accumulated gains inevitably make low-risk-appetite funds anxious. How should "height-fearing" funds choose? Based on industry trend certainty and odds thinking, "opening another table" in downstream applications is also a good approach.

7. Zhongtai Strategy: How to Understand Recent Market Capital Flow Changes?

Under current capital flow conditions, we believe subsequent market evolution may show the following characteristics: First, large-cap/CSI 300 indices will mainly oscillate, with limited strong continuation space. Subsequent trends more likely show oscillation and structural rotation rather than the broad-based rally markets expect.

Second, dividend sectors' defensive allocation value is prominent. Although not the short-term main attack direction, under tightening capital flows and major shareholder reduction pressure, dividend assets' allocation value is rising, potentially becoming important market support in future stages.

Finally, STAR and ChiNext boards face amplified short-term volatility, but medium-term mainlines remain unchanged. Recent STAR and ChiNext boards face capital pressure, with both ETF and institutional funds showing outflows. Early September volatility may further amplify. However, considering the Fourth Plenum in October may introduce "15th Five-Year Plan" centered on "new quality productive forces," technology sector medium-term logic remains solid. Any September adjustments should be viewed as strategic opportunities for medium-term technology positioning.

Recent markets may continue maintaining optimistic sentiment. However, based on this week's capital flow analysis, current timing still requires attention to increased volatility risks in early-to-mid September. Short-term cautiously optimistic, defensive allocation priority, medium-term firmly grasp technology mainlines and Hong Kong stock dividends.

8. China Galaxy: A-Share Upward Trend Unchanged, Market Hotspots Continue Rotating

August market concluded with A-shares showing upward trends throughout the month, with significantly increased trading volume. Looking ahead, short-term markets are expected to operate at relatively high centers. After previous upward movements, markets may show staged oscillation and consolidation characteristics. However, current market trading remains active, with capital flows continuously driving combined with warming policy expectations providing market support. Meanwhile, external environments remain relatively stable, with high Federal Reserve September rate cut expectations. Global capital flow restructuring benefits equity markets. A-share upward trends remain unchanged, market hotspots continue rotating, focus on structural allocation opportunities.

9. Haitong Strategy: Chinese Stock Market Won't Stop, Market Expected to Expand

Under accelerated Chinese transformation progress, declining risk-free returns, and capital market reform driving, Chinese stock markets won't stop and will reach new highs. Warming easing expectations and improving economic visibility support market expansion with mid-cap emergence; optimistic about Hong Kong stock rebounds.

10. Huaxi Strategy: Insurance Long-Term Funds Become Stabilizers of Current "Slow Bull"

Current A-share trading activity has surged significantly, with margin funds and Northbound Connect trading ratios notably increasing. Equity ETFs have returned to significant net subscriptions. Some trend funds' passive clustering and continued new highs in high-growth sectors create "positive feedback" effects, inevitably creating structural bubbles, which also represents rising market expectations. Meanwhile, data shows insurance companies' A-share holdings reached historic highs in the first half, indicating long-term funds are increasing market entry, effectively strengthening A-share strategic forces and stabilization mechanisms, helping current market trends evolve toward "slow bull" characteristics.