Investment Highlights

Key Economic Data

In August, the consumer market operated steadily overall. The Consumer Price Index (CPI) remained flat month-over-month and declined 0.4% year-over-year, while core CPI increased 0.9% year-over-year, with growth expanding for the fourth consecutive month. Domestic market competition order continued to optimize, with the Producer Price Index (PPI) shifting from a 0.2% month-over-month decline in the previous month to flat; year-over-year decline narrowed to 2.9%, a reduction of 0.7 percentage points from the previous month.

US August CPI rose 2.9% year-over-year and 0.4% month-over-month, generally meeting market expectations. Core CPI increased 3.1% year-over-year and 0.3% month-over-month, both unchanged from previous values. US August non-farm payrolls added only 22,000 jobs, below market expectations of 75,000. In household surveys, the August unemployment rate rose to 4.3%. Federal Reserve rate cut expectations strengthened.

In the first eight months of this year, China's goods trade maintained steady growth momentum, with total import-export value reaching 29.57 trillion yuan, up 3.5% year-over-year. In August alone, China's imports and exports totaled 3.87 trillion yuan, increasing 3.5%. Of this, exports reached 2.3 trillion yuan, up 4.8%, and imports totaled 1.57 trillion yuan, up 1.7%.

The National Development and Reform Commission and National Energy Administration recently issued the "Implementation Opinions on Promoting High-Quality Development of 'Artificial Intelligence+' Energy," proposing to explore establishing a financial support system for AI technology research and application in the energy sector, leveraging multi-level capital markets to support technological innovation and guide social capital participation in AI technology project implementation and commercialization.

Market Overview

This week, domestic securities market major indices showed divergent performance, with the STAR 50 Index posting the largest gain of 5.5%. Among CITIC Level-1 industries, the electronics sector led with a 6.15% increase.

This week's market developments show domestic core CPI continued rising, indicating effective domestic demand policies while consumption recovery still has room for improvement. PPI shifted from decline to flat month-over-month, with year-over-year decline narrowing. US August CPI met expectations, employment market data fell short of expectations, strengthening market rate cut expectations. In foreign trade, August saw double growth in imports and exports, highlighting trade resilience. On the policy front, the "AI+ Energy Development Implementation Opinions" were issued, providing direction for intelligent development in the energy sector and expected to drive technological breakthroughs and industrial upgrades in the energy field over the long term. Looking ahead, with continued domestic policy support, consumption and industrial sectors are expected to gradually improve. The integration of energy and artificial intelligence will also bring new opportunities for related industries, though attention should be paid to changes in domestic and foreign demand and the international environment.

Investment Recommendations

1) New Quality Productive Forces: Developing new quality productive forces represents important policy guidance for domestic economic direction. Under a loose liquidity environment, technology and innovation companies are expected to generate excess returns. Focus areas include: artificial intelligence, semiconductor chips, robotics, low-altitude economy, deep-sea technology, and controllable nuclear fusion.

2) Consumption Stimulus: Focusing on consumption stimulus to expand effective domestic demand, household consumption capacity is expected to be released. Focus areas include: new consumption, home appliances, and automobiles.

3) High Dividends: Dividend assets can provide investors with relatively stable investment returns over the long term.

4) Gold: Given ongoing geopolitical tensions and increasing global economic uncertainty, gold as a safe-haven asset is expected to see sustained medium to long-term demand growth. Focus on: medium to long-term gold investment opportunities.

Risk Warnings

Policy changes exceeding expectations, economic environment changes exceeding expectations, short-term market volatility risks.

Detailed Economic Analysis

China's August CPI fell 0.4% year-over-year, while core CPI continued rising

The year-over-year CPI shift from flat to decline was mainly due to higher comparison bases from the same period last year combined with food price increases below seasonal levels this month. From carryover effects, last year's price changes contributed approximately -0.9 percentage points to this month's year-over-year CPI, with downward pressure expanding 0.4 percentage points from the previous month. From new price increases, this month's CPI remained flat month-over-month, approximately 0.3 percentage points below seasonal levels. These factors combined to drive CPI year-over-year lower.

With continued effectiveness of policies to expand domestic demand and boost consumption, core CPI year-over-year growth expanded for the fourth consecutive month. This month, core CPI excluding food and energy prices rose 0.9% year-over-year, with growth expanding 0.1 percentage points from the previous month.

PPI ended downward trend month-over-month, shifting from 0.2% decline last month to flat

PPI month-over-month ended eight consecutive months of decline, shifting from last month's 0.2% decline to flat. Key features of this month's PPI month-over-month changes included improved supply-demand relationships affecting some energy and raw material industry prices, shifting from decline to increase.

PPI fell 2.9% year-over-year, with the decline narrowing 0.7 percentage points from the previous month, marking the first narrowing since March this year.

US August CPI rose 2.9% year-over-year, employment market data missed expectations, strengthening rate cut expectations

US August unadjusted CPI rose 2.9% year-over-year, matching expectations of 2.9% and up from the previous 2.7%. US August seasonally adjusted CPI rose 0.4% month-over-month, above expectations of 0.3% and up from the previous 0.2%, generally meeting market expectations.

Additionally, the US job market cooled, with August non-farm employment adding only 22,000 jobs, significantly below market expectations of 75,000. The August unemployment rate rose to 4.3%, reaching a nearly four-year high.

Following CPI release, markets quickly raised rate cut expectations, with traders betting nearly 90% probability of 75bp rate cuts by year-end, with possibilities of 50bp cuts in September.

Customs Administration: First eight months import-export total 29.57 trillion yuan, up 3.5% year-over-year

Data from the General Administration of Customs shows that in the first eight months of this year, China's goods trade maintained steady growth, with total import-export value reaching 29.57 trillion yuan, up 3.5% year-over-year. Trade with Belt and Road Initiative countries totaled 15.3 trillion yuan, up 5.4%, accounting for 51.7% of China's total import-export value.

In August alone, China's imports and exports totaled 3.87 trillion yuan, up 3.5%, with exports reaching 2.3 trillion yuan (up 4.8%) and imports totaling 1.57 trillion yuan (up 1.7%).

Two Departments Issue "Implementation Opinions on Promoting High-Quality Development of 'AI+' Energy"

The National Development and Reform Commission and National Energy Administration issued "Implementation Opinions on Promoting High-Quality Development of 'AI+' Energy." The opinions propose that by 2027, an initial innovation system integrating energy and artificial intelligence will be constructed, with computing power and electricity collaboration foundations continuously strengthened.

Weekly Perspective

HBM (High Bandwidth Memory) is high-performance DRAM designed to address massive data processing challenges. Through innovative 3D stacking packaging technology and ultra-wide data buses, it significantly improves data transmission bandwidth and efficiency while maintaining low power consumption. Under AI server demand, the HBM market is experiencing exponential growth. According to Yole predictions, the global HBM market will reach $34 billion in 2025, with global HBM revenue expected to exceed 50% of the DRAM market by 2030, reaching $98 billion with a compound annual growth rate of 33%.

Optical modules are experiencing strong demand growth from overseas AI data center expansion. Global tech giants including NVIDIA and Google are increasing AI computing power investments, directly driving demand for optical communication equipment and modules. LightCounting predicts the global Ethernet optical module market will maintain approximately 50% growth in 2025, with subsequent five years entering relatively stable phases with compound annual growth rates of 15-18%.

Market Overview

Major Index Performance This week, domestic securities market major indices showed divergent performance. Shanghai Composite, Shenzhen Component, ChiNext, CSI 300, SSE 50, CSI 500, CSI 1000, STAR 50, and STAR 100 indices posted weekly gains/losses of 1.5%, 2.6%, 2.1%, 1.4%, 0.9%, 3.4%, 2.4%, 5.5%, and 2.8% respectively.

Among CITIC Level-1 industries, the top five performing sectors were electronics (6.15%), real estate (5.98%), agriculture, forestry, animal husbandry and fishing (4.81%), media (4.27%), and non-ferrous metals (3.76%).

Investment Recommendations

1) New Quality Productive Forces: Developing new quality productive forces represents important policy guidance for domestic economic direction. Under loose liquidity conditions, technology and innovation companies are expected to generate excess returns. Focus areas: artificial intelligence, semiconductor chips, robotics, low-altitude economy, deep-sea technology, controllable nuclear fusion.

2) Consumption Stimulus: Focusing on consumption stimulus to expand effective domestic demand, household consumption capacity expected to be released. Focus areas: new consumption, home appliances, automobiles.

3) High Dividends: Dividend assets can provide relatively stable investment returns over the long term.

4) Gold: Given ongoing geopolitical tensions and increasing global economic uncertainty, gold as a safe-haven asset is expected to see sustained medium to long-term demand growth. Focus on medium to long-term gold investment opportunities.