I. Slowing down leads to greater distance, height, and quality. Subsequent market movements have rich structural depth, and there is no need to concentrate all bull market expectations on the current high-momentum directions. The short-term cost-effectiveness of momentum-driven markets dominated by active trading funds and institutions increasing their aggressiveness has significantly declined. Rising fear of heights and slowing capital inflows make appropriate market deceleration healthy.

In our weekly review and outlook "Slowing Down Leads to Greater Distance, Height, and Quality" published on August 23, we discussed the necessity of a slow bull market. A comprehensive bull market requires further accumulation of positive factors, and the direction of supply-demand improvement will continue to increase over time. The structural mainline of the global bull market cannot be limited to Chinese companies' deeper integration into overseas-dominated industrial chains. China's system going global will drive the competitive advantages of Chinese manufacturing and transform them into corresponding industrial discourse power and profitability. It seems unnecessary to project all expectations for a bull market onto current prosperity clues.

As market indices rise, fear of heights has increased and capital inflows have slowed. In the short term, the types of funds maintaining inflows have decreased, and the types of funds accelerating inflows have basically disappeared (second-derivative fund logic is needed to support positive momentum cycles). Active equity funds are still in the subscription and redemption offset phase, with net redemptions in technology ETFs this week, reflecting investors' profit-taking impact. Recently, some technology momentum markets have been mainly driven by active trading funds and institutions increasing their aggressiveness. As the market evolves to this stage, listed companies are issuing risk warnings, and appropriate market deceleration is healthy.

II. The debate between "One-Nine Market" and "High-Cut-Low": The continued evolution of the "One-Nine Market" is unfavorable to the continuation of bull market sentiment. Recent domestic computing power markets are still mainly an extension of overseas computing power markets, while markets driven by decisive AI progress domestically can spread from computing power to other segments, which would end the "One-Nine Market." Effective "High-Cut-Low" markets also require new supply-demand improvement clues. Therefore, both "One-Nine Market" and "High-Cut-Low" may not be market breakthrough points, and the market will re-enter a phase of waiting for new prosperity clues in the coming period.

Will the subsequent style be a "One-Nine Market" or "High-Cut-Low"? We believe the "One-Nine Market" has two problems: First, the foundation of "One-Nine Market" evolution is lackluster fundamental improvements plus funds' self-reinforcement in a few directions. However, continued divergent markets will harm profit-making effects and are unfavorable to bull market sentiment continuation. Second, industrial logic also does not support a sustained "One-Nine Market." Recently, domestic computing power markets are still mainly extensions of overseas markets. We fully believe that progress made by overseas AI will be followed domestically after some time. However, markets fermented by this have questionable medium-term stability. Markets based on decisive domestic AI progress will not be limited to computing power but will evolve into diffusion markets from computing power and large models to applications. The characteristics of market evolution at that time will no longer be a "One-Nine Market."

The effectiveness of "High-Cut-Low" markets should not be overestimated either. Over the past period, with the premise of overall index gains, various levels of high-cut-low markets have continuously evolved. However, medium-term effective "High-Cut-Low" markets require new supply-demand improvement clues. Pure sector rotation-based high-cut-low markets also tend to be short-term phenomena.

Therefore, both "One-Nine Market" and "High-Cut-Low" may not be market breakthrough points. The real breakthrough still needs to come from new catalysts in new or existing directions. In the coming period, the market will re-enter a phase of waiting for new prosperity clues. The medium-term bull market outlook remains unchanged, while short-term market deceleration, declining single-style returns, and appropriate adjustment are healthy.

Medium-term market views remain unchanged: Time has become a friend of the bull market, with the core being that bull market conditions of "cyclical fundamental improvements in mid-2026 + possible initiation of positive incremental fund cycles" will be met. Technology and venture capital itself is at a bottom-starting window, and new prosperity clues may continue to increase over time, with conditions for evolving into high-elasticity markets getting better. The lower bound for year-end and early-year market outlook is to "replicate" past market characteristics: momentum in a few prosperous directions + high-cut-low in 2026 turning point directions + broad rotation with sequential rises and catch-up. We maintain the judgment that Q4 2025 will be better than Q3 2025, and 2026 will be even better.

Key verification periods on the demand side and window periods for forming major structural mainlines will come after spring 2026. Fundamental verification disturbances at that time may bring bull market deceleration. If markets evolve too quickly, key verification periods may also come earlier.

III. Thinking about sources of new high-prosperity directions: We continue to emphasize that domestic technology and anti-involution are important sources of subsequent structural mainlines, while decisive domestic AI progress and advanced manufacturing industry alliances still need time. Pay attention to Tesla robot verification in September, and investment opportunities from high chemical industry capacity utilization + recovery growth in export orders. Hong Kong stock internet quarterly report verification shows that the impact boundaries of food delivery industry competition are becoming clear. Alibaba's financial reports show highlights in cloud computing + domestic chips. Hong Kong stocks have better short-term cost-effectiveness than A-shares and may repair relative returns in the medium term.

Thinking about sources of new high-prosperity directions, we continue to emphasize that subsequent bull market structural mainlines are more likely to come from domestic technological progress (domestic AI industrial chains, robotics chains) + advanced manufacturing anti-involution (solar, chemicals, some electrical machinery key components). Decisive catalysts still need time, as domestic AI major breakthroughs are not in verification periods, and advanced manufacturing anti-involution is still in early stages, requiring much preliminary work to form price alliances. We focus on clues that may be verified in September-October: 1. Tesla robot verification. 2. Demand highlights in some cyclical products. For example, in chemicals with medium-term high capacity utilization, short-term export order recovery may advance supply-demand improvement markets. 3. September consumer stimulus policies spreading to some export commodities.

We continue to emphasize that Hong Kong stocks have better short-term cost-effectiveness than A-shares. Current Hong Kong stock positions still mainly reflect prosperity trends with fewer concentrated optimistic bull market expectations. Hong Kong stock internet quarterly report verification shows food delivery industry competition impacts becoming apparent with clearer impact boundaries. Alibaba's financial reports show highlights in cloud computing + domestic chips, favorable for Hong Kong stock prosperity expectation recovery. We maintain our judgment that Hong Kong stocks are potential bull market leading markets, with short-term relative return repair waves starting.