September A-shares showed a pattern of alternating adjustment, repair, and renewed divergence. Computing power hardware and semiconductors staged periodic recoveries driven by industry catalysts, but their sustainability was constrained by trading volume; innovative drugs and CXO demonstrated a degree of independence, while banks and coal played a defensive role during the adjustment. Overall, capital rotated between cyclical growth and low-valuation defensive sectors, and subsequent market moves still require support from order fulfillment and earnings realization.
Looking ahead to October, A-shares are expected to remain rangebound, and the sustainability of the post-holiday recovery depends on capital inflows and third-quarter earnings delivery. Overseas, after the Federal Reserve's September rate decision, policy uncertainty was released in stages, but elevated US Treasury yields and "higher for longer" tightening expectations still constrain risk asset valuations, and whether a rate hike occurs in October and the subsequent rate path remain key variables. If oil prices and US Treasury yields stabilize, growth sectors may gain room for recovery. In addition, the consensus reached between Chinese and US leaders on economic and trade areas may also help improve risk appetite, and follow-through on implementation needs to be monitored.
Domestically, earlier adjustments have already released some valuation and positioning pressure, and post-holiday capital return may improve trading volume, but whether sustained incremental inflows can form remains to be seen. Domestic demand recovery is relatively weak, and the transmission of policy to demand and earnings still takes time; continued index gains still lack support from systematic fundamental improvement. Third-quarter earnings will test whether the earnings improvement seen in interim reports can continue, with focus on the matching of revenue, profit, and cash flow.
Structurally, rotation and performance screening are expected to remain dominant: the AI industry chain presents repair opportunities after adjustment, but verification is needed through orders, capital expenditure, and earnings realization, and capital may concentrate on core segments with confirmed prosperity and earnings that can absorb valuations; innovative drugs, power grids, and some new energy segments warrant attention for independent prosperity and earnings expectation repair, while high-dividend, stable cash flow, low-valuation assets still offer portfolio balancing value. If a rebound in trading volume and earnings realization resonate, the market rally may broaden; otherwise, it may remain mainly a stock-level rotation.
(1) Growth direction: The AI industry chain may present repair opportunities after adjustment, but the sustainability of the move still requires verification through third-quarter earnings and subsequent orders. Attention should be paid to segments with strong demand and earnings that can absorb valuations, such as optical communications, PCB, AI servers, and storage, while also emphasizing domestic substitution opportunities in domestic computing power, semiconductor equipment, and key materials. October industry conferences and overseas technology company earnings may provide catalysts, and allocation should concentrate on companies with higher earnings certainty and valuations that match growth, avoiding pure pursuit of theme expansion.
(2) Innovative drugs: As one of the few growth directions currently combining industry trends, earnings realization, and policy catalysts, innovative drugs have relatively low volatility correlation with the technology sector and possess a basis for some independent market performance. With leading companies' earnings improving, overseas licensing cooperation continuing to expand, and domestic and international R&D results gradually landing, industry prosperity may still continue; with strong prior capital consensus and allocation foundations, they still have good market sustainability under continuous earnings verification.
(3) Dividend value: The market is still in a phase of rangebound consolidation, and stable cash flow assets still offer good defensive and portfolio balancing value. High-dividend directions and individual stocks such as banks, power, utilities, oil and gas exploration, coal, white goods, farming, and dairy may continue to serve as base positions. Non-bank financials benefit from industry prosperity improvement and valuation repair; if subsequent market risk appetite recovers and trading activity improves, the sector may further benefit from a recovery in brokerage business and investment income.
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