Domestic economic conditions continue to show a fragile recovery marked by structural K-shaped divergence. On one front, domestic demand faces pressure while external demand serves as a critical support pillar. Retail sales growth for goods has decelerated, and consumer spending intentions require further stimulation, yet exports grew by 13.4% year-on-year in the first half. On another front, traditional growth engines are under strain, whereas new drivers represented by AI are contributing highly efficiently, accounting for over 40% of economic growth. Furthermore, primary and secondary industries are encountering headwinds, while the service sector's contribution has risen to exceed 60% of GDP growth. Overall, first-half GDP expanded 4.7% year-on-year, aligning with the full-year target range of 4.5%-5.0%. Consequently, the likelihood of large-scale economic stimulus in the remaining months is low. Fiscal policy is expected to focus on accelerating project implementation, stabilizing investment, and expanding domestic demand, with emphasis on major initiatives like the "six networks" to address infrastructure gaps. Domestic monetary policy retains easing potential, but constrained by tight overseas monetary conditions, any rate cuts or reserve requirement reductions will likely await signals of easing external constraints or further weakening in domestic demand. Globally, geopolitical tensions persist, stagflation risks are climbing, global monetary conditions remain restrictive, and high volatility expectations continue to shape asset markets.

For A-shares, maintaining a neutral stance and balanced positioning while managing risks is advisable. The anticipated August rebound materialized as expected, with the Shanghai Composite Index climbing 4.02% for the month, outperforming the ChiNext and STAR 50 indices. The predicted diversification of market hotspots also came to pass, with energy, non-ferrous metals, pharmaceuticals, and financials all showing gains. The strategy of maintaining a medium position with balanced allocation proved effective. Looking to September, external uncertainties remain substantial: the probability of further Fed rate hikes is not insignificant, recurring Middle East conflicts are fueling global risk aversion, and Sino-US relations still carry uncertainties. Being overly aggressive in investment is unwarranted. On the positive side, valuation and crowding risks in AI stocks have been partially alleviated, market hotspots are broadening with attention shifting to undervalued sectors, and the likelihood of continued moderate rotation from August remains relatively high. Sticking with a neutral position, balanced allocation, and risk management remains a viable strategy. Based on the WIND All-A-Index 10-year risk premium level at 60.76%, the overall valuation of the A-share market sits at a moderately low level (data source: WIND, 20260831; historical performance does not guarantee future results; markets carry risks; invest with caution).

Areas worth attention include:

True Growth (selective allocation, focus on divergence): The AI industry trend remains intact; genuine growth requires patient holding. Computing power, semiconductors, and communications are consistently favored. On the application side, opportunities exist in model providers, cloud vendors, and fintech, though fundamental developments must be closely monitored. The technology sector carries significant risk and volatility, necessitating robust risk controls.

True Recovery (bargain hunting, left-side positioning): Sectors such as innovative drugs, non-ferrous metals, consumer discretionary, non-bank financials, and energy, after sustained corrections and the August recovery, may still offer left-side entry opportunities at lower levels.

True Dividends (diminished cost-effectiveness, still within allocation range): Dividend-paying sectors have risen from last month, reducing their cost-performance appeal, yet they retain allocation value. The August release of the Insurance Company Asset and Liability Management Measures, under the constraint of net investment income coverage ratios, has largely cemented the long-term trend of insurance funds increasing allocations to dividend-type assets.

For Hong Kong stocks, liquidity remains subject to fluctuations, though maintaining modest left-side positioning is still recommended. HK market liquidity continues to be influenced by regional Asian capital flows. July saw significant volatility in South Korea, Japan, and Taiwan markets; in August, some funds exited HK to participate in bargain hunting in those regions, creating renewed capital diversion pressures. Looking ahead, this capital diversion is likely a periodic disturbance rather than a lasting trend. Leading HK-listed companies maintain robust cash flows, valuations sit at historically moderate-to-low levels, and they hold certain competitive advantages amid the AI transformation, offering global comparability. Their long-term strategic allocation value remains intact.

In China's bond market, the focus should be on coupon income, with selective convertible bonds offering enhanced value. The 10-year government bond yield dipped below 1.7% in August, with weak property and consumption data providing support. However, the rapid decline in long-end yields has made trading crowded. Chasing yields below 1.7% on the 10-year note is not advisable, though no major systemic risk looms in the bond market. For short-duration bonds, maintain a neutral holding stance, prioritizing stable coupon income while tempering return expectations. For long-duration bonds, expect range-bound fluctuations; hold as core positions, viewing them more as hedges against equity risk, with gradual profit-taking as yields move lower. For convertible bonds, adopt a neutral stance. Valuations in some traditional-industry convertibles have returned to reasonable levels, offering configuration value, and certain "fixed income plus" funds have improved appeal.

Overseas assets: US equities may face continued volatility, yet their allocation value persists. Persistent high long-end Treasury yields continue to pressure tech valuations. US tech stocks contend with dual constraints on valuations and earnings expectations, intensifying market fluctuations. Concurrently, market hotspots are broadening as funds rotate into undervalued sectors. Given that the AI industry thesis remains unresolved and the dynamic valuations of US AI leaders remain justifiable, the sector still offers allocation potential. Investors are cautioned against buying related exchange-traded products at excessive premiums. For other overseas equity markets, India and Vietnam remain under pressure from dollar liquidity constraints; waiting for dual improvements in fundamentals and liquidity may be prudent. Japanese and South Korean AI assets, after substantial corrections, have improved allocation appeal; minor positions could be considered if premiums on exchange-traded products normalize. Brazil, closely tied to precious metals and oil prices, merits some attention. European valuations offer discounts relative to the US, suggesting potential valuation advantages in traditional assets. Again, investors are reminded not to purchase exchange-traded funds at high premiums.

Regarding overseas dollar bonds, current Treasury yields are at historic highs, making short-duration US Treasuries suitable as satellite assets for regular allocation. Long-duration US Treasuries are also gaining investment attention, showing potential for medium-to-long-term left-side positioning for dollar-based investors. Should geopolitical conflicts ease and drive oil prices lower, trading opportunities from receding rate-hike expectations could emerge. Investors dealing in RMB must account for currency fluctuation risks and hedging costs.

Commodity markets present structural opportunities. Global monetary policy swings amplify commodity volatility; temper expectations for one-way price increases and adopt differentiated positioning across varieties. For precious metals, driven by falling real interest rates, sustained central bank gold purchases, and a major expansion in long-dated Treasury buybacks by the US Treasury, gold prices rallied notably in August but pared gains late in the month following hawkish remarks from Warsh. In the short term, gold may enter a consolidation phase; fresh catalysts are needed to unlock further upside. Over the medium-to-long term, with elevated fiscal deficits and debt pressures in major economies, possibilities remain for further US Treasury action or Fed easing. Gold's long-term allocation value remains prominent, though it is better suited for small, regular, staged purchases rather than heavy speculative bets. For non-ferrous metals, positive inventory signals, cost and supply rigidity provide support, and AI data centers are spurring incremental demand for metals like copper. However, geopolitical conflicts dampen traditional consumption demand, and US tariff policy on copper requires monitoring. In energy and chemicals, the persistence and intensity of geopolitical conflicts will determine oil price direction, likely resulting in high-level, broad fluctuations. A strategy of trimming positions when oil spikes on tensions and adding modestly when prices dip on temporary de-escalation - buying dips and selling rallies - may be appropriate. In agriculture, watch for potential supply disruptions from El Ni帽o weather patterns.

Within private fund strategies, index enhancement and CTA strategies still present opportunities. For index enhancement, with overall market valuations moderate and AI momentum broadening across the market, quantitative diversified stock selection advantages have partially recovered. Investors should select resilient products while managing risk. For CTA strategies, the profit environment is marginally improving. Geopolitical conflicts and supply disruptions offer short-term trading drivers for energy and chemicals; domestic black building materials and agricultural products show prominent near-far month contract tensions; continued fund inflows into precious metals presage rising volatility, which is relatively favorable for CTA. Maintain standard allocation, with more opportunities than in August. For market-neutral strategies, excess returns are recovering; allocations can be timed when basis conditions are favorable. For active long-only managers, those with robust fundamental stock selection and sector rotation capabilities, along with certain specialized strategies, are likely to outperform.

Under the quadruple pressures of a hawkish Fed, geopolitical escalation, surging oil prices, and elevated Treasury yields, September global markets carry considerable uncertainty. Investors are advised to maintain neutral positions and balanced style exposure, capturing structural opportunities across tech growth, recovery, and dividend themes, adhering to a multi-asset, multi-strategy approach, aligning choices with personal risk tolerance, and strictly evaluating portfolio returns and drawdown risks.