On October 5, CITIC Construction Investment Securities released a research report indicating that the A-share market experienced a comprehensive adjustment in September. This adjustment was primarily driven by tightening overseas liquidity conditions and valuation corrections in sectors that had previously witnessed substantial gains. Notably, the growth and resource sectors saw significant pullbacks, whereas traditionally lower-performing sectors such as real estate, pharmaceuticals, and banking fared relatively well.

As we look ahead to October, with overseas liquidity pressures showing signs of easing, the market is set to enter a critical period for third-quarter earnings disclosures. This phase underscores the significance of fundamental verification, as investors seek to assess the true health and performance of companies. It is widely expected that the technology sector will continue to demonstrate robust earnings growth in the third-quarter reports. Additionally, there are improved earnings expectations for industries such as resource products, pharmaceuticals, and non-bank financial sectors.

High-frequency sentiment data reveals sustained optimism in AI hardware, underpinned by strong energy prices and ongoing support for the medium-term supply and demand dynamics of industrial metals. Following the market corrections in September, valuation pressures in certain high-sentiment industries have been alleviated, providing a more favorable investment landscape.

In terms of asset allocation, it is advisable to focus on AI hardware, which boasts high earnings certainty. Industrial metals, coal, oil and gas, and basic chemicals are also attractive options, supported by supply constraints and earnings improvements. Furthermore, innovative pharmaceuticals, which are benefiting from favorable industry trends, as well as undervalued securities and insurance sectors with earnings improvements, present compelling investment opportunities.