Major brokerage firms and fund companies have recently unveiled their fourth-quarter investment strategies. Overall, institutions maintain an optimistic outlook toward A-share and Hong Kong stock markets. For A-shares, institutions believe liquidity and risk appetite improvements will provide market support, while pricing dominance is expected to gradually return to fundamentals. Regarding technology sectors, short-term attention should be paid to local overcrowding issues, though the sector remains a medium-to-long-term investment focus. For Hong Kong stocks, incremental capital is anticipated to drive continued market gains, with Hang Seng Tech, new consumption, and innovative pharmaceutical sectors warranting attention.

**Pricing Dominance Returns to Fundamentals**

During the third quarter, A-share markets delivered strong performance with significantly enhanced market activity and notable valuation recovery across multiple sectors. Wind data shows that as of September 30th close, the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index rose 13.39%, 30.33%, and 52.43% respectively in Q3.

Looking ahead to Q4 macroeconomic conditions, institutions broadly indicate that reasonably ample liquidity is expected to provide market floor support, while key meetings may further boost risk appetite. However, equity asset pricing dominance will gradually return to fundamentals.

Ping An Fund Management noted that looking toward Q4, monetary easing tone continues, and from an asset pricing perspective, the denominator side maintains support while the numerator side awaits policy reinforcement, with equity asset pricing dominance expected to return to fundamentals. Specifically, from an annual perspective, the "policy-economy-earnings" transmission continues advancing, with economic cycle recovery overlapping industrial upgrade-driven numerator improvements anticipated. Stock asset pricing drivers are also expected to gradually shift from denominator-driven to numerator-driven, with fundamental pricing power likely returning.

Penghua Fund Management stated that with major indices breaking through ten-year highs, current A-share overall pricing has returned to reasonable levels. Structurally, stock-bond rebalancing is the main driver behind recent ERP recovery, while market pricing for growth remains extremely optimistic.

Zheshang Securities Chief Economist Li Chao believes that overall, indices have a "safety net," with limited equity market risks in Q4. On one hand, China-US trade relations may maintain moderation amid volatility, while on the other hand, "quasi-stabilization" funds provide tail risk protection, making risk-adjusted equity asset returns still attractive.

**Technology Sector Remains Medium-to-Long-term Focus**

From Q3 industry performance perspective, driven by strong market catalysts, all industries generally showed broad gains, with technology sectors represented by telecommunications equipment and consumer electronics performing most prominently. At the index level, among CITIC Level-1 industry indices, telecommunications industry index Q3 gains reached 51.46%, ranking first among 31 CITIC Level-1 industries, while electronics, power equipment, and non-ferrous metals industry indices all rose over 40% in Q3. Meanwhile, the banking industry index fell over 10% in Q3, being the only declining industry index among CITIC industry indices.

Looking toward Q4, regarding the technology sector that performed hottest in Q3, institutions suggest current attention should focus on local overcrowding issues, but from a medium-to-long-term perspective, technology sectors remain investment mainlines. Additionally, innovative pharmaceuticals and manufacturing leader "going global" layout opportunities are equally worthy of attention.

Hwashang Fund Manager Chen Xiaqiong stated that industry trends represented by AI are still strengthening, with key focus on upstream materials, AI power equipment, and AI downstream applications including robotics and intelligent driving. She believes upstream materials benefit from concentrated demand explosions from overseas chains, domestic chains, and edge-side applications, representing key areas of volume-price increases with expected greater stock price elasticity after industry trend mid-stages. Simultaneously, core segments in AI power equipment such as diesel generator sets and HVDC systems, along with robotics core supply chain companies, are important focus areas for the full year.

Ping An Fund Management indicated that from a medium-term dimension, technology sector demand steady growth and supply "anti-involution" narratives are expected to drive new earnings cycle improvements, though currently still constrained by capacity contraction and demand expansion rhythm, requiring more policy and industry-side verification. At the current stage, certainty is concentrated more in continuous industry prosperity verification, with preference for technology growth directions where industry prosperity continues verification, while being optimistic about continued valuation recovery in innovative pharmaceutical sectors. Innovative pharmaceutical sector earnings capabilities are expected to accelerate release, with domestic innovative drug policy environment marginally improving, supporting sector valuation elevation.

Penghua Fund Management believes that compared to history, technology market conditions overall have not reached overheating stages, with industry valuation differentiation and leading company purchase concentration indicators still having room from historical peaks. Attention should be paid to excessively high local overcrowding within technology sectors. From balancing portfolio returns and volatility perspectives, trading levels can focus on directions with relatively lagging gains but positive fundamental changes.

Neuberger Berman Fund Management stated that after the Federal Reserve's September rate cut window opening, global manufacturing prosperity recovery prospects will become clearer. Investment mainlines are expected to shift from operating cash flow-driven AI investment toward credit-driven traditional manufacturing investment. Focus can be placed on export resilience improvement industries, with manufacturing leader "going global" layout opportunities worth concentrating on. Power equipment, machinery, and automotive sector leaders have basically achieved decoupling from real estate cycles while participating in emerging technology tracks. Additionally, technology growth remains medium-to-long-term allocation mainline.

**Capital Flows Drive Hong Kong Stock Upward Momentum**

Despite certain volatility in Hong Kong stock markets during Q3, comprehensively viewing the first three quarters, performance remains bright among global major stock indices. Wind data shows that as of September 30th, Hang Seng Index, Hang Seng Tech Index, and Hang Seng China Enterprises Index rose 10.59%, 21.05%, and 9.05% respectively in the first three quarters. Simultaneously, Hong Kong stock market trading was relatively active, and driven by A-share companies' Hong Kong "listing wave," Hong Kong stock IPO financing scale increased significantly year-over-year in the first three quarters, with five "A+H" leaders including CATL and Hengrui Medicine each raising over HK$10 billion.

From earnings perspective, quality Hong Kong stock companies are demonstrating strong performance fundamentals. Hwabao WP Fund Management stated that Hong Kong listed company earnings capabilities improved in the first half, showing distinctive "emerging-driven" characteristics. Wind data shows that from total operating revenue perspective, in the first half of 2024, over 1,230 Hong Kong stock enterprises achieved revenue growth. From Level-1 industry perspective, in the first half of 2024, information technology and discretionary consumption total operating revenue year-over-year growth rates both exceeded 10%, significantly leading other industries and becoming core engines driving Hong Kong stock earnings growth.

Looking toward Q4, institutions believe annual southbound capital may still have incremental space, expected to drive continued Hong Kong stock market gains. From industry perspective, Hong Kong stock Hang Seng Tech, new consumption, and innovative pharmaceutical sectors are all key focuses for institutional investors.

E Fund Digital Future Hybrid Fund Manager Ma Lei expressed optimism about Hong Kong technology sector investment value, mainly reflected in four aspects: first, Hong Kong markets possess a group of platform leader companies representing China's technology strength with scarcity; second, quality technology companies continuously list in Hong Kong, enriching investment targets; third, rational valuations allow finding undervalued quality companies from medium-to-long-term perspectives; fourth, positioning layouts in global AI innovation and intelligent hardware fields are relatively complete.

Guotai Junan Haitong research indicated that Hong Kong stocks have performed excellently since year-beginning. Although Hong Kong stocks underperformed A-shares in phases during the first three quarters, they have regained momentum since September driven by technology stocks. Current Hong Kong stock valuations are only at historical medians, with cost-performance advantages still prominent compared to A-shares, particularly with technology sector undervaluation advantages more evident. Industry trends overlapping continuous capital flow improvements suggest Hong Kong stocks may continue creating new highs in Q4. Structurally, under AI driving, Hong Kong technology stocks remain market mainlines. Additionally, Hong Kong dividend stocks benefit from "strengthen dividends + low interest rates" policies, while Hong Kong new consumption and innovative pharmaceutical assets are equally scarce compared to A-shares, potentially worthy of attention in the second half.