1. **A-Share Q3 Earnings Review**: Nominal GDP growth has slowed, and the fixed asset turnover ratio of A-shares continues to decline. However, revenue and net profit growth rebounded, reinforcing the view that A-share profitability has bottomed. Key sectors demonstrating resilience in Q3 include non-ferrous metals, basic chemicals, steel, power equipment, non-bank financials, and TMT.

**Revisiting "No Rush for a Bull Market"**: By 2026, supply-side clearing and cyclical fundamental improvements are expected to broaden. Conditions for household asset allocation shifting toward equities will also be more favorable.

2. **Post-4,000 SSE Composite Outlook**: Since early September, the SSE Composite has traded within a narrow range. This reflects muted market expectations for the sustainability and magnitude of the ongoing tech-driven rally, as long-term valuations in growth sectors lack compelling appeal. Factors triggering an upward breakout remain elusive, and short-term range-bound trading persists.

Structurally, the PPI rebound trade has seen elevated short-term returns but now offers lower risk-reward. Tech growth sectors faced profit-taking pressure in early September, with institutional heavyweights completing adjustments by early October before rebounding late in the month.

**Q3 Earnings Performance**: Electronics and communications underperformed high expectations, while computers and media exceeded modest forecasts. Despite this, growth stocks still hold relative value over cyclical and value peers. We maintain that any sustained rebound will likely require renewed momentum from tech growth catalysts.

**Historical Lessons from Low-Valuation Tech Rallies**: - Valuation-driven gains become harder in prolonged low-P/E regimes, requiring sustained industry catalysts or earnings validation. - Extended high-valuation phases may persist quarterly without immediate sharp corrections. - Major corrections to reset valuations typically follow disruptions to sector narratives. - Sensitivity to liquidity shocks rises during such phases (though current macro/market liquidity risks appear manageable).

**Mid-Term Market View Unchanged**: Spring 2026 may mark a cyclical peak (for structural rallies), with A-shares facing three challenges: - Demand-side validation: Post-supply contraction, weak demand could delay the供需 inflection. - Tech valuations may hit extreme lows, limiting multiple expansion and sector rotation. - New structural catalysts (e.g., domestic tech breakthroughs or anti-fragmentation policies) may need more time to emerge, complicating leadership transitions.

While Spring 2026 could be a local peak, it’s unlikely to be the annual or bull-market zenith. Three mid-term upside drivers remain: - Cyclical fundamental recovery. - Valuation re-rating from household asset shifts to equities. - China’s global influence driving earnings-valuation synergies.

We reiterate that the 2026 framework of "policy bottom → market bottom → economic bottom" will regain relevance as supply clears. Further monetary easing could ignite the next rally.

3. **Q4 Anticipates 2026 Improvements**: The expected PPI rebound (potentially turning positive) is a key input. Near-term price-cycle plays show elasticity, while mid-term PPI recovery provides support. Midstream manufacturing’s supply-demand rebalance post-clearing is another baseline scenario. Early demand outperformers (e.g., energy storage) offer tactical opportunities. Tech growth sectors (e.g., overseas compute beta, robotics, defense orders) also promise 2026 outperformance.

**Risks**: Overseas recession exceeding expectations; weaker-than-expected domestic recovery.