Haitong Securities: It is recommended to increase holdings of A-shares in October, over-allocate gold, and hold bonds as per usual.

Guotai Haitong released a research report stating that based on the "Three-Act" asset allocation framework of Guotai Haitong, Guotai Haitong believes that the increasing geopolitical uncertainties may intensify global equity market volatility. Chinese equity assets and gold still have performance opportunities. It is recommended to increase holdings of A-share and H-share in October, over allocate to gold, and allocate bonds as usual. Guotai Haitong's main points are as follows: We have constructed a "Three-Act" asset allocation framework consisting of "Strategic Asset Allocation (SAA) - Tactical Asset Allocation (TAA) - Major Event Review Adjustment" as an overall guide for investment decision-making. Through SAA, the framework first diversifies macro risks and sets long-term benchmark proportions to ensure portfolio stability. TAA uses quantitative methods to identify assets with better short-term risk-return characteristics and moderately adjust portfolio weights to increase return levels. Finally, subjective review of major events corrects and supplements the quantitative results. We believe that the increasing geopolitical uncertainties or the intensification of the global equity market volatility on a stage may provide performance opportunities for Chinese equity assets and gold. We recommend increasing holdings of AH shares in October, over-allocating to gold, and allocating bonds as usual. The suggested equity allocation weight is 41.25%, bond allocation weight is 45%, and commodity allocation weight is 13.75%. We are relatively optimistic about Chinese equity assets and recommend an equity allocation weight of 41.25% in October: over allocate to A-shares (8.75%), over allocate to Hong Kong shares (8.75%), allocate US stocks as usual (15.00%), under allocate European stocks (2.75%), allocate Japanese stocks as usual (3.25%), and under allocate Indian stocks (2.75%). Among equity assets, we continue to have a positive view on the performance of Chinese A/H shares and recommend increasing holdings. The increasing geopolitical uncertainties or the intensification of the global equity market volatility may provide buying opportunities for the Chinese market, as the adjustment in China's market is a buying point. On a tactical level, the boundaries of this trade risk are relatively clear, with China's counterstrikes targeting key points. After the US imposes 100% tariffs, it no longer has practical significance and faces realistic constraints. Domestic financial conditions are stable, and the other side of the conflict is China's loose fiscal/monetary reserves; a stable capital market now has a significant impact on the economy and society, and winning the financial war is a response to the tariff war. The certainty trend of China's "transformation bull" has formed internally: the pace of transformation is accelerating/increased risk-free returns/capital market reforms. Currently, there is a continuous surge in Chinese society and investors' demand for "finding assets," especially high-quality assets with solid development logic. Therefore, the decline in asset prices caused by external conflicts and trade disruptions may actually be a buying point. We are relatively neutral on bonds and recommend a bond allocation weight of 45% in October: allocate long-term government bonds as usual (10.00%), allocate short-term government bonds as usual (12.50%), allocate long-term US bonds as usual (10.00%), allocate short-term US bonds as usual (12.50%). The imbalance between credit supply and demand and ample stable liquidity still support the bond market. After undergoing adjustments in the past period, the odds in the bond market have improved, and the cost-effectiveness of allocation has gradually increased. The themes of "central bank buying bonds" and adjustments in bond fund redemption fees will continue to be in play. Against the backdrop of increasing geopolitical uncertainties and rapidly rising risk aversion, domestic interest rates may fluctuate at high levels. The adjustment of the Federal Reserve's monetary policy framework and market expectations for a looser monetary policy are favorable for the performance of US bonds, but inflation expectations will also rise concurrently, and the central rate of US bonds may continue to fluctuate downward. We are relatively optimistic about commodities and recommend a commodity allocation weight of 13.75% in October: over allocate to gold (10%), under allocate to oil (1.25%), allocate industrial commodities as usual (2.5%). In the commodities market, the gold market has yet to finish. After breaking through the resistance level of $3,500 at the end of August, the gold price surged, breaking through the key level of $4,000 at the beginning of October. The rate cuts by the Federal Reserve, global geopolitical situation, and continuous gold purchases by the Chinese central bank will continue to provide strong support for the gold pricing. While we are bullish on the short-term performance of gold prices, we see long-term value in gold allocation. Risk disclaimer: There are limitations in the analysis, subjectivity in model design, deviations between historical and expected data, market consensus adjustments, and limitations in quantitative models.