CMSC: Overseas interest rate repricing, how to plan for the future?

CMSC released a research report stating that the core contradiction in the market this week centers on the repricing of overseas interest rates and the differentiation in domestic industry vitality. U.S. non-farm employment surpassed expectations, shifting market focus towards inflation, while U.S. Treasury rates and the dollar are expected to face short-term upward pressure. In China, earnings in the A-share market continued to improve in the second quarter, but industry differentiation remains evident. Risks in energy supply have driven up crude oil and chemical product prices, reflecting supply shocks rather than a comprehensive recovery in demand. The profits in the AI industry are accelerating the shift from hardware to software and application sides. It is recommended to evenly balance structural growth with dividends, focusing on AI computing power, expansion abroad, and improvements in undervalued sectors. CMSC's main viewpoints are as follows: Market Analysis With the repricing of overseas interest rates, how should future layouts be arranged? On the overseas front, U.S. non-farm job numbers in August significantly exceeded expectations, and the unemployment rate held steady at 4.1%. Market attention has shifted from employment to inflation, leading U.S. Treasury rates and the dollar to face continuing short-term upward pressure, suggesting that global equity markets may remain volatile; the future inflection point depends on inflation data, the September interest rate meeting, and the U.S.-Iran situation. Meanwhile, recent energy supply risks have driven structural price increases in commodities, with oil becoming a critical anchor. Price increases are spreading to chemical intermediates, while precious metals and photovoltaic materials are under pressure. Domestically, revenue and profit growth in the A-share market accelerated in the second quarter, with the proportion of overseas revenues continuing to rise, but industry differentiation is still pronounced. In terms of industrial trends, there have been intensive updates to large AI models abroad, while the crowding of technology in the A-share market is on a decline. The market is still trading under the "hard cuts soft" logic; the overall narrative in technology hasnt been adjusted up, yet profit redistribution within the industry chain may occur. It is recommended to maintain a balanced portfolio of "structural growth + dividends," focusing on AI computing chains, outbound chains, and the direction of undervalued improvements, and to pay attention to marginal improvement sectors, including semiconductors, overseas computing power, chemicals, agriculture, and Siasun Robot & Automation. Review and Reflection This week, the A-share market underwent a volatile adjustment, mainly due to: (1) an increase in overseas liquidity pressure, rapid rises in U.S. Treasury yields leading to adjustments in the global bond market; for instance, the yield on the U.S. 10-year Treasury bond approached 4.8%, and the 30-year Treasury yield rose to about 5.28%. Concerns surrounding the scale of U.S. debt, inflation expectations, and rising energy prices have suppressed the valuations of global risk assets. (2) AI hardware trading has entered a phase of differentiation, with continued profit realization in previously high-prosperity sectors. However, the AI application side remains supported by industrial catalysts, with areas like media, short dramas, and AI videos receiving inflows of funds. (3) Market hotspots are rapidly rotating, with low-position areas like agriculture and military-related sectors performing well in the short term. The hog farming sector is driven by expectations of sows reduction and pork price recovery, while military-related sectors have become significant conduits for funds during the adjustment period due to market risk-averse sentiments, although trading volumes continue to decline, leaving the index lacking sustained upward momentum. Mid-Observation: Economic Vitality The manufacturing PMI in August rose month-on-month, and pork prices increased. This week, areas seeing improvement in vitality mainly include: 1) Among resource products, coal, crude oil, and most chemical prices increased; 2) TMT (Technology, Media, Telecommunications) continued to show high vitality, with DDRM prices rising continuously, and the year-on-year growth rate of PCB shipments and orders in North America expanded in July; 3) Improvement in pork prices and an increase in vegetable prices. Recommended sectors with higher vitality or improvement include coal, chemicals, chemical pharmaceuticals, agriculture, forestry, animal husbandry and fisheries, semiconductors, and banks. Capital: Supply and Demand There is a net subscription for ETFs, while financing experienced a net outflow, and the issuance of funds has declined. In the first four trading days of financing funds, a total net outflow of 2.71 billion yuan was recorded; newly established equity public funds totaled 4.99 billion shares, decreasing by 740 million shares from the previous period; ETFs saw net subscriptions corresponding to a net inflow of 10.87 billion yuan. The financing funds had net purchases in machinery equipment, basic chemicals, and building materials; the information technology ETF saw significant subscriptions, while the brokerage ETF faced considerable redemptions. The net reduction of major shareholders has decreased, with planned reduction scales declining. Themes: Direction of Wind OpenAI, Anthropic, and Google have released their latest models consecutively. This week, the competition of large models abroad has notably intensified: OpenAI released GPT-6 Astra on September 4, Anthropic launched Claude Fable 5.1 and Claude Mythos 5.1 on September 2, and Google released Gemini 3.8 Flash on the same day. The three leading companies completed a new round of flagship or main model updates in a very short time. From the common trends observed in the three models, actual production efficiency has become an important standard for measuring the value of cutting-edge models, with research capability being one of the key focuses of flagship models. Meanwhile, the product paths of different companies have further diverged: OpenAI is enhancing computer operation capabilities, Anthropic continues to delve into Agents, while Google relies on the Flash series to strengthen the balance between performance, speed, and costs. Data: Valuation This week, the overall valuation level of A-shares declined compared to the previous week, with the Wind All-A index PE (TTM) at 17.2, down 0.5 from last week, which is at the 63.4% percentile of historical valuation levels. Most index valuations fell this week, among which light industry manufacturing, construction decoration, and media led the gains, while electronics, building materials, and military industries led the declines. Risk Warning: Economic data falling short of expectations, incomplete understanding of policies, and unexpected tightening of overseas policies.