Broker Morning Meeting Highlights | Fed Holds Steady as Expected in October, 25bps Rate Hike Expected in December

On the previous trading day (October 28), the Shanghai Composite Index rose 0.91% to 3,681.47 points, the Shenzhen Component Index rose 2.02% to 11,473.18 points, and the ChiNext Index rose 3.40% to 2,634.76 points; combined turnover of the two markets was RMB2.080714 trillion; across the entire market, 4,156 stocks advanced, 1,239 declined, and 181 were flat, with 67 hitting the daily limit-up and 1 hitting the daily limit-down. CITIC SEC believes the Fed held steady in October as expected, with its statement offering more cautious guidance on the policy stance, and still expects another 25bp rate hike in December; Guosheng believes active equity fund equity positions fell in Q3, with pharmaceuticals receiving the most active additions; Guotou Securities believes the PBOC's BNSF tool helps block the negative feedback loop of redemption-driven selling and is moderately positive for the bond market over the medium to long term; Huafu Securities believes competition in physical AI is extending toward systematized full-chain capabilities, with data collection becoming a key link; Sinolink believes AI drug discovery can compress R&D cycles by 50-90%, offering broad industry space. CITIC SEC: Fed pauses moderately in October with more cautious guidance, may hike another 25bps in December The Fed held steady in October as expected, with statement language more optimistic on the pace of economic expansion and more cautious in its guidance on the policy stance; Warsh's post-meeting remarks were more dovish than in September, mentioning that credit conditions have tightened, inflation expectations have moved in the right direction, and previewing adjustments to the FOMC meeting schedule over the next two years. The institution still expects the Fed to hike another 25bps in December, and the terminal rate of this hiking cycle may not be far from current levels. New variables in the Middle East situation are not yet sufficient to provide a clear and long-lasting exit path for both the US and Iran; high oil prices may persist until the situation becomes clearer, and further improvement in dollar liquidity requires new catalysts. Guosheng: Q3 active equity fund positions broadly declined, pharmaceuticals saw the most additions, electronics saw reductions (market assessment) In 2026Q3, overall equity positions of active equity funds declined: median equity positions for ordinary equity funds, equity-biased hybrid funds, and flexible allocation funds were 90.56%, 89.02%, and 83.55%, respectively, down 0.69, 1.47, and 3.73 percentage points from the previous quarter. By board, weights of the Main Board and Hong Kong stocks increased (+4.11 and +2.32 percentage points), while ChiNext and STAR Market weights declined (-2.97 and -3.47 percentage points). By industry, electronics remained the largest allocation sector (34.38%) but saw the largest active reduction (-2.79 percentage points), while pharmaceuticals received the most active additions (+1.94 percentage points); fixed-income-plus funds reduced electronics more aggressively (active reduction of 5.43 percentage points). At the individual stock level, the top three by absolute allocation market value were Zhongji Innolight, Eoptolink Technology Inc., and WuXi AppTec (RMB87.3 billion, RMB80.4 billion, and RMB43.1 billion), and the top three by active additions were WuXi AppTec, Suzhou TFC Optical Communication, and Zijin Mining Group. Guotou Securities: PBOC's BNSF tool has zero net injection throughout, blocking the negative feedback loop of redemption-driven selling, positive for the bond market over the medium to long term On October 26, the PBOC established the Bond Market Non-Bank Large-Value Redemption Swap Facility (BNSF), positioned as a crisis-resolution-type liquidity support tool and explicitly not a backstop: scenarios are limited to systemic stress in the bond market, counterparties are limited to wealth management subsidiaries and public fund managers with systemic influence, and use is limited to purchasing holdings of the company's own products that have suffered redemptions; the PBOC lends central bank bills rather than funds, with credit risk and valuation losses remaining with the institutions themselves. The tool involves zero net liquidity injection throughout, but blocks the negative feedback loop of "product NAV drawdownliability-side redemptionsforced asset-side selling" in three ways: by using central bank bills as collateral substitutes, changing "must sell bonds" into "can pledge bonds for financing"; by limiting purchases to the company's own product holdings, internalizing the externality of discounted selling; and by giving managers a liquidity backstop, reducing the probability of trading ahead of redemption expectations. Over the medium to long term, the tool helps compress the liquidity tail-risk premium, with the most obvious beneficiaries being short- to medium-term high-grade credit bonds that are heavily held by wealth management products and public funds and prone to being sold during stress periods; it does not inject base money and does not directly affect yield levels, so its benefit to the bond market is indirect and relatively limited in magnitude. Huafu Securities: Physical AI competition extends to the full chain, data collection becomes a key link for implementation This week saw progress in the physical AI field, with industry competition extending from single-point model capabilities toward a systematized full chain of "physical reasoningsimulation trainingreal-world deployment"; NVIDIA expanded the Isaac platform and jointly launched the Agile ONE-SN humanoid Siasun Robot&Automation reference platform, promoting software-hardware collaboration and integration of the development process. As Siasun Robot&Automation large models move toward real-task validation, data collection becomes a key link affecting model iteration and deployment efficiency; data collection equipment makers, data collection companies, and Siasun Robot&Automation OEMslinks in the data collection industry chainare worth watching. Sinolink: AI drug discovery moves from tool to engine, can compress R&D cycles by 50-90% and save about US$54 billion in costs AI drug discovery can compress R&D cycles by 50-90% and save about US$54 billion in costs; MNCs are accelerating their, with global AI drug discovery deal upfront payments reaching US$1.8 billion in the first half of 2026 and total deal value exceeding US$50 billion. With AI enablement, Phase I clinical success rates exceed 70% (versus about 50% traditionally), while Phase II-III results remain to be validated. The dry-wet closed loop is driving expansion of wet-lab demand; Twist has completed more than 200,000 protein expressions and more than 130,000 antibody tests cumulatively; the industry is growing rapidly with broad space.