China Merchants Securities: In light of the third-quarter earnings reporting window, allocation criteria should shift from long-term potential to current earnings realization.

China Merchants Securities released a research report noting that after the market rebound, the core of allocation lies in the earnings premium on the numerator side under high interest rates. In the short term, the foundation should be technology leaders with the strongest earnings and clean positioning plus dividend assets, while waiting for the repair of technology breadth after U.S. Treasury yields turn. This week's market was a moderate rebound supported by micro-level liquidity, with broad-based ETFs seeing increased net inflows by volume and pulse-style net buying in the afternoon of October 9, pointing to market stabilization operations. Externally, the U.S.-Iran negotiation window has reopened, and China-EU trade frictions have shown substantive easing, reducing geopolitical risks in the short term; however, the 10Y U.S. Treasury yield remains at a high of 5.2%-5.3%, the Fed's September minutes were hawkish, and a pause in rate hikes in October is the baseline scenario, with rising term premiums making interest rate judgments more difficult. Industrially, the AI boom has not experienced systemic deterioration, and capital is further concentrating in leaders with the strongest earnings and cash flow; combined with the third-quarter earnings window, allocation criteria should shift from long-term potential to current-period earnings realization. In the short term, priority should still be given to areas where third-quarter earnings are expected to grow strongly or improve, such as the AI industry chain, resource products, mid-to-high-end manufacturing, pharmaceuticals, securities, and textile manufacturing.