China Merchants Strategy: Multiple A-share indicators have approached historical bottom ranges.

CMS Strategy research report believes that after the recent rapid market decline, multiple A-share indicators have approached historical bottom ranges: trading volume has visibly contracted, and turnover rate has fallen to levels close to historical major bottoms; medium- and long-term funds represented by ETFs are accelerating entry, and efforts to stabilize the market are intensifying; the institutionalization of the market-stabilization mechanism is strengthening, and the policy bottom is gradually being consolidated; the market bottom often leads the fundamental bottom, and current earnings and PPI are still in an improving trend, which remains a positive driver for A-shares. On external pressure, leverage in the Japanese and Korean markets has clearly deleveraged, and overseas contagion risk is controllable; however, US equity AI pricing is shifting from "input expansion" to "capital return verification," and combined with high US Treasury yields and rising oil prices compressing room for easing, high interest rates still constrain valuations. Considering that after ETF volume expansion and support, the probability of historical market rebounds is relatively high, the short term may be dominated by volatile bottoming and structural opportunities. It is recommended to maintain a balanced allocation and focus on important nodes in the next two weeks. The core approach for industry allocation over the next 3-6 months lies in: during the high-interest-rate phase, focus on advantages on the numerator side, and secondly examine whether the chip structure is healthy; when rates turn lower, prioritize the breadth of technology; and wait for subsequent domestic policy follow-through before further spreading toward domestic demand.