Dissecting the Market: Differences in internal structure led to significant divergence between the two markets today. A-shares weakened again as tech stocks plunged without sustained support from large capital, while Hong Kong stocks gapped up at the open, then filled the gap and stabilized, closing up 0.29%.

The Middle East remains in a state of conflict, with airports in Riyadh and Dammam, Saudi Arabia, successively attacked, and Yemen's Houthi armed forces claiming responsibility. Trump stated that the U.S. "may" join strikes against the Houthis because Americans were bombed, though it is highly unlikely to take action. Trump is shifting tactics: reaching an agreement with Putin under which Russia will release millions of tons of diesel to the global market. Russia will partially lift its diesel export ban starting Saturday under the bilateral agreement, allowing 500,000 tons of diesel into the international market. Trump demanded that Ukraine not attack Russian refineries, saying Russia and Ukraine have entered an "energy ceasefire," agreed by both sides. Crude oil briefly turned negative; Iran warned that severe punishment for violating ships would no longer be limited to the Strait of Hormuz. Oil, which had fallen nearly 2% intraday, reversed into gains and closed at a more than one-week high. This is a major shift. Europe and Ukraine were left stunned—after fighting for so long, the U.S. and Russia have actually joined forces, rendering all the sanctions meaningless. The core demands behind the U.S. move are first to lower oil prices and inflation, then to court Russia and ease tensions with Iran, and more importantly, to gradually extricate itself from the Russia-Ukraine conflict. Trump even suggested Ukraine change its president, which is exactly what this means. How Europe responds next is crucial—whether to continue swallowing its pride or seek a way out is worth watching. Hong Kong capital attitudes are relatively positive.

Over the weekend, there appeared to be positive signals. The CSRC held a symposium: developing and strengthening patient capital, promoting increased dividend payouts and buybacks, and optimizing the issuance and listing system. The CSRC significantly revised public fund regulations: the threshold for establishing equity funds is proposed to be lowered to 50 million yuan. China's Ministry of Finance: promptly plan and introduce pragmatic and effective incremental policies, intensify efforts to expand domestic demand and optimize supply. The Ministry of Finance arranged to use 550 billion yuan of local government debt carryover quota. However, at this juncture, what matters most is whether large capital continues to enter the market. Last Friday was fairly obvious; today it was left to its own devices, making A-shares difficult to sustain and causing continued weakness. Only bank stocks remained firm. The core logic behind the sustained strength of the banking sector is the dual drive of "dividend defense + fundamental revaluation." As of now, 21 A-share banks have disclosed their 2026 interim dividend plans, with total proposed payouts exceeding 260 billion yuan, of which 15 banks increased their dividend ratios compared to last year. The cash dividend ratio of the six major banks was uniformly raised from 30% to 31%, with total proposed payouts exceeding 220 billion yuan, accounting for over 80%. Agricultural Bank of China (01288), Bank of China (03988), and China CITIC Bank (00998) rose over 2%, continuing to hit historic highs. Also on the dividend track is Orient Overseas International (00316) with solid performance. According to operating data as of October 9, 2026, third-quarter shipping revenue was $3.285 billion, up 45.1% year-on-year; total loaded volume increased 9%, load factor improved 4.2%, average revenue per TEU increased 33.1%, and first three-quarter shipping revenue grew 18.9%, with shares up over 4%. Expressway operator Jiangsu Expressway (00177) rose over 3%.

Regarding the sharp decline in tech stocks, prominent private fund manager Liang Hong explained the reason: certain insurance asset management giants bought heavily into tech stocks at high levels in July but significantly reduced positions and cut losses in late September. Such large institutions chasing highs and dumping lows is truly puzzling. Currently, it appears the insurance capital sell-off has not yet cleared out; otherwise, there would not have been rumors of window guidance last Friday. Hong Kong tech stocks are also a mess, with Cambridge Technology (06166) falling over 11% and Changfei (06869) dropping over 7%. Additionally, there is another negative factor: the U.S. ITC launched a Section 337 investigation, involving multiple companies, including Chinese companies such as Luxshare Precision (02475) and Foxconn Industrial Internet (601138.SH). Everyone knows these are corporate actions with limited impact, but the two still fell over 2% and 7% respectively. According to the latest research report from Epoch AI, as of September 2026, the combined AI-related revenue of six companies—Alibaba, ByteDance, Zhipu, Moonshot AI, DeepSeek, and MiniMax—was approximately 10% of the combined total of OpenAI and Anthropic. Extremely low payment rates and relatively low subscription prices drag down C-end gross margins, while open-source weights weaken API pricing power. Compared to pure model companies, large firms are more easily able to achieve indirect monetization through cloud services and advertising. This shows that the strength of U.S. tech stocks is indeed backed by profitability. Relatively speaking, this profitable AI software direction is still viable, with Kingdee International (00268) and Kingsoft (03888) both rising over 3%.

A glimmer of hope has appeared in China-Europe relations. The consultation results: no new tariffs will be initiated, export quotas will be allowed to grow upward from the 2025 baseline, and commitments to non-discrimination and WTO compliance will be made, while China reserves the right to appeal. The Ministry of Commerce: the hybrid vehicle trade arrangement will not specifically target Chinese products, and China's quota will not be lower than any other EU import source. Two departments: starting April 1, 2027, the VAT export tax rebate rate for new energy vehicles will be reduced from 13% to 9%, objectively weakening the EU's evidence for "excessive government subsidies" allegations. It appears like a negative, but in reality, the 4-percentage-point loss can be fully passed through, because overseas markets do not engage in price wars and consumers are less price-sensitive than domestically. Leapmotor (09863), relying on the Stellantis Spanish factory, will see its B10 model roll off the production line locally this week, marking Leapmotor's formal transition from product export to localized manufacturing. It is expected that 9,000 Leapmotor B10 vehicles will be produced in 2026, covering sales demand in Spain, France, Italy, and other regions. The Leapmotor Lafa5 is planned to be introduced to the Zaragoza factory in Q1 2027. In the future, localized production in overseas markets will account for over 40% of Leapmotor's overseas output, with shares up over 4% today. Another company, Seres (09927), is deepening strategic cooperation with CATL (03750). AITO vehicles are planned to enter the European market in 2027, and WVTA EU whole vehicle type approval work has been fully launched. AITO cumulative deliveries have exceeded 1.2 million units. One more point: the auto industry recently faced the "quick-build car" controversy, with rumors that an ultra-luxury SUV will be made by Seres and that Zunjie is abandoning its SUV plans. Today Seres surged over 15%.

Sentiment in wind power is also improving. Last Friday, a rumor titled "EU launches anti-dumping and anti-subsidy investigation into Chinese wind turbine towers" triggered a sharp sell-off in wind power. After verification from multiple sources, this rumor is highly likely to be false information pieced together from misread old measures. Related companies have clearly been oversold. Leader Dajin Heavy Industry (01081) rebounded over 3% today. Among other names, MOMENTA-W (06880) signed a global strategic cooperation agreement with Dongfeng Peugeot Citroën Automobile Technology, jointly developing an advanced intelligent driving system based on the R7 world model, to be deployed on all-new mass-production models of Peugeot and Jeep for global markets. Additionally, SAIC Volkswagen announced a comprehensive upgrade of ID.ERA9X intelligent driving assistance, with the company's R7 world model officially open for OTA push, with shares up over 5%. ByteDance is replicating its Hongguo free short drama model overseas, with its independent short drama app PineDrama surpassing 100 million downloads in less than a year, reaching 7 million daily active users, making strong breakthroughs in Indonesia and Brazil through TikTok's traffic advantage and local original content. The free model has proven its ability to acquire users and viewing time, but advertising monetization has not fully caught up. WeChat's "Green Bubble Short Drama" launched at the end of September and released a 2026 Q4 Green Bubble Short Drama joint distribution incentive campaign. This once again stimulated China Literature (00772) to rise nearly 3%. The newly included stock mentioned last Friday, Yunji (02670), has seen its robots complete 19.785 million service instances cumulatively, up 25.2% year-on-year; cumulative travel distance of 1.689 million kilometers, equivalent to approximately 42 laps around the Earth's equator. In scenarios with highly concentrated holiday guest traffic, robots undertook high-frequency repetitive tasks such as item delivery, distribution, and cleaning, cumulatively saving cooperative hotels approximately 1.877 million work hours, effectively alleviating the common pressure of "tight labor and difficult scheduling" during holidays. Shares surged over 18% again. The mentioned PP latest price on October 12 was 10,566.67 yuan/ton, up 6.38% in the past 5 days and 17.49% in 60 days. Guoen Technology (02768) rose another 4%.

Sector Focus

Power Grid: During the "15th Five-Year Plan" period, China will invest over 5 trillion yuan to build a new-type power grid. By 2030, a new-type power grid will be initially completed, capable of efficiently supporting new energy consumption of over 2.8 billion kilowatts. UBS identified the next main theme for AI trading: power, data centers, and critical resources. Key Hong Kong stock names: Wasion Holdings (03393), Harbin Electric (01133), Weichai Power (02338).

Stock Spotlight

Dajin Heavy Industry (01081): Offshore wind sentiment improving, European order proportion continuously rising. Recently, Dajin Heavy Industry's self-designed, fully self-built KING series No. 3 large deck transport vessel—KING THREE—was officially delivered at the Dajin Heavy Industry Panjin base. The company formally signed a design contract with renowned Norwegian ship design firm Ulstein for a new-generation ULSTEIN HX122 with U-STERN® offshore foundation installation vessel. In the first half of 2026, revenue was 3.253 billion yuan, up 14.48% year-on-year; net profit attributable to parent was 601 million yuan, up 9.89% year-on-year, the best half-year profit in the same period in history. Commentary: European offshore wind sentiment continues to improve. The company is the leading European exporter among domestic offshore wind manufacturers. Concentrated European offshore wind deliveries brought an earnings explosion, with first-half net profit hitting a new same-period high. Gross margin rose significantly, with wind power equipment gross margin at 35.90%, up 10.37 percentage points year-on-year, driven by the continuously rising proportion of high-margin European orders, with overall gross margin at 37.53%. Cash flow improved substantially, with operating cash flow net of 1.533 billion yuan, up 544.06% year-on-year. Core highlights: 1) Overseas order gross margins far exceed those of domestic tower peers. 2) Full-chain closed loop (manufacturing + owned transport vessels + European mother ports), controllable costs, strong delivery competitiveness. 3) Shipbuilding second growth curve materialized, with tens of billions in ship orders locking in future years' revenue, opening a new track. 4) Cash flow significantly repaired, with high-margin overseas business proportion continuously rising. The company has a full order book. Offshore wind equipment orders: overseas offshore wind orders concentrated in Europe (UK, Germany, France), large long-cycle orders, with deliveries mainly concentrated in 2026–2027. Institutions estimate approximately 250,000 tons of offshore wind deliveries in 2026. Shipbuilding orders are the company's second growth curve, with cumulative ship orders of 24 vessels totaling approximately 12 billion yuan, with delivery cycles from 2027–2030. Vessel types include 3+1 bulk carriers with a Greek shipowner totaling 2.1 billion yuan, and 4 bulk carriers with a Norwegian shipowner worth approximately 2 billion yuan. The shipbuilding business order volume is substantial, but delivery cycles are long, with earnings gradually materializing after 2027. The company self-builds KING/Emperor series large-component transport vessels, no longer renting ships at high prices, controlling ocean transport costs and ensuring delivery timeliness. It has established 4 European mother ports in Germany, Spain, and Denmark, covering the North Sea and Baltic Sea, providing overseas terminal assembly, warehousing and maintenance, and one-stop delivery solutions for overseas customers. The company's European offshore wind order gross margins are significantly higher than domestic projects, with overseas revenue accounting for 82.25%. The company benefits from the major trend of European deep and distant offshore wind; it simultaneously enters special vessels and other high-value-added ship types, not limited to ordinary bulk carriers. The shipbuilding segment has entered international top-tier shipowners, opening a second growth curve. The company's European offshore wind order expectations and shipbuilding progress boost confidence.