Chinese equities traded lower with a choppy bias today. The Shanghai Composite Index slipped 0.39% to 3,936.52 points, the Shenzhen Component Index fell 0.64%, the ChiNext Index declined 0.60%, while the STAR Composite Index edged up 0.29%. Total turnover on the two major exchanges reached 1.76 trillion yuan. By sector, technology-related segments such as artificial intelligence, chip design, integrated circuits, and software led the gains, while oil and gold-related stocks posted the steepest losses. Risk appetite was broadly neutral during the session, with 1,891 stocks advancing across the market versus 3,564 declining. In terms of style, small-caps outperformed large-caps, growth beat value, and the dual-creation boards showed notable divergence. Overall, market sentiment remained balanced today.

The bond market has continued its narrow-range consolidation this week, with the 10-year government bond yield fluctuating slightly within the 1.67%-1.68% band without establishing a directional move. With the quarter-end period approaching, the central bank has stepped up liquidity injections through open market operations, keeping funding conditions broadly stable. While the fundamental picture shows soft volumes but firmer prices, the liquidity environment remains steady yet positioned at relatively elevated levels, leaving bond market bulls and bears largely in equilibrium. We believe narrow-range consolidation remains the medium-term theme, and maintaining a wait-and-see stance could be prudent while observing the market's directional choice. For investors, focusing on medium-duration, stable instruments may be worthwhile, such as the Treasury Bond ETF (511010) and the 10-Year Treasury Bond ETF (511260). In the current phase, where yields lack a clear directional driver, coupon income and capital gains contributions are relatively more certain, and while the short-term win-rate environment is neutral, a configuration mindset should take precedence over a trading mindset.

Turning to fundamentals, the manufacturing PMI came in at 49.8 in August, up 0.6 percentage points from July, though still below the expansion-contraction line. This data point temporarily caps the downside room for interest rates, but it has not yet disproven the core issue of persistently weak financing demand from traditional industries. On the price front, August PPI rose 3.8% year-on-year, higher than July's reading. On the liquidity and policy front, the DR007 center remains stable near 1.4%, which we view as neither clearly bullish nor bearish for the bond market at this stage. Policy expectations are still divided, with some brokerages suggesting rate cuts or RRR reductions may not materialize this year, while others argue that a rate cut is necessary as an incremental policy tool. In our view, the extremely low volatility of the 10-year bond itself reflects the market's underlying indecision regarding direction. With bulls and bears relatively balanced at present, we maintain a neutral short-term win-rate outlook and expect narrow-range consolidation over the medium term. We recommend monitoring the Treasury Bond ETF (511010) and the 10-Year Treasury Bond ETF (511260).

The technology sector has shown a notable rebound over the past week. The pullback since July was mainly driven by deleveraging of margin funds and reduced crowding in AI trades, compounded by market skepticism over whether AI growth can justify elevated valuations. After the earlier correction, valuations across the TMT sector have come down significantly. Currently, the AI theme is transitioning from the breakdown of extreme concentration trades toward growth diffusion, making it a viable window to position in segments with real earnings support, attractive valuation-versus-quality profiles, and clear competitive landscapes. Two types of targets are worth attention: the Chip ETF (512760), which covers the broad market, and higher-beta dual-creation products such as the STAR Market Chip Design (589260), the STAR Market Artificial Intelligence (589110), and the ChiNext Artificial Intelligence (159388).

On the memory front, the supply shortage persists, and the primary demand driver has clearly shifted toward AI computing power. TrendForce projects that by 2027, memory demand will continue to be led by AI applications. In DRAM, HBM continues to crowd out capacity, while AI server demand remains robust, sustaining tight supply conditions and firm pricing trends. Against this backdrop, global server shipment growth in 2027 could expand further from the 17% level expected in 2026. Combined with rising per-unit HBM capacity and the introduction of new specifications such as SOCAMM, which boosts per-server memory capacity, these factors will collectively support sustained high bit growth in DRAM demand through 2027. In terms of industry revenue, as AI drives substantial growth in the memory market, TrendForce estimates that memory industry output will reach a new peak of 1.28 trillion USD in 2027, up 44% year-over-year. On the supply side, capacity additions are coming online slowly, as the expansion plans disclosed by major manufacturers indicate a pattern of new capacity being gradually released between 2027 and 2030. Domestic memory makers represent a variable, but their pace is broadly similar, with ChangXin Memory Technologies and YMTC both expected to begin production in 2027.

In summary, we believe the AI industry trend remains unchanged, and the current rebound is likely driven primarily by valuation recovery and growth diffusion. Investors may consider tracking the Chip ETF (512760), STAR Market Chip Design (589260), STAR Market Artificial Intelligence (589110), and ChiNext Artificial Intelligence (159388).

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