Risk/Reward for Pre-Holiday Positioning Improves

We believe the A-share market is likely in a choppy recovery phase. The earlier correction has released much of the valuation and trading risk, and historically the market tends to recover after a pre-holiday pullback, so the risk/reward of holding positions through the holiday has improved. However, with US employment, PMI and other data likely to be released during China's National Day holiday (1-7 October 2026), we suggest positioning should tilt toward areas with high earnings certainty and fully digested valuations: 1) within tech, prioritize optical communications, PCB, and select domestic AI compute leaders where valuations have corrected sufficiently and earnings visibility is high, while reducing exposure to names facing earnings downward revisions and pure-theme plays;