汇丰-中国策略追踪：AI叙事受审视-需再平衡-China Strategy Tracker AI narrative under scrutiny–time to rebalance-20261021

HSBCGlobalInvestmentResearch

21October2026EquityResearchReport

ChinaStrategyTracker

Alnarrativeunderscrutiny-timetorebalance

◆MutedmarketturnoversuggestsbetterreturnsindefensivesectorsandpressureontheAl-heavyinfotechsector..

◆...furthercatalystsandrecoveryindailyturnovertoabove

RMB2trnneededfortheAltradetobounceback

◆10stocks,fourthemes:Al,high-qualitydividends,

beneficiariesofthesixnetworks,andbiotechgoingglobal

Defensivesectorsoutperform.AsA-sharedailyturnovertrendslowerto

cRMB1.5trn,marketriskappetitehasdiminishedanddefensivesectorshavebeenoutperformingtheoverallmarket.Inour4Q26outlook(seeChinaEquityStrateqv-4Q26outlook:Realitycheck,13October2026),weconcludeddefensivesectorslikefinancialsandhealthcareshowmoreresilienceamidsluggishmarketturnover,

whereasasustainedcomebackintheAl-heavyinfotechsectornormallymaterialiseswhenturnoverisaboveRMB2.0trn.Recentmarketmovementsvalidateourview,

andtheslightbeatinSeptembereconomicdata(retailsalesup1.1%y-0-y,andFAly-o-ydeclinenarrowedto7.2%)alsolentsupporttonon-techsectorssuchas

consumersandfinancials.FortheAltrade,weretainapositivelong-termview.Thatsaid,alistofnegatives(e.g.,Anthropic'sIPOvaluationmarkdown,CPOparadigmswitch,andEliceGroup'sIPOdebutsell-off)weighonshort-termsentiment.Furthercatalystsandarecoveryinmarketturnoverarethekeyfactorstowatch.

Datahighlights:1)SinceSeptember,marginfinancingaccountshavehadnetoutflowsofRMB178.6bn,ofwhichtheITsectorcontributedRMB90.1bn.2)WeeklyAltoken

usageonOpenRouterroseto164trnintheweekending16October,up20%vs

September'saverage,withChinesemodelsaccountingfor82%ofthetopninelarge

languagemodels’(LLMs)tokenusage.3)Globalsemisalesgrew144%y-0-yinAugust,whileTaiwan'soutsourcedsemiconductorassemblyandtest(OSAT)saleswereup

42%y-o-yinSeptember,bothacceleratingfrompriorones.4)DRAMandNANDflashwaferpriceshaveincreased12%and9%respectivelysinceSeptember.5)Secondaryhomepricesintier-1citiesrose0.2%m-0-minSeptember,theseventhconsecutivesequentialincreaseandacceleratingfromthe0.1%m-0-mgrowthinAugust.

Tightergloballiquidity:ThelatestUSinflationnumbers(CPlup3.7%y-0-yin

September)suggestmoreratehikesmaybeneededtobringinflationbacktothe

Fed'stargetrange(seeUSCPI(Sep):Smallupsidesurprise,RyanWang,14

October2026).WhileFederalFundFutures(FFF)implynoratehikeinOctober,theypointtothree25bphikesbyend-2027,whichcouldkeepgloballiquiditytightand

hindertherotationfromDMtoEM.

10stocks,fourinvestmentthemesbasedonouranalysts'bottom-upanalysis:1)AI:NauraTech,ShengyiTech,andKingdee;2)high-qualitydividends:Midea,BankofChengduandGuangdongExpressway;3)beneficiariesofthesix

networks:NariTechandSieyuanElectric;and4)biotechgoingglobal:WuxiBioandHansohPharma.

EquityStrategy

China

JeffreyXie*(Reg.No.S1700523100002)Analyst,ChinaEquityStrategyResearch

jeffrey.p.xie@

+861057952361

HSBCQianhaiSecuritiesLimited

NealChen*,PhD(Reg.No.S1700524120001)Analyst,ChinaEquityStrategyResearch

HSBCQianhaiSecuritiesLimitedneal.m.chen@

+862150662066

StevenSun*,CFA(Reg.No.S1700517110003)

HeadofResearch,HSBCQianhaiSecuritiesLimited

HSBCQianhaiSecuritiesLimitedstevensun@

+8675588983158

LydiaLi*,CFA(Reg.No.S1700525040002)Analyst,ChinaEquityStrategyResearch

HSBCQianhaiSecuritiesLimitedlydia.j.y.li@

+862150662022

*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnofregistered/qualifiedpursuanttoFINRAregulations.

Lessbull,morebite

The25heditionoftheEMSentimentSurvey

Disclosures&Disclaimer

ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit

Issuerofreport:HSBCQianhaiSecuritiesLimited

ViewHSBCQianhaiSecuritiesat:

2

https://www

EquityStrategy●China

21October2026

Contents

Indextargets,sectorallocations,

stockideas,andsectorviews3

Marketfocus5

Macrofocus7

Liquidityfocus8

Sectors:Growthsectors10

Sectors:Valuesectors12

Globalmarkets14

Sino-USlinks15

Valuationandrisks16

Disclosureappendix18

Disclaimer21

https://www.

EquityStrategy●China

21October2026

3

Indextargets,sectorallocations,stockideas,andsectorviews

Exhibit1.HSBCQianhaiend-2026eindextargets

SHCOMPCSI300SZCOMP

Dividendyield(%)3.02.82.2

Indexlevel3,716.34,170.611,802.5

EPSgrowthYR1(2026e)25.3%16.3%43.4%

EPSgrowthYR2(2027e)12.4%18.3%31.9%

Growthinstage210.0%11.0%13.0%

Numberofyearsofexcessgrowth101010

Perpetualgrowthrate(%)3.73.43.9

COE(%)9.009.009.00

Payoutratio(%)39.838.441.9

Fairvalue4,1094,92414,878

Undervalued/overvaluedvsfairvalue-10%-15%-21%

HSBCQianhai’send-2026etargets

4,100

4,800

14,500

TargetimpliedforwardPE(x)

14.7

15.5

23.2

Indexupside

10.3%

15.1%

22.9%

Note:Indexupsidecalculatedbasedonindexlevelsasof16October2026.

Source:Bloombergconsensusestimates,HSBCQianhaiSecuritiesestimates

Exhibit2.Sectorallocations

Sector

Benchmarkweight

Sectorweighting

Growthvsaverage(2027e)

3Mearningsrevision(2027e)

3MPEre-rating (2027e)

Investorsentiment

2026y-t-dperformance

InfoTech

22.5%

Overweight

Higher

Positive

Downward

Negative

+0.8%

Healthcare

6.0%

Overweight

Lower

Positive

Downward

Negative

-8.0%

Materials

11.8%

Neutral

Higher

Positive

Downward

Negative

-12.4%

Utilities

3.9%

Neutral

Lower

Negative

Upward

Negative

+3.3%

CommSvs

2.4%

Neutral

Lower

Negative

Upward

Positive

-14.3%

Energy

5.6%

Neutral

Lower

Positive

Upward

Positive

+14.6%

Financials

17.4%

Neutral

Lower

Positive

Upward

Positive

-5.9%

ConsStap

5.3%

Neutral

Higher

Negative

Upward

Positive

-12.3%

Industrials

17.8%

Underweight

Higher

Positive

Downward

Negative

-18.7%

ConsDisc

6.4%

Underweight

Higher

Negative

Upward

Negative

-20.8%

RealEstate

0.9%

Underweight

Lower

Negative

Upward

Positive

-14.4%

Note:Dataupdatedto16October2026.

Source:Wind,Windconsensusestimates,HSBCQianhaiSecuritiesestimates

Exhibit3.HSBCQianhaiSecurities’keystockideas

Theme

Ticker

Company

Industry

Rating

TP

Currprice

Upside

Mcap

3MADT

PE

(x)

EPSg

(%)

PB

(x)

ROE

(%)

DY

(%)

Analyst*

LC

LC

USDbn

USDm

2027e

2027e

2027e

2027e

2027e

AI

002371CH

600183CH

NAURA

Electronics

Buy

1031.90

191.50

593.63

74%

64.6

912.3

44.3

39.4

8.1

20.0

0.2

CaraSu

SYTECH

Electronics

Buy

114.60

67%

41.6

1370.2

25.1

47.2

14.4

59.9

3.4

CaraSu

268HK

KINGDEEINT'L

Computer

Buy

16.00

8.37

91%

4.4

56.8

36.5

76.8

3.2

8.3

0.1

YiranLiu

Highdividend

000333CH

601838CH

000429CH

MIDEAGROUP

HomeApp

BanksTransportation

Buy

Buy

Buy

97.00

24.40

84.60

19.09

15%

28%

96.1

12.1

347.1

57.5

13.3

5.6

21.4

4.5

2.5

0.8

19.7

14.0

5.8

5.5

LiQuan

BANKOFCHENGDU

AngelSun

GDEXPRESSWAY

15.50

13.66

13%

4.0

18.7

18.1

-0.6

2.4

13.3

3.9

WilliamSun

“Six

networks”

600406CH

002028CH

NARI-TECH

ElecEquip

Buy

36.20

22.73

59%

27.3

167.0

17.4

14.7

3.0

17.7

3.4

CoreyChanDunWang

SIEYUAN

ElecEquip

Buy

266.00

118.03

125%

13.8

251.3

16.3

38.8

3.9

26.3

1.1

Biotechgoingglobal

2269HK

WUXIBIO

Healthcare

Buy

64.60

48.20

34%

25.3

215.8

21.6

18.8

3.3

14.0

0.0

LindaShu

3692HK

HANSOHPHARMA

Healthcare

Buy

49.50

31.74

56%

24.5

44.1

23.6

2.0

4.3

16.9

1.7

LindaShu

Note:Pricedasof16October2026.*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc.andnotregistered/qualifiedpursuanttoFINRAregulations.

Source:Wind,Bloomberg,HSBCQianhaiSecuritiesestimates

https://www

EquityStrategy●China

21October2026

4

Exhibit4.Keysectorviews

Sector

Keyviews

Links

MostliquidstocksoverL1M

InfoTech

(Overweight)

Opticaltransceivers:PotentialFCCrestrictions’near-termvaluation

pressureislikelytooutweighearningsimpact;ablanketrestrictionwouldfacesignificantpracticalconstraints.

Software:DeepSeek’slatestmodelsignificantlyimprovesagenticcodingwithunchangedpricing,implyingfurthertokendeflation;intense

competitionincreasesLLMmonetisationuncertainty;applicationsstandtobenefitfromlowertokencost.

ChinaTechnology-Opticaltransceivers:AssessingpotentialFCCpolicyimplications,BingyiZheng,5August2026

ChinaSoftware-Deepseekv4.1flashupdated

versionunderscorescontinuedtokendeflationtrend,YiranLiu,19October2026

Innolight(300308CH)Eoptolink(300502CH)CXMT(688825CH)

Healthcare

(Overweight)

ls:2H26-2027eoutlook:stabilisedChinagrowth,acceleratingglobalfootprint.

CXOs:Wefavourcompanieswithstronggrowthmomentumbackedbynewproducts.

AIDD:Weexpectamorevolatile4Q26,whileChina’sfasterexecutionandasset-backedmonetisationoffersadifferentiatedinvestment

opportunity.

ChinaPharmaceutical-Chinabusinessunder

pressure;globalpipelineprogressturnsnext

narrativefocus,LindaShu,28September2026

ChinaCXOs-Howtopositionin2027:Convictionbuywithstronggrowthmomentumbackedbynewproducts,LindaShu,21September2026

ChinaHealthcare-AIDDandAI4Supdate:MarketvolatilityandChinaopportunity,LindaShu,16

October2026

WuxiApptec(603259CH)HPGC(600664CH)

HengruiPharma(600276CH)

Materials

(Neutral)

Chemicals:Weexpecttherefiningvaluechaintoleadsequentialgrowthin3Q,butrecordfreightcostscouldweighon4Qearnings;iftheMiddleEastconflictends,wewouldpreferphosphateproducersinto2027.

Copper:Solidproduction,costcontrolandclearershareholderreturnstonarrowvaluationdiscountvsglobalpeers.

ChinaChemicals-3Q26preview:Refiningtolead3Qgrowth,freightpressuretorisein4Q,YiRu,13

October2026

ChinaCopperSector-Pricebreakoutandsolid

executiontodrivevaluationcatch-up,StephenWang,15September2026

ChinaJushi(600176CH)ZijinMining(601899CH)Sinocera(300285CH)

Utilities

(Neutral)

Powerutilities:Powerpricescouldreboundwiththerallyincoalpricesandboostpowerutilityearningsin2027e.

ChinaPowerUtilities-Turningalotmorebullish,DanielYang,9October2026

YangtzePower(600900CH)MDElectric(000993CH)

HDLNEnergy(600396CH)

CommSvs

(Neutral)

Telcos:Weexpectlessintensemobilecompetitionin2H26andone-offscouldsupportamodestrecoveryinnetprofits.

Gaming:Recentcompanyvisitssuggestthatgamingcompaniesareconstructiveaboutoverseasmarkets−particularlySLGandcasualgames−andthatAIadoptionisdeepeningin-gamedevelopment.

Video:AImodelupgradesshouldhelpboostAIvideocontent;AIwillsignificantlyreducecontentcostsandincreasegrossmargins.

ChinaTelcos-Modestrecoveryin2H26,PiyushChoudhary,23September2026

ChinaGaming-Companyvisittakeaways,JingHan,

18September2026

ChinaVideoIndustry-IndustryrevolutiononAIvideobreakthroughs,JingHan,15October2026

Bluefocus(300058CH)Mango(300413CH)

Kunlun(300418CH)

Energy

(Neutral)

Oil&gas:HSBCGlobalInvestmentResearchraisedBrentforecasttoUSD90/bfor2026andUSD85/bfor2027,onHormuzdisruptionsbeingthenewnormal.

Coal:SuspendedproductioninShanxihaslastedlongerthanexpected;outputcontractionlikelytolingerinto3Q.

Oilmarkets-RaisingforecastsondisruptedHormuznewnormal,KimFustier,8September2026

Chinacoal-Stringentproductioninspectionstolingerthrough3Q26,DanielYang,14August2026

JerehGroup(002353CH)

PetroChina(601857CH)

ChinaShenhua(601088CH)

Financials

(Neutral)

Banks:Capitalinjectionsplanannouncedon6September2026could

help:1)improvebanks’assetgrowth;2)accelerateearningsgrowth;and3)increasebanks’dividendpayoutratio.

ChinaBanks-Capitalinjection:Secondbatchconfirmed,GaryLam,7September2026

PingAnIns(601318CH)Eastmoney(300059CH)CMB(600036CH)

ConsStap

(Neutral)

Baijiu:Sell-throughwasdownbyc10%duringtheMid-autumnFestivalandNationalDayholiday,whichindicatesthatanindustryrecoverymayneedmoretime.Marketconsolidationcontinues.

Dairy:Rawmilkpricesarerising,easingtheindustrypricecompetition,whichispositivefordairyproductleaders.

Snacks:Wearepositiveonthesnackretailersectorwhichcouldcontinuetoseehighgrowth.

Hogindustry:Weremainconstructiveonthehogpriceupcyclein2027andpreferplayerswithleadingcostadvantages.

ChinaConsumer-Goldenweekholiday:Largelyinline,KathySong,8October2026

ChinaConsumerTracker-Septemberretailsalesshowedmarginalimprovement,KathySong,20October2026

China’shogindustry-CapacityreductionacceleratedinAugust,YihuiSha,17September2026

Moutai(600519CH)

JinjianCereals(600127CH)LHG(600186CH)

Industrials

(Underweight)

Powerequipment:Themarketsizeforsolid-statetransformers(SST),solid-statecircuitbreakers(SSCB)andbatterybackupunits(BBU),willreachRMB84.9bn(240%2027-30CAGR),RMB14.9bn(211%2027-30CAGR)andRMB9.1bn(11%2026-30CAGR),respectively,inAIDCsby2030.

Humanoidrobots:Basedontheexistingpricequotesofkey

components,theBOMofawheeledhumanoidrobotwithgripperscouldbeaslowascRMB100k/unit,whichimpliesapaybackperiodofjusttwoyears.

Batteryequipment:Newordersforlithiumbatteryequipmentcouldreach622-809GWhduring2026-28e.

ChinaPowerEquipment-Bettervisibilityfor800VDCbenefitssupplychainplayers,CoreyChan,29

September2026

ChinaIndustrials-Triptakeaways:Humanoidrobotprogressaheadoftrack,CoreyChan,11September2026

ChinaBatteryEquipment-Istheboomover?,CoreyChan,5August2026

CATL(300750CH)

CSSC(600150CH)DHI(002487CH)

ConsDisc

(Underweight)

Auto:HSBCGlobalInvestmentResearchcut2026ePVdemandgrowthforecastto-20%(from-13%),andEVsto-10%(from-6%)duetoweakdomesticdemand.

Homeappliances:Theindustrywasunderpressurein2Q26,whileoverseassaleswereresilient.Weexpectindustryearningsgrowthtobottomoutin3Q26e.

ChinaEVTracker-Demandrecoveryremainselusive,YuqianDing,20October2026

ChinaHomeAppliances-1H26resultspreview:Earningsbottomingout,LiQuan,16July2026

JAC(600418CH)Midea(000333CH)BYD(002594CH)

RealEstate

(Underweight)

Property:Broadinventorywilldeclineatan11-13%CAGRin2025-30e,andthesupplysqueezecoincidingwithimprovedresaleliquiditycould

supportprimarysell-throughandpricing.

ChinaRealEstate-Backfromholidays,backtofundamentals,MichelleKwok,8October2026

VANKE(000002CH)5I5J(000560CH)

PolyDevelps(600048CH)

Source:Wind,HSBCGlobalInvestmentResearch,HSBCQianhaiSecuritiesestimates

https://www

EquityStrategy●China

21October2026

5

Marketfocus

Exhibit5.Keyeventstowatch

Corporateearnings

Date

Event

Keydatatowatch

Consensus(USDbn)

Implications

21Oct

MetaFY3Q26earning

CY27capex

202

Overseascomputevaluechain

28Oct

AlphabetFY3Q26earnings

CY27capex

313

Overseascomputevaluechain

28Oct

MicrosoftFY1Q27earnings

CY27capex

206

Overseascomputevaluechain

29Oct

AmazonFY3Q26earnings

CY27capex

285

Overseascomputevaluechain

Macrodatarelease

Date

Event

Marketexpectations

Previous

Implications

29Oct

FOMCRateDecision

3.75%-4.00%

3.75%-4.00%

Rates,liquidityandvaluation

06Nov

USnonfarmpayrollsforOct

N.A

29,000

Rates,liquidityandvaluation

10Nov

USCPIforOct

N.A

+0.6%m-o-m;+3.7%y-o-y

Rates,liquidityandvaluation

10Nov

UScoreCPIforOct

N.A

+0.3%m-o-m;+2.6%y-o-y

Rates,liquidityandvaluation

Source:Companydata,BBGconsensusestimates,HSBCQianhaiSecurities

Exhibit6.Valuationlevelsofbroad-basedindicesandindustries

Index

PE-TTMPercentileMedianHistoricalrange

PB-LFPercentileMedianHistoricalrange

AllA-shares

20.0x56.819.3x[11.5,58.2]

1.7x30.31.9x[1.3,7.4]

SSE50

10.8x47.910.9x[6.9,48.5]

1.2x32.21.4x[1.0,7.2]

CSI100

11.4x47.611.6x[7.1,50.1]

1.2x21.21.4x[1.0,7.3]

CSI300

13.0x46.313.2x[8.0,50.7]

1.4x20.11.6x[1.1,7.5]

CSI500

29.2x46.630.0x[15.6,92.8]

2.1x37.52.3x[1.4,5.9]

Industry

PE-TTMPercentileMedianHistoricalrange

PB-LFPercentileMedianHistoricalrange

BasicChem

23.7x40.925.5x[12.5,76.6]

2.0x23.52.4x[1.4,6.8]

Steel

29.4x71.321.1x[4.7,153.7]

1.0x20.51.2x[0.7,4.7]

NFMetals

15.5x8.134.3x[12.5,140.3]

2.6x35.93.0x[1.4,13.7]

BlgMaterials

34.4x73.724.9x[10.0,124.6]

1.4x11.82.0x[0.9,6.7]

Construction

14.2x50.314.1x[7.1,92.8]

0.7x1.61.5x[0.6,7.0]

ElecEquip

25.4x13.437.6x[13.6,100.0]

2.4x23.73.3x[1.5,9.8]

Machinery

37.0x72.829.7x[11.8,136.1]

2.8x56.72.6x[1.4,8.9]

Defense

55.5x38.960.4x[17.8,245.8]

3.0x38.23.3x[1.2,12.7]

Auto

23.8x57.721.8x[7.9,70.0]

2.0x32.42.3x[1.1,6.2]

HomeApp

14.6x29.316.6x[10.6,89.5]

2.2x23.02.7x[1.0,5.3]

Textile

24.2x38.726.0x[13.1,98.3]

1.7x18.11.9x[1.1,6.3]

LightMfg

32.2x54.230.9x[14.0,113.3]

1.7x23.62.1x[1.1,6.4]

Retail

31.8x53.630.2x[13.1,96.2]

1.6x16.62.2x[1.2,8.6]

Agriculture

79.2x87.742.5x[15.0,157.0]

2.4x14.03.3x[1.1,8.1]

F&B

21.1x15.830.5x[16.5,101.0]

3.4x9.55.2x[2.0,12.7]

SocialSvs

39.9x30.547.0x[17.4,209.7]

2.4x6.43.6x[1.6,10.5]

Healthcare

31.4x26.636.7x[20.3,99.4]

2.5x12.64.0x[1.6,8.4]

Utilities

21.6x45.622.5x[13.8,74.4]

1.6x19.21.9x[1.3,5.3]

Transportation

16.7x38.418.2x[10.0,58.6]

1.2x1.91.6x[1.1,6.6]

RealEstate

13.3x29.817.5x[6.8,120.0]

0.8x9.61.8x[0.5,10.1]

Electronics

50.5x55.547.7x[20.3,118.1]

5.2x94.33.4x[1.3,9.0]

Computer

56.9x59.252.9x[18.6,159.7]

3.3x29.63.9x[1.9,15.8]

Media

34.6x23.244.1x[19.5,141.8]

2.6x25.23.2x[1.6,11.5]

Communications

41.5x62.938.1x[9.2,96.3]

4.8x94.82.5x[0.7,8.5]

Banks

6.5x40.56.8x[4.3,65.3]

0.5x15.51.0x[0.4,8.1]

Non-bankFin

8.8x0.017.6x[8.8,174.0]

1.0x2.92.0x[0.9,14.3]

Conglomerates

73.7x83.847.9x[20.7,176.7]

2.5x48.12.5x[0.9,7.9]

Coal

18.8x67.513.1x[5.7,67.5]

1.6x51.81.5x[0.8,11.1]

Oil&Gas

16.6x39.818.6x[9.0,46.8]

1.4x24.51.8x[1.1,8.1]

EnvProt

23.4x28.430.0x[14.7,89.5]

1.5x7.82.5x[1.1,8.3]

BeautyCare

28.2x11.438.2x[11.8,164.1]

2.4x14.13.7x[0.8,7.2]

Note:Dataupdatedto16October2026.GreyfontimpliesPEmultiplesofcyclicalsectors,whichmaybelessrelevant.Historicalrangedatesbacktothestartof2005.

Source:Wind,HSBCQianhaiSecurities

https://www.

EquityStrategy●China

21October2026

6

Exhibit7.China’smarketistradingata21.8%discountvsEM(10.1xforwardPEforFTSEChinavs13.0xforwardPEforFTSEEM)

80%

60%

40%

20%

0%

-20%

-40%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

PEpremium/discount:ChinavsEMAverage

+/-1SD

Note:Dataupdatedto16October2026.

Source:FTSERussell,FactSet,HSBCQianhaiSecurities

Exhibit8.DuringL1M,electronicsand

communicationssawthemostupward

earningsrevisions;steelandconstructionwerereviseddownthemost

Electronics

+3.6+1.8

+1.6

+0.9+0.8

Communications Coal BanksEnvProt

…

-0.9

-1.0

-1.3-3.0

-4.4

LightMfg AutoBeautyCareConstructionSteel

-6.0-4.0-2.00.0+2.0+4.0+6.0

2027eearningsrevisioninL1M(%)

Note:Dataupdatedto16October2026.

Source:Wind,HSBCQianhaiSecurities

Exhibit9.Consensus2027eearningsforITandhealthcarehaveseenupwardrevisionsof11.8%and1.8%,respectively,since2H26

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

InfoTech,+11.8%

Healthcare,+1.8%

CSI800,+1.5%

ConsStap,-5.3%

01-Jul

06-Jul

11-Jul

16-Jul

21-Jul

26-Jul

31-Jul

05-Aug

10-Aug

15-Aug

20-Aug

25-Aug

30-Aug

04-Sep

09-Sep

14-Sep

19-Sep

24-Sep

29-Sep

04-Oct

09-Oct

14-Oct

ConsDisc,-5.9%

CSI800

Healthcare

Energy

Financials

MaterialsInfoTech

IndustrialsTelecom

ConsDiscUtilities

ConsStap

Note:Dataupdatedto16October2026.Therealestatesector,whoseestimated2027enetlossnarrowedfrom-RMB6.7bnto-RMB4.7bn,isexcludedfromthechart.

Source:Windconsensus,HSBCQianhaiSecurities

Exhibit10.Consensus2027eearningsforSTAR50haveseenupwardrevisionsof9.7%,whileHSTECHsawdownwardrevisionsof5.7%since2H26

+10.0%

+8.0%

+6.0%

+4.0%

+2.0%

0.0%

-2.0%

-4.0%

-6.0%

STAR50,+9.7%

ChiNextIndex,+9.2%

CSI500,+2.3%

CSI300,+1.3%

SSEDI,+1.1%

HSTECH,-5.7%

Jul-26Aug-26Sep-26Oct-26

CSI300CSI500ChiNextIndexSSEDISTAR50HSTECH

Note:Dataupdatedto16October2026.

Source:Windconsensus,HSBCQianhaiSecurities

https://www.

EquityStrategy●China

21October2026

7

Macrofocus

Exhibit11.InSeptember2026,major

economicindicatorssuggestmoderateupsidesurprises…

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

Growth(y-o-y)

GDPRetailsalesIPFAI

(3Q26)(Sep)(Sep)(9M26)

ActualHSBCeConsensus

Note:IPisinrealterms,whileretailsalesandFAIareinnominalterms.

Source:Bloombergconsensus,HSBCestimates,HSBCQianhaiSecurities

Exhibit13.…they-o-ygrowthofM1

(+3.2%),M2(+7.1%),totalsocialfinancing(+7.2%)alldecelerated…

6.0

4.0

2.0

0.0

-2.0

-4.0

-6.0

16.0

12.0

8.0

4.0

0.0

-4.0

-8.0

202120222023202420252026

M2(%y-o-y)-TSF(%y-o-y)

M2(%y-o-y,RHS)

M1(%y-o-y,RHS)

TSF(%y-o-y,RHS)Source:Wind,HSBCQianhaiSecurities

Exhibit15.…CPIroseto0.9%y-o-yand

PPIpickedupto5.0%y-o-y,duetohigherenergyprices

15.0

10.0

5.0

0.0

-5.0

-10.0

202120222023202420252026CPI(%y-o-y)PPI(%y-o-y)

Source:Wind,HSBCQianhaiSecurities

Exhibit12.…andwithinFAI,

manufacturingandinfrainvestmentsawnarrowery-o-ydecline…

GrowthofFAIanditsconstituents(y-o-y)

20.0%

10.0%

0.0%

-10.0%

-20.0%

-30.0%

Feb-25

Mar-25

Apr-25

May-25

Jun-25

Jul-25

Aug-25

Sep-25

Oct-25

Nov-25

Dec-25

Jan-26

Feb-26

Mar-26

Apr-26

May-26

Jun-26

Jul-26

Aug-26

Sep-26

-40.0%

OverallFAIManufacturing

PropertyInfra(incl.utilities)

Source:Wind,HSBCQianhaiSecurities

Exhibit14.…PMIofmanufacturingedgedupto50.1,whilethatofhigh-tech

manufacturingedgeddownto52.5…

54.0

53.0

52.0

51.0

50.0

49.0

48.0

Jan-25

Feb-25

Mar-25

Apr-25

May-25

Jun-2