In August, the U.S. stock market entered a consolidation phase following previous gains, as investors awaited further guidance from upcoming economic data and monetary policy decisions. We anticipate that interest rate cuts will commence in September. Given the resilience of the U.S. economy, this round of rate cuts is more likely to be a preemptive measure, which should have a positive impact on U.S. equities. Corporates continue to increase investments in AI, which has begun contributing positively to revenue growth, while also maintaining profit margins through efficiency improvements and workforce reductions. Although valuations remain elevated, we expect them to gradually normalize over time.

In contrast, the Chinese market outperformed the U.S. market in August, driven by two main factors: first, policies aimed at reducing internal competition and boosting domestic demand have shifted market expectations toward more optimistic growth prospects for 2026; second, an improved liquidity environment, with both state capital and private funds flowing into equities. Meanwhile, notable progress has been made in China's AI chip sector, and major internet companies increased CAPEX during Q2. Domestic computing power infrastructure and AI applications are expected to accelerate further in the second half of the year and into next year.

We will continue to prioritize AI computing power and applications as the core focus of our portfolio allocation.