**Congestion Eases as Market Opportunities Broaden**
Following the elevated volatility observed since July, the trading concentration of the top 5% stocks has declined markedly from its peak of 49.8%, dropping further last week to 43.2%. This level is now approaching the medium-term observation range of 40%–42% that we previously outlined. The vulnerability in shareholding structure caused by extreme trading concentration is gradually improving, with capital flowing toward a wider array of stock tiers. The effectiveness of various strategies—including small-cap, earnings gap, high free cash flow, and high-dividend approaches—has all shown signs of recovery.
**U.S. Treasury Yields Climb Again, Yet Equity Sensitivity to Rate Shocks Is Diminishing**
This week's release of U.S. inflation data triggered a rapid spike in Treasury yields, but equities experienced only initial pressure before recovering, displaying a clear "dip-then-recover" pattern. We believe equity pricing factors have become increasingly diversified. While higher rates continue to constrain valuation expansion for technology names, earnings growth, AI industry momentum, risk appetite, and market speculation around potential "TACO" dynamics collectively reduce sensitivity to any single rate variable. For A-shares, domestic trading congestion has already begun easing, enhancing the microstructure's resilience against external shocks. Overly negative interpretations of overseas rate fluctuations are therefore not warranted at this juncture.