Market volatility intensifies as investors adopt a dual-pronged strategy! Last week, over RMB 1.2 billion flowed into food and beverage ETFs, while the Huaxia Gold ETF attracted inflows for the 10th consecutive session.

Gelonghui, October 20 – Following the holiday, market volatility has significantly increased. Amid substantial profit-taking, technology stocks have experienced a notable pullback. Meanwhile, international gold prices surged for five consecutive days last week to reach a record high. The sustained net inflow of funds into ETFs and margin trading indicates strong investor willingness to accumulate positions on dips, with a focus on two themes: 'safe haven' and 'value for money.' Last week, the ETF market saw a net inflow exceeding RMB 60 billion, with the top three indices attracting the most inflows being SGE Gold 9999, Hang Seng Tech, and CSI Bank. For example, the lowest-cost gold ETF, Huaxia Gold ETF, has seen continuous net subscriptions for 10 days, with inflows surpassing RMB 1.4 billion. The 800 Consumption and细分食品 indices also witnessed rare inflows of RMB 1.2 billion last week, such as the Food & Beverage ETF (515170), which recorded a net inflow of RMB 1.21 billion. This dual-pronged capital deployment stems from one side the heightened concerns over escalating trade frictions driving safe-haven demand, alongside renewed expectations of an October rate cut by the Federal Reserve. On the other hand, investors are focusing on 'value for money.' Currently, among the 31 SW first-level industry indices, nine sectors still have a price-to-earnings ratio (TTM) below the 50th percentile of the past decade. The sector with the lowest valuation is the food and beverage industry; for instance, the latest PE of the细分食品 index stands at 20.52x, sitting at the 7.06th historical percentile over the past decade. Whether the fourth quarter can achieve a rotation between 'technology-led cyclical sectors' and 'low-priced cyclical sectors' depends on whether there will be further policy catalysts. Discussions on the content of the '15th Five-Year Plan' began on October 20, with markets closely watching policy announcements aimed at boosting domestic demand. According to China Merchants Securities, in the medium to long term, 2026 could be a year of 'economic resonance' between China and the US, coinciding with a critical domestic policy window. Against the backdrop of rising PPI, the allocation value of pro-cyclical sectors is becoming increasingly prominent. If adopting a 'barbell strategy' in the current market environment, potential investment targets include: leading liquor stocks represented by the Food & Beverage ETF (515170), which tracks the细分食品 index and focuses on segments like baijiu, dairy products, and condiments. Its major holdings encompass industry leaders such as Moutai, Wuliangye Yibin, Luzhou Laojiao, Shanxi Xinghuacun Fen Wine, and Yanghe Distillery ('Maowu Luzhenyang'). Additionally, the lowest-cost Gold ETF offering T+0 trading is the Huaxia Gold ETF (518850).