On October 24th, Li Xiaoxing, the "top stream" fund manager, released the third quarter report of the largest managed fund, Yinhua Xinjia Two-Year Holding Fund. As of the end of the third quarter, the top ten heavy holdings of the Yinhua Xinjia Two-Year Holding Fund were: CATL (300750.SZ), Huichuan Technology (300124.SZ), AVIC Xifei (000768.SZ), East Money Information (300059.SZ), Northern Huachuang (002371.SZ), AVIC Shenyang Aircraft (600760.SH), China Hongqiao (01378), Aerospace Electrical Appliance (002025.SZ), AVIC Opto-electronics (002179.SZ), and Huahai Qingke (688120.SH). In the third quarter, Li Xiaoxing made new investments in CATL, China Hongqiao, AVIC Opto-electronics, and Huahai Qingke, and increased holdings in Huichuan Technology. It is worth mentioning that after a two and a half year interval, CATL once again became the largest heavy holding of the fund. Li Xiaoxing stated in the report that the new energy industry, from the perspective of the basic fundamentals of the industry chain, is currently operating at the bottom, with the lithium battery industry chain still digesting the rapid expansion of production capacity in the past. Some prices in certain segments have rebounded slightly after hitting bottom, but overall they are still operating at low profitability. The uncertainty in overseas demand for the new energy industry is gradually improving. In terms of the capital market in the quarter, the adjustment time and magnitude of the new energy sector are large enough, and the industry still maintains a certain growth rate, which will be more optimistic in terms of stock prices. From a stock selection perspective, the focus is on leading companies with significant cost advantages. CATL returns to the top holding position Specifically, as of the end of the third quarter, the equity investment position of the Yinhua Xinjia Two-Year Holding Fund reached 94.54%. The size of the fund at the end of the third quarter was 5.875 billion yuan, a slight increase of 527 million yuan from the end of the second quarter. As of the end of the third quarter, the top ten heavy holdings of the Yinhua Xinjia Two-Year Holding Fund were: CATL, Huichuan Technology, AVIC Xifei, East Money Information, Northern Huachuang, AVIC Shenyang Aircraft, China Hongqiao, Aerospace Electrical Appliance, AVIC Opto-electronics, and Huahai Qingke. In terms of heavy holdings, compared to the end of the second quarter, there have been changes in the top ten heavy holdings of the Yinhua Xinjia Two-Year Holding Fund in the third quarter report. It is worth mentioning that after a two and a half year interval, CATL has once again become the largest heavy holding of the fund. On the other hand, Wuliangye, Shanxi Fenjiu, Kingsoft Office, and HAIG Aircraft have exited the top ten holdings; AVIC Xifei and East Money Information have reduced their holdings by 6.41% and 16.03% respectively. In terms of net asset value, as of the end of the third quarter, the net asset value per unit of the Yinhua Xinjia Two-Year Holding Fund was 0.6412 yuan; the net asset value growth rate in the third quarter was 14.75%, and the performance benchmark return rate was 13.51%. The market may enter a relatively stable upward phase, and the uncertainty of overseas demand for new energy is gradually improving. In the third quarter report, Li Xiaoxing pointed out that sharp rises and falls in the market are not the norm, and the significant rise in the market at the end of the third quarter mostly reflects the recovery of the overly pessimistic sentiment in the market. The market may enter a phase of relatively stable upward movement, and high-quality companies with reasonable valuations in line with the national development direction may significantly outperform the market, with a relative preference for the direction of new productive forces. The wealth effect brought by the market's rise will also restore consumer confidence, and some undervalued consumer stocks may perform well. New productive forces and high-level technological self-sufficiency are key areas of focus in the technology sector. With the strong support of national policies, areas of focus include domestic semiconductor substitution, domestic information technology, and national defense technology. As the global semiconductor inventory replenishment cycle comes to an end, avoiding pro-cyclical investments, structurally favoring domestic substitution, and investing in wafer manufacturing, semiconductor equipment, and domestic AI chip opportunities driven by advanced process breakthroughs. In terms of computers, the direction of domestic information technology is expected to restart, and there is optimism for leading companies in CPU, operating system, database, and other aspects; also focusing on the progress of the AI industry. The execution of the "Fourteenth Five-Year Plan" in the national defense industry has entered a crucial sprint period, and industry demand is expected to transition from weak recovery to strong recovery by the end of the year. Looking towards the 100th anniversary goal of the founding of the army in 2027, it guides the next two years of strong defense equipment construction, and the defense industry can expect high industry prosperity in the next two years. The industry has significant horizontal comparative advantages, with a positive outlook on the extended mainframe factory chain, central state-owned enterprise core supporting manufacturers, missile industry chain experiencing a turnaround, as well as new trending directions such as unmanned systems, satellite internet, and domestic large aircraft. Li Xiaoxing believes that the new energy industry, from the perspective of the basic fundamentals of the industry chain, is currently operating at the bottom, with the lithium battery industry chain still digesting the rapid expansion of production capacity in the past. Some prices in certain segments have rebounded slightly after hitting bottom, but overall they are still operating at low profitability. The prices of the photovoltaic and wind power industry chains are also at the bottom and face a situation of declining growth rate similar to new energy vehicles, as well as supply surplus, but there may not be a significant downward space in the future, and certain segments may stabilize and rebound. The uncertainty in overseas demand for the new energy industry is gradually improving. In terms of the capital market in the quarter, the adjustment time and magnitude of the new energy sector are significant, and the industry still maintains a certain growth rate, which will be more optimistic in terms of stock prices. From a stock selection perspective, the focus is on leading companies with significant cost advantages. Consumption in the fourth quarter is still in the expected improvement after the policy shift, with the market feedback being very positive recently, the market bottom area is likely established, and there is relatively optimistic sentiment about the sustainability of the market. Although there is still pressure on the short-term fundamentals of consumption, it is difficult to find support from the fundamentals at present. However, after a series of policies from the central bank, finance, and other areas, expectations for housing prices and income will gradually improve. Market confidence in the economy in the medium to long-term will also gradually strengthen. Currently, the valuations of most consumer stocks are still reasonably low, and there are opportunities for valuation recovery in food and beverage, home appliances, and automotive sectors. Li Xiaoxing mentioned that the overall market valuation percentile is on the lower side, and the fundamentals of many companies are gradually entering an upward trajectory, which bodes well for the long-term perspective of the secondary market.