Morning News

# Market Overview

Source: Wall Street CN

Against the backdrop of a continued vacuum in U.S. macroeconomic data, investors grew concerned about bubble risks, and the demand for profit-taking intensified. U.S. stocks declined after the opening bell; however, in the late trading session, Microsoft predicted that the shortage in data center supplies would persist until 2026, which helped U.S. stocks rebound from their lows. Nevertheless, all three major U.S. stock indices still closed lower.

The "Magnificent Seven" U.S. tech giants saw divergent performances: Meta rose by over 2%, NVIDIA hit another all-time high, while Apple fell by more than 1.5%. Investors sold off cyclical sectors and shifted to defensive sectors. Chinese concept stock indices dropped by over 2%.

U.S. Treasuries also faced selling pressure, with yields on major tenors generally rising by 1-2 basis points.

The U.S. Dollar Index climbed 0.72%, breaking through the 99 level and reaching a new high in more than two months. Bitcoin once plummeted by approximately 3.3% from its daily high. Ethereum fluctuated downward by 3.7%. Affected by the strong U.S. dollar and the Israel-Hamas peace talks, precious metals turned lower during the trading session: gold fell by 1.70%, dropping below the $4,000 mark; silver, after historically breaking through $51, pulled back by over 5.6% and then rebounded.

U.S. crude oil fell by more than 1.3% intraday.

During the Asian trading session, the Shanghai Composite Index achieved a "good start" to the fourth quarter, breaking through the 3,900-point mark for the first time in a decade. Shanghai Gold and Shanghai Copper surged by over 4%. The semiconductor industry chain retraced in the afternoon. Hong Kong stocks closed lower, with pharmaceutical stocks declining.

# Key News

1. China's Ministry of Commerce issued four consecutive announcements regarding export controls on rare earths, lithium batteries, superhard materials, and other products.

2. The U.S. government shutdown crisis remains unresolved: the Senate has rejected appropriations bills seven times; Donald Trump threatened to cut Democratic Party projects; and Republican leaders denied plans to take a "drastic move".

3. Report: The U.S. Bureau of Labor Statistics is prepared to release the September CPI data during the government shutdown.

4. U.S. Treasury Secretary Yellen has interviewed 11 candidates for the Federal Reserve Chair position, with 4 of them being the most promising. Federal Reserve Governor Barr emphasized inflation risks and stated that interest rate cuts need to be cautious. The Wall Street Journal noted that this highlights divisions within the Federal Reserve. John Williams, the "third-in-command" of the Federal Reserve, expressed support for further interest rate cuts this year and stated that he does not believe the economy is on the brink of a recession.

5. U.S. Treasury Secretary Yellen: The deficit-to-GDP ratio has fallen to the 5% range, and it is expected to drop to the 3% range in a few years.

6. The U.S. provided a $20 billion "financial lifeline" to Argentina. Treasury Secretary Yellen announced that the U.S. Treasury Department would intervene in Argentina's foreign exchange market, leading to a rise in the Argentine peso.

7. Gold and silver futures turned lower during the session. Earlier, spot silver had historically surged above $51, reaching its highest level since the Hunt brothers' short squeeze. Analysis: The premium of Shanghai Gold turned from positive to negative, and Western ETF funds have driven this round of gold's all-time high.

8. Microsoft predicts that the shortage in data center supplies will last until 2026.

9. NVIDIA, Oracle, and AMD are just the beginning; Sam Altman stated that OpenAI will have more major deals.

10. Intel made its debut of the new 18A process AI PC chips, and its production plants in the U.S. have fully commenced production.

11. Sustained AI demand drives growth! TSMC's Q3 revenue exceeded expectations, with a year-on-year increase of 30%.

12. HSBC plans to privatize Hang Seng Bank for $13.6 billion, offering a premium of over 30%.

# Market Closing Quotes

## U.S. and European Stock Markets

- S&P 500 Index: Closed down 0.28% at 6,735.11 points.

- Dow Jones Industrial Average: Closed down 0.52% at 46,358.42 points.

- Nasdaq Composite Index: Closed down 0.08% at 23,024.626 points.

- European STOXX 600 Index: Closed down 0.43% at 571.31 points.

## A-Share Market

- Shanghai Composite Index: Closed at 3,933.97 points, up 1.32%.

- Shenzhen Component Index: Closed at 13,725.56 points, up 1.47%.

- ChiNext Index: Closed at 3,261.82 points, up 0.73%.

## Bond Market

- U.S. 10-Year Treasury Yield: Rose 2.13 basis points to 4.1384%.

- U.S. 2-Year Treasury Yield: Rose 0.84 basis points to 3.5885%.

## Commodities

- WTI Crude Oil Futures (November contract): Closed down 1.66% at $61.51 per barrel.

- Brent Crude Oil Futures (December contract): Closed down 1.55% at $65.22 per barrel.

- COMEX Gold Futures: Closed down 1.96% at $3,990.90 per ounce.

# Details of Key News

## Global Highlights

China's Ministry of Commerce issued four consecutive announcements regarding export controls on rare earths, lithium batteries, superhard materials, and other products. On October 9, the Ministry of Commerce, together with the General Administration of Customs, released an announcement on implementing export control measures for items related to superhard materials, rare earth equipment and raw auxiliary materials, five types of medium and heavy rare earths including holmium, lithium batteries, and artificial graphite anode materials. These measures will be formally implemented on November 8.

The U.S. government shutdown crisis remains intractable: The Senate has rejected appropriations bills seven times; Donald Trump threatened to cut Democratic Party projects; and Republican leaders denied plans to take a "drastic move". Trump stated that the projects to be cut would be "ones very popular with Democrats but not supported by Republicans" and that the cuts would be "permanent". The Senate Republican leader explicitly denied considering the use of the so-called "nuclear option" — a mechanism that would allow temporary appropriations bills to be approved without meeting the 60-vote threshold — and did not confirm the agenda arrangement for next week. The House of Representatives remains in recess, and the Speaker of the House maintains a "48-hour notice" status but has not committed to resuming the session next week.

Report: The U.S. Bureau of Labor Statistics (BLS) is prepared to release the September CPI data during the government shutdown. Citing an informed U.S. Department of Labor official, media reported that the BLS has recalled some employees to prepare for the release of the key September CPI inflation report. This report is crucial for calculating the amount of U.S. Social Security benefits to be distributed next year. The U.S. September CPI report is likely to miss its original release date of October 15; however, it is still expected to be released before the Federal Reserve's FOMC policy meeting scheduled for October 28-29.

Who will be the next Federal Reserve Chair? Yellen has interviewed 11 candidates, with 4 being the most promising. According to reports, Trump will make a final decision from four top candidates: former Federal Reserve Governor Kevin Warsh, current Governor Christopher Waller, White House Economic Adviser Kevin Hassett, and BlackRock Chief Investment Officer Rick Rieder. Warsh supports Yellen's proposals for central bank reform; Waller has put forward a balance sheet reduction plan; Hassett aligns with Trump's policy positions; and Rieder, as an external candidate, has rich experience.

Federal Reserve Governor Barr emphasized inflation risks and stated that interest rate cuts need to be cautious. The Wall Street Journal noted that this highlights divisions within the Federal Reserve. Barr said the Federal Reserve should proceed cautiously when further adjusting its policy stance, as the pace of price increases remains too fast. The Wall Street Journal commented that Barr's remarks suggest he may be skeptical of the market's widespread expectation that the Federal Reserve will continue to cut interest rates for the remainder of 2025. On the same day, according to the latest research from the Federal Reserve Bank of Dallas, the slowdown in immigration has rebalanced the labor market, and the cooling of employment is not a sign of weakness.

John Williams, the "third-in-command" of the Federal Reserve, expressed support for further interest rate cuts this year and stated that he does not believe the economy is on the brink of a recession. Williams said that if inflation stabilizes around 3% and the unemployment rate rises slightly, he supports further interest rate cuts within this year to prevent a sharp slowdown in the labor market. He believes the U.S. economy is not in a recession, and while inflation risks have eased, vigilance is still necessary. Williams emphasized that monetary policy remains "moderately restrictive" and reaffirmed the Federal Reserve's independent decision-making, stating that all policies will continue to be data-driven.

U.S. Treasury Secretary Yellen: The deficit-to-GDP ratio has fallen to the 5% range, and it is expected to drop to the 3% range in a few years. Yellen recently stated that the U.S. deficit as a percentage of GDP is now in the 5% range, which is lower than the 2024 level; she hopes to reduce the deficit-to-GDP ratio to the 3% range by the end of Trump's second term. Yellen predicted that the U.S. Treasury Department will issue more tax refunds next year.

The U.S. provided a $20 billion "financial lifeline" to Argentina. Treasury Secretary Yellen announced that the U.S. Treasury Department would intervene in Argentina's foreign exchange market, leading to a rise in the Argentine peso. Yellen announced the finalization of a $20 billion currency swap framework and direct purchases of Argentine pesos in the spot market for market intervention. She emphasized that the U.S. will take necessary measures to provide stability to the market and stated that a strong and stable Argentina is in the strategic interests of the U.S. Boosted by this news, Argentine sovereign bonds rose by 4.3 cents, and the Argentine peso closed up 0.7% against the U.S. dollar.

Gold and silver futures turned lower during the session; spot silver retraced after historically surging above $51. Earlier on Thursday, silver prices hit a record high since the Hunt brothers' short squeeze! Silver prices have risen by more than 70% this year, outperforming gold, which has repeatedly set new highs. The sharp rise in silver prices this round has been driven by tight supply in the London market, industrial demand, and safe-haven demand. If the U.S. dollar depreciates, the boost to silver will be greater than that to gold, and at the same time, the rise in gold prices will also drive silver prices higher. However, analysts warned that technical indicators show that gold and silver are severely overbought, and historically, periods of a strong U.S. dollar are often accompanied by a pause in gold's rise or a correction.

Who is driving this round of gold's all-time high? The premium of Shanghai Gold turned from positive to negative, and Western ETF funds are in the lead. The macro team led by Zhou Junzhi from CSC Financial Holdings believes that the new highs in gold since August have been mainly driven by financial investment participants, especially the recovery in ETF fund inflows. Through analysis from three high-frequency tracking dimensions: first, the Western market has reclaimed dominance in ETF inflows, and the pricing focus has shifted from "de-dollarization" to interest rate cut expectations; second, there is a disconnect between the "fast money" positions in COMEX futures and gold prices; third, the premium of Shanghai Gold has turned from positive to negative, reflecting the cooling of investment in non-U.S. regions and the re-emergence of Western funds as the dominant force in global gold investment.

Microsoft predicts that the shortage in data center supplies will last until the first half of 2026, exceeding the previously expected timeframe of the end of 2025. Although Microsoft has launched a historic construction boom, increasing its capacity by more than 2 gigawatts in the past year, the multi-year construction cycle and supply chain bottlenecks still cannot meet the immediate demand. Customers are forced to turn to other cloud service providers or adopt multi-region deployment to cope.

NVIDIA, Oracle, and AMD are just the beginning? Altman: OpenAI will have more major deals. Sam Altman revealed that OpenAI will make more aggressive infrastructure bets in the next few months, aiming to meet the huge demand driven by next-generation AI models. Analysts believe that these deals are centered on a "cross-ownership" model — chip giants obtain OpenAI orders through investments or equity commitments, forming an "AI closed-loop economy".

Intel made its debut of the new 18A process AI PC chips, and its production plants in the U.S. have fully commenced production. The 18A process is Intel's first 2nm-level node developed and manufactured in the U.S., achieving a 15% improvement in performance per watt and a 30% increase in chip density compared to the previous generation. Intel's 3rd Gen Core Ultra processors based on the Panther Lake architecture are expected to start shipping by the end of this year. Intel's Fab 52 factory in Arizona is prepared to begin mass production of 18A process chips later this year.

Sustained AI demand drives growth! TSMC's Q3 revenue exceeded expectations, with a year-on-year increase of 30%. TSMC's sales in September reached NT$330.98 billion, up 31.4% year-on-year and down 1.4% month-on-month; its revenue in the third quarter increased by 30% year-on-year to NT$989.9 billion, exceeding the average analyst expectation of NT$962.8 billion.

HSBC plans to privatize Hang Seng Bank for $13.6 billion, offering a premium of over 30%. After the announcement was released, the stock price of HSBC Holdings in Hong Kong plummeted by more than 6%, while Hang Seng Bank soared by over 26%, on track to set the largest single-day gain in its history.

## Domestic Macroeconomics

Li Qiang met with Kim Jong-un, General Secretary of the Workers' Party of Korea and Chairman of the State Affairs Commission. According to Xinhua News Agency, on the afternoon of October 9 (local time), Li Qiang met with Kim Jong-un in Pyongyang. Li Qiang pointed out that China is willing to strengthen high-level exchanges and strategic communication with the DPRK, further carry forward the traditional friendship, deepen practical cooperation, enhance coordination and collaboration in international and regional affairs, strengthen multilateral cooperation, firmly safeguard and practice multilateralism, and promote the international order to develop in a more fair and reasonable direction.

## Domestic Companies

Bank of America raised the target price of Seres; orders for the new M7 model exceeded expectations, with Q3 profit expected to reach 3 billion yuan. Bank of America Merrill Lynch believes that the new AITO M7 received over 70,000 non-refundable orders within two weeks of its launch, with a conversion rate of 30%, showing strong order performance. The brand strength and product portfolio of AITO will continue to drive profit expansion. It is expected that Seres' net profit in the third quarter will reach 3 billion yuan, with a net profit of 24,000 yuan per vehicle. Bank of America significantly raised Seres' target price to 190 yuan and maintained a "Buy" rating.

## Overseas Macroeconomics

Trump will undergo a medical examination on Friday; the White House called it a "routine" check-up. Previously, bruises on his right hand and swelling in his ankle had sparked speculation. The 79-year-old Trump will undergo a medical examination this Friday, which the White House described as a "routine" check. This medical examination comes only six months after the last one and coincides with the appearance of swelling in his ankle and bruises on his right hand. The White House previously explained that the swelling was caused by venous insufficiency, and the bruises were side effects of frequent handshakes and aspirin use.

The U.S. may exempt generic drugs from drug tariffs, including common drugs such as antibiotics, which account for 90% of the daily drug consumption of Americans. Spokespersons for the White House and the U.S. Department of Commerce have confirmed that the U.S. government is not actively discussing imposing tariffs on generic drugs under the framework of the Section 232 national security investigation. Although the possibility of imposing tariffs on generic drugs has decreased, reports indicate that the U.S. government is considering whether to issue an executive order to provide federal grants or loans to domestic manufacturers of key generic drugs.

Amid widespread bearish sentiment, the U.S. dollar is staging an "unexpected rebound". The simultaneous weakness of the Japanese yen and the euro, combined with remarks from Federal Reserve officials refuting expectations of aggressive interest rate cuts, is providing multiple supports for the U.S. dollar. Currently, the U.S. dollar against the Japanese yen is setting the longest winning streak since the beginning of this year, and the market's short positions on the euro have reached the highest level in a month.

The best-performing U.S. stock sector this year is not AI or Bitcoin concept stocks, but gold mines! Gold prices have soared to $4,000 per ounce, triggering an epic rally in gold mining stocks. The S&P Global Gold Miners Index has surged by 129% this year, far outperforming the technology and crypto sectors, and the stock prices of giants such as Newmont and Barrick have doubled. The profit leverage effect brought by rising gold prices has made mining companies cash-rich, but investors are wary of a repeat of the 2011 bubble.

Goldman Sachs' macro expert: No signs of a shift to risk aversion in U.S. stocks; the "universe" of asset buyers is expanding. Schiavone analyzed that currently, major global stock indices still stand firmly above all key moving averages, and there are no clear signals or catalysts in the market that require a shift to risk aversion. Potential buyers are still queuing up to enter the market, and this gradual expansion of buyers constitutes a continuous positive factor for the market. He stated that the current strategy is to "continue to chase risks until the market trend changes".

AI is not just the hottest stock market concept; it has also become a major story in the U.S. bond market. The debt scale of AI-related companies has surpassed that of the traditional banking industry, making AI-related companies the largest sector in the investment-grade bond index. Analysts warned that if the AI paradigm shifts, the burst of the AI credit bubble will have a more severe impact than a stock market crash.

Will the U.S. adopt an "escape velocity strategy" before the midterm elections? Bank of America said the Federal Reserve will rescue the housing market and suggested trading with "large-scale leverage". Bank of America stated that on the eve of the midterm elections, the U.S. may adopt an "escape velocity strategy" to stimulate economic growth, and the Federal Reserve may implement more aggressive interest rate cut policies to unfreeze the real estate market. If more aggressive interest rate cuts are adopted (with the federal funds rate falling to 1-2% and the 10-year Treasury yield dropping to 3.25%), it will benefit small-cap value stocks, homebuilders, long-term Treasury bonds, emerging market bonds, and gold.

## Overseas Companies

Despite being invitation-only, Sora surpassed 1 million downloads in less than five days, faster than ChatGPT when it had no restrictions.

Google Cloud launched the enterprise version of its AI platform Gemini, competing with Microsoft and OpenAI for the enterprise AI market. Gemini Enterprise integrates multiple existing Google technologies into a unified platform, allowing employees to interact with enterprise data, search for information, and use AI agents to perform tasks. The platform costs $30 per month and aims to provide easy-to-use AI tools for employees in various departments.

Amazon's new enterprise AI assistant integrates multiple App services to assist workers, meeting all needs that ChatGPT cannot fulfill! Quick Suite costs $20 per month and integrates chatbot and AI agent functions, enabling users to analyze sales data, generate reports, or summarize online content. This tool can integrate multiple Apps such as Slack, Salesforce, Microsoft file storage, and Adobe creative tools, allowing employees to directly extract and use data without switching between various Apps and enterprise systems.

CoreWeave CEO refuted the "AI closed loop" theory: Major companies are investing heavily in infrastructure; there is no such loop — it's all about demand. Michael Intrator, CEO of CoreWeave, stated that tech giants such as Meta, Microsoft, Amazon, and Google are heavily purchasing infrastructure to serve customers, and this is a "fundamental infrastructure construction" driven by real demand. During such large-scale infrastructure construction, "it is not uncommon to see partnerships, as people try to provide infrastructure services to consumers", and this dynamic also occurs in other markets.

Brain-Computer Interface (BCI) — "symbiosis" between humans and AI. As AI becomes more like humans, humans are also becoming more like machines. Morgan Stanley stated that products such as Neuralink have enabled paralyzed patients to control computers with their minds and are committed to helping blind people regain their sight. This potential market worth $400 billion is starting from the medical field and moving towards a broader future of human-machine symbiosis. However, along with the rapid advancement of technology, there are also ethical challenges such as data security and social equity.

The most popular "Ethereum Treasury", BitMine, has been shorted; its business model was attacked by Kerrisdale. As the largest public holder of Ethereum, BitMine was shorted by the short-selling firm Kerrisdale Capital on Wednesday. Kerrisdale stated that BitMine's "buying coins and issuing additional shares" model has failed, with its valuation premium dropping from 2x to 1.2x, and frequent stock issuances have led to investor fatigue. BitMine's stock price fell first and then rose on Tuesday, fluctuating sharply during the session before closing up 1.35%. Despite a cumulative surge of over 170x this year, its stock price is still half of its July high.

Betting on the liver disease treatment track, Novo Nordisk spent $5.2 billion to acquire Akero. Novo Nordisk announced the acquisition of U.S. biotech company Akero Therapeutics for up to $5.2 billion to obtain its potential drug efruxifermin for the treatment of metabolic-associated steatohepatitis (MASH). This transaction is the first major acquisition since the new CEO took office. Akero's stock price rose by more than 19%, while Novo Nordisk's stock price fell by nearly 2%.

"Disappointing" earnings outlook triggered sell-offs; Ferrari's stock price plummeted by 16%, the largest drop since 2016. Ferrari raised its 2025 net income forecast from the previous "over 7 billion euros" to "at least 7.1 billion euros" and set a 2030 net income target of approximately 9 billion euros. Analysts generally believe that this long-term guidance is too conservative. At the same time, Ferrari also announced an adjustment to its electrification strategy, drastically lowering its target for the proportion of electric vehicle sales by 2030 from 40% to 20%.

The operating profit of Uniqlo's parent company increased by 13% in fiscal year 2025, setting a record for four consecutive years, and it raised its profit guidance for fiscal year 2026. Fast Retailing Co., Ltd. set a profit record for the fourth consecutive year, with an operating profit of 564.27 billion yen in fiscal year 2025, a year-on-year increase of 13%, exceeding market expectations. International business has become the main growth driver, with the Chinese market contributing the most. The company raised its fiscal year 2026 forecast to 610 billion yen. It is expected that the weak Japanese yen will significantly boost overseas revenue and drive domestic duty-free consumption.

# Industries/Concepts

1. **Superhard Materials** | According to CCTV News, on October 9, the Ministry of Commerce, together with the General Administration of Customs, issued an announcement on implementing export control measures for items related to superhard materials, rare earth equipment and raw auxiliary materials, five types of medium and heavy rare earths (including holmium), lithium batteries, and artificial graphite anode materials. The measures will be formally implemented on November 8.

Commentary: Research institutions believe that the production-sales ratio of China's superhard materials in various sub-sectors currently remains at a relatively high level, reflecting a basically balanced supply-demand relationship in the industry and strong market absorption capacity. Among them, the production-sales ratio of diamond wires and micro-powder products is close to 100%, indicating strong demand and efficient capacity utilization in mature application scenarios such as photovoltaics and grinding. The production-sales ratio of PCD (Polycrystalline Diamond), PCBN (Polycrystalline Cubic Boron Nitride) cutting tools, and superhard grinding wheels also remains at around 95%, demonstrating stable penetration in traditional manufacturing and precision processing. The production-sales ratio of CVD (Chemical Vapor Deposition) diamond films is 75%, but it has great growth potential; the market size is expected to exceed 5 billion yuan by 2030, driving the industry to upgrade to high-value-added fields.

2. **Semiconductors** | According to Shanghai Securities News, on October 9, TSMC released its performance data, showing that the company's sales in September reached NT$330.98 billion, a year-on-year increase of 31.4% and a month-on-month decrease of 1.4%. TSMC's revenue in the third quarter increased by 30% year-on-year to NT$989.9 billion, exceeding the average analyst expectation of NT$962.8 billion. The cumulative sales volume since the beginning of this year has reached NT$2.76 trillion, a year-on-year increase of 36.4%.

Commentary: Reports point out that TSMC is the preferred chip manufacturer for major AI accelerator designers such as NVIDIA, AMD, and Broadcom. As global tech giants continue to invest billions of dollars in the field of artificial intelligence, the demand for high-end chips has provided strong performance support for TSMC. TSMC executives believe that the large-scale spending of U.S. tech companies on cloud computing capacity building will become an important long-term growth driver for the company, and this trend has driven sustained demand for advanced process chips. Research institutions believe that driven by AI demand, the semiconductor industry may achieve a full recovery in 2025, the industry competition pattern is expected to accelerate the clearance and recovery, and the industry profit cycle and corporate profits are expected to continue to recover.

3. **Humanoid Robots** | According to Securities Times, Yunshen Technology, one of the "Six Dragons of Hangzhou", officially launched the new generation of industrial-grade humanoid robot DR02. The core breakthrough of DR02 lies in its IP66-level (IP protection level is an important criterion for the safety protection of electrical equipment) overall waterproof and dustproof capability, which meets the needs of all-weather outdoor operation scenarios. Yunshen Technology's DR02 humanoid robot adopts a highly anthropomorphic design; its height of 175 cm and arm length of 68 cm are close to the standard body shape of an adult male.

Commentary: Orient Securities believes that humanoid robots are on the eve of mass production, and the prosperity at home and abroad is resonating. Tesla clearly stated the progress of its robot in the Q2 earnings call; Elon Musk said that the prototype of the third-generation humanoid robot Optimus will be completed within 3 months, and production is planned to start in early 2026, with the goal of reaching a monthly output of 100,000 units within the next 5 years. Domestic humanoid robots are developing rapidly, and leading companies such as UBtech, DeepRobotics, and Unitree have obtained orders worth hundreds of millions of yuan. Driven by leading humanoid robot companies at home and abroad, the industry is expected to enter the mass production stage in 2026.

4. **Rare Earths** | According to Securities Times, on October 9, the Ministry of Commerce and the General Administration of Customs announced a decision to implement export controls on some items related to medium and heavy rare earths. This announcement will be formally implemented from November 8, 2025. On the same day, Announcements No. 56 and No. 62 of 2025 were released, imposing export controls on some items related to rare earth equipment and raw auxiliary materials, and rare earth technologies respectively.

Commentary: Reports indicate that in 2024, China's rare earth output accounted for 68.57% of the global total, and its reserves accounted for 39.21%, showing an obvious dominant position in supply, and the global market is highly dependent on China's rare earths. In April this year, China imposed export controls on some rare earth products, leading to a sharp rise in the prices of medium and heavy rare earths overseas and a rapid widening of the price gap between domestic and foreign markets. This round of export control policies has been significantly strengthened, expanding the scope of rare earth export controls to overseas re-export and technology transfer. Even if overseas enterprises obtain mineral ores, they will face difficulties in obtaining smelting and separation technologies and intermediate products containing Chinese components. This helps consolidate China's competitive advantages in the entire industrial chain and further strengthen its global pricing power over rare earths.

5. **Physical AI** | According to IT Home, XPeng Motors will announce a major breakthrough in the field of Physical AI at this year's AI Technology Day, with key progress made in the world simulation capability of the XPeng World Foundation Model. XPeng's AI team has been engaged in the research and development of the Physical AI foundation model for more than a year, reconstructing its methodology in the field of Physical AI starting from the underlying AIInfra. The foundation model under development uses the largest amount of model data in history and is the most advanced large Physical AI model in China. This move will be a key step in overcoming large-scale L4 autonomous driving, enabling the rapid deployment of Turing AI autonomous driving to other countries around the world, and also allowing the technology to be reused in AI-enabled cars and AI robots, which is beneficial to its building of an "AI + Mobility" ecosystem.

Commentary: Securities Times points out that Physical AI aims to enable AI to understand the physical world, with its core being the understanding of friction, inertia, causality, the "permanence" of objects, and the 3D world. It is regarded as a key driver for the development of robots. NVIDIA previously launched Omniverse + Cosmos, which can generate Physical AI data for application in autonomous driving and robotics fields. At present, it has completed industrial Physical AI practice, providing important support for end-side model training. Currently, Physical AI has moved from the conceptual stage to the implementation stage, and there are already practical applications of projects. With the continuous advancement of tech companies such as NVIDIA and XPeng, the commercialization process of Physical AI is accelerating, and the effectiveness of scenario implementation is becoming apparent. Attention can be paid to high-quality companies that have laid out core barriers and made progress.

6. **2D Semiconductors** | According to Shanghai Observer, a research team from Fudan University has deeply integrated the 2D ultrafast flash memory device "PoX (Dawn)" with the mature silicon-based CMOS process, pioneering the development of the world's first 2D-silicon hybrid architecture chip. The relevant results were published in the journal *Nature* and are regarded as "source technology" in China's integrated circuit field, which is expected to subvert the traditional storage architecture and promote the upgrading of data storage in the AI era. In April this year, the team proposed the "PoX" 2D flash memory prototype device, which achieved 400-picosecond ultra-high-speed non-volatile storage—currently the fastest semiconductor charge storage technology—to provide an underlying principle for breaking the predicament of computing power development.

Commentary: China Securities Journal points out that in the face of the global challenge of Moore's Law approaching its physical limit, 2D semiconductors with atomic-level thickness are currently internationally recognized as the key to breaking the impasse. 2D semiconductors are a cutting-edge direction in the current semiconductor technology field; their core advantage lies in atomic-level thickness (composed of a single layer or several layers of atoms), which can break through the physical limit of silicon-based materials and provide a new path for chip development in the post-Moore era. The 2D-silicon hybrid architecture flash memory chip technology is expected to subvert the traditional memory system, allowing general-purpose memory to replace the multi-level hierarchical storage architecture, providing faster and lower-energy data support for cutting-edge fields such as artificial intelligence and big data, and making 2D flash memory the standard storage solution in the AI era.

7. **Hydrogen Energy** | According to Jiemian News, a research team from Tokyo University of Science in Japan released a study showing that they have developed a high-performance solid electrolyte that can reversibly absorb and release a large amount of hydrogen at 90 degrees Celsius. Based on this solid electrolyte, the researchers constructed a magnesium-hydrogen battery using metallic magnesium and hydrogen as electrode active materials. Experiments show that at 90 degrees Celsius, the battery can achieve a reversible hydrogen absorption and desorption capacity of 2030 mAh per gram, which is almost reaching the theoretical hydrogen storage limit of magnesium.

Commentary: China Securities Journal points out that safe and efficient hydrogen storage technology is the key to realizing a hydrogen energy society. The *Medium- and Long-Term Plan for the Development of the Hydrogen Energy Industry (2025-2035)* clearly identifies hydrogen storage technology as a key research focus. This achievement is expected to play an important role in multiple fields such as renewable energy storage and hydrogen supply for fuel cell vehicles, providing a new technical path for the commercialization of hydrogen energy.

# Today's Key News Preview

- Speeches by Mary Daly (President of the Federal Reserve Bank of San Francisco), Austan Goolsbee (President of the Federal Reserve Bank of Chicago), and Adriana Kugler (President of the Federal Reserve Bank of St. Louis).

- U.S. October University of Michigan Consumer Sentiment Index and Inflation Expectations (Preliminary Reading).

- Announcement of the Nobel Peace Prize laureate.

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