On July 22, retired Qiu Dongrong gathered with four new fund managers to communicate with investors regarding the second quarter report. Qiu Dongrong expressed that he remains very proactive and optimistic. Even though the market fundamentals may be fluctuating with uncertainty, they still exhibit cyclic characteristics. At this time, one should pursue higher expected returns, better resilience, and higher possibilities, even if it means taking on a bit more risk. It is important to be cautious when high dividend assets or stocks carry high profit risks, such as when profits are at cyclic highs or when future profit volatility and uncertainty are significant. Specifically, Qiu Dongrong believes that the market outlook is very positive and optimistic. Firstly, even though market fundamentals may fluctuate with uncertainty, they will still exhibit cyclic characteristics. Secondly, the attractiveness and risk compensation implied by valuation and pricing are very strong, possibly being the most attractive among all asset categories, especially when the returns of other assets are relatively low. Thirdly, in the foreseeable future, special attention will be paid to the net financing cash flow of the market. Looking from the perspective of investors, the entire market may transition from a market with net financing, where there are significant amounts of financing, issuance, and IPOs annually, to a market with more dividends and buybacks. Having studied many markets including the US and Japan, the determining factor for long-term market returns is the change in net cash flow of the market. In the past year, the biggest change brought to the market by the changes in policies and the business environment is the shift from a market with net financing to a market with net dividends or buybacks. Regarding Hong Kong stocks, Qiu Dongrong expressed that they are very attractive. There is confidence in Chinese assets, and the main assets in Hong Kong stocks are Chinese assets. From a fundamental perspective, three aspects are particularly attractive. Firstly, the profits and cycles of Chinese assets are negatively correlated with global assets, and this value and advantage will become increasingly significant in the future. In simple terms, while other assets have experienced a bull market, Chinese assets have been in a bear market. However, this is not necessarily a bad thing. This lack of correlation or negative correlation may be very attractive for global portfolio management from an allocation and risk diversification standpoint. Secondly, looking at the cyclical aspect, the characteristic of Chinese assets being at cyclic bottoms will become increasingly significant. Combining this with bottom-up industry research, these cyclic bottoms encompass various aspects such as real estate cycles, consumption cycles, and so on. This cyclic aspect should be respected, as there is a possibility of recovery in the future. Thirdly, they offer alpha. Firstly, for Chinese assets listed in Hong Kong or overseas, they may be the most dynamic and innovative companies in the Chinese economy. There are not only traditional state-owned enterprises such as mobile operators and energy companies, but more importantly, there are emerging companies in new economies such as the internet and smart electric vehicles. These companies may be the most valuable in the long run. From this perspective, this category of Chinese assets is very attractive. Furthermore, they are at absolute and relative low valuations, implying significant expected returns. In addition, the pricing foundation of Hong Kong and A shares differs. Hong Kong stocks are priced based on US dollar interest rates, which are currently at high levels, providing an additional yield for A share managers. Lastly, the Hong Kong stock market may have been the least favored in the past. This preference and allocation proportion may be relatively low, potentially leading to high risk compensation. Any change in the above factors will lead to an increase in the implied return rate of these assets. At this stage, Qiu Dongrong pointed out that one should pursue higher risk compensation. Whether from a structural or bottom-up perspective, now is the time to be more proactive and pursue higher risk compensation and expected returns. From a fundamental perspective, one should seek better profit resilience and growth. This is because companies with growth and resilience at the bottom may exhibit stronger resilience and growth once their fundamentals improve. Additionally, the expected returns brought by being at absolute low valuations are very high. At this time, the difficulty in investing is actually decreasing. Therefore, from a portfolio perspective, even though the performance of the allocation direction has not been outstanding in the past half year to a year, and there may have been high volatility, taking on this volatility is actually very worthwhile. When looking from a bottom-up perspective, real estate, pharmaceuticals, smart electric vehicles, the internet, and some particularly outstanding leading companies in the manufacturing industry and technology sector possess these characteristics. In summary, at this time, one should pursue higher expected returns, better resilience, and higher possibilities, even if it means taking on a bit more risk. However, Qiu Dongrong also cautioned against the risks of high dividend strategies and companies going overseas. Attention should be paid to several areas that are prone to risk. Firstly, there is concern over the current high dividend strategy mentioned in two consecutive quarters' reports. The concern about high dividends is not against this strategy, but high dividend strategies may focus more on Smart Beta rather than alpha performance. In this scenario, the effectiveness of high dividend strategies still depends on fundamental valuation and pricing. If high dividend assets or stocks carry high profit risks, such as when profits are cyclically high or when there is significant volatility and uncertainty in future profits, caution should be exercised. It should be noted that the certainty of high dividends cannot be equated with bonds. Therefore, profit risk is definitely the primary source of risk. For example, traditional energy sources such as energy, coal, and oil that have strong profit cycle risks have been closely monitored. Secondly, valuations are relatively high, resulting in insufficient implied return rate. For instance, valuations of over ten times may correspond to less attractive implied return rates. Valuations above 15 times, and even 20 times, definitely do not offer attractive returns. Thirdly, the most important and closely watched point is opportunity cost. Currently, the market is at a relatively low point, making opportunity costs very high. It is possible to find industries and companies with stronger growth and sustainability of cash flow and profitability, even in industries where the certainty is strong. In this case, there is no need to waste positions and positions on industries and companies with high dividends but lower possibilities. Additionally, it is important to pay attention to potential risks of exports or going global. This direction largely depends on Chinese companies, especially the competitiveness of Chinese manufacturing worldwide. In the past, due to strong external demand, exports have been very good. However, one must not underestimate the cyclical risks that may exist in external demand, especially for companies that heavily rely on government spending or external financial demands. During these times, if the valuation is particularly high, such as more than thirty to forty times the valuation, risks will exist.