Group 1 - The core viewpoint of the article is that global manufacturing is undergoing a multi-centralization trend, with significant shifts in manufacturing centers, particularly focusing on the re-industrialization process in the United States [2][5][20] - By 2024, the manufacturing value added shares are projected to be 27.7% for China, 20.6% for the US-Mexico-Canada Agreement (USMCA), 17.9% for the EU and the UK, and 4.7% for ASEAN [2][4] - The article highlights that while the US manufacturing sector's contribution to GDP is declining, this is attributed to faster overall economic growth rather than a decline in manufacturing itself [3][14] Group 2 - The US manufacturing sector is characterized by high value-added production, but it faces challenges due to a relative lack of actual production capacity [4][19] - The US has transitioned from being a net exporter of intermediate goods to a net importer since 2000, indicating a growing reliance on foreign supply chains [28][29] - The manufacturing trade deficit in the US has been expanding, with net imports accounting for 46% of manufacturing GVA in 2023, contrasting with other major manufacturing nations [20][24] Group 3 - The article discusses the "hollowing out" phenomenon of US manufacturing, where high-value sectors are not matched by corresponding production levels [19][28] - The US's dependency on foreign intermediate goods has increased, with 40% of its manufacturing value added coming from imports in 2023 [28][29] - The high-tech manufacturing sector in the US shows significant reliance on imports, particularly in electronics and electrical equipment, with dependency rates of 69% and 59% respectively [34][35] Group 4 - The US manufacturing sector's structure is heavily driven by research and development, with a high proportion of mid-to-high-tech manufacturing [35][36] - In 2021, the US's manufacturing R&D expenditure as a percentage of manufacturing GDP was 14.1%, significantly higher than that of China, Japan, and Germany [40] - The article emphasizes that the US excels in high-value segments of the manufacturing value chain, particularly in R&D and design, while actual production remains relatively low [35][39]

Core Viewpoint - The article discusses the increasing divergence between new and old economies in both China and the United States, highlighting the impact of AI on investment and employment, as well as the implications for financial markets and economic stability moving into 2026 [4][6]. Group 1: Economic Divergence - The global economy is experiencing a structural change characterized by the rapid growth of AI-driven high-tech industries, while traditional sectors like real estate and consumption face challenges [4][6]. - In the U.S., the "three highs" (high inflation, high interest rates, and high wages) are pressuring the economy and leading to a decline in corporate profits and economic activity [17][20]. - China's economy is supported by record trade surpluses and fiscal deficits in 2025, but these factors are expected to face constraints in 2026, potentially weakening economic support [4][6]. Group 2: Policy Implications - Global fiscal policies are under increasing constraints, necessitating a shift towards more accommodative monetary policies to alleviate debt interest pressures [4][6]. - The article anticipates that both the U.S. and China will likely see limited fiscal policy enhancements, with a greater probability of accelerated monetary easing [4][6]. Group 3: Market Dynamics - The stock market is reflecting the strength of the new economy, particularly in AI-related sectors, while the bond market is indicative of the weakening traditional economy [6][8]. - The article suggests that the bond bull market is more certain compared to the stock bull market, as bond yields are expected to decline significantly by the end of 2026 [4][6]. Group 4: Real Estate and Investment Trends - In China, the real estate sector continues to experience downward pressure, with new construction and sales areas declining, which is expected to impact overall economic growth [94][97]. - The article notes that the investment growth rate in real estate has reached historical lows, indicating a significant drag on the economy [97][99]. - The new economy in China, while showing some breakthroughs, still constitutes a small portion of the overall economy, with traditional sectors remaining dominant [91][93].

Core Viewpoint - The report explores whether the advantages of quantitative investment strategies can be sustained in the A-share market environment of 2026, highlighting the cyclical switching between "consensus" and "divergence" market conditions as a key determinant of strategy effectiveness [2][3][5]. Market Environment and Strategy Effectiveness - The A-share market is expected to enter a "central uplift platform period" after returning from historical lows, driven by the long-term trend of market institutionalization and the recovery of incremental funds, particularly from ETFs [3][38]. - The report identifies "institutional holding concentration" as a core indicator linking macro market patterns with micro Alpha sources, suggesting that increased concentration indicates a shift to "consensus" markets, while decreased concentration favors "divergence" markets [2][26][30]. Market Outlook for 2026 - The overall market environment for 2026 is assessed as optimistic, with a focus on structural opportunities due to attractive risk premiums and the absence of extreme overheating [4][44]. - The report anticipates a shift in investment strategies from capturing short-term opportunities in "divergence" markets to identifying core trends in "consensus" markets, particularly with the emergence of AI as a new investment theme [11][41]. Alpha Sources and Market Modes - The evolution of Alpha sources is linked to market modes, with "trading Alpha" being more effective in "divergence" markets and "cognitive Alpha" in "consensus" markets [17][25]. - "Trading Alpha" focuses on capturing short-term pricing inefficiencies, while "cognitive Alpha" emphasizes accurate predictions of future fundamentals [18][19]. Market Concentration Dynamics - High market concentration reflects a consensus-driven environment that rewards depth in research, while low concentration indicates a divergence-driven environment that favors breadth in strategy [27][28]. - The report constructs a market concentration index based on the top holdings of public funds, indicating stronger consensus when the index is high and greater divergence when it is low [30][31]. Investment Strategy Recommendations - In the anticipated "central uplift platform period," strategies that effectively combine depth (through alternative data and machine learning) with breadth (systematic capture of rotation opportunities) are expected to perform better [42][41]. - The report suggests that quantitative strategies may continue to outperform average active equity funds due to their ability to adapt to complex market conditions [42][43].

Core Viewpoint - The Hong Kong real estate market has shown signs of stabilization and recovery since the second quarter of this year, with expectations for further deepening of the recovery due to the anticipated interest rate cuts by the US Federal Reserve [2][5]. Market Outlook - The main factors influencing the market will be the interest rate levels, with a high probability of continued rate cuts into 2026. The local housing demand release is crucial for further recovery, with mortgage rates being a significant variable [5][9]. - Since the peak in 2021, Hong Kong property prices have adjusted approximately 29% by the second quarter of 2025, indicating a substantial correction. The market has shown a trend of month-on-month improvement since June, with total monthly housing transactions stabilizing around 5,000 units [9][10]. Recovery Dynamics - A moderate recovery is the baseline expectation, but potential upward risks should be monitored. The ideal inventory turnover period is estimated to return to around two years within the next 12 months [10][11]. - Key catalysts for demand include accelerated overseas capital inflow, significant US dollar interest rate cuts, and further inflow of mainland capital [11][12]. Sector Analysis - The residential and retail markets are recovering more rapidly than the office sector. The retail market has shown positive changes since May, with supply-demand dynamics becoming more balanced [6][58]. - The office market, while showing some positive demand signals, still faces high vacancy rates, particularly in non-core areas, and is expected to lag in recovery [6][58]. Long-term Positioning - The valuation of Hong Kong real estate stocks remains low compared to historical extremes, suggesting potential for further recovery. The current market valuation is around the historical tenth percentile, indicating it is not overly high [5][11]. - The long-term return characteristics of Hong Kong real estate stocks show an average annual compound return of slightly above 8%, with dividends contributing significantly to total returns [51][52]. Retail and Office Market Trends - The retail property sector is expected to recover sooner than the office sector due to healthier supply-demand dynamics, with retail vacancy rates at historical lows [58][59]. - The office market faces challenges with rising vacancy rates and anticipated supply increases, which may exert downward pressure on rental rates [59][62].

Core Viewpoint - The Chinese market in 2025 is characterized as a bull market driven by industry trends (AI), fundamental improvements, and liquidity narratives, with significant contributions from risk premiums and structural performance [2][17]. Group 1: Market Dynamics - The market's performance is influenced by excess liquidity chasing scarce return assets, leading to significant structural changes and asset rotation [25][26]. - The Hang Seng Index and Hang Seng Tech Index saw a 30% increase, primarily driven by risk premiums rather than earnings growth [17][18]. - Structural characteristics include significant contributions from a small number of stocks, with 15 stocks accounting for 70% of index gains, while many others underperformed [2][19]. Group 2: Liquidity Environment - The liquidity environment remains abundant, with macro, micro, and external liquidity factors contributing to the current state [28][30]. - Macro liquidity is characterized by low interest rates and a loose monetary policy, while micro liquidity reflects a lack of effective demand leading to capital stagnation [28][30]. - External liquidity is expected to remain loose in the first half of 2026, influenced by the Federal Reserve's interest rate policies and the ongoing "de-dollarization" narrative [34][35]. Group 3: Scarce Assets and Credit Cycle - The concept of "scarce assets" is determined by the credit cycle, with different phases affecting asset preferences, such as fixed-return assets during credit contraction and growth assets during recovery [3][36]. - The current credit cycle is expected to experience fluctuations, making it challenging for scarce return assets to expand broadly across the market [40][41]. - The government’s fiscal policies are limited in scope, with structural preferences affecting the ability to stimulate traditional demand sectors [45][46]. Group 4: Sector Outlook - Emerging demand sectors, particularly in technology and AI, are projected to maintain high growth, although expectations may be overly optimistic [41][42]. - Traditional demand sectors, such as real estate and consumer goods, are likely to weaken again after a brief recovery, primarily due to low income expectations and cost-return mismatches [43][44]. - Fiscal spending is expected to be limited but may shift structurally to support sectors with higher growth potential, such as technology and innovation [45][46].

Core Viewpoint - The public REITs market in China has transitioned from "quality improvement and expansion" to "normal issuance" by 2025, with a total market value exceeding 200 billion yuan, reaching 221 billion yuan, showing significant growth compared to the end of 2024 [7][8]. Market Trends and Developments - In 2025, the primary market continued to see strong issuance and subscription activity, characterized by a richer variety of asset types and high subscription multiples for new projects, with over 12 projects having subscription multiples exceeding 100 times by the end of Q3 [4][8]. - The secondary market exhibited a "rising then falling" trend, with an overall increase in the first half of 2025, followed by a decline due to rising long-term interest rates and profit-taking demands [4][14]. 2026 Market Outlook - For 2026, the primary market is expected to focus on new asset types and accelerated project expansions supported by policy measures, while the private REITs market is anticipated to grow rapidly [5][34]. - The secondary market is expected to remain influenced by interest rate fluctuations and funding needs, with high dividend-bearing assets maintaining good investment value [5][40]. Asset Type Expansion and Innovation - The 2025 public REITs market saw a continuous expansion of asset types, including the successful launch of several "firsts" in various sectors, notably data centers and municipal infrastructure [12][34]. - The approval and issuance of data center REITs marked a significant breakthrough, indicating the entry of public REITs into the digital infrastructure sector [12][34]. Investor Sentiment and Participation - Investor enthusiasm for new public REITs remained high, with many new projects experiencing substantial first-day gains, reflecting a strong profit-making effect [12][13]. - Institutional investor participation continued to rise, with an average institutional investor share of 97.21% by the first half of 2025, indicating growing recognition and engagement with public REITs [19][21]. Market Structure and Strategy - The construction of a multi-tiered REITs market is seen as essential for further market scale enhancement, with a focus on supply-side measures to improve market capacity and liquidity [31][34]. - The private REITs market is expected to complement public REITs by covering a broader range of asset types and facilitating the revitalization of existing real estate assets [35][39]. Investment Strategy Recommendations - The investment strategy suggests a "barbell" approach, prioritizing projects with resilient or improving fundamentals, while also considering high-potential projects that show value after valuation corrections [5][40]. - Attention should be given to projects with strong fundamentals and short-term improvement expectations, as well as those with attractive valuations in the logistics and industrial park sectors [57].

Macroeconomic Overview of Southeast Asia - Southeast Asia faces dual pressures from the US "reciprocal tariffs" and the opening of a "zero-tariff door" by the US, leading to a reduction in export competitiveness due to an average tariff of 19-20% on goods exported to the US [2][7] - Despite these challenges, the average economic growth rate for Southeast Asia is projected to be 4.2% in 2026, outperforming the global average of 2.9% [2][7] - Individual GDP growth rates for 2026 are expected to be 7.0% for Vietnam, 5.7% for the Philippines, 4.9% for Indonesia, 4.2% for Malaysia, and 1.8% for both Singapore and Thailand [2][7] Investment Themes in Southeast Asia - A low-interest-rate environment is anticipated, benefiting the real estate sector and other capital-intensive industries, with policy rates in various countries reduced significantly [3] - The effective tax rate advantage for ASEAN countries is expanding, with an average effective tax rate of 15%, compared to 43% for China, which may benefit local industries and logistics [4] - Geopolitical tensions are expected to drive growth in sectors such as AI, data centers, and mining, particularly in Malaysia and Singapore, which have strong semiconductor and electronic manufacturing capabilities [5] Country-Specific Investment Strategies - **Vietnam**: Plans to achieve double-digit GDP growth by 2026, focusing on infrastructure and real estate investments, and aims to establish financial hubs [11] - **Indonesia**: Facing internal challenges but has plans for significant economic reforms and investments in public housing and resource integration [12] - **Malaysia**: The government is focusing on high-value industries like semiconductors and AI, aiming to enhance its position in global supply chains [13] - **Singapore**: Expected to benefit from a stable political environment and low-interest rates, with potential growth in construction and REITs [14] - **Thailand**: Internal conflicts and policy uncertainties may hinder economic performance, despite potential benefits from foreign capital [14] - **Philippines**: Faces challenges from stalled infrastructure projects and competition from AI, which may impact economic growth [14] Trade and Foreign Investment Dynamics - Southeast Asia is adapting to new trade dynamics due to high tariffs, with countries seeking to establish new trade relationships to mitigate risks from US tariffs [16] - The region has seen a diversification of foreign direct investment sources, with a notable decrease in US investment and an increase from ASEAN countries [28] - The manufacturing supply chain in Southeast Asia is evolving, with significant greenfield investments in sectors like automotive and machinery [24] Capital Market Trends - Southeast Asian equity markets have shown resilience, with Vietnam leading in performance, while other countries like Malaysia and Thailand face challenges due to internal issues [29] - The region's liquidity remains strong, but foreign institutional investors have been net sellers, indicating a shift in investment preferences towards fixed-income assets [33]

Core Viewpoint - The article emphasizes that the direction of credit expansion is a key determinant of asset performance in global markets, with assets in credit expansion areas performing better than those in credit contraction areas [2][16]. Group 1: Global Market Trends - By early 2025, the rise of China's DeepSeek initiated a revaluation of core technology assets, impacting both Chinese and U.S. AI industries, leading to concerns about over-investment [3][72]. - In February, expectations of fiscal and military expansion in Europe contrasted with U.S. spending cuts, resulting in a significant rise in European assets [3][16]. - By April, tariff negotiations raised doubts about the sustainability of U.S. debt and dollar credit expansion, leading to a decline in U.S. stocks, bonds, and the dollar [3][16]. Group 2: U.S. Credit Cycle - The U.S. credit cycle is expected to gradually recover and may even reach "overheating" conditions, driven by strong AI investments and fiscal expansion [5][27]. - The "Big Beautiful" Act is projected to increase annual spending by approximately $340 billion, raising the deficit rate from 5.9% to 6.4% [6][45]. - Traditional demand is anticipated to improve slightly as high financing costs ease, with potential for a recovery in real estate and manufacturing sectors [50][66]. Group 3: China’s Credit Cycle - China's credit cycle, after a year of recovery, faces challenges due to high bases, slowing policy support, and structural issues, potentially leading to stagnation or decline [8][72]. - AI investments are expected to continue, but traditional demand in sectors like real estate and consumption may weaken due to declining income expectations [9][72]. - The fiscal response is limited, with a need for significant new debt to maintain credit cycle growth, which may not be feasible [9][72]. Group 4: Investment Recommendations - Investment strategies should align with credit expansion directions, favoring U.S. assets over Japan and Europe, while focusing on structural opportunities in China [11][12]. - The S&P 500 index is projected to have a potential upside of 13-16%, reaching levels between 7600 and 7800 points [7][12]. - In the Chinese market, a focus on sectors with structural growth, such as AI and technology, is recommended, while traditional sectors may face headwinds [10][12].

Core Viewpoint - The article discusses the restructuring of global trade patterns accelerated by the 2025 U.S. tariff policy, leading to a reconfiguration of global industrial division and macro order, which may significantly increase asset volatility and economic uncertainty [2][8]. Group 1: Geopolitical and Supply Challenges - Geopolitical tensions and resource protectionism are expected to further challenge the already fragile supply elasticity in energy and metal markets, with a decade-long down cycle in upstream investments leading to unstable existing supplies and insufficient incremental supplies [5][16]. - The ongoing geopolitical risks and resource protectionism are likely to increase macro uncertainties, further challenging the supply elasticity in energy and metal markets [5][23]. Group 2: Demand Dynamics and Energy Transition - The focus on strategic security is shifting demand-side attention towards energy transition and reserve construction, indicating that energy transition remains a significant trend and reserve building is essential for strategic commodities [5][36]. - The global energy system has seen a new round of investment expansion since 2021, with a significant shift towards renewable energy and related sectors, reflecting a steady advancement in energy transition [36][39]. Group 3: Emerging Demand and Industrialization - Emerging demand is gaining momentum, driven by AI narratives and the ongoing electrification trend, which is expected to provide sustained demand growth for commodities like copper [6][48]. - The restructuring of trade patterns and industrial division is likely to support the industrialization processes in emerging economies, with significant demand potential from countries along the Belt and Road Initiative [6][56]. Group 4: Commodity Market Outlook for 2026 - The article anticipates that geopolitical tensions, resource security demands, and emerging demand growth will form a "triple play" for the commodity market as it enters a new chapter [2][8]. - The supply-demand balance in the commodity market is expected to improve marginally in 2026, with a focus on micro-level differences and fundamental changes in various commodities [58][60]. Group 5: Specific Commodity Insights - The copper market is projected to face a supply gap due to insufficient upstream investment and increasing demand from electrification, with prices expected to remain elevated [68]. - The oil market may experience a shift from surplus to a more balanced state, with potential upward price adjustments driven by geopolitical risks and supply constraints [64][65]. - Agricultural commodities are expected to see a gradual recovery, influenced by trade policies, weather risks, and the growth of biofuels [70][71].

Core Viewpoint - The A-share market is expected to continue its upward trend since "9.24", with increasing importance of fundamentals after a valuation correction, supported by the new phase of Sino-US relations, restructuring of the international monetary order, and the AI revolution entering a critical application period [2][5][10]. Group 1: Macroeconomic Environment - The new global order and domestic macroeconomic needs require proactive responses, with the Sino-US relationship entering a new stage, which will continue to promote global capital reallocation favoring Chinese assets [6][12]. - The A-share market is transitioning from valuation recovery to improved profit expectations, with an estimated overall profit growth of around 4.7% for 2026, driven by high-growth sectors and industries nearing performance improvement inflection points [6][30]. - The overall valuation of A-shares remains reasonable, with the current risk premium of the CSI 300 at 5.2%, indicating a favorable comparison to the bond market in the context of "asset scarcity" [6][30]. Group 2: Investment Strategy - The investment strategy for 2026 focuses on three main lines: 1) Growth in high-prosperity sectors, particularly in AI and innovative industries; 2) Opportunities from external demand, especially in sectors like home appliances and engineering machinery; 3) Cyclical reversals in industries such as chemicals and renewable energy [7][28]. - The market style is expected to become more balanced, driven by the end of the capacity reduction cycle and policies promoting "anti-involution," leading to a closer supply-demand balance in many cyclical industries [7][28]. Group 3: Profit Growth and Structural Analysis - The profit growth for A-shares is projected to be around 4.7% in 2026, with non-financial companies expected to see an 8.2% increase in net profit, supported by policy implementation and the ongoing AI trend [29][30]. - High-growth innovative sectors are anticipated to support the index, with significant contributions expected from AI technology, innovative pharmaceuticals, and high-end manufacturing [31][32]. - The capacity cycle is showing signs of improvement, with many industries experiencing a turning point after three years of capital expenditure reduction, leading to potential investment opportunities [32][33].