Core Insights - The real estate industry is currently facing significant challenges, with a decline in GDP contribution from the real estate and construction sectors, dropping from 15% in 2019 to 12% in the first three quarters of 2025 [7] - The shift in housing demand from "having a house" to "having a good house" indicates a structural change in the market, with a projected annual housing demand of over 860 million square meters until 2035, primarily driven by improvement needs [7] - The report emphasizes the need for policy adjustments to address the ongoing market downturn, with potential policy directions including administrative, public fund, fiscal, urban renewal, and stock activation measures [7][9] Macro Perspective - The economy is undergoing a transformation, with a noticeable decline in the contribution of the real estate sector to GDP [7] - The population peaked in 2021 and has been declining, affecting housing demand dynamics, particularly among potential first-time buyers [7] - Employment and income expectations remain weak, impacting consumer willingness to purchase homes [7] Mid-Macro Perspective - Market transaction volumes and prices are continuously declining, with new home transactions in 100 cities down 15% year-on-year from January to November 2025 [7] - The frequency and effectiveness of local policy interventions have decreased, leading to rising inventory levels and prolonged de-stocking periods [7] - Real estate companies are experiencing significant financial strain, with funding levels dropping from 20.1 trillion yuan in 2021 to 10.8 trillion yuan in 2024 [7] Micro Perspective - Home prices in first-tier cities have seen significant declines, with second-hand home prices dropping over 35% from their peak [7] - The expectation of falling home prices is growing among residents, with 23.5% anticipating further declines as of Q3 2025 [7] - The market is witnessing a shift towards improvement-type housing, with larger units (over 120 square meters) gaining market share [7] Policy Space - Future policy adjustments are expected to focus on loosening purchase restrictions in major cities and enhancing public fund policies [9] - Fiscal measures may include subsidies for home loans and adjustments to tax policies related to property transactions [9] - Urban renewal initiatives are anticipated to expand, particularly in transforming urban villages [9] Opportunities in the Real Estate Sector - The commercial real estate sector is poised for growth by adapting to new consumer demands and creating innovative shopping experiences [9] - Residential developers focusing on core cities and high-demand housing types are likely to benefit from market shifts [9] - The report highlights the potential for real estate investment trusts (REITs) to expand, particularly in commercial properties, as the market matures [9] Investment Recommendations - The report suggests focusing on companies with strong fundamentals in core cities, such as China Resources Land and China Merchants Shekou [9] - Smaller, agile firms that have made significant sales and land acquisition strides since 2024 are also recommended for consideration [9] - Companies innovating in the commercial real estate space, such as China Resources Vientiane Life and Swire Properties, are highlighted as potential investment opportunities [9]

Investment Rating - The report rates the real estate industry as "Outperform" [1] Core Views - The current market is under pressure with declining transaction volumes and prices, but there is potential for policy adjustments in the first quarter of the year to stabilize the market [9] - The report suggests focusing on companies with strong fundamentals in core cities, smaller firms with significant breakthroughs, and commercial real estate companies exploring new consumption scenarios [9] Summary by Sections 1. Key City New Housing Market, Second-hand Housing Market, and Inventory Tracking - New housing transaction area decreased by 45.7% month-on-month and 35.6% year-on-year, with a notable increase in the decline rate [20][28] - Second-hand housing transaction area increased by 35.5% month-on-month but decreased by 21.6% year-on-year [51] - New housing inventory area increased by 0.2% month-on-month and decreased by 8.6% year-on-year, with an average de-stocking cycle of 16.3 months [44][45] 2. Land Market Tracking - Total land transaction area across 100 cities was 1,744.7 million square meters, down 60.3% month-on-month and 2.2% year-on-year [67] - Total land transaction value was 32.19 billion, down 71.2% month-on-month and 63.3% year-on-year, with an average floor price of 1,844.7 yuan per square meter [67][73] - The land premium rate was 0.6%, down 7.9 percentage points month-on-month and 4.6 percentage points year-on-year [67][69] 3. Policy Overview - Various cities are optimizing housing fund policies, such as extending the mutual assistance policy for housing fund withdrawals in Chengdu until the end of 2026 [5][104] - In Shenyang, five housing fund loan policies were optimized starting January 2026, including extending the minimum down payment ratio of 15% [5][104] 4. Sector Performance Review - The real estate sector's absolute return was 5.1%, up 5.8 percentage points from the previous week, and the relative return compared to the CSI 300 was 2.3%, up 2.4 percentage points [106][107] - The sector's price-to-earnings ratio was 25.66X, an increase of 1.02X from the previous week [110] 5. Key Company Announcements - New City Holdings reported a shareholding change with its controlling shareholder holding 1.4 billion shares, representing 6.11% of the total [118]

Investment Rating - The report maintains an "Outperform" rating for the social services industry, expecting it to perform better than the market index over the next 6-12 months [1]. Core Insights - The social services sector saw a 3.96% increase in the first two trading weeks of 2026, ranking 15th among 31 industries in the Shenwan classification. This performance outpaced the CSI 300 index by 1.77 percentage points [1][12]. - The New Year's holiday travel data showed positive trends, with 142 million domestic trips taken, a year-on-year increase of 5.2%, and total spending reaching 84.789 billion yuan, up 6.3% year-on-year [1][4]. - The report highlights the expectation for continued high demand in the travel sector, particularly with the upcoming Spring Festival holiday [4]. Summary by Sections Market Review & Industry Dynamics - The social services sector's performance was strong, with notable increases in sub-sectors such as education (+7.45%), professional services (+6.37%), and tourism retail (+3.77%) [12][16]. - Domestic air travel saw a total of 104,558 flights during the holiday period, a 1.99% increase from the previous week and 108.86% of the 2019 level [1][4]. Investment Recommendations - The report suggests focusing on companies with strong growth potential in the travel chain and related industries, including Tongcheng Travel, Huangshan Tourism, and Lijiang Shares, among others [4]. - It also recommends hotel brands like Jinjiang Hotels and ShouLai Hotels, which are expected to benefit from the recovery in business travel and increased market share [4]. Company Dynamics & Announcements - The report notes significant growth in the Hainan duty-free shopping market, with sales exceeding 1.21 billion yuan during the first week of January, marking an 88% year-on-year increase [28]. - The report mentions that the domestic hotel market is expected to see a price drop of over 50% compared to the upcoming Spring Festival holiday, indicating a favorable environment for travelers [28]. Travel Data Tracking - The report indicates that the recovery of business travel is nearly complete, with ongoing policy relaxations for inbound and outbound travel, including the expansion of visa-free entry for several countries [34].

Investment Rating - The industry investment rating is "Outperform the Market," indicating that the industry index is expected to perform better than the benchmark index over the next 6-12 months [12]. Core Insights - The report highlights that commercial space applications are opening new growth opportunities for photovoltaic (PV) technology, particularly in satellite energy supply, as endorsed by Elon Musk. The demand for PV in space is expected to grow significantly [2][4]. - Current space PV technology solutions are not yet standardized, and the core barrier in the industry lies in distribution channels. The limited number of manufacturers with experimental capabilities indicates a potential for differentiation among companies in the PV supply chain [2][4]. - The extreme conditions in space require PV materials to have strong radiation resistance and temperature tolerance, leading to a significant change in the basic material systems used in PV technology. This change is expected to disrupt the leading positions of traditional silicon manufacturers and create new growth points for material companies [4]. - The cost sensitivity in space applications is relatively low, allowing leading companies to capitalize on high-margin markets and initiate a new growth phase [4]. Summary by Sections Industry Overview - The report discusses the strategic planning by SpaceX to deploy 100GW of solar-powered AI satellite energy networks annually, with potential future plans for lunar PV capacity to meet AI energy demands [4]. - The current stage of the space PV industry is characterized as an introduction phase, with limited rocket launches affecting the maturity of technology solutions [4]. Technology and Market Dynamics - The report emphasizes that the debate over the final technology solutions for space PV is less critical at this stage. Instead, the focus should be on manufacturers' actual supply experience and the stability of their supply channels [4]. - The report notes that the price of gallium arsenide batteries, a common engineering solution for space PV, is significantly higher than traditional silicon components, indicating a lower cost sensitivity in space scenarios [4]. Investment Recommendations - The report recommends specific companies for investment, including JunDa Co., Maiwei Co., Jiejia Weichuang, JinkoSolar, Trina Solar, and Haiyou New Materials, while suggesting to pay attention to Dongfang Risheng, Shanghai Port Bay, Jing Shan Light Machine, and Taisheng Wind Energy [4].

Investment Rating - The industry investment rating is "Outperform the Market," indicating that the industry index is expected to perform better than the benchmark index over the next 6-12 months [40]. Core Insights - The "AI + Manufacturing" initiative aims to establish a globally leading development ecosystem by 2027, focusing on key technology breakthroughs and the cultivation of influential enterprises [11][13]. - The CES 2026 showcased significant advancements in smart electric vehicles, highlighting the industry's shift towards deep integration of hardware and software solutions [14][16]. - China's application for over 200,000 satellite frequency resources marks a strategic move in the low Earth orbit satellite internet sector, aiming to enhance its capabilities against competitors like SpaceX [17][20]. - SpaceX's approval to deploy an additional 7,500 second-generation Starlink satellites reinforces its dominant position in the global low Earth orbit satellite market [21][23]. - The upcoming release of DeepSeek V4 is expected to significantly impact the AI landscape, particularly in code generation capabilities, positioning it as a strong competitor in the market [24][25]. Summary by Sections AI + Manufacturing - The initiative outlines 21 specific tasks across seven key areas, including innovation, product breakthroughs, and international cooperation, to support the integration of AI in manufacturing [12]. - The policy aims to reshape production models and create vast market opportunities across the supply chain [11][13]. CES 2026 - The event highlighted the transition of the automotive industry from basic electrification to deep technological integration, with a focus on unique user experiences [14][16]. - Companies showcased advancements in smart driving systems and integrated solutions for vehicle production [15]. Satellite Internet - China's strategic application for satellite frequency resources aims to secure a competitive edge in the satellite internet market, with significant implications for future deployment and operational capabilities [17][20]. - The initiative is seen as a national priority, with the potential to enhance China's satellite manufacturing and launch capabilities [18]. SpaceX Developments - SpaceX's expansion of its Starlink satellite network is expected to improve internet connectivity and performance, particularly in underserved regions [21][22]. - The approval of new satellites and technology upgrades positions SpaceX as a key player in shaping global satellite internet standards [23]. DeepSeek V4 - The anticipated launch of DeepSeek V4 is expected to elevate its competitive stance in the AI sector, particularly in programming capabilities, challenging existing market leaders [24][25].

Market Performance - The Hang Seng Index (HSI) closed at 26,232, up 0.3% for the day and 2.3% year-to-date (YTD) [1] - The MSCI China index increased by 0.3%, with a YTD gain of 3.0% [1] - The KOSPI index showed a strong performance, rising 0.7% for the day and 8.8% YTD [1] Commodity Prices - Brent Crude oil prices rose to $63 per barrel, reflecting a 2.2% increase for the day and 4.1% YTD [2] - Gold prices reached $4,510 per ounce, up 0.7% for the day and 4.4% YTD [2] - Copper prices increased by 2.2% for the day, with a YTD gain of 4.6%, closing at $12,998 per ton [2] Economic Indicators - The US CPI YoY for December was reported at 2.7%, matching consensus expectations [3] - China's GDP YoY growth was recorded at 4.8%, slightly above the expected 4.5% [3] - The Core CPI in the US remained stable at 2.8% YoY, indicating consistent inflationary pressures [3] Sector Insights - H-share banking stocks are gaining attention from long-term investors, particularly in a low-interest-rate environment [8] - The H-share banking sector is expected to report positive gains in 2026, maintaining an OVERWEIGHT rating [9] - CIMC Enric's green methanol plant is projected to significantly reduce greenhouse gas emissions by 85%, tapping into a new market [12]

Report Industry Investment Rating - The report does not provide a specific industry investment rating [164][165] Core Viewpoints of the Report - The impact of commercial housing acquisition on the bond market may be limited. The acquisition mode may generate more financing needs, but the net impact on the bank - system liquidity should be less than that of government bond financing for new investments [2] - The US Treasury market downplays the impact of the tariff ruling. After the suspension of the tariff ruling by the US Supreme Court, the market may have reached a consensus on its impact. Regarding the new Fed Chair candidate, if Trump chooses Hassett, it may cause short - term market shocks and is difficult to achieve a super - large - scale interest rate cut without fundamental support [2] - The US employment market continued to cool in December last year, with only a slight year - on - year increase in non - farm employment, but stable non - farm salary growth, basically in line with the "soft landing" scenario. It is expected that the US government and the Fed may reach a compromise, with a possible final interest rate cut to the lower limit of the neutral interest rate predicted by the December interest rate dot - plot (2.5 - 2.75%), leaving room for 4 times of 25BP interest rate cuts from the current level. Under the baseline scenario, it is expected to cut interest rates 2 - 3 times in 2026 and 1 - 2 times in 2027 [2] - The producer price index continued to rise. In the week of January 10, 2026, the average wholesale price of pork by the Ministry of Agriculture increased by 1.45% week - on - week and decreased by 21.17% year - on - year; the average wholesale price of 28 key - monitored vegetables decreased by 0.89% week - on - week and increased by 8.55% year - on - year. In the week of January 2, the price index of edible agricultural products decreased by 0.10% week - on - week and decreased by 1.90% year - on - year. The domestic cement price index decreased by 0.62% week - on - week; the average of the Nanhua Iron Ore Index increased by 2.40% week - on - week; the operating rate of coking enterprises with a production capacity of over 2 million tons increased by 0.96% week - on - week; the inventory index of rebar increased by 2.66% week - on - week, and the price index of rebar increased by 0.63% week - on - week. In the week of January 2, the producer price index increased by 0.30% week - on - week and decreased by 0.18% year - on - year [2] Summary by Directory High - Frequency Data Panoramic Scan - It shows the comparison of high - frequency data and important macro - indicators, including the relationship between US ADP and official non - farm employment, US non - farm weekly wages and core CPI, etc. It also presents the week - on - week changes of high - frequency data and the panoramic scan of high - frequency data with the latest values and historical values of various indicators [11][15][16] Comparison of High - Frequency Data and Important Macro - Indicator Trends - It includes multiple charts showing the relationships between high - frequency data and important macro - indicators, such as the relationship between the year - on - year change of copper spot price and the year - on - year change of industrial added value (+ year - on - year change of PPI), the year - on - year change of daily crude steel output and the year - on - year change of industrial added value, etc. [26][30][33] Important High - Frequency Indicators in the US, Europe, and Japan - It presents charts about important high - frequency indicators in the US, Europe, and Japan, such as US weekly economic indicators and actual economic growth rate, US initial jobless claims and unemployment rate, etc. [87][91][95] Seasonal Trends of High - Frequency Data - It shows the seasonal trends of high - frequency data through charts, including the seasonal trends of the transaction area of commercial housing in 30 large and medium - sized cities, the spot settlement price of LME copper, etc. [99][100][107] High - Frequency Traffic Data in Beijing, Shanghai, Guangzhou, and Shenzhen - It provides charts showing the year - on - year changes of subway passenger volume in Beijing, Shanghai, Guangzhou, and Shenzhen [156][157]

Macro Economic Overview - The macroeconomic report indicates that the Shanghai Composite Index rose by 2.79% this week, with the CSI 300 index futures increasing by 3.20% [1][3][13] - The report highlights a significant increase in commodity futures, with coking coal futures up by 6.50% and iron ore futures up by 3.23% [3][13] - The annualized yield of Yu'ebao (a money market fund) decreased by 2 basis points to 1.03%, while the yield on ten-year government bonds rose by 4 basis points to 1.88% [3][13] Employment Data Analysis - The U.S. non-farm payrolls data for December 2025 showed a mixed picture, with new jobs added decreasing to 50,000, down by 14,000 month-on-month, indicating weakness in the private sector, particularly in manufacturing [4] - Average hourly earnings in the private sector increased by 3.8% year-on-year, with the unemployment rate at 4.4%, down by 0.1 percentage points [4] Asset Allocation Recommendations - The report maintains the asset allocation order as follows: equities > commodities > bonds > cash, suggesting an overweight position in stocks and a cautious stance on bonds and cash [5][6] - The report emphasizes the importance of monitoring the implementation of incremental policies in the stock market [6] Commodity Market Insights - The commodity futures index increased by 4.01% this week, with notable gains in precious metals (6.84%) and non-ferrous metals (5.19%) [52] - Lithium carbonate saw a significant price increase of 17.80%, while industrial silicon experienced a decline of 1.56% [52][53] Real Estate and Automotive Sector Trends - The report notes a decline in the transaction area of commercial housing in 30 major cities, with a weekly transaction area of 226.42 million square meters, but anticipates stabilization due to supportive policies [37] - In the automotive sector, wholesale and retail sales of passenger vehicles showed a year-on-year increase of 45% and 17%, respectively, indicating strong consumer demand [43]

Core Insights - The report highlights a slight improvement in December's CPI and PPI growth rates, which were better than consensus expectations, indicating a positive trend in consumer prices and industrial production prices [2][4][5] - The report emphasizes the ongoing effects of consumption-boosting policies, which have contributed to the stabilization and gradual recovery of prices in various sectors [4][5][6] - The analysis suggests that the macroeconomic environment in 2026 may support a moderate increase in both CPI and PPI, driven by improved supply-demand dynamics and policy measures [6][12] Macroeconomic Overview - December CPI increased by 0.2% month-on-month and 0.8% year-on-year, with core CPI rising by 1.2% year-on-year [4][5] - Food prices had a lesser drag on CPI, contributing approximately 0.05 percentage points to the month-on-month increase, while industrial consumer goods prices (excluding energy) contributed about 0.16 percentage points [4][5] - PPI showed a month-on-month increase of 0.2% but a year-on-year decline of 1.9%, indicating a mixed performance in industrial prices [5][6] Strategy Research - The report discusses the current valuation pressures on the A-share market, noting that the equity risk premium (ERP) is approaching a critical threshold, which could limit upside potential [8][10] - Historical analysis indicates that the A-share index has only breached the "2X" ERP threshold during significant bull markets in 2007 and 2015, suggesting caution in the current market environment [8][9] - The report outlines four constraints that may prevent a repeat of past "2X" breakthroughs, including limited profit elasticity, a shift in funding sources, and regulatory expectations [9][10] Fixed Income Outlook - The report anticipates that fiscal policy will maintain a stable broad deficit rate relative to 2025, while monetary policy may allow for two 10 basis point rate cuts and one to two 25 basis point reserve requirement ratio reductions [12][16] - The interplay between fiscal and monetary policies is crucial for interest rate movements, with potential upward pressure from stronger fiscal measures and downward pressure from more aggressive monetary easing [12][16] - The bond market is expected to experience range-bound trading with opportunities, particularly when the 10-year government bond yield approaches or reaches 1.9% [12][16]

Investment Rating - The report maintains an "Outperform" rating for the power equipment and new energy industry [1]. Core Insights - The global sales of new energy vehicles are expected to grow rapidly in 2026, driving demand for batteries and materials [1]. - The Ministry of Industry and Information Technology is working to regulate competition in the power and energy storage battery industry, which is likely to improve profitability across the supply chain [1]. - Sodium batteries are anticipated to enter large-scale applications, while solid-state battery industrialization is progressing, highlighting the importance of related materials and equipment companies [1]. - The photovoltaic sector is focusing on "anti-involution" as a key investment theme, with regulatory discussions aimed at controlling upstream silicon material prices and enhancing profitability in downstream battery components [1]. - The demand for wind power is expected to continue growing, supported by government initiatives for new photovoltaic and wind power projects [1]. - The energy storage sector remains robust, with recommendations to focus on energy cell and large-scale integration manufacturers [1]. - Hydrogen energy is projected to open new demand avenues, particularly in green hydrogen applications, with a focus on equipment and operational segments [1]. - Nuclear fusion is identified as a long-term energy development direction, with recommendations to monitor core suppliers in this area [1]. Summary by Sections New Energy Vehicles - Expected sales in 2025 for new energy passenger vehicles in China are projected at 12.809 million units, a year-on-year increase of 17.6% [2]. Battery Technology - CATL announced plans for large-scale sodium battery applications in 2026, while solid-state battery prototypes are entering real vehicle testing [2]. Photovoltaic Industry - The cancellation of VAT export rebates for photovoltaic products is set to take effect from April 1, 2026, impacting market dynamics [2]. - The photovoltaic industry is experiencing price adjustments, with silicon material prices rising and a focus on maintaining profitability in the supply chain [15][19]. Wind Power - The wind power sector saw significant growth, with a 22.06% increase in stock prices for wind energy companies [10][13]. Energy Storage - The price of lithium carbonate has risen significantly, with current prices around 115,000-119,000 RMB per ton, reflecting a 19.1% increase [27]. - Energy cell prices for various models have also increased, with the average price for 100 Ah cells at 0.403 RMB per watt-hour, up from previous levels [28]. Market Trends - The overall power equipment and new energy sector saw a 5.02% increase in stock prices, outperforming the broader market indices [10][13].