- The report discusses the "Industry Trend Allocation Model" which indicates that the communication, industrial metals, and energy storage sectors continue to show an upward trend[2][5][7] - The "Two Beta Model" is recommended for the technology sector, focusing on domestic computing power and commercial space[2][5][7] - The "Mid-term Distress Reversal Expectation Model" signals attention to retail and tourism service consumption[2][5][7] Model Construction and Evaluation - **Industry Trend Allocation Model**: This model identifies sectors with upward trends based on historical data and current market conditions. It uses various indicators to determine the sectors that are likely to perform well in the near future[2][5][7] - **Two Beta Model**: This model focuses on sectors with high growth potential, particularly in technology. It evaluates the beta coefficients of different sectors to identify those with higher expected returns relative to the market[2][5][7] - **Mid-term Distress Reversal Expectation Model**: This model identifies sectors that are expected to recover from a period of underperformance. It uses historical performance data and current market signals to predict which sectors will experience a turnaround[2][5][7] Model Backtesting Results - **Industry Trend Allocation Model**: The model continues to show an upward trend in the communication, industrial metals, and energy storage sectors[2][5][7] - **Two Beta Model**: The model recommends the technology sector, focusing on domestic computing power and commercial space, indicating strong growth potential[2][5][7] - **Mid-term Distress Reversal Expectation Model**: The model signals attention to retail and tourism service consumption, suggesting these sectors are poised for recovery[2][5][7]

Report Industry Investment Rating - The industry rating of this report is "Overweight", indicating an expected increase of over 10% compared to the benchmark index in the next 6 - 12 months [24] Core Viewpoints - Since December 2025, although market volatility has increased, the upward trend remains unchanged. The A - share market showed a "V - shaped" reversal last week, and the sentiment for long - positions is still strong [2][6] - This year has seen a significant "stock - strong, bond - weak" trend, but at the year - end, bonds may have a greater reverse impact on stocks. The year - end is a buying opportunity for stocks, following the principle of "buying on small dips, buying more on large dips, and not buying without dips" [2][6] - There will likely be a spring rally. After the year - end, with reduced institutional indicator constraints, funds will form a synergy, and the technology growth sector will have the greatest elasticity [3][6] Summary by Directory Why is December 2025 a "Buy - on - Dip" Opportunity for Stocks? - Extreme stock - bond market conditions at the year - end have increased institutional behavioral differentiation. Bond fluctuations directly affect stocks. Institutions with increased bond investment durations may reduce equity exposure due to solvency and volatility requirements [8] - Banks need to sell long - term bonds due to exceeding EVE indicators, while insurance companies buy long - term bonds. Since Q4 2025, insurance companies have net - bought 313 billion yuan of 10 - year + treasury bonds, and joint - stock banks have net - sold 479 billion yuan. Large bond price fluctuations have led to floating losses for bond buyers [8] - The "Fixed - Income +" strategy has become a negative feedback. The scale of "Fixed - Income +" products expanded significantly in the second half of this year. As of now, new funds in October have not yet made floating profits and have weaker volatility - bearing capacity. In Q3, the scale of "Fixed - Income +" strategy products increased by about 422.5 billion yuan, while the scale of pure - bond funds decreased by 1.6 trillion yuan [9] - The supply and demand of long - term bonds are worrying, and the potential risk of bonds lies in the pressure on the liability side. Even after a sharp decline, the rebound of long - term bonds is weak. The median return of "Fixed - Income +" public funds from October to now is 0.2%, and the maximum loss is - 10.1% [11] Every Decline at the Year - End is a New Opportunity for Stocks - The "relocation" of residents' deposits this round is carried out through institutions. Institutions are responsible for their liability sides, and the liability side has gradually shifted to equity. Asset allocation needs to match the liability side, which requires a slow - bull market [13] - Insurance companies have increased the number of dividend - insurance products since the second half of this year. In November, dividend - insurance products accounted for 48% of new insurance products, and future product layouts will also focus on them, increasing the need to boost investment - end returns [13] - The reinvestment of matured insurance investments is a new variable. The traditional life - insurance products, which account for 55% of the on - sale stock, have a liability - end duration of over 15 years. The 5 - 10Y bonds they hold are due for reinvestment, facing lower yields and thinner capital gains. This may force the asset side to shorten the duration or invest in equity [15] - From the perspective of boosting returns, technology is a necessary choice. The correlation coefficient between the China Bond Index and the CSI Dividend Total Return Index is as high as 0.95, while other broad - based equity indices are negatively correlated with the 10 - year treasury bond index [17] From "Buy - on - Dip" to "Spring Rally" - It is estimated that the incremental funds flowing into the stock market in 2026 will reach 3.1 trillion yuan, and the scale of "Fixed - Income +" will double. If the market adjusts in December, incremental funds are likely to enter the market in advance [19] - At the year - end, stock price movements are affected by bonds and may be more volatile, but it is a buying opportunity for well - capitalized institutions. In the spring rally next year, technology will still be the most worthy sector to focus on [19] - The importance of industry portfolio research is increasing. A "Fixed - Income + Technology" or a combination of technology and other weakly - correlated industries can meet the requirements of the liability side. For "Fixed - Income +" funds, adding 5% technology is better than adding 10% dividends [19]

Group 1: Allocation Demand in Low-Interest Rate Environment - The demand for dividend-related assets is expected to continue increasing, driven by the need for stable cash returns in a low-interest rate and asset scarcity environment [4][9]. - As of December 17, 2025, the tracking scale of dividend index ETFs approached 200 billion, while cash flow-related products reached 24.8 billion since their issuance in February of the same year [9]. Group 2: Comparison of Dividend and Free Cash Flow Indices - The report outlines the selection rules for the CSI Dividend Index and the National Index Free Cash Flow, emphasizing liquidity and consistent dividend payments over the past three years [12]. - The performance comparison shows that both dividend and cash flow indices outperformed the overall market during periods of market downturns, indicating their defensive characteristics [15]. Group 3: Relationship Between Dividend Capability and Willingness - There is a significant positive correlation between dividend yield and free cash flow, indicating that companies with high cash flow are more willing to distribute dividends [51]. - The analysis shows that companies with a history of consistent dividends and strong cash flow tend to have more stable and superior long-term stock price performance [59]. Group 4: "High-Yield Cash Cow" Strategy Construction - The "High-Yield Cash Cow" strategy involves selecting stocks based on high free cash flow rates and consistent dividend payments, excluding financial and real estate sectors [59]. - The strategy has shown strong performance, with the "Cash Cow 50 High Yield 30" combination achieving an annualized return of 25.9% since 2014, outperforming the CSI Dividend Index by 13.5% [62].

Group 1: Report Industry Investment Rating - The report does not mention the industry investment rating [1][2][3] Group 2: Core Viewpoints of the Report - The current main logic of the bond market is the lack of incremental funds, and there is also a "debt repayment theory" that the bond market is repaying the over - drawn "debt" since December last year. The "debt repayment" in terms of bond yields is almost done, and the second stage is the return of the bond's duration through secondary - market influence on primary issuance [3][4][32] - There is short - term allocation value in the bond market, but it needs to be considered separately from the perspectives of banks and insurance. The bank's bond allocation value is weakened due to possible over - limit constraints of interest - sensitive assets, while the allocation value of local bonds is prominent from the insurance perspective [3][19][20] - The anti - reflexivity in the bond market supply - demand framework exists. The EVE indicator can adjust assumptions, and the urgency of the indicator decreases in the second year. The issuance structure of interest - rate bonds is not fixed, and the steepening market may reverse [3][13] - The "stock - strong and bond - weak" consensus expectation needs to be vigilant against the anti - reflexivity caused by over - concentrated expectations in the first quarter [4][37][39] Group 3: Summary According to Related Catalogs 1. Behind the Framework of Bond Market Supply and Demand: Where is the Reflexivity? - The impact of bond market supply and demand on the market mainly has two paths: the rise of equities leads to the decline of the bond market, the withdrawal of trading funds with unstable liabilities, and the over - limit of the bank's EVE indicator after long - term bonds are taken back to the balance sheet; the rise of equities leads to insurance institutions rebalancing to more stocks and less bonds, resulting in a change in the insurance product structure and a decrease in the demand for long - term bonds [8] - If the treasury bond issuance structure is determined by plans such as stable growth and the proportion of ultra - long bonds remains unchanged, the long - term bond supply and demand will face an annual - level "imbalance" logic [8] - The anti - reflexivity of bond market supply and demand lies in that problems that can be deduced perfectly may not have a large impact. The EVE indicator can be adjusted, and the issuance structure of interest - rate bonds is variable [3][13] 2. Abuse of the Concept of "Allocation Disk": Measuring the Current Allocation Value of Bonds - The insurance allocation disk's buying rhythm has been relatively stable, and it mainly has trading demand for 30 - year treasury bonds, while large - account allocation or amortized product accounts still use local bonds of the same term as allocation varieties [3][15][17] - From the bank's perspective, the EVA cost - performance of 30 - year treasury bonds is better than that of mortgage loan interest rates, but the bank's bond allocation value is weakened due to possible over - limit constraints of interest - sensitive assets. From the insurance perspective, the allocation value of local bonds is prominent [3][19][20] - The seasonal "red - start" market of bonds has been advancing year by year, resulting in the anti - reflexivity of seasonal failure this year [3][23] 3. Why Does the Stock - Bond Correlation Fail? - Since October, the rapid expansion of fixed - income + strategy products has not produced a strong profit - making effect. Under the recent market consensus expectation of "stock - strong and bond - weak", the hedging effect of the fixed - income + strategy is average [25][27] - The relationship between liquidity and assets is like that between flour and water. The increase in risk preference may have led to an increase in "flour" with little marginal change in "water", resulting in unstable trading liquidity, and more precise liquidity injection is needed to break the situation [28] 4. How to Quantitatively Understand the Widening of the Yield Spread? - The market generally agrees on the widening of the term spread, with differences mainly in quantification and duration. In December, the 30 - year to 10 - year spread has reached over 40BP, returning to the level at the end of 2022. The market may have over - drawn the rhythm of next year [29] - There may be new factors for the spread to widen further, such as the widening of the bond yield curve in other countries, the possible inadequacy of using the 2022 bull - market term spread to measure in case of a bull - bear conversion, and the possible inadequacy of the current priced term spread in case of re - inflation. However, if the long - term bond issuance term is adjusted from over 20 years to under 10 years, the spread may change from widening to narrowing [31] 5. Summary: The Current Main Line of the Bond Market - The main line of the current bond market is the lack of incremental funds, and the "debt repayment theory" also has a certain basis. The "debt repayment" in terms of bond yields is almost done, and the second stage is the return of the bond's duration [32][34] - In terms of strategy, the 30 - year bond has the highest short - term over - sold betting odds, but the space for one - sided direction betting is limited. The spread between special 6 and special 2 still has room for betting on regression. Medium - and short - term credit bonds and interest - rate bonds with a term of 5 years or less are relatively stable choices [4][37]

Group 1: Core Insights - The report highlights the "Davis Double Hit Strategy," which involves buying stocks with low price-to-earnings (PE) ratios that have growth potential, and selling them once their growth is realized, achieving a multiplier effect on returns [4][7] - The "Net Profit Discontinuity Strategy" focuses on selecting stocks that show significant upward price gaps on the first trading day after earnings announcements, indicating market recognition of earnings surprises [10][11] - The "Enhanced CSI 300 Portfolio" is constructed based on investor preferences, targeting stocks with low valuations and strong profitability, aiming for stable excess returns over time [13][18] Group 2: Performance Metrics - The Davis Double Hit Strategy achieved an annualized return of 26.45% during the backtest period from 2010 to 2017, with excess returns exceeding 11% in each of the seven years [4][8] - The Net Profit Discontinuity Strategy has recorded a cumulative absolute return of 65.34% this year, outperforming the benchmark by 40.13% [11][12] - The Enhanced CSI 300 Portfolio has shown a relative excess return of 19.48% this year, with a weekly excess return of 1.60% [18]

Investment Rating - The report maintains a rating of "Buy" for several key companies in the aviation and logistics sectors, including China Southern Airlines, Spring Airlines, and SF Express [2]. Core Insights - The aviation sector is expected to benefit from multiple catalysts, including the recovery of passenger demand and improved ticket pricing due to high load factors and regulatory support [4][6]. - The logistics and express delivery industry is experiencing a divergence in growth rates, with a focus on improving operational quality through policies aimed at reducing "involution" and the adoption of automation technologies [6][7]. Summary by Sections Aviation Sector - The report highlights the positive impact of the national strategy to expand domestic demand, which is expected to drive up airline stock prices. For instance, companies like China Eastern Airlines and China Southern Airlines saw stock increases of 12.48% and 13.60%, respectively [4]. - Key metrics for airlines from December 15 to December 19 include average daily flights and aircraft utilization rates, with notable year-on-year increases in flight numbers for several airlines [4]. - The report emphasizes the long-term growth potential of the aviation sector, driven by a combination of recovering demand, regulatory support for pricing, and a gradual recovery in aircraft utilization rates [6]. Logistics and Express Delivery - The express delivery sector is witnessing a mixed trend in volume and pricing, with November data showing a year-on-year increase in delivery volumes for some companies while others face declines [6]. - The report notes that the integration of Danbird Logistics into Shentong Express is expected to enhance scale and operational efficiency [6]. - The "anti-involution" policy is anticipated to improve profitability across the express delivery industry, with a focus on enhancing service quality and pricing strategies [6][7]. Infrastructure - The report suggests that the infrastructure sector, particularly highways, remains stable with consistent cash dividends and ongoing expansion projects [6]. - Data from December 8 to December 14 indicates a slight decline in freight traffic on highways and railways, but overall port throughput showed a year-on-year increase [6]. Shipping and Trade - The shipping sector is experiencing fluctuations in freight rates, with oil shipping showing strength while dry bulk rates are declining. The report suggests that geopolitical factors may reshape global shipping dynamics [7]. - The report recommends monitoring companies in the shipping sector for potential investment opportunities, particularly those positioned to benefit from seasonal demand increases [7].

Investment Rating - The report maintains an "Overweight" rating for the real estate sector [1] Core Insights - The report highlights a rebound in sales in Guangzhou due to the promotion of prefabricated buildings, with a week-on-week increase in sales despite a year-on-year decline [1][6] - The overall market performance remains weak, with the Shenwan Real Estate Index down by 0.41% and the CSI 300 Index down by 0.28%, indicating underperformance relative to the broader market [3][11] Summary by Sections Weekly Market Review - The Shenwan Real Estate Index decreased by 0.41%, while the CSI 300 Index fell by 0.28%, resulting in a relative return of -0.13% [3][11] - The report notes that the performance of the real estate sector is weaker than the overall market [3][11] Industry Fundamentals - For the week of December 12-18, 38 tracked cities saw a total of 29,303 new homes sold, a year-on-year decrease of 31.9% but a week-on-week increase of 8% [4][19] - The total transaction area for new homes was 3.19 million square meters, with a year-on-year decline of 29.6% but a week-on-week increase of 21% [4][19] - In the same week, 16 tracked cities recorded 18,668 second-hand homes sold, down 23% year-on-year but up 1.5% week-on-week [34][37] - The total transaction area for second-hand homes was 181.8 million square meters, with a year-on-year decline of 26.1% and a week-on-week increase of 5.7% [34][37] Land Market Supply and Transactions - In the week of December 8-14, land supply was 2,056.8 million square meters, down 55.1% year-on-year, with an average supply price of 1,053 yuan per square meter, down 38.5% year-on-year [5] - Land transactions totaled 8,132.5 million square meters, up 53.5% year-on-year, with a transaction amount of 135.41 billion yuan, up 55.9% year-on-year [5] Financing Analysis - Real estate companies issued a total of 5.33 billion yuan in credit bonds, reflecting a year-on-year decrease of 39.34% and a week-on-week decrease of 64.51% [5] Investment Recommendations - The report suggests focusing on financially stable and well-performing leading real estate companies such as Yuexiu Property, China Merchants Shekou, Poly Developments, and others, which are expected to effectively respond to market fluctuations [6] - It also notes that property management companies may see performance and valuation recovery as market demand rebounds, recommending attention to companies like China Resources Vanke and Poly Property [6]

Investment Rating - The report maintains an "Overweight" rating for the coal industry [2][5]. Core Views - The coal market is expected to stabilize as supply tightens and demand rebounds, driven by seasonal factors and production adjustments [7][8]. - China Shenhua's acquisition of significant assets is projected to enhance its coal production capacity and resource reserves substantially [8]. - The investment strategy suggests a focus on undervalued stocks with high dividend yields and growth potential in the coal sector [8]. Summary by Sections 1. Industry Overview - The coal industry comprises 37 listed companies with a total market capitalization of 1,875.44 billion yuan and a circulating market value of 1,839.35 billion yuan [2]. 2. Coal Price Tracking - Recent trends indicate a divergence in coal prices, with coking coal stabilizing upwards while thermal coal prices are under pressure due to weak demand [7][8]. - As of December 19, 2025, the price of thermal coal at the port was 708 yuan/ton, reflecting a week-on-week decrease of 42 yuan/ton [8]. 3. Supply and Demand Dynamics - Coal production in November 2025 was 42,679 million tons, a year-on-year decrease of 0.5% but a month-on-month increase of 4.93% [7]. - The report highlights that the demand for electricity coal has been affected by warmer weather, leading to a decrease in daily coal consumption [7]. 4. Key Company Insights - China Shenhua's acquisition plan involves purchasing multiple coal and energy assets for a total consideration of 1,335.98 billion yuan, significantly increasing its coal production capacity by approximately 230 million tons per year [8]. - Other companies such as Yancoal Energy and Shanxi Coking Coal are also highlighted for their growth potential and dividend policies [13]. 5. Investment Recommendations - The report recommends a strategy of buying undervalued stocks with strong dividend yields, such as China Shenhua, Zhongmei Energy, and Xinji Energy, while also focusing on companies with significant production capacity growth [8][13].

Group 1 - The core view of the report indicates that the A-share insurance industry is expected to return to a P/EV of 1x, with both asset and liability sides flourishing, driven by a recovery in EV growth and favorable interest rate conditions [3][4][36] - The report anticipates a long-term EV growth rate returning to double digits, with a focus on opportunities for long-term interest rates to break through the 2.0% threshold [3][36] - The insurance sector is expected to benefit from a gradual recovery in the equity market, which will enhance the investment ecosystem for insurance capital [6][39] Group 2 - In the life insurance sector, the report highlights a comprehensive and sustained widening of profit sources, with a positive outlook for the 2026 performance driven by asset reallocation and a gradual bull market in equities [4][36] - The non-auto insurance sector is set to improve underwriting profitability through a regulatory shift towards quality enhancement, with a projected increase in underwriting profit of approximately 5.8 billion yuan if profit margins improve by 1 percentage point [5][36] - The report suggests that the insurance companies are likely to maintain double-digit growth in core premium income and value growth in 2026, supported by effective channel expansion and improved sales dynamics [4][52] Group 3 - The report emphasizes the importance of the investment strategy, noting that the current low interest rate environment necessitates a focus on equity investments to enhance returns [6][39] - It is projected that the average EV growth for listed insurance companies will be 10.6%, 10.9%, and 10.8% from 2025 to 2027, with NBV growth rates of 34.7%, 21.7%, and 10.0% respectively [36][37] - The report indicates that the insurance sector's valuation is expected to gradually approach 1x P/EV as long-term interest rates stabilize and improve [39][40]

Group 1: A-Share Market - The A-share market showed a mixed performance this week, with value sectors being relatively strong. Major indices like the Shanghai 50 and CSI 2000 saw slight increases, while the ChiNext index fell by 2.26%. Value performance was notable across large, mid, and small-cap stocks, with sectors such as retail, consumer services, and non-bank financials leading the gains. The average daily trading volume was 1.76 trillion, down 9.86% week-on-week [6][7]. - The market experienced a pattern of initial decline followed by recovery, indicating structural hotspots. The China Securities Regulatory Commission (CSRC) chairman emphasized the need to deepen the capital market's 14th Five-Year Plan and expand high-level opening-up to boost market confidence. The Central Financial Office highlighted that expanding domestic demand is a primary task for the coming year, aiming to stimulate consumption through supply and demand-side efforts [6][7]. - Looking ahead, the A-share market is expected to remain structurally active due to ongoing policy support for capital markets and consumption. Despite a decline in trading volume, support from emerging industries like technology and new energy, along with the push for domestic demand, will provide market backing. Investors are advised to focus on sectors benefiting from policy support, such as consumption upgrades, technological innovation, and high-end manufacturing [7]. Group 2: Hong Kong Market - The Hong Kong market faced overall pressure this week, with major indices recording declines. The Hang Seng Index, Hang Seng China Enterprises Index, and Hang Seng Technology Index fell by 1.1%, 1.96%, and 2.82%, respectively, with the technology index experiencing the largest drop. Essential consumer and financial sectors rose against the trend, while most sectors, including information technology and non-essential consumer goods, showed weakness [8]. - Despite the overall pressure, the market was supported by expectations of improved liquidity due to anticipated interest rate cuts by the Federal Reserve. In 2025, the Fed has already cut rates three times, with potential for further easing, which may optimize the debt side for Hong Kong stocks. Additionally, a rebound in U.S. tech stocks provided some uplift to the Hong Kong technology sector [8]. - In the future, while the Hong Kong market may experience volatility due to external factors, the expected improvement in liquidity from the Fed's easing cycle will have a positive impact. Strong performance from the mainland economy and ongoing policy support, particularly in high-level opening-up, will provide a solid foundation for the Hong Kong market. Investors are encouraged to focus on sectors benefiting from Fed easing and mainland economic recovery, as well as technology sectors with growth potential amid the AI wave [8].