Investment Rating - The report maintains a rating of "Outperform" for the industry [7] Core Views - Precious metals are experiencing significant price volatility, with silver prices retreating from highs due to profit-taking and macroeconomic factors [3][14] - Industrial metals, particularly copper and aluminum, are undergoing price corrections influenced by macroeconomic conditions, with copper prices showing signs of recovery despite inventory accumulation [4][20] - In the new energy metals sector, lithium carbonate prices have sharply declined, but strong demand signals from downstream industries may support a rebound in prices post-holiday [22][27] - Other minor metals, such as rare earths, are showing mixed price movements, with some products experiencing upward pressure due to supply constraints [24][27] Summary by Sections Precious Metals - Silver prices have seen a significant drop, with fluctuations driven by market sentiment and macroeconomic news, including the nomination of Kevin Warsh as the next Federal Reserve Chair [3][14] - Key stocks to watch include Zijin Mining, Zhongjin Lingnan, and others in the gold sector [15] Industrial Metals - Copper prices have corrected, but market activity has increased, with strong buying sentiment noted despite the holiday season affecting production schedules [4][20] - Aluminum prices have experienced volatility, with a notable drop followed by a brief recovery, although the overall supply-demand structure remains weak [20][21] New Energy Metals - Lithium carbonate prices have decreased significantly, but robust demand from downstream sectors indicates potential for price recovery in the near future [22][27] - Key stocks in the lithium sector include Ganfeng Lithium and others [23] Other Minor Metals - The rare earth market has shown mixed price trends, with some products like praseodymium-neodymium oxide experiencing upward price movements due to supply constraints [24][27] - Stocks to monitor include Hunan Gold and others in the minor metals sector [27]

Investment Rating - The coal industry maintains a strong rating compared to the broader market [7] Core Insights - The report emphasizes that the coal industry is currently experiencing a transformation driven by energy security and policy changes, suggesting that coal may still be in a golden era [5][6] - The report indicates that coal prices are expected to stabilize, with potential fluctuations, as demand remains uncertain but supply constraints are evident [5] - The report highlights the importance of focusing on high-quality core stocks in coal investments, given the expected policy support for the industry [5][6] Summary by Sections Coal Market Overview - As of February 6, the price of Qinhuangdao 5500K thermal coal is 695 RMB/ton, with a week-on-week increase of 3 RMB/ton [3] - The average daily production of thermal coal from 462 sample mines is 5.281 million tons, a decrease of 48,000 tons week-on-week but an increase of 8.8% year-on-year [3][39] - The report notes a significant drop in daily consumption at power plants, with an increase in inventory levels [3][40] Coking Coal - As of February 6, the price of main coking coal at Jingtang Port is 1,660 RMB/ton, down 140 RMB/ton week-on-week [4] - The average daily production of coking coal from 523 sample mines is 755,000 tons, a decrease of 16,000 tons week-on-week but an increase of 60.7% year-on-year [4][65] - The report indicates a slight increase in the operating rate of large coking plants [4] Investment Recommendations - The report suggests focusing on companies with strong resource endowments and stable operating performance, such as China Shenhua, China Coal Energy, and Shaanxi Coal and Chemical [6] - It also recommends companies with production growth potential and those benefiting from a bottoming coal price cycle, including Yanzhou Coal Mining, Huayang Co., and Gansu Energy [6] - Companies with global resource scarcity attributes and those involved in coal-electricity integration are also highlighted as investment opportunities [6]

Group 1 - The report highlights the recovery opportunities in the consumer building materials sector, driven by the stabilization of the real estate market and the emergence of sub-industry advantages [2][3] - The funding aspect shows an increasing proportion of active equity funds' holdings in the building materials sector, with noticeable net inflows into building materials ETFs since late January 2026 [10][11] - The fundamental aspect indicates that the consumer building materials sub-industry is showing alpha advantages due to an optimized competitive landscape, smoother price transmission, channel transformation, and dual recovery of performance and valuation [14][42] Group 2 - The competitive landscape in the consumer building materials industry has improved, with the market concentration in the waterproof materials sector expected to increase, as indicated by the CR5 rising from 55% in 2023 to 60% in the first half of 2025 [17][19] - The report notes that major companies in the waterproof materials sector have begun to raise prices in response to rising raw material costs, indicating a shift away from intense competition [19][20] - The transformation of business models is highlighted, with companies shifting focus from large B clients to small B and C end customers, which helps mitigate risks associated with large client concentration [20][25] Group 3 - The report anticipates a turning point in the revenue and net profit growth rates for the consumer building materials index, with current PB valuations below the 50th percentile since 2020, suggesting potential for both performance improvement and valuation recovery [42][44]

Group 1 - The report indicates that the excess reserve ratio in December increased by 0.4 percentage points to 1.6%, which is relatively low for year-end months and below the expected 0.3 percentage points, primarily due to a lower-than-expected decline in government deposits [1][13][17] - In December, government deposits decreased by approximately 1 trillion, which is lower than the previously expected 2 trillion, reaching a historical high of 5 trillion [1][13][17] - The report highlights that the general public budget revenue and expenditure did not meet the annual budget targets, with the expenditure completion rate being the lowest in recent years, leading to a significant fiscal deficit of 2.66 trillion in December, exceeding expectations by about 500 billion [2][16][17] Group 2 - The report forecasts that the broad fiscal surplus for January is expected to be around 410 billion, which is at a neutral level compared to previous years, with government deposits anticipated to increase by approximately 1.25 trillion, potentially impacting liquidity [2][26][35] - In January, the monetary issuance is projected to increase by about 600 billion, with the reserve requirement ratio expected to rise by approximately 350 billion, indicating a tightening effect on liquidity [2][26][35] - The report notes that the funding rates in January have marginally increased compared to December, but the overall liquidity remains loose, with the average DR001 rate reaching 1.34%, higher than December's 1.28% [3][43][45] Group 3 - The report suggests that the fiscal deficit in February may reach the highest level for the same period in previous years, with government deposits expected to decrease by about 370 billion [7][35] - It is anticipated that the monetary issuance in February will remain high, with an expected increase of around 900 billion, influenced by the timing of the Chinese New Year [7][35] - The report indicates that the central bank's monetary policy has subtly shifted, focusing on guiding reasonable growth in financial totals rather than excessively loosening financial conditions [8][35]

Core Insights - The report indicates that the Chinese real estate market has undergone a deep adjustment since the second half of 2021, nearing the average adjustment period internationally. The stabilization of the real estate market is crucial for economic development [2][9] - The decline in second-hand housing prices in first-tier cities signals that these cities often lead the overall adjustment in the country. The report suggests that the "correction" phase may enter a deeper stage starting from May 2025 [9][10] - The experiences of Japan and Hong Kong in terms of housing price recovery, particularly the relationship between rental yield and housing prices, are highlighted as important references for understanding the current situation in China [3][28] Group 1: First-tier City Price Adjustments - The report notes that first-tier cities have shown a more resilient new housing price trend compared to second and third-tier cities. However, since May 2025, second-hand housing prices in these cities have entered a "correction" phase with a more significant decline [10] - Historical data indicates that first-tier cities typically lead the national adjustment process, suggesting that the current price corrections may indicate a transition into a more profound adjustment phase [10] Group 2: Rental Yield and Housing Price Relationship - The report argues that rental yield should be compared with loan interest rates rather than government bond yields. A rental yield exceeding loan interest rates is seen as a preliminary step towards price stabilization, with actual price recovery dependent on rising rental prices [3][28] - The report emphasizes that the relationship between rental prices and housing prices is crucial, with evidence showing that rental price increases are necessary for housing price recovery [3][28] Group 3: Current Rental and Price Trends in China - The report identifies a positive correlation between rental and housing price increases in 2025, with specific examples from cities like Urumqi, where both rental and housing prices are expected to rise simultaneously [3][69] - Positive signals are emerging from major cities such as Beijing, Shanghai, Shenzhen, and others, where rental prices have recently increased, leading to either price stabilization or a reduction in price declines [76][78]

Group 1: Election Overview - Japanese Prime Minister Sanna Takashi announced the dissolution of the House of Representatives on January 19, with elections scheduled for February 8, aiming to convert her high approval ratings into control for the Liberal Democratic Party (LDP) [3] - The House of Representatives consists of 465 seats, all of which will be contested in the upcoming election, using a mixed electoral system of single-member districts and proportional representation [4] - Polls indicate that the LDP is likely to secure more than half of the seats, despite a recent decline in Takashi's personal approval ratings, which remain around 59% [5] Group 2: Polling Insights - Current polls show the LDP at 35.9%, followed by other parties with significantly lower support, indicating a strong position for the LDP [26] - Concerns over rising prices, particularly food costs, are the primary voter issues, with 41% prioritizing measures to address inflation [55] - The election outcome is considered highly unpredictable, with factors such as the youth vote and historical turnout rates influencing potential results [5] Group 3: Market Implications - A significant LDP victory would likely lead to smoother implementation of policies such as tax cuts and increased defense spending, positively impacting domestic consumption and infrastructure sectors [6] - If the LDP fails to secure a majority but remains in coalition, market reactions will be more tempered, reflecting a shift from aggressive expansion to moderate policy advancement [6] - The potential for increased government debt due to fiscal expansion could pressure long-term interest rates and weaken the yen [6]

Investment Rating - The industry rating is "Outperform the Market" [8] Core Insights - The thin-film lithium niobate (TFLN/LNOI) is positioned as a foundational material platform for next-generation photonic chips, benefiting from advancements in AR glasses and optical communication [4][5] - The market for lithium niobate is expanding due to its superior piezoelectric, ferroelectric, and electro-optic properties, with China accounting for 42% of global production capacity [4][24] - The demand for TFLN is driven by the growth of AR glasses and the transition in optical communication towards high-speed data center interconnects [5][39] Summary by Sections 1. Introduction to Lithium Niobate and Thin-Film Lithium Niobate - Lithium niobate (LiNbO₃) is recognized for its multifunctional properties, making it a key material in integrated and guided optics [14] - Thin-film lithium niobate (TFLN) is produced as sub-micron films, enhancing device integration density and performance compared to traditional bulk lithium niobate [3][14] 2. Industry Trends & Competitive Landscape 2.1 Industry Trends - The rapid development in 5G/6G, AI, and data centers is driving the demand for lithium niobate, which is becoming a leading material in photonics [23] 2.2 Competitive Landscape - China is the largest producer of lithium niobate, with companies like TianTong and JiNan JingZheng leading in production capabilities [4][24] 3. Potential Growth Markets: AR Glasses and Optical Communication 3.1 AR Glasses - TFLN technology enables ultra-fast electro-optic response and significant improvements in color switching speed for AR glasses, with a projected global shipment of 1.06 million units by 2025 [5][35] 3.2 Optical Communication - The shift towards high-speed optical communication is creating a new growth cycle, with TFLN being crucial for supporting high data rates and low power consumption [5][39] 4. Material Characteristics of Thin-Film Lithium Niobate - TFLN offers advantages over silicon photonics and indium phosphide, including higher bandwidth and better linearity, making it suitable for high-density integration [45] 5. Key Industry Players - Key companies include: - **Sumitomo Metal Mining**: Leading in large-scale lithium niobate wafer production [49] - **TDK**: Innovating in the direct growth of lithium niobate films on standard semiconductor substrates [49] - **TianTong Co.**: Focused on the development of lithium niobate crystals for RF filters and optical devices [49] - **JiNan JingZheng**: A pioneer in the thin-film lithium niobate sector, breaking foreign monopolies [49] - **NanZhi Semiconductor**: Specializing in high-quality lithium niobate crystals for advanced applications [50]

Market Overview - In January 2026, the overall A-share market experienced an increase, with the CSI 300 index rising by 1.65%, the CSI 1000 by 8.68%, the CSI 500 by 12.12%, and the ChiNext by 4.47% [15][16] - The top three performing sectors were non-ferrous metals, media, and oil and petrochemicals, while banking, transportation, and non-bank financial sectors saw declines [15] Multi-Strategy Stock Selection - The multi-strategy stock selection strategy achieved an absolute return of 8.16% in January 2026, with a relative excess return of 2.29% compared to the CSI All Share Index [3][32] - The strategy's weight allocation as of February 2026 showed the highest allocation to value stocks at approximately 45.00%, while growth stocks had the lowest allocation at about 7.60% [3][21] - The strategy's portfolio included 49 stocks, with an average market capitalization of 1384.85 billion, concentrated in real estate, electricity, public utilities, and media sectors [25][31] Extreme Style High Beta Stock Selection - The extreme style high beta stock selection strategy had the highest weight in large-cap value stocks at 72.09%, with the lowest in large-cap growth stocks at 12.91% [4][50] - The strategy's absolute return in January 2026 was 4.14%, with a relative excess return of -1.51% compared to the CSI All Share Index [4][20] "Dividend +" Preferred Stock Strategy - The "Dividend +" preferred stock strategy achieved an absolute return of 2.81% in January 2026, with a relative excess return of -2.78% compared to the CSI All Share Index [5][20] - The strategy's portfolio consisted of 30 stocks, with an average market capitalization of 1104.10 billion, primarily in banking and retail sectors, accounting for 60.00% of the portfolio [5] Moving Average Trend Strategy - The moving average trend strategy recorded an absolute return of 6.83% in January 2026, with a relative excess return of 1.02% compared to the CSI All Share Index [6][20] - The strategy's portfolio included 30 stocks, mainly in the oil, petrochemical, and telecommunications sectors, with a weight of 50.21% [6] Sentiment Price-Volume Strategy - The sentiment price-volume strategy's top 50 combination achieved an absolute return of 10.14% in January 2026, with a relative excess return of 4.15% compared to the CSI All Share Index [6] - The strategy's portfolio was concentrated in the machinery and electronics sectors, accounting for 24% and 20% respectively [6] Sci-Tech Innovation Board Strategy - The Sci-Tech Innovation Board strategy achieved an absolute return of 12.50% in January 2026, with a relative excess return of 0.19% compared to the Sci-Tech 50 Index [7] - The strategy's portfolio included 30 stocks, primarily in the electronics sector, with a weight of 49.90% [7]

Group 1 - The report discusses the volatility in the capital markets, particularly in precious metals and colored metals, highlighting that gold prices have surged nearly 30% in January, leading to increased volatility [2][10][11] - The report emphasizes the contradiction between asset pricing and positioning, noting that despite gold's price increase, the volatility has also escalated, raising questions about the rationale for investing in such volatile assets for hedging purposes [11][12] - The report identifies that the characteristics of 30-year government bonds have changed, with a significant drop in yield and increased volatility, indicating a loss of the "fixed income" nature of these assets [15][18] Group 2 - The report outlines that convertible bonds have become a leveraged asset, with their leverage stemming from the underlying equity assets and the specific investment restrictions of "fixed income+" products [3][21][25] - It highlights that the short-term impact on convertible bonds is influenced by equity market trends, strong redemption clauses, and opportunity costs, suggesting that if the equity market remains bullish, there is no strong reason to be bearish on convertible bonds [4][27] - The report recommends focusing on convertible bonds with high equity characteristics and no strong redemption expectations, as well as those with moderate pricing and positive fundamental changes [5][31][32] Group 3 - The report suggests a defensive approach by including convertible bonds with solid cash flow and low premium rates, as well as those in the chemical sector, which may benefit from upcoming demand [35][36][37] - It identifies specific convertible bonds to watch, including Daotong Convertible Bond, Zhoubang Convertible Bond, and Liugong Convertible Bond for high equity characteristics, and Yong 22 Convertible Bond and Southeast Convertible Bond for moderate pricing with positive changes [31][32][33]

- The report categorizes quantitative funds into three main types: active quantitative funds, enhanced index quantitative funds, and hedged quantitative funds, each with distinct characteristics and advantages suitable for different trading needs[10] - Active quantitative funds are further divided based on the indices they track, including CSI 300, CSI 500, other broad-based indices, industry theme indices, and smart beta indices[13] - Enhanced index quantitative funds are also categorized similarly, tracking indices such as CSI 300, CSI 500, other broad-based indices, industry theme indices, and smart beta indices[13] - In January 2026, the median return rates for active quantitative funds tracking CSI 500, other broad-based indices, and CSI 300 were 8.63%, 8.02%, and 6.54%, respectively[14][18] - The median excess returns for active quantitative funds tracking CSI 500, other broad-based indices, and CSI 300 in January 2026 were 10.33%, 8.63%, and 6.54%, respectively[18] - The median annualized volatility for active quantitative funds tracking CSI 300 in January 2026 was 13.55%, with a maximum drawdown of -1.97%[26][27] - The median annualized volatility for active quantitative funds tracking CSI 500 in January 2026 was 15.09%, with a maximum drawdown of -2.06%[28][33] - The top three active quantitative funds tracking other broad-based indices in January 2026 were those tracking the ChiNext Index and CSI 800[34][39] - The top three active quantitative funds tracking industry theme indices in January 2026 were those tracking the CSI Leading Enterprises, CSI High-end Equipment, and CICC Electronic Components indices[40][41] - The top smart beta active quantitative fund in January 2026 was the one tracking the CSI 800 Value Index[42][43] - Enhanced index funds tracking CSI 500 and CSI 300 had median excess returns of -2.0% and 1.1%, respectively, in January 2026[46][50] - The median annualized volatility for enhanced index funds tracking CSI 500 in January 2026 was 16.93%, with a maximum drawdown of -2.44%[46][47] - The median annualized volatility for enhanced index funds tracking CSI 300 in January 2026 was 12.0%, with a maximum drawdown of -2.44%[50][53] - The top three enhanced index funds tracking other broad-based indices in January 2026 were those tracking CSI 800, CSI A500, and CSI 800[57] - The top three enhanced index funds tracking industry theme indices in January 2026 were those tracking the photovoltaic industry, chip industry, and consumer leaders indices[58] - The top smart beta enhanced index fund in January 2026 was the one tracking the CSI State-owned Enterprise Dividend Index[59][61] - Hedged quantitative funds had an average absolute return of 0.25% in January 2026, with higher net asset value volatility compared to December 2025[62][63]