Key Insights - The report emphasizes the importance of long-term capital entering the market, particularly focusing on three main directions: new productive forces, dual new directions, and assets with high safety margins [2][20][22] - The macroeconomic analysis indicates an improvement in fiscal revenue and expenditure, with expectations for a more proactive fiscal policy in 2025, including a projected narrow deficit rate of around 4% and a broad deficit rate of about 9% [5][12][18] - The report highlights the structural opportunities in the A-share market, particularly in February, driven by liquidity recovery, policy expectations from the upcoming Two Sessions, and a favorable investment window for corporate earnings [20][22] Group 1: Long-term Capital Market Entry - The implementation plan for promoting long-term capital market entry was jointly issued by six government departments, aiming to stabilize the capital market and enhance long-term funding [2] - The report notes that insurance funds, social security funds, and pension funds have significant potential for increasing their investments in A-shares, with specific targets set for insurance companies to allocate 30% of new premiums to A-share investments starting in 2025 [2][20] - The report identifies that the long-term capital entering the market will likely focus on sectors aligned with national strategic needs and technological innovation [2][20] Group 2: Fiscal Policy and Economic Outlook - The fiscal data analysis shows that overall fiscal revenue and expenditure improved in December, indicating a shift in fiscal policy towards more proactive measures [5][12] - The report suggests that local governments have adjusted their revenue growth targets for 2025, reflecting a more realistic assessment of economic conditions and the need for increased central government support [12][18] - The analysis indicates that the structure of fiscal expenditure is shifting towards technology and education, reflecting a focus on economic transformation and social welfare [8][10] Group 3: A-share Market Performance - Historical data from 2015 to 2024 suggests a high probability of positive returns in the A-share market following the Spring Festival, with expectations for a bullish trend in February [20][22] - The report highlights that the upcoming Two Sessions are expected to boost market sentiment and policy expectations, which could lead to increased investment in sectors benefiting from government support [20][22] - The recommended investment strategy for February focuses on growth-oriented value stocks in technology and consumer sectors, capitalizing on favorable policy and earnings expectations [20][22]

Group 1: Global Climate Governance and China's Role - The U.S. withdrawal from the Paris Agreement has solidified China's leadership in global climate governance[3] - China aims to peak carbon emissions by 2030 and achieve carbon neutrality by 2060, establishing a "1+N" policy framework for carbon management[3] - China has become a core force in global green transformation, providing 70% of the world's photovoltaic components and 60% of wind power equipment[3] Group 2: Economic and Investment Opportunities - China's renewable energy, electric vehicles, and green finance sectors show significant market potential, offering vast investment opportunities[4] - The energy sector is shifting towards clean energy, with traditional energy sources undergoing transformation; companies like Sungrow Power, GCL-Poly, and Sany Heavy Industry are recommended for investment[4] - The chemical industry is expected to see breakthroughs in green hydrogen and CCUS, with firms like Sinopec and CNOOC highlighted for potential growth[4] Group 3: Risks and Challenges - Global economic downturn poses risks to climate governance, with rising debt levels and inflation impacting investment in green technologies[6] - The U.S. exit from the Paris Agreement has created a funding gap for climate initiatives, particularly affecting developing countries' low-carbon transition capabilities[6] - The volatility in energy prices during the transition from traditional to renewable energy sources presents challenges for economic stability and investment[44]

Core Insights - The overall trading activity on the Beijing Stock Exchange (BSE) has decreased, with an average daily trading volume of approximately 128.43 billion yuan, down from 179.41 billion yuan the previous week [4][5] - The BSE 50 index experienced a weekly decline of 3.89%, with 53 out of 263 listed companies showing positive weekly growth, led by Vision Intelligent (+27.33%) and Clait (+22.76%) [10][19] - The overall price-to-earnings (P/E) ratio for BSE-listed companies is around 35.1 times, a decrease from 36.1 times the previous week [19][22] Market Overview - The total trading volume for the week was 642.13 billion yuan, a decrease of 28.42% from the previous week [4][5] - The trading volume was 33.59 billion shares, down 30.93% from 48.63 billion shares the previous week [4][5] - The turnover rate for the BSE was 21.87%, lower than the ChiNext but higher than the Sci-Tech Innovation Board and the Shanghai and Shenzhen main boards [5][19] Company Performance - Among the 263 listed companies, the highest weekly gainers included Vision Intelligent (+27.33%), Clait (+22.76%), and Fangsheng Co. (+15.17%) [10][19] - The largest decline was seen in Huawi Design, which dropped by 14.72% [10][19] - The computer industry was the only sector to show a positive performance this week, with a gain of 2.4%, while the construction decoration sector saw the largest decline at -6.5% [10][19] Investment Strategy - The report recommends focusing on three main investment directions for 2025: 1. Targeting companies with growth potential and strong R&D investment, particularly those with high performance growth and capacity expansion from fundraising projects [26] 2. Monitoring companies that are expanding their industrial chains or planning overseas layouts, encouraged by policy support for mergers and acquisitions [26] 3. Paying attention to state-owned enterprises with stable operations and strong growth capabilities [26] Important Announcements - Key announcements from BSE companies included external investments, performance forecasts, and project delays, with notable mentions such as Kangpu Chemical's external investment and various companies releasing their 2024 annual performance forecasts [28][30]

Investment Rating - The report maintains a "Recommended" investment rating for the public utility sector [2][5]. Core Insights - The green energy transition is ongoing, with significant emphasis on clean and efficient coal utilization as part of the government's goals for 2025 [4]. - Economic growth is projected to remain high, with a weighted GDP growth target of 5.3% across 31 provinces, leading to an expected electricity demand growth of over 6% in 2025 [4]. - The report highlights three main strategies for promoting green transition: increasing the use of clean energy sources like solar, wind, hydrogen, and nuclear; constructing zero-carbon parks; and enhancing carbon footprint management [4]. - Coal remains a major energy source, accounting for 53.7% of total energy consumption in 2024, although its share is decreasing [4]. - The report suggests a favorable outlook for clean energy sectors such as wind, solar, and nuclear power, while also supporting the efficient use of coal through integrated coal and power operations [4]. Summary by Sections Economic Outlook - The GDP growth target for 2025 is set at around 5%, with electricity demand growth historically outpacing GDP growth, averaging a ratio of 1.24 [4]. - The report anticipates that electricity demand will maintain high elasticity, with a growth rate expected to exceed 6% [4]. Green Energy Transition - The report outlines initiatives for promoting clean energy, including significant new installations of wind and solar power across various provinces [4]. - It emphasizes the importance of building zero-carbon facilities and improving carbon management systems [4]. Coal Utilization - The report notes that coal will continue to play a crucial role in energy supply, with initiatives to enhance its clean and efficient use [4]. - Specific projects and targets for coal production and modernization are highlighted, including the establishment of intelligent coal mines and modern coal chemical projects [4]. Investment Recommendations - The report recommends focusing on companies with strong policy support, improving performance, and potential valuation increases, particularly in the thermal power sector [4]. - Long-term investment is favored in hydropower and nuclear power sectors due to their stable performance and strong dividend capabilities [4]. - Specific companies to watch include Huaneng International, Anhui Electric Power, Sichuan Investment Energy, and Yangtze Power [4].

Group 1: Fiscal Overview - The overall fiscal revenue and expenditure improved in December, indicating a continued increase in counter-cyclical fiscal policy since August[1] - The first account (general public budget) showed expenditures exceeding revenues, with central government spending growth significantly outpacing local government at 6.5% compared to 3.2%[2] - The second account (government funds) reported revenues exceeding expenditures, reflecting structural adjustments in investment, with local governments reducing inefficient investments[3] Group 2: Budget Performance - The first account's revenue completion rate was 98.1%, with a negative growth of -3.4% against a target of 3.6%, prompting local governments to lower revenue growth targets for 2025[4] - The second account's revenue completion rate was 87.7%, with a significant decline in land revenue growth recorded at -16% for the year[5] - The total revenue for the second account was 6.2 trillion yuan, with an expected carryover of approximately 1 trillion yuan to 2025 due to lower expenditures of 10.14 trillion yuan[6] Group 3: Taxation and Expenditure Trends - Tax revenue growth was below initial targets, with value-added tax, corporate income tax, and personal income tax showing negative growth, while consumption tax grew by 2.6%[7] - Non-tax revenue surged to 25.4% in December, reflecting pressure on local governments to meet year-end revenue targets[8] - The overall expenditure structure shifted towards economic transformation, with significant increases in spending on education and technology, indicating a focus on social welfare[9]

Investment Rating - The report maintains a "Recommended" rating for the agriculture, forestry, animal husbandry, and fishery industry [2]. Core Insights - The overall performance of the agriculture, forestry, animal husbandry, and fishery industry in January 2024 was under pressure, with the SW Agriculture, Forestry, Animal Husbandry, and Fishery Index down 11.58%, significantly underperforming the Shanghai and Shenzhen 300 Index, which rose by 14.68% [4][7]. - The pig farming sector showed a mixed performance, with the average pig price experiencing fluctuations throughout 2024, while the pet food sector demonstrated significant growth in both domestic sales and exports [4][35]. - The feed industry faced challenges with declining demand and falling prices, leading to compressed profit margins for companies [49][55]. - The animal health sector saw a decline in performance due to slow recovery in demand for veterinary vaccines and increased market competition [56]. Summary by Sections 1. Industry Performance Overview - The SW Agriculture, Forestry, Animal Husbandry, and Fishery Index fell by 4.36% in January 2025, underperforming the Shanghai and Shenzhen 300 Index, which decreased by 3.50% [16]. - Various sub-sectors experienced different levels of decline, with feed and agricultural product processing showing relatively smaller drops [4][16]. 2. Pig Farming Sector - As of December 2024, the number of breeding sows was 40.78 million, reflecting a slight decrease of 0.05% month-on-month and a 1.55% year-on-year decline [26]. - The average pig price in January 2025 was 15.22 yuan/kg, down 28.2% from the peak in August 2024 [27]. - Most pig farming companies reported improved profitability in 2024, with several companies expected to turn losses into profits [33]. 3. Pet Food Sector - The pet food market in China saw significant growth in both domestic and export sales, with exports reaching $1.48 billion in 2024, a year-on-year increase of 20.7% [42]. - Major companies like Zhongchong Co. and Petty Co. are expected to report substantial profit increases, driven by strong domestic and international sales [47]. 4. Feed Industry - The feed industry faced a decline in both volume and price, with the average price of pig feed dropping by approximately 10.9% in 2024 [49]. - The overall feed production in China decreased by 2.54% year-on-year, primarily due to reduced demand from the pig farming sector [55]. 5. Animal Health Sector - The animal health industry experienced a decline in performance, with a year-on-year decrease in the number of vaccine approvals [56]. - The sector's revenue growth was negatively impacted by the sluggish recovery in demand for veterinary vaccines [56].

Industry Rating - The report maintains a **Recommend** rating for the utilities industry [2] Core Views - The **Distributed Photovoltaic Power Generation Development and Construction Management Measures** (referred to as the "Measures") was officially issued on January 23, 2025, clarifying the distinction between new and existing distributed photovoltaic projects [5] - The Measures are expected to trigger a temporary rush for grid connection due to the uncertainty introduced by the new policies, especially for projects that were filed before the Measures' release and connected to the grid before May 1, 2025 [5] - The Measures categorize distributed photovoltaic projects into four types: residential (natural persons), residential (non-natural persons), general commercial and industrial, and large commercial and industrial projects, each with different investment methods, voltage levels, capacity limits, and grid connection modes [5] - The Measures introduce increased uncertainty for general commercial and industrial projects, while relaxing restrictions for large commercial and industrial projects, potentially impacting the short-term installation scale of distributed photovoltaics [5] - The Measures remove references to market-oriented transactions but suggest that the integration of distributed photovoltaics into the market is still a long-term trend, with some provinces already taking action [5] - New projects and eligible existing projects must meet the "four observables" (observable, measurable, adjustable, and controllable) requirements and participate in grid dispatch, which is expected to benefit related equipment manufacturers [6] Investment Recommendations - The new regulations standardize distributed photovoltaic projects across multiple dimensions, including investment methods, voltage levels, installation scale, and grid connection modes, which, despite short-term disruptions, are expected to promote sustainable and healthy industry development in the long term [7] - The integration of distributed photovoltaics into the market, the "four observables" requirements, and participation in grid dispatch are expected to increase demand for equipment and software such as metering devices, power prediction systems, and grid dispatch systems [7] - The new regulations are also expected to drive the penetration of new business models such as virtual power plants and aggregators, benefiting related equipment and service providers [7]

Investment Rating - The report maintains a "Recommend" rating for the banking sector [3][4]. Core Viewpoints - The implementation plan for mid-to-long-term capital entering the market is expected to improve the funding situation, benefiting the banking sector [3]. - The plan encourages large state-owned insurance companies to increase their investment in A-shares, potentially bringing in an annual market increment of approximately 668.59 billion yuan, with around 162.73 billion yuan directed towards the banking sector [4]. - The expansion of strategic investors in public offerings is anticipated to enhance capital strength and improve market valuation for major banks [3]. - The report highlights a trend of increasing passive fund investments in the banking sector, with significant growth in both the scale and proportion of holdings since Q1 2023 [3][4]. Summary by Sections Investment Strategy - The report suggests that fiscal stimulus will benefit credit growth, and while bank interest margins may remain under pressure, the optimization of funding costs is expected to accelerate [3]. - The banking sector's dividend yield is projected to be 4.78% by the end of 2024, making it an attractive option for long-term capital allocation compared to fixed-income products [3]. Market Dynamics - The report notes that the introduction of long-cycle assessments for various funds aims to stabilize investment behaviors and facilitate smoother market entry [3]. - Passive funds have shown a notable increase in their heavy holdings within the banking sector, with a market value of 98.12 billion yuan by the end of 2024, reflecting a significant rise from earlier periods [3][4]. Individual Stock Recommendations - The report recommends specific banks for investment, including Industrial and Commercial Bank of China (601398), China Construction Bank (601939), Postal Savings Bank of China (601658), Jiangsu Bank (600919), and Changshu Bank (601128) [3].

Group 1: Fiscal Revenue Trends - As of January 22, 2025, 21 out of 31 provinces have announced lower growth targets for general public budget revenue compared to the previous year[1] - The weighted target growth rate for local general public budget revenue in 2025 is approximately 3.1%, the lowest since 2018[4] - In 2023, the total general public budget revenue for 31 provinces was 11.6 trillion yuan, while the total local general public budget revenue was 22 trillion yuan, indicating significant reliance on central transfers[3] Group 2: Budget Formulation Process - The fiscal budget formulation process involves multiple stages, with local governments submitting budgets to the central government for approval by January 10 each year[5] - The current revenue targets have undergone preliminary approval by the central government, reflecting a more realistic assessment of economic conditions[7] Group 3: Implications for Government Spending - The reduction in local revenue growth targets does not significantly impact government spending levels, as the overall revenue scale remains around 11 trillion yuan[12] - Lower revenue growth expectations may lead to increased central government support and higher debt allowances for local governments[12] - Historical data shows that during periods of low revenue growth, there is often an increase in both new debt issuance and central transfers to local governments[12] Group 4: Economic Outlook - The current revenue targets reflect a more objective understanding of the economy, driven by discrepancies between actual and targeted tax revenue growth since 2024[13] - The narrow deficit ratio is expected to be around 4%, while the broad budget deficit ratio may reach approximately 9%[13]

Investment Rating - The report maintains a "Recommended" rating for the automotive industry [2]. Core Insights - The automotive industry is expected to see steady growth in sales, with a projected increase in domestic passenger car sales to 23.25 million units in 2025, reflecting a year-on-year growth of 2.8% [5]. - The "old-for-new" policy is anticipated to significantly boost automotive consumption, with an expected sales volume of 4-5 million vehicles in 2025, contributing to 17.2%-21.5% of total sales [5]. - The report highlights a shift towards electric vehicles (EVs) and smart technologies, driven by decreasing costs in technology and research and development, which is expected to enhance the market share of EVs [5]. Summary by Sections Market Trends - The report indicates that the automotive market will experience a "U-shaped" growth pattern in 2024, with a total of 22.61 million passenger cars sold, marking a 3.1% increase year-on-year [5]. - The "old-for-new" policy will expand in 2025, with funding support increasing from 150 billion yuan in 2024 to 300 billion yuan [5]. Sales Projections - In 2025, the domestic passenger car sales are projected to reach 23.25 million units, with the "old-for-new" policy expected to drive sales by 4-5 million units [5]. - The report notes that the sales growth will be more pronounced in the latter half of the year due to the implementation of supportive policies [5]. Investment Recommendations - Recommended companies in the automotive sector include BYD, Li Auto, and Geely, with specific recommendations for parts suppliers such as Huayu Automotive, Bertel, and Desay SV [6]. - The report emphasizes the potential for growth in the smart and new energy components sector, recommending companies like Farah Electronics and Zhongrong Electric [6].