1. Report Industry Investment Rating - The report does not provide a specific industry investment rating [1][3] 2. Core Viewpoints of the Report - The central bank indicates there is still room for reserve requirement ratio cuts and interest rate cuts. The pre - released policies are mainly "broad - credit" in effect, and the exchange rate does not strongly constrain interest rate cuts. The large - scale maturity and repricing of long - term deposits in 2026 will help stabilize the net interest margin [3] - Deposit repricing supports the space for interest rate cuts, but the bond market also needs to pay attention to the diversion effect of the stock market on matured deposits. The proportion of non - bank deposits may reach a new high, which is related to the form and rhythm of the stock market [3] - The year - on - year increase in the US core CPI in December last year was the same as the previous month. The risk of re - inflation is temporarily limited, and the impact of the US tax - cut policy on inflation remains to be observed [3] - Powell is facing a criminal investigation. The decision of the grand jury may be the key variable affecting the uncertainty of the Fed's subsequent decision - making process and the volatility of US Treasury bonds [3] - Geopolitical risks have caused oil price fluctuations. There are also changes in the prices and indicators of various domestic products such as agricultural products, industrial products, and metals [3] 3. Summary by Relevant Catalogs 3.1 High - frequency Data Scan - The repricing of time deposits supports the space for interest rate cuts. In 2025, with a 10BP cut in the LPR, the bank's net interest margin remained stable, and this effect should be further enhanced in 2026. However, the bond market needs to pay attention to the impact of the stock market on the diversion of matured deposits [3] - The year - on - year increase in the US core CPI in December last year was flat compared to the previous month. The risk of re - inflation is temporarily limited, and the impact of the US tax - cut policy on inflation remains to be seen. Powell's criminal investigation may affect the volatility of US Treasury bonds [3] - In the week of January 16, 2026, the average wholesale price of pork increased by 0.45% week - on - week and decreased by 20.75% year - on - year; the average wholesale price of 28 key - monitored vegetables decreased by 1.44% week - on - week and increased by 6.49% year - on - year. There were also changes in the prices and indicators of other products such as cement, iron ore, and crude oil [3] 3.2 High - frequency Data Panoramic Scan - The report presents data on the growth rate of time and other deposits, the relationship between LPR and bank net interest margin, and the proportion of non - bank deposits, as well as data on the ratio of US currency in circulation to GDP and personal consumption, and the relationship between US non - farm weekly wages and core CPI [11][16] - It also shows the week - on - week and year - on - year changes in various high - frequency indicators, including food, other consumer goods, bulk commodities, energy, non - ferrous metals, ferrous metals, real estate, and shipping [21][22] 3.3 Comparison of High - frequency Data and Important Macroeconomic Indicators' Trends - The report provides multiple sets of charts to show the relationship between high - frequency indicators such as copper spot price, crude steel daily output, and various price indices, and important macroeconomic indicators such as industrial added value, PPI, CPI, and fixed - asset investment [24][29][32] 3.4 Important High - frequency Indicators in the US, Europe, and Japan - It includes charts showing the relationship between US weekly economic indicators and actual economic growth, the number of first - time unemployment claims and the unemployment rate, US same - store sales growth and PCE year - on - year, as well as the implied prospects of interest rate hikes or cuts by the US Federal Reserve, the Bank of Japan, and the European Central Bank in the derivatives market [94][102][105] 3.5 Seasonal Trends of High - frequency Data - The report shows the seasonal trends (in terms of month - on - month increases) of high - frequency indicators such as the commodity trading area in 30 large and medium - sized cities, LME copper spot settlement price, and crude steel daily output [108][110][114] 3.6 High - frequency Traffic Data in Beijing, Shanghai, Guangzhou, and Shenzhen - It presents the year - on - year changes in subway passenger volumes in Beijing, Shanghai, Guangzhou, and Shenzhen [157][162]

Index Performance - HSI closed at 26,924, down 0.3% daily and up 5.0% YTD [2] - HSCEI closed at 9,267, down 0.5% daily and up 4.0% YTD [2] - HSCCI closed at 4,154, up 0.4% daily and up 3.4% YTD [2] - MSCI HK closed at 14,490, up 0.3% daily and up 5.9% YTD [2] - MSCI CHINA closed at 87, down 1.0% daily and up 5.0% YTD [2] - FTSE CHINA A50 closed at 15,340, unchanged daily and up 0.2% YTD [2] - CSI 300 closed at 4,751, up 0.2% daily and up 2.6% YTD [2] - TWSE closed at 30,811, down 0.4% daily and up 6.4% YTD [2] - SENSEX closed at 83,628, down 0.3% daily and down 1.9% YTD [2] - NIKKEI 225 closed at 54,111, down 0.4% daily and up 7.5% YTD [2] - KOSPI closed at 4,798, up 1.6% daily and up 13.8% YTD [2] - ASX 200 closed at 8,821, down 0.1% daily and up 1.7% YTD [2] - DJIA closed at 49,442, up 0.6% daily and up 2.9% YTD [2] - S&P 500 closed at 6,944, up 0.3% daily and up 1.4% YTD [2] - FTSE 100 closed at 10,239, up 0.5% daily and up 3.1% YTD [2] Commodity Price Performance - Brent Crude closed at US$64/bbl, down 4.1% daily and up 4.8% YTD [3] - Gold closed at US$4,616/oz, down 0.2% daily and up 6.9% YTD [3] - Copper closed at US$13,189/t, up 0.2% daily and up 6.2% YTD [3] - Aluminum closed at US$3,203/t, down 0.5% daily and up 7.9% YTD [3] - Nickel closed at US$18,495/t, up 5.8% daily and up 12.1% YTD [3] - CH domestic steel rebar 25 closed at RMB3,244/t, up 0.1% daily and up 0.1% YTD [3] - CH domestic high speed wire closed at RMB3,700/t, unchanged daily and up 0.3% YTD [3] - CH domestic hot rolled steel closed at RMB3,287/t, down 0.1% daily and up 0.5% YTD [3] - CH domestic cold rolled steel closed at RMB3,800/t, down 0.1% daily and down 0.1% YTD [3] - BDI closed at 1,608, unchanged daily and down 14.3% YTD [3] Key Macro and Earnings Releases - China's Retail Sales YoY in January 19th actual was 1.3%, higher than the consensus of 1.1% [4] - China's Industrial Production YoY in January 19th actual was 4.8%, lower than the consensus of 5.0% [4] - China's Fixed Assets Ex Rural YTD YoY in January 19th actual was -2.6%, higher than the consensus of -3.1% [4] - China's Property Investment YTD YoY in January 19th actual was -15.9%, higher than the consensus of -16.5% [4] - China's Residential Property Sales YTD YoY in January 19th actual was -11.2% [4] - China's Surveyed Jobless Rate in January 19th actual was 5.1%, lower than the consensus of 5.2% [4] - China's GDP YoY in January 19th actual was 4.8%, higher than the consensus of 4.5% [4] - China's GDP YTD YoY in January 19th actual was 5.2%, higher than the consensus of 5.0% [4] - China's 1-Year Loan Prime Rate on January 20th remained at 3.0% as expected [4] - China's 5-Year Loan Prime Rate on January 20th remained at 3.5% as expected [4] - US PCE Price Index YoY in January 22nd actual was 2.8% [4] - US Core PCE Price Index YoY in January 22nd actual was 2.8%, in line with the consensus [4] - US Personal Income MoM in January 22nd actual was 0.4%, in line with the consensus [4] - US Personal Spending MoM in January 22nd actual was 0.4%, lower than the consensus of 0.5% [4] - US GDP Annualized QoQ in January 22nd actual was 4.3%, in line with the consensus [4] - US S&P Global US Services PMI in January 23rd actual was 52.5%, lower than the consensus of 52.8% [4] - US U. of Mich. Sentiment in January 23rd actual was 54.0%, in line with the consensus [4] - US S&P Global US Manufacturing PMI in January 23rd actual was 51.8%, lower than the consensus of 52.0% [4] - BOJ Target Rate in January 23rd actual was 0.8%, in line with the consensus [4] New Loans and Monetary Policy - In December, new loans reached RMB910bn, down RMB80bn YoY, narrowing the YoY decline from -32.8% in November to -8.1% [6][8] - Corporate short - term, medium - and long - term loans, and bond financing bounced up YoY in December, while household sector credit demand remained sluggish [6][8] - Monetary policymakers announced incremental loosening policies of structural monetary tools and signaled room for further RRR and policy rate cuts [7][8] TSMC - Rating: BUY (TT & ADR). TSMC's 4Q25 EPS was 8% above consensus, and 1Q26 sales/margins are ahead of expectations [9][13] - The 2026 outlook projects sales growing close to 30% YoY with US$52 - 56bn CAPEX [9][13] - Management lifted long - term guidance, targeting 25% / mid - to - high 50s Group / AI sales CAGR (2024 - 29) and a 56% gross margin [10][13] - Target prices are raised to NT$2,420 / US$445 based on 24x 2026 - 27 P/E and a 16% premium [11][14] Li Ning - Rating: HOLD. Li Ning's 4Q25 retail sell - through was down LSD YoY, affected by weak consumer sentiment [15][17] - The full - year 2025 results were in line with guidance, with revenue achieving marginal growth and NPM approaching the upper end of HSD [15][17] - The inflection point may take longer due to athleisure adjustment and Olympic marketing investment lag [16][17] - The current 2025/2026 P/E valuation of 17x/16x appears full [16][17] Uranium Sector - Uranium spot price rose to US$83.5/lb, and major uranium ETFs rallied 22% YTD [18][20] - The White House's proclamation on critical materials may lead to supportive policies for uranium [19][20] - Positive outlook for the uranium sector in 2026, with top pick Kazatomprom, also recommending CGN Mining and Cameco [19][20] CMOC Group - Rating: HOLD. CMOC expects 2025 net profit of RMB20.0 - 20.8bn, up 48 - 54%, and 2025 copper output grew 14% YoY to 741k tonnes [21][23] - 2025 profit was 4 - 8% below forecast, though copper output was 5% above forecast; 2026 copper output target is 6 - 14% above forecast [22][23] - Forecasts and HOLD rating remain unchanged, and the market may react positively to output guidance [22][23]

Core Insights - The report highlights a significant increase in December's financial data, with new social financing (社融) reaching 2.21 trillion yuan, exceeding expectations of 1.82 trillion yuan, although it was lower than the previous year by 645.7 billion yuan [5][6] - The report indicates a strong demand for corporate loans, with new corporate loans amounting to 1.07 trillion yuan in December, while household loans remained weak, showing a decrease of 916 million yuan [8][9] - The central bank's recent policy adjustments, including a 0.25 percentage point reduction in the re-lending and rediscount rates, signal a continued easing of monetary policy, with expectations for further reductions in reserve requirements [9][10] Macroeconomic Overview - December's financial data showed that new social financing, new loans, and M2 growth were all above consensus expectations, driven primarily by an increase in corporate loan demand [3][5] - The total social financing stock grew by 8.3% year-on-year, slightly above the expected 8.2%, while the new RMB loans for December were 9.757 trillion yuan, an increase of 1.355 trillion yuan compared to the previous year [5][6] Market Strategy - The regulatory body has raised the margin requirement for financing from 80% to 100%, effective January 19, 2026, to curb speculation and stabilize market volatility [10][11] - This adjustment is seen as a response to recent market overheating, aiming to balance market styles and reduce leverage growth rates [10][12] - Historical context suggests that such margin adjustments can indicate market tops and bottoms, with potential short-term impacts on high-beta stocks due to reduced liquidity [11][12]

Economic Overview - In December 2025, new social financing (社融) reached 2.21 trillion yuan, which was 645.7 billion yuan less than the same month last year and 280.8 billion yuan less than November 2025, exceeding the consensus expectation of 1.82 trillion yuan[2] - The year-on-year growth of social financing stock was 8.3%, slightly above the expected 8.2%, but down 0.23 percentage points from November 2025[2] Loan and Deposit Trends - New RMB loans in December amounted to 975.7 billion yuan, an increase of 135.5 billion yuan year-on-year and 566.1 billion yuan more than November 2025[2] - December saw a strong increase in deposits, totaling 1.68 trillion yuan, which was 3.08 trillion yuan more than the same month last year, driven mainly by a rise in household deposits of 2.58 trillion yuan[2] Monetary Supply and Policy - M2 growth in December was 8.5%, up 0.5 percentage points from November, while M1 growth was 3.8%, down 1.1 percentage points[2] - The People's Bank of China (PBOC) announced a 0.25 percentage point reduction in the re-lending and rediscount rates on January 15, 2026, indicating potential for further monetary easing[2] Corporate and Household Loan Dynamics - New corporate loans in December were robust at 1.07 trillion yuan, with short-term loans and bills accounting for 617.7 billion yuan and medium to long-term loans for 340 billion yuan[2] - Household loans continued to show weakness, with a decrease of 916 billion yuan in December, marking a trend of declining household loan demand over the past three months[2] Risk Factors - Potential risks include a resurgence of global inflation, a faster-than-expected economic slowdown in Europe and the U.S., and increasing complexity in international relations[2]

Core Insights - The report emphasizes a multi-cycle resonance upward trend, suggesting that the index space may be further opened by profit recovery in 2026 [2][5] - It predicts that major economies will likely enter a destocking phase in 2026, following the current proactive restocking phase [5] - The report indicates that the overall profit recovery trend is expected to continue into 2026, with non-financial A-share companies' cumulative profit growth projected to be in the range of 2.4%-5.5% [5] Market Performance - The report highlights the performance of various indices, with the Computer index showing a rise of 3.42%, while the Banking index fell by 1.88% [4] - Other sectors such as Comprehensive and Communication also showed positive growth, while Real Estate and Non-bank Financials experienced declines [4] Investment Strategy - The recommended asset allocation for 2026 is A-shares > Chinese bonds, US bonds > US stocks, indicating a preference for A-shares due to stabilizing corporate earnings [5] - The report suggests that despite high valuations in A-shares, the market has not entered a bubble phase similar to 2007 or 2015, leaving ample room for growth in 2026 [5] Sector Focus - The report identifies AI as a key area of focus, noting that the current AI market does not exhibit significant bubble characteristics and that hardware demand remains strong [6] - It highlights investment opportunities in AI-related sectors, particularly in areas experiencing shortages such as optical communication and storage chips [6] - The report also emphasizes the potential for new consumption trends driven by policy support and a recovering CPI, focusing on emotional consumption, value-for-money consumption, and service-oriented consumption [6] Thematic Investment - The report anticipates a concentrated investment structure in 2026 around three main themes: AI, consumption, and pharmaceuticals, with AI infrastructure and digital economy being high-growth areas [7] - It suggests a systematic approach to technology investments, covering key technologies and advanced manufacturing, while also recommending attention to policy-driven sectors [7]

Group 1 - The report highlights that the regulatory authority has raised the margin requirement for financing from 80% to 100%, effective January 19, 2026, as a measure to stabilize market volatility and reduce leverage growth rate [3][4]. - This adjustment is part of a "counter-cyclical adjustment" mechanism aimed at addressing recent overheated market sentiments, and it applies only to new financing contracts, leaving existing contracts unaffected [4]. - Historical context shows that similar adjustments in the past have led to significant market shifts, with the current adjustment expected to create short-term pressure on high-beta sectors while promoting a healthier market environment in the long run [4]. Group 2 - The report indicates that active funds typically favor high-volatility technology and thematic stocks, but the increase in leverage costs may slow down new capital inflows into these sectors [4]. - Conversely, undervalued blue-chip stocks and core assets with strong earnings certainty are expected to be less affected by financing pressures and may gain relative attention as market risk appetite declines [4]. - The report suggests that investors should manage leverage proactively and focus on sectors with expected earnings surprises and sustainable profit improvement, aligning with the policy direction of "de-leveraging" [4].

Group 1 - The economic and financial cycles are currently in a phase of upward resonance, with the second inventory cycle entering a proactive replenishment stage, likely transitioning to a destocking phase in major economies by 2026 [11] - The recommended asset allocation for 2026 is A-shares > Chinese bonds, US bonds > US stocks, as the stabilization of overall A-share corporate earnings supports further recovery [11] - The cumulative profit growth for all A non-financial companies in 2025 is expected to be in the range of 2.4%-5.5%, indicating a continued trend of profit recovery that will underpin the upward movement of the equity market [15][16] Group 2 - The current A-share environment is compared to the 2013-2014 period, highlighting similarities in macroeconomic conditions and structural trends, with a focus on technology and consumption sectors [27] - The technology sector is expected to continue contributing significant profit increments, particularly in the AI industry chain, which remains robust in demand [45] - The report suggests focusing on sectors such as electronics, media, innovative pharmaceuticals, non-ferrous metals, and new energy, which are expected to outperform in 2026 due to various driving factors [48]

Core Insights - The report highlights a significant increase in the current account surplus, reaching a historical high in Q3 2025, with a GDP ratio of 4.0%, indicating a robust trade surplus environment [4] - The AI industry is transitioning from a focus on computational power to practical applications, marking a new phase in the market where AI applications are expected to drive growth [6] - The commercial space sector is opening new growth opportunities for photovoltaic (PV) technology, particularly in space applications, which are expected to have unique requirements and market dynamics [7][10] Macroeconomic Overview - The current account surplus has expanded year-on-year, maintaining a reasonable GDP ratio, but the rising surplus raises concerns about increasing trade protectionism [4] - There has been a notable acceleration in domestic capital outflows, with foreign investment shifting from net inflows to slight outflows, particularly in Q3 2025 [4] - The increase in domestic capital outflows is attributed to rising foreign debt and equity investments, alongside a significant net outflow of foreign capital [4] AI Industry Insights - The AI sector is moving towards application-driven growth, with recent market entries indicating a maturation of business models within the industry [6] - The report suggests that the AI application market remains a high-value investment area, with potential for significant returns as the industry evolves [6] Photovoltaic Technology in Space - The report discusses the potential of space-based photovoltaic technology, which is still in its early stages, with limited manufacturers capable of meeting the unique demands of space environments [7][10] - The need for PV technology to withstand extreme conditions in space is expected to create a divide among companies in the industry, favoring those with strong supply channels and technological capabilities [9][10] - The cost sensitivity in space applications is low, allowing leading companies to capitalize on high-margin opportunities as they develop space PV solutions [9][10]

Investment Rating - The industry investment rating is "Outperform" [11] Core Viewpoints - Solid-state batteries are expected to become a key energy storage technology in the aerospace sector due to their lack of liquid electrolytes, low gas release risk, radiation resistance, and temperature tolerance, making them highly compatible with satellite applications [1][3] - The penetration rate of solid-state batteries in the aerospace field is anticipated to increase as industrialization progresses, with ongoing engineering and in-orbit validation [1][3] - The report maintains a strong outlook for solid-state battery production acceleration, highlighting it as a high-certainty investment direction [3] Summary by Sections Industry Overview - Solid-state batteries have transitioned from laboratory validation to engineering and in-orbit verification in the satellite sector, with successful demonstrations of charging and discharging capabilities in space [5] - NASA is advancing solid-state battery projects aimed at developing technologies suitable for space exploration and manned missions, indicating strong institutional support for this technology [5] Market Potential - The report emphasizes that solid-state batteries offer advantages in energy density and safety, positioning them as a significant upgrade direction for lithium-ion battery technology, supported by multiple national policies since 2025 [5] - The report recommends specific companies such as CATL, Yiwei Lithium Energy, and others as key players in the solid-state battery market, suggesting a focus on companies that are initiating small-scale production and advancing solid-state technology [3]

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]