Key Points Industry/Company Involved - **Industry**: Chinese economy, equities, commodities, fixed income - **Company**: Shanghai Hanxia Investment Core Views and Arguments - **Economic Recovery**: The Chinese economy is likely entering a new upswing cycle, supported by policy efforts and economic cycles. Economic indicators have been recovering for three months, validating the earlier prediction. - **Market Sentiment**: Most market participants remain skeptical about the sustainability of economic recovery, leading to downward pressure on commodity and stock markets. - **Investment Performance**: Hanxia Macro hedge fund achieved a slight positive return in the fourth quarter, outperforming the Shanghai and Shenzhen 300 indices. - **Policy Stimulus**: China's policy stimulus extends beyond central and local government deficits, with continued efforts in other areas such as city construction, special bonds, policy banks, and public sector salaries. - **Real Estate**: Real estate prices are expected to stabilize and recover, driving economic growth. - **US Policy**: The appointment of Wally Adeyemo as US Treasury Secretary may lead to policies that encourage China to stimulate domestic demand and appreciate the yuan, benefiting Chinese assets. - **Valuation**: Market valuations are at extreme levels, with significant potential for reversal. - **Investment Strategy**: Emphasize defensiveness and safety in the short term, with a focus on long-term growth potential. Other Important Points - **Commodities**: Short-term defense, medium-term offense. Maintain a balanced position between long and short positions, with a focus on defense. - **Equities**: Focus on high-dividend, low PB, and cyclical stocks, particularly in the financial, construction, and real estate sectors. - **Banks**: Large banks, building materials, and construction companies with strong risk-return characteristics are key contributors to the portfolio. - **Valuation**: The portfolio consists of companies with an average PB of less than 0.6 and an average PE of less than 6, offering significant upside potential. References - [4], [5], [6], [7], [10], [11], [12], [13], [15], [16], [17], [18], [19], [20], [21], [22], [23], [24], [25], [26], [27]

Performance and Risk Metrics - The fund's cumulative return from December 14, 2017, to October 31, 2024, is 189.10%[3] - The annualized return of the fund is 17.26% with a volatility of 17.21%[3] - The Sharpe ratio is 0.86, and the maximum drawdown is 25.65%[3] Asset Allocation and Performance Attribution - The fund's asset distribution includes net positions in bonds, commodities, and equities, with a net asset value of 4 billion[7] - In 2024, the monthly performance attribution shows varying contributions from bond, commodity, and equity classes, with significant fluctuations in March and September[5] Economic and Market Review - The market experienced a rapid rise in September driven by sentiment, followed by a divergence in October due to policy anticipation and skepticism about economic recovery[10] - Domestic retail investors and speculative funds showed high enthusiasm, with margin balances reaching a five-year high, while foreign and institutional investors reduced their positions[10] Economic and Market Outlook - The Chinese economy is expected to enter a 2-3 year upward cycle, driven by fiscal policies, local debt resolution, and real estate stabilization[12] - The market is currently in a phase similar to 2015, with monetary easing preceding fiscal stimulus, leading to speculative trading in small-cap and concept stocks[12] Investment Strategy - The fund maintains a net long position in commodities and focuses on state-owned enterprises benefiting from debt resolution and real estate stabilization, with low PB and high dividend yields[19][20] - The equity portfolio has an average PB of 0.5x, PE of 5x, and a dividend yield of 6.5%, providing both defensive and upside potential[21]