Zhong Guo Zheng Quan Bao·2025-11-01 00:17Core Viewpoint - The transformation of China's economy is entering a new stage, with a shift from old to new economic drivers, which is positively impacting the capital market ecosystem [1][2][7]. Economic Transformation - The transition from old to new economic drivers is seen as a trend, with the old economy's clearance benefiting the bond market and the rise of the new economy favoring the stock market [2]. - The "14th Five-Year Plan" is expected to provide a foundation for long-term development, with nominal GDP growth likely to improve, leading to slight profit growth expectations [2][6]. Liquidity and Investment Trends - The Federal Reserve is expected to cut interest rates twice this year and potentially three more times next year, contributing to a globally loose liquidity environment [2][6]. - There is increasing interest from foreign investors in Chinese assets, while domestic demand for reallocation of funds from maturing deposits and wealth management products is strong, favoring various equity assets [2][6]. Market Strategy and Asset Allocation - A diversified portfolio including technology stocks, resource stocks, gold, and short-term bonds is recommended for risk diversification [3]. - The "anti-involution" theme is prevalent in the market, promoting supply-demand balance and improving the business environment, although the complexity of current supply-demand imbalances is acknowledged [4]. Market Style and Sector Focus - The market is expected to shift from small-cap and dividend stocks in the first half of the year to large-cap growth stocks in the second half, with technology and resource stocks remaining focal points [5]. - The Hong Kong stock market is more sensitive to geopolitical issues, but long-term benefits from liquidity easing due to Fed rate cuts are anticipated [5]. Long-term Market Outlook - The long-term positive outlook for the Chinese capital market is supported by the transition to new economic drivers, increased long-term capital inflows, and the introduction of stabilizing funds to reduce irrational market volatility [6][7].