Zhong Guo Zheng Quan Bao·2025-11-18 22:24Core Viewpoint - The year 2026 is anticipated to be a pivotal year for reform and development in China's economy and capital markets, with a potential full-scale rally in A-shares expected by mid-2026, driven by trends in the technology industry and the enhancement of China's manufacturing global influence [1][5]. Economic Growth Drivers - New factors and assets are emerging as new drivers of economic growth, moving away from traditional reliance on investment and exports. The focus is shifting towards knowledge, technology, data, computing power, and talent as key growth enablers [2]. - The "14th Five-Year Plan" marks the beginning of a new phase of high-quality development for China's economy and capital markets, emphasizing the importance of effective markets and proactive government [2][3]. Reform and Investment Opportunities - The upcoming reforms during the "14th Five-Year Plan" period are expected to be systematic and effective, with a focus on enhancing macroeconomic governance and promoting self-reliance in technology [3][4]. - Key areas for potential investment include the construction of a unified market, development of new productive forces, reforms in social welfare, financial and tax systems, and acceleration of green transformation [4]. A-share Market Outlook - The A-share market is projected to experience a significant rally starting in mid-2026, supported by improvements in the fundamental economic cycle, strengthening trends in emerging industries, and a shift in household asset allocation towards equities [5][6]. - The market is expected to transition through different phases, with technology growth stocks likely to see short-term rebounds before a broader market rally led by cyclical sectors and the technology industry [6]. Investment Themes for 2026 - Three major investment themes are highlighted for 2026: 1. Recovery trades in cyclical sectors such as basic chemicals and industrial metals 2. Technology sectors including AI, humanoid robots, energy storage, photovoltaics, pharmaceuticals, and military industry 3. Manufacturing sectors that enhance China's global influence, such as chemicals and engineering machinery [6].