Summary of the 2026 China Equity Strategy Outlook Industry Overview - The report focuses on the **Chinese stock market** and its outlook for 2026, following a strong performance in 2025 where major indices like the MSCI China Index and Hang Seng Index rose over **30%** year-to-date [1][10][11]. Core Insights and Arguments 1. **Market Stability and Growth**: - 2026 is expected to be a year of stabilization after the high returns of 2025, with limited upside potential for indices and moderate earnings growth projected at **6%** [2][15]. - The MSCI China Index is forecasted to trade at a forward P/E ratio of **12-13x**, with a target of **90 points** for December 2026, indicating a **3%** upside from the current levels [2][15]. 2. **Valuation and Earnings Quality**: - The report highlights that the valuation re-rating has already occurred, with a **30%** increase in the past year, suggesting limited room for further upward revaluation [12][15]. - Concerns about the sustainability of corporate earnings are raised, as recent earnings reports show a slight deterioration in the number of companies exceeding expectations [11][15]. 3. **Macroeconomic Factors**: - The Chinese economy is expected to face ongoing deflationary pressures, with real GDP growth projected to slow to **4.8%** in 2026 [12][15]. - Global macroeconomic uncertainties, particularly regarding the U.S. economy, could impact China's growth trajectory [14][15]. 4. **Investment Strategy**: - A "barbell strategy" is recommended, favoring high-quality internet and technology leaders while underweighting sectors like real estate, consumer staples, and energy that are negatively impacted by macroeconomic conditions [3][30]. - Key trading ideas include focusing on stocks benefiting from the "anti-involution" policies and those included in the Hong Kong Stock Connect [3][31]. 5. **Liquidity and Capital Flows**: - The report anticipates continued net inflows into both A-shares and offshore markets, supported by policy measures aimed at stimulating consumption and managing real estate inventories [2][28]. Additional Important Insights - **Geopolitical Considerations**: The report notes that a stable geopolitical environment, particularly in U.S.-China relations, could positively influence market sentiment [22][25]. - **Sector Preferences**: There is a strong emphasis on investing in companies with robust fundamentals and growth prospects, particularly in technology and innovation sectors aligned with China's strategic planning [19][30]. - **Scenario Analysis**: The report outlines a wide range of potential outcomes for the Chinese stock market, with optimistic scenarios suggesting a **30%** upside and pessimistic scenarios indicating a potential **34%** decline [25][26]. Conclusion - The outlook for the Chinese stock market in 2026 is characterized by cautious optimism, with a focus on sustainable growth and selective investment strategies. The anticipated stabilization in market performance, combined with macroeconomic challenges, necessitates a strategic approach to capital allocation in the coming year [1][15][19].

Report Summary 1. Report Industry Investment Rating No relevant information provided. 2. Core View of the Report - The prices of oils and fats are expected to fluctuate and consolidate. The domestic fundamentals are loose, and the domestic supply of oils and fats is stable. Sino - US relations are tense, which puts pressure on the price of new US soybeans due to export setbacks. Malaysian palm oil inventory is neutral, demand has improved, and Indonesia's B40 policy promotes domestic consumption with a planned B50 implementation in 2026. The domestic fundamentals of oils and fats are neutral, and the import inventory is stable [2][3][4] 3. Summary by Related Catalogs Daily View - Soybean Oil - **Fundamentals**: MPOB report shows that Malaysian palm oil production in August decreased by 9.8% MoM to 1.62 million tons, exports decreased by 14.74% MoM to 1.49 million tons, and the end - of - month inventory decreased by 2.6% MoM to 1.83 million tons. The report is neutral with less - than - expected production cuts. Current monthly export data of Malaysian palm oil shows a 4% MoM increase, and as it enters the production - reduction season, the supply pressure of palm oil will decrease [2] - **Basis**: The spot price of soybean oil is 8480, with a basis of 160, indicating that the spot price is at a premium to the futures price [2] - **Inventory**: On September 22, the commercial inventory of soybean oil was 1.18 million tons, up 20,000 tons MoM and 11.7% YoY [2] - **Market**: The futures price is above the 20 - day moving average, and the 20 - day moving average is upward [2] - **Main Position**: The long positions of the main soybean oil contract increased [2] - **Expectation**: The soybean oil contract Y2601 is expected to fluctuate in the range of 8200 - 8600 [2] Daily View - Palm Oil - **Fundamentals**: Similar to soybean oil, but palm oil will enter the production - increase season, leading to an increase in supply [3] - **Basis**: The spot price of palm oil is 8740, with a basis of 32, indicating that the spot price is at a discount to the futures price [3] - **Inventory**: On September 22, the port inventory of palm oil was 580,000 tons, up 10,000 tons MoM and down 34.1% YoY [3] - **Market**: The futures price is below the 20 - day moving average, and the 20 - day moving average is downward [3] - **Main Position**: The long positions of the main palm oil contract decreased [3] - **Expectation**: The palm oil contract P2601 is expected to fluctuate in the range of 8600 - 9000 [3] Daily View - Rapeseed Oil - **Fundamentals**: Similar to soybean oil and palm oil, with an increase in palm oil supply as it enters the production - increase season [4] - **Basis**: The spot price of rapeseed oil is 10240, with a basis of 366, indicating that the spot price is at a premium to the futures price [4] - **Inventory**: On September 22, the commercial inventory of rapeseed oil was 560,000 tons, up 10,000 tons MoM and 3.2% YoY [4] - **Market**: The futures price is above the 20 - day moving average, and the 20 - day moving average is upward [4] - **Main Position**: The long positions of the main rapeseed oil contract decreased [4] - **Expectation**: The rapeseed oil contract OI2601 is expected to fluctuate in the range of 9800 - 10200 [4] Recent利多and利空Analysis - **利多**: The US soybean stock - to - use ratio remains around 4%, indicating tight supply, and there is a tremor season for palm oil [5] - **利空**: The prices of oils and fats are historically high, domestic inventories of oils and fats are continuously increasing, the macro - economy is weak, and the expected production of related oils and fats is high [5] - **Main Logic**: The global fundamentals of oils and fats are relatively loose [5] Supply - Related - **Soybean Oil Inventory**: Relevant information about soybean oil inventory is provided [6] - **Soybean Meal Inventory**: Information on soybean meal inventory [8] - **Soybean Pressing by Oil Mills**: Details about oil mills' soybean pressing [10] - **Palm Oil Inventory**: Information on palm oil inventory [17] - **Rapeseed Oil Inventory**: Details about rapeseed oil inventory [19] - **Rapeseed Inventory**: Information on rapeseed inventory [21] - **Total Domestic Oil and Fat Inventory**: Details about the total domestic inventory of oils and fats [23] Demand - Related - **Apparent Consumption of Soybean Oil**: Information on the apparent consumption of soybean oil [12] - **Apparent Consumption of Soybean Meal**: Details about the apparent consumption of soybean meal [14]

在此前的亚太经合组织第32次领导人非正式会议期间，我方与加拿大总理卡尼进行了会谈，双方就如何进一步改善两国关系达成了共识。会后，我方外交部 发言人毛宁在例行记者会上明确表示，愿与加拿大共同努力，借此会谈为契机，恢复两国在各个领域的合作，推动解决双方关心的具体问题，让两国关系尽 早回到健康、稳定且可持续的发展轨道。这无疑是过去一年里，中国向中加外交关系释放出的最积极、友好的信号。 值得注意的是，加拿大在挑战中国的同时，与美国的关系也在不断恶化。此前，卡尼公开表示，加拿大与美国之间的特殊关系已经结束。随后，在美加两国 的经济和政治谈判中，双方出现了严重分歧，甚至一度让特朗普公开表示要停止与加拿大的所有谈判。这样一来，加拿大几乎同时得罪了中美两个大国。 中国一直对与加拿大的合作持有善意。如果没有这种善意，中国就不会在亚太经合会议上与卡尼会面。但中加关系的改善与双方恢复合作的前提，应该是加 拿大能够充分尊重中国的国家利益。如果加拿大做不到这一点，那么谈何合作？而且，卡尼应该清楚，现在是他需要中国的支持。自从加拿大前政府配合美 国对中国实施封锁后，中国已采取了一些反制措施，比如暂停部分加拿大农产品的进口，这对加拿大经济 ...

Report Industry Investment Rating - Not provided Core Viewpoints - The prices of oils and fats are expected to fluctuate and consolidate. The domestic fundamentals are loose, and the domestic supply of oils and fats is stable. Sino-US relations are tense, the export of new US soybeans is frustrated, and prices are under pressure. Malaysian palm oil inventories are neutral, demand has improved, Indonesia's B40 policy promotes domestic consumption, and the B50 plan is expected to be implemented in 2026. The domestic fundamentals of oils and fats are neutral, and import inventories are stable [2][3][4] - The current main logic revolves around the relatively loose global fundamentals of oils and fats [5] Summary by Related Catalogs Daily View - Soybean Oil - Fundamental: The MPOB report shows that in August, Malaysian palm oil production decreased by 9.8% month-on-month to 1.62 million tons, exports decreased by 14.74% month-on-month to 1.49 million tons, and the end-of-month inventory decreased by 2.6% month-on-month to 1.83 million tons. The report is neutral, and the production cut is less than expected. Currently, shipping survey agencies show that the export data of Malaysian palm oil this month has increased by 4% month-on-month. Subsequently, it will enter the production cut season, and the supply pressure of palm oil will decrease [2] - Basis: The spot price of soybean oil is 8440, the basis is 158, and the spot price is at a premium to the futures price [2] - Inventory: On September 22, the commercial inventory of soybean oil was 1.18 million tons, compared with 1.16 million tons previously, a month-on-month increase of 20,000 tons and a year-on-year increase of 11.7% [2] - Market: The futures price is running above the 20-day moving average, and the 20-day moving average is upward [2] - Main Position: The long positions of the main soybean oil contract have increased [2] - Expectation: The soybean oil Y2601 is expected to fluctuate in the range of 8200 - 8600 [2] Daily View - Palm Oil - Fundamental: Similar to soybean oil, the MPOB report is neutral, and the production cut is less than expected. Currently, the export data of Malaysian palm oil has increased by 4% month-on-month. Subsequently, it will enter the production increase season, and the supply of palm oil will increase [3] - Basis: The spot price of palm oil is 8710, the basis is 30, and the spot price is at a discount to the futures price [3] - Inventory: On September 22, the port inventory of palm oil was 580,000 tons, compared with 570,000 tons previously, a month-on-month increase of 10,000 tons and a year-on-year decrease of 34.1% [3] - Market: The futures price is running below the 20-day moving average, and the 20-day moving average is downward [3] - Main Position: The long positions of the main palm oil contract have decreased [3] - Expectation: The palm oil P2601 is expected to fluctuate in the range of 8600 - 9000 [3] Daily View - Rapeseed Oil - Fundamental: Similar to soybean oil and palm oil, the MPOB report is neutral, and the production cut is less than expected. Currently, the export data of Malaysian palm oil has increased by 4% month-on-month. Subsequently, it will enter the production increase season, and the supply of palm oil will increase [4] - Basis: The spot price of rapeseed oil is 10240, the basis is 360, and the spot price is at a premium to the futures price [4] - Inventory: On September 22, the commercial inventory of rapeseed oil was 560,000 tons, compared with 550,000 tons previously, a month-on-month increase of 10,000 tons and a year-on-year increase of 3.2% [4] - Market: The futures price is running above the 20-day moving average, and the 20-day moving average is upward [4] - Main Position: The long positions of the main rapeseed oil contract have increased [4] - Expectation: The rapeseed oil OI2601 is expected to fluctuate in the range of 9800 - 10200 [4] Recent Bullish and Bearish Analysis - Bullish: The inventory-to-sales ratio of US soybeans remains around 4%, indicating tight supply [5] - Bearish: The prices of oils and fats are at a relatively high level historically, and domestic inventories of oils and fats are continuously increasing. The macroeconomy is weak, and the expected production of related oils and fats is high [5] - Main Logic: The global fundamentals of oils and fats are relatively loose [5]

Macroeconomic Overview - October fundamentals continued to weaken, with real growth indicators showing significant decline, while price indicators remained supported by base effects and rebounds[2] - New home sales and investment in real estate further weakened, with infrastructure and manufacturing investment growth rates declining more sharply[2] - Social financing in October was 815 billion CNY, significantly below the expected 1,528.4 billion CNY and the previous value of 3,529.6 billion CNY[9] - New credit in October was 220 billion CNY, compared to an expected 460 billion CNY and a previous value of 1,290 billion CNY[9] Economic Data Analysis - Industrial value added in October grew by 4.9%, below the expected 5.5% and previous 6.5%[15] - Retail sales in October increased by 2.9%, slightly above the expected 2.7% but below the previous 3%[15] - Fixed asset investment showed a cumulative year-on-year decline of 1.7%, worse than the expected decline of 0.7%[15] - Real estate development investment fell by 14.7% year-on-year, slightly worse than the expected decline of 14.5%[15] Market Reactions - The stock market experienced a volume decline, with the Shanghai Composite Index down by 0.18% and the Shenzhen Component Index down by 1.40%[8] - Bond yields generally decreased, with the 10-year government bond yield falling by 0.1 basis points[8] - The U.S. stock market initially rose but later fell, with the Dow Jones up by 0.34% and the S&P 500 up by 0.08% before declining[8] - The U.S. dollar index fell by 0.26%, while the offshore RMB appreciated by 251 basis points against the dollar[8]

Group 1 - The core viewpoint of the article is that the recent interactions between the U.S. and China have led to China gaining two significant advantages in understanding U.S. President Trump's negotiation style and the potential for negotiations on previously deemed non-negotiable issues like chip controls [1][2][3] - The first key outcome for China is the understanding of Trump's tendency to compromise under pressure, which allows China to leverage this knowledge in future negotiations [2][3] - The second key outcome is the U.S. agreement not to impose new export controls or additional national security measures against China, marking a significant breakthrough for China in negotiations [3] Group 2 - The article discusses the context of U.S.-China relations, highlighting that both countries have returned to a state similar to earlier this year, with the U.S. significantly reducing tariffs while China has paused its rare earth supply restrictions [1][3] - It emphasizes that the Biden administration aims to manage competition with China without escalating into conflict, maintaining communication channels and creating opportunities for cooperation on major issues [4] - The article also critiques Trump's approach to international relations, suggesting that his strategies may undermine U.S. credibility and inadvertently strengthen China's diplomatic position [4]

Core Insights - The current macroeconomic situation and future investment outlook emphasize two main investment themes: the evolving Sino-U.S. relations and the explosive growth of AI and computing power [1] Group 1: Investment Themes - The first theme focuses on the new dynamics in Sino-U.S. relations, highlighting opportunities in precious metals, domestic substitution in China's supply chain, and the reshaping of the global trade system [1] - The second theme revolves around the impact of AI and computing power, which is expected to lead to significant growth in technology companies and increased demand for electricity, power grids, and energy storage, thereby enhancing the strategic value of non-ferrous metals like copper and lithium carbonate [1] Group 2: Market Outlook - The improvement in China's comprehensive national strength is seen as a foundation for a slow bull market in A-shares, with sectors such as AI, computing, energy storage, and autonomous driving driving industry transformation and the rapid growth of quality listed companies [1] - The transition of China's economy to a high-quality development phase indicates that companies representing high-quality economic growth will become core assets in the market [1] - As the credibility of the U.S. dollar declines and the dollar index depreciates, there will be an increasing demand from foreign investors to allocate assets in China [1] Group 3: Gold as an Investment - Gold is viewed not only as a metal but also as a form of currency, with a positive outlook on future gold prices [1] - Factors such as the increasing share of gold in reserve assets, challenges to the U.S. dollar, and unresolved major disagreements among global powers are expected to support higher gold prices [1]

Core Points - The meeting between China's Vice Minister of Foreign Affairs, Lu Kang, and former U.S. Deputy Assistant Trade Representative, An Kaibin, focused on exchanging views regarding issues in China-U.S. relations [1] - Lu Kang emphasized the spirit of the 20th Central Committee's Fourth Plenary Session and the suggestions in the "14th Five-Year Plan" related to expanding foreign openness [1] Group 1 - The meeting aimed to address and discuss key issues affecting China-U.S. relations [1] - Lu Kang highlighted the importance of the 20th Central Committee's Fourth Plenary Session in shaping China's foreign policy [1] - The "14th Five-Year Plan" was presented as a framework for enhancing China's openness to foreign investment and trade [1]

Asset Allocation - The investment research framework has evolved from the traditional Merrill Lynch clock to a Chinese-style monetary credit model, reflecting significant changes in China's economic development model and the diminishing role of investment in driving economic growth [12] - In the new era, liquidity is identified as a core factor influencing asset prices, with the monetary cycle remaining highly relevant. Additionally, international factors, exemplified by US-China relations, significantly impact export engines and cross-border capital flows, becoming crucial for capturing asset price changes [12] Historical Review of Stock and Bond Performance - The report reviews stock and bond performance since 2018, highlighting that in 2018, macroeconomic fundamentals were weak, leading to significant stock market declines while bonds provided good coupon returns. In 2019, equity markets experienced volatility, and bonds continued to offer protection [18] - The analysis indicates that from 2020 to 2025, equity markets have shown resilience driven by technology stocks and structural bull markets, while bonds have entered a bull market phase characterized by declining yields [18] Long-term Bond Market Trends - Historical data shows that each bond bull market corresponds with a downward trend in 10-year government bond yields, driven by the interplay of "debt bulls" and "asset scarcity" [20] - The current bond bull market has seen 10-year government bond yields reach new lows, indicating a significant shift in the bond market landscape [21] Equity Market Trends - The equity market is believed to be in a long-term upward trend, with the current phase identified as the third wave of a five-wave cycle. This phase is expected to last longer than previous cycles, indicating a gradual upward movement [25] - The report draws parallels with Japan's experience, noting that after the economic bubble burst in the 1990s, the Japanese stock market entered a long-term upward channel, supported by structural reforms and monetary easing [29] Core Investment Themes - The report emphasizes a bullish outlook on A-shares and Hong Kong stocks, driven by stable US-China relations and a supportive global monetary environment. It suggests that technology stocks will lead the market in the next 5-10 years [36] - The bond market is expected to maintain a volatile environment, with a focus on coupon strategies as interest rates are projected to fluctuate between 1.7% and 2.0% [36]

Core Points - The Chinese government, represented by Vice Minister of the International Liaison Department Lu Kang, emphasizes the commitment to high-level opening up and invites countries, including the United States, to share in China's development opportunities [1] Group 1 - Lu Kang conveyed the spirit of the 20th Central Committee's Fourth Plenary Session, highlighting China's intention to continue expanding its openness to the outside world [1] - The meeting included an exchange of views on issues related to China-U.S. relations, indicating ongoing diplomatic engagement [1]