Market Overview - In 2025, A-shares experienced significant growth, with the total market capitalization exceeding 100 trillion yuan and the Shanghai Composite Index reaching a nearly ten-year high[1] - The ChiNext Index saw an annual increase of nearly 50%, with the technology sector surpassing the banking sector to become the largest industry by market capitalization[1] Economic Outlook for 2026 - The A-share market is expected to enter a "slow bull" phase in 2026, driven by macroeconomic policies, industrial transformation, and capital market reforms[2] - The core logic supporting the bull market remains solid, with expectations of continued inflows of capital and reduced overseas disturbances[2] Key Drivers of the Bull Market - Continuous macro policy support is anticipated to improve the economic fundamentals, with a focus on domestic demand and investment stabilization[3] - Rapid industrial transformation is expected to release new growth momentum, particularly in emerging sectors like renewable energy, aerospace, and biotechnology[3] - Deepening capital market reforms will enhance investor returns and improve market stability, with a focus on better resource allocation[3] Capital Inflows - Insurance funds are projected to increase their equity investments, with direct investments in stocks reaching 3.6 trillion yuan, accounting for 9.7% of their total assets[3] - There is a notable shift of household assets towards equity markets, with a significant reduction in new bank deposits and increased investments in ETFs and private equity[3] Sector Opportunities - The technology sector, particularly AI, is expected to be a primary investment focus in 2026, with significant growth in AI-related hardware and applications[3] - The energy storage sector is projected to grow substantially, with global demand for storage batteries expected to increase nearly 20 times from 15 GWh to over 300 GWh by 2030[3] - The commercial aerospace industry is entering a rapid development phase, supported by favorable policies and growing market demand for satellite internet and space tourism[3] Metal Sector Insights - The A-share metal sector has seen a 73.7% increase in 2025, with industrial metals like copper and aluminum expected to continue their upward trend due to supply-demand imbalances[3] - Copper demand is driven by AI infrastructure and energy transition, with a projected global shortage of 150,000 tons in 2026[3] - Precious metals like gold and silver have seen significant price increases, with silver prices rising 121.7% year-to-date, although future growth may slow[3]

Economic Overview - In 2025, China's economy demonstrated resilience with two "above expectations" and two "below expectations" characteristics, showing a "front high and back low" trend throughout the year[1] - The GDP growth for 2025 is projected to be around 5%, with a nominal GDP growth target of 5% as well, indicating a need for price recovery embedded in growth targets[2] Key Economic Drivers - The main economic lines for 2026 will focus on real estate and local government debt, with exports and central government-supported infrastructure investment serving as primary support forces[2] - In 2025, China's exports grew by 5.3% year-on-year, supported by diversified market layouts and upgraded export structures[8] Challenges and Risks - The real estate market's recovery in 2025 was slower than expected, with real estate investment declining by 14.7% year-on-year from January to October, exceeding the previous year's decline of 10.6%[10] - Internal challenges include low consumer spending and ongoing adjustments in the real estate market, which may prolong the recovery process[28] Policy Recommendations - Fiscal policy should be proactive, with a recommendation for a fiscal deficit rate of no less than 4% in 2026 to counteract the negative effects of real estate downturns and local government debt[33] - Monetary policy should leverage the opportunity presented by the Federal Reserve's interest rate cuts to further lower domestic interest rates and stimulate economic recovery[34] Consumer and Investment Outlook - Consumer spending is expected to gradually recover, supported by subsidy policies in childcare and pensions, alongside a potential increase in service consumption[24] - Fixed asset investment is projected to decline by 1.8% in 2026, with real estate investment expected to decrease by 15.2%[26]

Group 1: Causes of the Bull Market - The current A-share bull market is driven by profound global capital reallocation and breakthroughs in Chinese technology innovation, termed as the "technology revaluation bull" [2] - Changes in macroeconomic policy since the September 26 meeting last year and significant advancements in artificial intelligence have boosted investor risk appetite and market expectations [4] - Continuous improvement in capital market systems and the influx of quality companies have enhanced market attractiveness [6] Group 2: Market Outlook - The bull market is expected to continue, with short-term corrections providing buying opportunities [3] - The foundation for the bull market remains solid, supported by China's transition from "catching up" to "leading" in various tech sectors [8] - Domestic long-term capital continues to flow into the market, with overseas capital seeking to allocate assets in China amid global changes [9]