Core Insights - The report highlights the significant increase in travel demand during the 2026 Spring Festival, indicating a potential shift in consumer behavior towards more robust spending patterns [2][8] - It emphasizes the importance of the upcoming "Two Sessions" in shaping economic policies and targets, particularly regarding GDP growth and inflation rates [7][8] - The analysis suggests a transformation in consumption patterns, with a notable rise in travel among older demographics and a shift towards personalized consumption experiences [3][8] Economic Indicators - The GDP growth target for 2026 is set at approximately 5%, slightly lower than the previous year's target of 5.3%, reflecting a more pragmatic approach to economic management [7] - The Consumer Price Index (CPI) target for 2026 is expected to remain around 2%, aligning with current economic conditions and aiming for moderate inflation [7] - The report anticipates a fiscal deficit rate of around 4% and an increase in local government special bond issuance to support economic growth [7] Consumer Trends - The report identifies three unusual trends in consumer behavior during the Spring Festival: a surge in travel, increased participation from older travelers, and a shift towards more personalized consumption [8] - Travel data shows a 35% increase in flight bookings for travelers aged 60 and above, with significant growth in hotel reservations and ticket purchases for attractions [3][8] - The rise of self-driving trips and the use of new media platforms for travel planning are noted as key factors driving changes in consumer preferences [8] Policy Implications - The report underscores the need for effective fiscal policies to stimulate domestic demand and consumption, with a focus on enhancing service consumption and supporting small businesses [7][8] - It suggests that the government will continue to implement measures to boost consumer confidence and spending, including personal credit repair initiatives and targeted financial support [9] - The analysis indicates that the current economic environment may lead to a greater emphasis on service consumption as disposable income increases and consumer preferences evolve [9]

Group 1 - The key agenda for the upcoming "Two Sessions" includes the review of core reports such as the government work report, plan and budget report, and the work report of the Standing Committee of the National People's Congress [3][4][49] - Important news conferences during the "Two Sessions" will provide insights into policy deployments, with specific sessions scheduled for economic, diplomatic, and livelihood themes [3][4][11] - Discussions related to the "14th Five-Year Plan" will be a focal point, with the government work report mentioning its implementation and subsequent deliberations by representatives [3][12][50] Group 2 - The national GDP growth target for 2026 is expected to be set at around 5%, slightly lower than the 5.3% target for 2025, reflecting a pragmatic approach to economic work [4][14][51] - The CPI target for 2026 is likely to remain around 2%, aligning with the current economic pace and aiming for moderate inflation [5][19][52] Group 3 - Fiscal policy will focus on enhancing efficiency, with expectations of maintaining a deficit rate around 4% and increasing the scale of local government special bonds and long-term special bonds to 5.5 trillion yuan and 2 trillion yuan respectively [6][24][27] - Monetary policy is anticipated to maintain a moderately loose stance, emphasizing liquidity support and precise structural support, while also focusing on fiscal coordination and expectation management [6][33][39] - Expanding domestic demand and promoting consumption will remain a primary task, with various departments implementing measures to stimulate service consumption and activate private investment [7][45][53]

Investment Rating - The report maintains a "Positive" investment rating for the construction and engineering sector [8]. Core Insights - The construction sector's performance shows a phase differentiation around the Two Sessions from 2021 to 2025, with most years experiencing an increase in the two trading days before the sessions, while the period during the sessions has seen declines. Post-session, there is often a recovery in the following five trading days [2][6]. - The construction sector is primarily policy-driven, with a notable weakening in the pre-session policy speculation. However, there is a significant recovery following the clarification of policies post-sessions. The report highlights that the Longjiang Construction Engineering Index saw increases in the two trading days before the sessions, except for 2022 and 2025, with a notable 3.9% increase in 2023 [12]. - The report suggests that the industry focus may shift towards cutting-edge technologies related to new productive forces and consumer sectors related to domestic demand expansion [12]. Summary by Sections Market Performance - The construction sector has shown a mixed performance in the past 12 months, with a notable increase in the Longjiang Construction Engineering Index compared to the CSI 300 index [10]. Event Commentary - The report indicates that the overall resumption of work in early 2023 has improved, with a work resumption rate of 8.9% and a labor utilization rate of 15.5% as of February 25, 2023. The anticipated GDP growth target for 2026 is likely to be set between 4.5% and 5.0% [12]. - The report emphasizes the importance of monitoring the construction sector's response to policy changes, particularly in the context of local debt pressures and the ongoing real estate downturn [12]. Investment Recommendations - The report recommends focusing on three main lines within the construction sector: 1. **Domestic Demand Chain**: Highlighting companies like Sichuan Road and Bridge, China State Construction, and China Railway [12]. 2. **Inflation Chain**: Companies such as China Chemical are expected to benefit from rising commodity prices [12]. 3. **Technology Chain**: Companies involved in cleanroom construction and commercial aerospace are highlighted, including Yaxiang Integration and Shenghui Integration [12].

Group 1 - The A-share market showed strong recovery after the Spring Festival, with overall positive performance and increased trading volume, indicating a bullish sentiment among domestic investors [1] - The market's rebound was characterized by significant inflows into cyclical industries, reflecting investor expectations for a further rise in PPI [1] - Small and mid-cap stocks outperformed large-cap blue-chip and technology stocks, which is a typical feature of the spring market [1] Group 2 - The Shanghai Composite Index entered a consolidation phase after a series of rebounds, with current market characteristics including sector differentiation and rapid industry rotation [2] - Attention is needed on the technical resistance at previous highs and the ability of the 5-day moving average to hold [2]

Market Review - After the Spring Festival, the Wind All A Index saw a significant increase, breaking through the high point of January 26, indicating a reduction in post-holiday cautious sentiment. The financing balance returned to approximately 2.65 trillion yuan, with a net financing inflow of 77.6 billion yuan over the first three trading days after the holiday. Resource products and computing hardware sectors benefited from price increase logic, with steel, non-ferrous metals, and chemical indices rising over 7%. Since February, precious metals and crude oil prices have generally risen due to geopolitical risks and differing expectations regarding Federal Reserve policies. The US dollar index fluctuated around 97, while the offshore RMB continued its appreciation trend, recently surpassing the 6.9 mark [1][2][3]. Market Outlook - As the "Two Sessions" approach, the A-share market is characterized by stability. The escalation of overseas geopolitical conflicts may trigger short-term global risk aversion and inflation trading, with the duration of these conflicts being a key variable affecting the market. Domestically, the upcoming "Two Sessions" will focus on expanding domestic demand and new productive forces, which may become annual priorities. Historical data shows that the market tends to operate steadily during the "Two Sessions," with an increased probability of market gains following the conclusion of the sessions. Key areas of focus include the impact of geopolitical tensions in the Middle East, which may drive short-term global risk aversion and inflation expectations, benefiting sectors like crude oil and non-ferrous metals [2][3]. Focus on "14th Five-Year Plan" Direction - The A-share market will enter the "Two Sessions" period, emphasizing the direction of the "14th Five-Year Plan." Historical analysis from 2019 to 2025 indicates that the market's performance tends to decline during the "Two Sessions," likely due to some funds cashing out during the meetings. However, the performance of the Shanghai Composite Index and Wind All A Index tends to improve in the seven trading days following the sessions. Sectors highlighted during the sessions often continue to perform well throughout the year, such as the power sector after the mention of "carbon neutrality" in 2021 and the AI sector after the introduction of "AI+" in 2024. This year marks the beginning of the "14th Five-Year Plan," and the review of its draft will likely anchor mid-to-long-term industry directions [3][4]. Economic Focus for 2026 - The key tasks for economic work in 2026 include expanding domestic demand and fostering new productive forces. The economic growth target for 31 provinces is set around 5%, reflecting a pragmatic approach of "seeking progress while maintaining stability." The Central Political Bureau emphasized the continuation of a more proactive fiscal policy and moderately loose monetary policy, indicating a supportive and expansionary stance for 2026. The focus on expanding domestic demand and new productive forces is underscored by President Xi Jinping's article outlining eight key tasks, with the first two emphasizing the importance of domestic demand and innovation-driven growth [4][5]. Valuation and Risk Premium - From a valuation perspective, the latest Wind All A price-to-earnings (P/E) ratio, excluding negative values, stands at 18.58 times, which is at the 80th percentile of historical highs since 2010. However, approximately 40% of industries still have valuations below the median since 2010. The latest equity risk premium (ERP) for the CSI 300 is 5.26%, close to the median over the past decade, indicating that A-shares are relatively reasonably valued. In the medium to long term, the current "slow bull" market still has room for further development. Industry allocation should focus on sectors benefiting from inflation expectations, such as oil transportation, non-ferrous metals, and petrochemicals, as well as new productive forces supported by industrial policies, including military, computing, energy storage, and commercial aerospace [5].

Investment Rating - The report maintains a rating of "Buy" for the transportation sector [5] Core Insights - The VLCC (Very Large Crude Carrier) freight rates continue to rise unexpectedly, with a focus on oil transportation and VLCC shipbuilding sectors. The non-compliant market is restricted, and the supply-demand relationship in the compliant market is improving, leading to increased freight rate elasticity during the economic cycle [1][2] - Sinokor's significant acquisition of VLCC assets is raising industry concentration, which is expected to enhance freight rate elasticity during the economic cycle. Key companies to watch include China Merchants Energy Shipping, COSCO Shipping Energy, ST Songfa, COSCO Shipping International, and Haitong Development [1][2] - The air travel sector is expected to benefit from high passenger load factors translating into ticket price increases, supported by low supply growth and recovering demand. The report emphasizes monitoring demand recovery and international flight resumption [3][12] - The express delivery industry saw a year-on-year growth of 5.4% in January-February 2026, with significant investments in companies like ZTO Express and Jitu Express. The report highlights two investment themes: overseas expansion driven by e-commerce growth and the consolidation of market share among leading express companies [3][19] Summary by Sections Weekly Insights and Market Review - The transportation sector index rose by 3.64% from February 24 to February 27, 2026, outperforming the Shanghai Composite Index by 1.66 percentage points. The top-performing sub-sectors were shipping, warehousing and logistics, and ports, with increases of 11.81%, 5.37%, and 5.08%, respectively [2][20] - The VLCC market saw freight rates of $209,352 per day for a 270,000-ton vessel from Ras Tanura to Ningbo and $224,195 per day for a 260,000-ton vessel from West Africa to Ningbo as of February 27, 2026 [2][13] Air Travel - The average ticket price for economy class during the 2026 Spring Festival was 1,026.9 yuan, a 6.6% increase year-on-year. The passenger load factor reached 86.9%, up 1.7 percentage points from the previous year [11][12] Shipping and Ports - The report indicates that the oil transportation sector is experiencing a high level of prosperity, which is positively impacting new shipbuilding and second-hand ship markets. Key companies to focus on include China Merchants Energy Shipping and COSCO Shipping Energy [1][2][14] Logistics - The express delivery sector is expected to see continued growth, with a focus on the overseas expansion of e-commerce and the consolidation of market share among leading companies. The report recommends monitoring ZTO Express and YTO Express for potential investment opportunities [3][19][17]

Core Insights - The report highlights the significance of the upcoming "Two Sessions" in March 2026, which is expected to influence China's policy direction for the year and the next five years, thereby impacting capital market trends [1] - Historical analysis indicates a "Two Sessions Effect" in A-shares, characterized by pre-session index increases, small-cap outperformance, and excess returns in the TMT sector before and after the sessions [1][2] - The report categorizes years based on total policy expectations, noting that strong expectations lead to significant market impacts, while stable expectations result in structural market trends [2][3] Market Trends - Historically, the A-share index tends to rise in the 20 trading days leading up to the Two Sessions, with an 81% win rate and an average increase of 2.40% [4] - During the sessions, the market experiences uncertainty, leading to a win rate drop to 50%, but post-session, the win rate increases again to 75% with an average increase of 2.44% in the following 20 trading days [4][5] - Small-cap indices, represented by the CSI 2000 and CSI 1000, show significant outperformance before the sessions, with win rates of 80% compared to larger indices [4][5] Sector Performance - The consumer and TMT sectors are expected to perform well, with high win rates and positive returns due to policy announcements and economic targets set during the sessions [4][5] - Specific sectors such as social services, beauty care, and textiles are highlighted for their strong performance before and after the sessions, benefiting from cyclical economic policies [4][5] - The report emphasizes the importance of structural highlights in 2026, particularly in expanding domestic demand and fostering new productive forces, such as commercial aerospace and AI applications [6][7] Policy Focus - The report indicates that the 2026 Two Sessions will focus on structural adjustments rather than aggressive total policy measures, with a notable emphasis on expanding domestic demand and optimizing real estate policies [5][6] - The central government's focus on high-quality development and nurturing new productive forces is expected to shape the market landscape, with significant attention on sectors like commercial aerospace and AI [6][7] Investment Strategy - The report suggests that due to the low probability of exceeding total policy expectations, market movements will be stable, with a focus on price increases and AI-related sectors [8] - Key investment areas include AI and related fields, cyclical sectors like chemicals and construction materials, and emerging industries highlighted in government reports [8]

Core Viewpoint - The issuance of local government bonds in China has accelerated significantly in early 2026, with a total issuance exceeding 2 trillion yuan, reflecting a proactive fiscal policy aimed at stabilizing investment and boosting economic growth [1][2][4]. Group 1: Bond Issuance Details - On February 27, 2026, Liaoning Province successfully issued approximately 210.8 billion yuan in local government refinancing general bonds, while Hunan Province issued about 681 billion yuan in special bonds [1]. - As of February 27, the total issuance of local government bonds across the country has surpassed 2 trillion yuan, with a planned issuance of 2.6 trillion yuan [1]. Group 2: Investment Focus and Strategy - The newly issued special bonds are primarily directed towards municipal and industrial park infrastructure, transportation, and affordable housing projects, emphasizing the creation of tangible work output [1][3]. - The issuance structure shows that newly issued special bonds amount to approximately 824.2 billion yuan, while refinancing special bonds total around 774 billion yuan, with the latter mainly used for replacing hidden debts [1][2]. Group 3: Economic Impact and Policy Support - The acceleration of local government bond issuance is seen as a key measure for fiscal support in the early stages of the 14th Five-Year Plan, acting as a stabilizing force for economic operations [4]. - The issuance of these bonds is expected to stabilize investment, expand domestic demand, and address infrastructure shortfalls, thereby laying a solid foundation for long-term economic growth [3][4].

Group 1: Consumption Subsidies - In 2025, over 360 million people applied for consumption subsidies, driving related sales exceeding 2.6 trillion yuan, directly boosting social retail sales by 0.6 percentage points[17] - The retail sales of key subsidized products such as furniture, home appliances, and communication equipment grew by 14.6%, 11.0%, and 20.9% respectively, significantly outpacing the overall retail sales growth of 3.7%[18] - The government allocated 300 billion yuan in special bonds for consumption subsidies in 2025, doubling the amount from 2024[12] Group 2: Investment Support - Fixed asset investment in China decreased by 3.8% in 2025, with equipment updates and high-tech services countering declines in real estate and private investment[23] - The government supported 1,459 projects with 800 billion yuan in "two heavy" investments in 2025, an increase from 700 billion yuan in 2024[27] - Equipment investment grew by 11.8% in 2025, accounting for 18.0% of total fixed asset investment, contributing 1.8 percentage points to overall investment growth[23] Group 3: Policy Optimization - The "two new" policies were optimized in 2026, expanding support for old equipment updates and consumption subsidies to include more product categories and enhance subsidy standards[30] - Structural monetary policy tools were adjusted, with a 0.25 percentage point reduction in interest rates, expected to lower interest costs by approximately 12.5 billion yuan[37] - Fiscal policies in 2026 will focus on increasing total expenditure while optimizing the structure to enhance the effectiveness of spending on consumption and investment[42]

Core Viewpoint - The overall metal sector showed a strong oscillating pattern during the Spring Festival holiday, driven by a dual focus on risk aversion and stagflation trading, with investors encouraged to seize opportunities in the metal sector [1] Group 1: Market Analysis - Multiple uncertainties in the global macro environment during the holiday period supported the price increase of metal assets, including both non-ferrous and precious metals [1] - According to Zhongyin Securities, by 2026, the market is expected to enter a "profit-driven upward phase," with domestic re-inflation narratives strengthening under the influences of "anti-involution" and expanding domestic demand [1] - The strong cyclical attributes of metal assets are anticipated to manifest, with financial attributes and industrial trends leading to revaluation opportunities [1] Group 2: Investment Opportunities - Investors are advised to consider industrial metals and minor metals as offensive strategies, while using precious metals as a defensive measure to effectively capture market opportunities [1] - The ongoing issuance of the Yinhua CSI Non-Ferrous Metal ETF linked fund provides a convenient investment tool for investors seeking exposure to resource assets [1] - This fund closely tracks the CSI Non-Ferrous Metal Index, allowing investors to easily access core assets in the non-ferrous industry [1] Group 3: Investment Strategy - Given the diverse subcategories and significant stock volatility within the non-ferrous industry, investors can leverage the Yinhua Non-Ferrous ETF and its linked fund to significantly reduce stock selection difficulty and trading costs [1] - This approach enables more efficient participation in the overall growth of the industry [1]