1. Report Industry Investment Rating - Overweight A-shares and H-shares [10] - Bullish on the steady appreciation of the RMB against the US dollar, with a 12 - month target of 6.85 [10] 2. Core View of the Report - Goldman Sachs' forecast for China's economic growth in 2026 (real GDP growth of 4.8%) is higher than the market consensus of 4.5%. The prediction is based on expected policy easing and the strong resilience of the export sector. Net exports' contribution to growth is expected to narrow, while consumption and investment will support domestic demand. The real - estate market's decline remains a drag, but its negative impact is expected to weaken [8]. - China is in a profound structural transformation. New growth drivers are emerging as traditional engines (exports to the US and real - estate) have declined. The export sector has diversified, and the current account surplus is expected to expand. Domestic consumption growth may slow, but government consumption is expected to accelerate. Fixed - asset investment is expected to rebound. The real - estate and labor markets are the main challenges in 2026 [9]. - China's macro - policy will maintain a "gradual" and "flexible" easing mode. Fiscal policy will be the main force for "stabilizing growth", and the stock market has room for further growth [10]. 3. Summary by Relevant Catalogs Central Bank and Market Liquidity - After the holiday, the central bank conducted net withdrawals of funds. On January 5, the 7 - day pledged repurchase amount was only 135 million yuan with a 1.4% interest rate, and the net withdrawal was 46.88 billion yuan. After two days of net withdrawals, the OMO stock fell below 60 billion yuan. The post - holiday capital price declined, and market liquidity was generally abundant [2]. International and Domestic Stock Market Performance - On the first trading day of the new year, the A - share market had a good start. The Shanghai Composite Index rose 1.38% to 4023.42 points, the Shenzhen Component Index rose 2.24%, and the total trading volume of the two markets was 2546.271 billion yuan, an increase of 501.129 billion yuan from the previous trading day. The ChiNext Index rose 2.85%, and the STAR 50 Index rose 4.41%. Asian stock markets in Japan, South Korea, and China led the gains, and European and American major stock indexes also closed higher. In the Hong Kong stock market, the Hang Seng Technology Index and the Hang Seng Index rose 0.09% and 0.03% respectively [3]. Bond Yields and Interest Rates - The yield of the 10 - year China Treasury bond was 1.8592%, up 0.84 BP. The average daily prices of R001 and R007 in the inter - bank market were 1.3315% and 1.4861% respectively [3]. Sector Performance - Media, pharmaceutical biology, electronics, and non - bank finance led the gains, with increases of 4.12%, 3.85%, 3.69%, and 3.14% respectively. Petroleum and petrochemicals, banks, and transportation led the losses, with declines of 1.29%, 0.34%, and 1.3% respectively [3]. Exchange Rates - The US dollar index closed at 98.3291, down 0.13%. The US dollar against the offshore RMB exchange rate was 6.9829, and the offshore RMB depreciated by 130 basis points [4]. Goldman Sachs' Forecast for China's Economy in 2026 - Policy: China's macro - policy will be "gradually" and "flexibly" eased. Monetary policy will be moderately relaxed, and fiscal policy will be the main force for "stabilizing growth". The net issuance of government bonds is expected to increase, focusing on consumer infrastructure, people's livelihood, urban renewal, and major projects [10]. - Growth: Real GDP growth is expected to reach 4.8%, higher than the market consensus. Net exports' contribution to growth will narrow, and consumption and investment will support domestic demand. The real - estate market's decline will continue to be a drag, but its negative impact will weaken [8]. - Market: Overweight A - shares and H - shares. Short - term interest rates are expected to decline more than long - term interest rates, and the yield curve may steepen. The RMB is expected to appreciate steadily against the US dollar [10].

Core Viewpoint - Temasek's investment strategy in China aligns with the country's economic transition from high-speed growth to high-quality development, focusing on long-term, patient, and value-driven capital investments [1][4]. Group 1: Investment Directions - Temasek has established four long-term investment directions globally: digitalization, sustainable living, future consumption, and longevity [3]. - The company continues to support the development of China's new economy, particularly in sectors like digitalization, smart technology, renewable energy, life sciences, and biotechnology, which are believed to have significant growth potential [3][4]. Group 2: Investment Strategy - Temasek's investment strategy in China is increasingly diversified, involving public market investments, private equity, special opportunity funds, and strategic partnerships [4]. - The company emphasizes the importance of structural transformation in the Chinese economy, which is pursuing growth in a more balanced and sustainable manner, driven by innovation [4][5]. Group 3: Mergers and Acquisitions - In the Chinese market, Temasek focuses on a dual-driven approach of innovation and mergers & acquisitions, as many mature companies with strong fundamentals are entering a conducive environment for M&A [5][6]. - The unique demand-supply iteration ecosystem in China is creating a strong innovation flywheel effect, leading to the emergence of world-class leading companies and growth investment opportunities [6]. Group 4: Future Outlook - Temasek plans to continue investing long-term, patient, and value capital to build a resilient and forward-looking investment portfolio in China [6].

Core Viewpoint - The article emphasizes the significant opportunities for private equity funds in the Greater Bay Area of China, driven by policy benefits, capital accumulation, and cross-border innovation, amidst a backdrop of global economic uncertainty and evolving macroeconomic conditions [3][4][6]. Group 1: Global Macro Market Outlook - The U.S. tariff policies have been a major disruptor in the global macroeconomic landscape, impacting growth momentum [4]. - The recent "truce" in U.S.-China tariffs provides a temporary positive sentiment for the market and supply chains, but the sustainability of this impact depends on future agreements and China's economic rebalancing progress [6]. Group 2: Equity Market Dynamics - China's equity market is currently attracting international investors due to its appealing valuations, strengthened market confidence from policy expectations, structural upgrades, and global capital allocation needs [8]. - The MSCI China Index has returned to its five-year average valuation, and future performance will heavily rely on the recovery of earnings momentum [10]. - The "Eight Giants" of China still show significant valuation discounts compared to the "Seven Sisters" of U.S. stocks, indicating potential for capital inflow as trade tensions clarify and China's economic resilience is demonstrated [10]. Group 3: Fixed Income Market Outlook - In the first half of 2025, high-yield bonds performed strongly while investment-grade bonds met expectations [11]. - As the U.S.-China interest rate differential narrows, Chinese dollar bonds may face pressure from widening credit spreads, potentially redirecting some "southbound funds" towards more attractive municipal bonds [13]. Group 4: Quantitative Research and Data Solutions - Alternative data is crucial for quantitative research, providing investors and analysts with forward-looking insights to navigate market fluctuations [14][16]. - Bloomberg's enterprise data solutions offer high-quality, globally covered data to assist private equity clients in making informed investment decisions [19]. Group 5: Insights from Industry Leaders - The integration of cutting-edge technology with solid industry research is essential for identifying value in the current market environment, particularly in the rapidly growing Greater Bay Area [22]. - Sustainable free cash flow is prioritized over short-term profit fluctuations, with current market conditions presenting opportunities for value investors to capitalize on undervalued companies [24].