Core Viewpoint - The article discusses the recent trends in China's cross-border direct investment, highlighting a shift from net outflows to net inflows in foreign direct investment, despite ongoing external pressures such as tariffs and trade protectionism [1][2]. Group 1: Investment Trends - In the first three quarters of 2023, China's net outflow of outward direct investment decreased year-on-year, while foreign direct investment shifted from net outflow to net inflow [1][2]. - The cross-border direct investment still shows a deficit, but the deficit amount has halved compared to the previous year, indicating an improvement in capital flow under direct investment [1][2]. - From 2021 to 2024, China's cross-border direct investment transitioned from a surplus to a deficit, with the deficit increasing by $319 billion [9]. Group 2: Factors Influencing Investment - The significant reduction in foreign direct investment inflows is attributed to a sharp decline in equity investment inflows and a reversal in inter-company debt flows [11][12]. - Equity investment inflows dropped from $300.6 billion to $72.8 billion between 2021 and 2024, contributing to 70% of the total decline in foreign direct investment inflows [11]. - The net outflow of equity investment remained stable, with a slight increase from $152.4 billion to $130 billion, indicating that the primary reason for the decrease in outward direct investment was the reduction in inter-company debt outflows [26]. Group 3: Government Response and Economic Outlook - The Chinese government has implemented measures to mitigate external shocks, including deepening reforms and expanding high-level opening-up policies [18][19]. - In response to external pressures, the government has introduced a foreign investment stabilization plan, focusing on easing foreign investment access and optimizing the business environment [19]. - The first three quarters of 2023 saw a 50.8% reduction in the cross-border direct investment deficit, primarily due to increased foreign direct investment inflows and decreased outward direct investment outflows [22].

Group 1 - In 2025, global markets are influenced by several macro narratives, including the long-term weakening of dollar credit, restructuring of global supply chains, gold as a new anchor for the monetary system, AI as the infrastructure for a new industrial transformation, and non-ferrous metals as the new oil [1][8][36] - Domestic assets in 2025 are driven by fundamentals such as external demand and new industries, while high-yield assets are concentrated in non-ferrous metals and AI-related sectors [1][9][10] - The existence of a "temperature difference" in the economy indicates that new industrial investments are concentrated in emerging sectors, while traditional sectors show weaker performance [1][10] Group 2 - In 2026, a "mirror" relationship may form, with global narratives expected to converge, leading to reduced uncertainty in the global trade environment [2][11] - The expected recovery in investment gaps during the first year of the 14th Five-Year Plan may stabilize the real estate sector and improve consumption rates [2][13] - The profitability of large-scale industrial enterprises is projected to improve, with an expected increase in profit growth from approximately 3% to 6.6% [3][14] Group 3 - The transition of macroeconomic policy from "counter-cyclical" to "expanding domestic demand" is expected to enhance fundamental pricing power [3][15][16] - The combination of converging narratives and reduced temperature differences will impact asset pricing characteristics, with a shift from forward pricing to a combination of near and far pricing for commodities [4][17] - The normalization of risk preferences among residents will lead to an increase in rental yield pricing power in the real estate sector [4][18] Group 4 - The next round of narratives may include themes such as industrialization in southern countries, the second wave of globalization for Chinese enterprises, AI scenario applications, and a new quality of consumption [5][20] - The traditional investment research framework faces challenges from these narratives, necessitating an optimization of the investment research framework to incorporate narrative analysis [5][21] Group 5 - Key assumptions for economic judgment in 2026 include a moderate recovery in investment gaps, improvement in consumption, stable export fundamentals, and a reduction in downward pressure on the real estate sector [6][22][23][26] - The projected economic growth for 2026 is approximately 4.9% in real terms and 5.1% in nominal terms, indicating a stable growth outlook [6][28]

Global Asset Narrative - The core narrative of global assets is showing signs of loosening expectations but has not yet reversed. Key narratives include the weakening of dollar credit, gold transitioning from a safe-haven asset to a new monetary anchor, the reshaping of global supply chains, AI as the foundation of a new technological revolution, and non-ferrous metals being likened to the oil of this new revolution [1][2]. Recent Market Developments - Since October, the pricing environment for assets has shown signs of loosening consensus expectations, particularly with a rebound in the dollar, which rose from a low of 96.6 on September 16 to 99.7 by October 31. This shift has led to discussions around new economic logics such as increased labor productivity and rising real interest rates [2]. - Gold prices have experienced significant adjustments, peaking at $4,357 per ounce on October 20 before falling to $3,997 by October 31, influenced by geopolitical factors and easing global trade tensions [2]. - Recent economic discussions between China and the U.S. have yielded new outcomes, with tariffs being canceled or suspended, indicating a reduction in the risks of further disruptions in global supply chains [2]. Sector-Specific Insights - Meta's increased capital expenditures have led to a significant stock price adjustment, indicating a potential break in the positive cycle of AI infrastructure investment and market valuation [3]. - There is a general consensus on the increased demand for non-ferrous metals due to new industries, but there are differing views on the magnitude of this demand [3]. - The loosening of narratives is expected to impact asset prices, leading to increased volatility in financial market expectations, although the foundational narratives remain intact [3]. Global Market Performance - Global stock markets have shown divergence, with U.S. stocks beginning to exhibit signs of concern. The MSCI developed and emerging markets saw narrower gains of 0.61% and 0.92%, respectively [4][5]. - The S&P 500 and Nasdaq indices rose by 0.71% and 2.24%, respectively, despite concerns over Meta's aggressive capital spending plans leading to an 11% drop in its stock price on October 30 [5]. - In the commodities market, precious metals have moved away from a one-sided trend, with gold prices continuing to decline while silver prices increased by 2.0% [6]. Economic Indicators - The eurozone's economic performance in Q3 exceeded market expectations, with GDP growth of 0.2%, driven by stable investment and public spending despite weak private consumption [18][19]. - The ECB maintained interest rates at 2% during its October meeting, indicating a cautious approach to future monetary policy adjustments [19]. - In China, the stock and bond markets have shown signs of a "see-saw" effect, with the A-share market experiencing a slight increase of 0.41% [11]. Policy and Regulatory Developments - The Chinese government has announced plans to enhance digital transformation in urban areas, aiming to establish over 50 fully digitalized cities by 2027 [27][28]. - Recent policy measures aim to improve the financing environment for enterprises, with the BCI index rising from 47.6 to 52.4, indicating a more favorable outlook for corporate financing [24].