Core Viewpoint - The focus of global AI development is shifting from hardware infrastructure to software applications, with China positioned advantageously due to its low-cost and open-source AI services, potentially gaining greater influence in AI standard-setting [1] Investment Opportunities - The company sees attractive risk premiums in Chinese assets, particularly favoring Hong Kong stocks. Key areas of interest include AI applications, internet platforms, internationally competitive innovative pharmaceuticals and medical devices, high-barrier electrical equipment, leading cyclical sub-industry leaders, and the financial sector [1] Research Framework - The investment research framework "4Alpha-Hats" categorizes sources of excess returns into four types: growth, value, cyclical, and opportunity. The framework emphasizes understanding the core factors driving companies to outperform the market [2] Growth Alpha Focus - The highest allocation in the investment portfolio is currently in growth alpha, as many value opportunities have already seen significant excess returns. The market sentiment is cautious, leading to less optimistic premiums for growth companies, which are expected to have more room for growth in the long term [2] AI Investment Insights - In the AI sector, the company identifies midstream AI cloud computing platform providers and various downstream vertical applications as key investment areas. The current stage of AI presents early investment opportunities, with China's advantages including a large user base and rich application scenarios [3] Value Alpha and High Dividend Stocks - High-dividend stocks overlap significantly with value alpha, including sectors like life insurance, utilities, and traditional manufacturing. However, investment decisions should consider fundamental factors rather than solely relying on dividend yield [3] Cyclical Alpha Outlook - The company is optimistic about a leading equipment manufacturing firm in the durable goods sector, which is experiencing an upward trend post-2023 cycle bottom. Demand is driven by companies reassessing global production layouts amid trade tensions [4] Market Sentiment and Recovery - The company expresses a more optimistic outlook for investment opportunities in the Chinese market, noting a supportive domestic policy environment and increased market activity. The A-share market is still in a bottom-building phase, while the Hong Kong market is recovering [5] Consumer Sector Potential - There are significant opportunities in the consumer sector, particularly as macroeconomic pressures and housing prices stabilize, which may restore consumer confidence. Strong brand traditional consumer goods are expected to regain market share during economic recovery [5] Innovative Pharmaceuticals - The company believes that many quality innovative pharmaceutical companies are undervalued, with their R&D capabilities and pipeline potential not fully recognized by the market. As market sentiment improves, these companies are expected to see a valuation correction [5] Internet and Financial Services - The internet sector, particularly companies reliant on advertising, is expected to benefit from economic stabilization. In the financial sector, strong retail banks with robust deposit capabilities are viewed positively, despite current low-interest-rate perceptions [6] Long-term Military Investment - The military sector is seen as a promising area for technological upgrades in the long term, indicating a strategic focus on defense-related investments [7]