Core Viewpoint - The 2026 Global and China Capital Market Outlook Forum highlighted a moderate economic recovery, a shift in asset allocation towards equities over bonds, and increasing differentiation within commodity markets [1][3][4]. Economic Outlook - The economic fundamentals are showing a moderate recovery, with nominal GDP, average indices, PPI, and CPI readings all improving compared to 2025 [3][9]. - Macro policies are expected to move away from "extraordinary" measures as the economy improves, leading to less aggressive policy actions [3][9]. - Financial conditions are anticipated to tighten marginally, with M2 year-on-year growth expected to shift from a unilateral increase in 2025 to a unilateral decrease in 2026 [3][9]. Asset Allocation Strategy - The strategic asset allocation is leaning towards "long on stocks, short on bonds," with a particular emphasis on Chinese equities [3][9]. - The 10-year government bond yield is expected to rise above 2% to achieve reasonable value [3][9]. - Since 2025, A-share volatility has been significantly lower than bond volatility, making stocks more attractive in terms of risk-adjusted returns (Sharpe ratio) [3][9]. Commodity Market Insights - Commodities are categorized into three types: gold, minor metals, and traditional grains/oil, with significant differentiation observed among them [4][10]. - The differentiation within commodities is expected to persist, driven by global security concerns and the scarcity of certain resources [4][11]. - The market dynamics indicate that scarce resources will become increasingly valuable, while those that are not scarce will lose value [4][11].

Core Insights - The commodity market in 2025 is characterized as a "structural bull market," with significant annual gains in gold and silver, while oil prices face pressure due to supply-demand dynamics [1] - Goldman Sachs' 2026 Commodity Outlook indicates a trend towards "increasing differentiation" in the commodity market, with overall returns expected to moderate but significant disparities among different commodities [1][2] - Key factors influencing the market include the geopolitical tensions between the US and China, the competition in AI, and dual supply shocks in the energy market [1][2] Commodity Performance - Precious metals, particularly gold and silver, are expected to continue their strong performance into 2026, with gold prices projected to reach $4,900 per ounce and silver between $50-$60 per ounce [3][6] - Industrial metals like copper are forecasted to maintain a strong price trajectory, with potential average prices between $11,400 and $12,075 per ton, driven by demand from technology and energy transitions [6][8] - The oil market is anticipated to face downward pressure, with Goldman Sachs predicting Brent and WTI crude oil prices to average $56 and $52 respectively in 2026, reflecting a supply surplus [8] Economic and Policy Context - The shift from "monetary easing + fiscal tightening" to "fiscal expansion + accelerated de-globalization" has highlighted the value of physical assets, creating structural opportunities in commodities [2] - The expected continuation of a loose monetary policy by the Federal Reserve in 2026 is seen as a catalyst for increased investment in commodities, as it lowers the opportunity cost of holding these assets [2] Market Dynamics - The energy market is expected to experience significant changes due to supply shocks in both oil and LNG, impacting pricing and availability [1][8] - The agricultural market's performance in 2026 is uncertain, with potential impacts from climate anomalies and trade policy changes affecting supply and demand dynamics [8] Strategic Focus - The 2026 commodity market will require a nuanced approach, moving away from a one-size-fits-all investment strategy to focus on structural opportunities influenced by geopolitical and technological factors [10]

1. Report Industry Investment Rating - No relevant information provided 2. Core Viewpoints of the Report - The market focused on the Fed's December FOMC meeting overseas and the Central Economic Work Conference in China last week. The Fed cut interest rates by 25bp as expected, and the market strengthened its easing expectations. In China, the Central Economic Work Conference set the tone for continued easing in 2026 [5]. - Global stock markets and commodities mostly declined, and A - shares showed a differentiated trend. Commodities were more differentiated, with precious metals and non - ferrous metals rising strongly, while the energy and chemical sectors were dragged down by weak oil prices, and the black series tumbled [5]. - The domestic bond market showed mixed performance, with short - term bonds stronger than long - term bonds, and the stock index fluctuated and differentiated. Most domestic commodity categories closed down [6]. 3. Summary by Relevant Catalogs Market Overview - Overseas, the December FOMC meeting cut interest rates by 25bp, and the dot - plot showed differences among Fed officials. The market strengthened its easing expectations, with U.S. bond yields showing a pattern of short - term weakness and long - term strength, and the U.S. dollar index under pressure. In China, the Central Economic Work Conference affirmed 2025 and set the tone for 2026. The November macro - economic data was mediocre, with industrial production weakening, investment slowing down, consumption decreasing, exports being strong, prices differentiating, and credit being weak. Capital market investors were cautious, and the VIX index fluctuated narrowly. Global stock markets and commodities mostly declined, and A - shares showed a differentiated trend. The BDI index dropped significantly. Commodities were more differentiated, with precious metals and non - ferrous metals rising strongly, the energy and chemical sectors being dragged down by weak oil prices, and the black series tumbling due to the deterioration of the real estate market and relatively stable policies [5]. Domestic Market Performance - The domestic bond market showed mixed performance, with short - term bonds stronger than long - term bonds, and the stock index fluctuated and differentiated. The growth - style stocks performed better than value - style stocks, and the CSI 500 rebounded significantly. Most domestic commodity categories closed down, with the Wind Commodity Index having a weekly change of 4.4%. Among the 10 commodity category indices, 3 rose and 7 fell. Precious metals soared by more than 4%, non - ferrous metals were strong, and soft commodities were resistant to decline. Other sectors all declined, with the energy and chemical sectors being weak, and the black series and non - metallic building materials having large declines [6]. - In terms of the futures market capital flow, funds in the commodity futures market flowed out significantly overall. The precious metals and soft commodities sectors had obvious capital inflows, while the energy, grain, and agricultural and sideline products sectors had significant capital outflows [6][18]. - Regarding commodity volatility, the volatility of the international CRB Commodity Index decreased slightly, while the volatility of the domestic Wind Commodity Index and Nanhua Commodity Index increased. The volatility of commodity futures categories showed mixed performance, with the chemical and oil and fat sectors having obvious volatility declines, and the non - ferrous and energy sectors having notable volatility increases [6]. Fed's Situation - The CME's FedWatch tool shows that the probability of the Fed cutting interest rates in January changed little, with the probability of maintaining the interest rate at 3.5 - 3.75% at 72.7%, similar to last week's 61.6%, and the probability of a 25bp cut to 3.25 - 3.5% remaining at less than 30%. The market expects 1 - 3 more interest rate cuts in 2026 [7]. - The Fed cut the federal funds rate target range from 3.75% - 4.00% to 3.50% - 3.75% at the December FOMC meeting, with a total of 75bp cuts this year. The Fed also announced the start of reserve management to rebuild liquidity buffers in the money market [77][78]. - The Fed raised the GDP growth expectations for this year and the next three years, with the largest increase of 0.5 percentage points for next year. It slightly lowered the unemployment rate expectation for 2027 by 0.1 percentage points and slightly lowered the PCE inflation and core PCE inflation expectations for this year and next year by 0.1 percentage points each [84]. - The dot - plot shows that the Fed still expects one 25bp interest rate cut next year, and the interest rate path prediction is consistent with three months ago. There are still differences among Fed officials, with three members voting against the 25bp interest rate cut at the December meeting [90][96]. China's Economic Situation - In November, China's CPI increased by 0.7% year - on - year, with the core CPI increasing by 1.2% year - on - year, remaining the same as last month. PPI decreased by 2.2% year - on - year, with a 0.1% month - on - month increase. The inflation data showed differentiation, and more efforts are needed to promote the recovery of prices [109][110]. - The Central Economic Work Conference pointed out that the core contradiction in the current economic operation is the strong supply and weak demand in China, and there are three intertwined challenges. The conference emphasized that these are "problems in development and transformation" and aimed to manage expectations and boost confidence [113]. - In November, China's industrial production weakened, investment slowed down, consumption decreased, exports were strong, prices differentiated, and credit was weak [117]. This Week's Focus - The market is concerned about a series of postponed U.S. economic data, including the November non - farm payroll report and CPI, as well as the interest rate decisions of the Bank of Japan, the European Central Bank, and the Bank of England. It is expected that the Bank of Japan may raise interest rates, and the Bank of England may cut interest rates by 25bp [7]. - A series of economic data and central bank interest rate decisions from various countries will be announced this week, including China's November economic data, U.S. inflation and employment data, and the interest rate decisions of the Bank of England, the European Central Bank, the Bank of Japan, and the Russian Central Bank [121].

Core Viewpoint - The current commodity market is experiencing a significant divergence, with silver prices surging while oil and copper prices are declining, reflecting different asset responses to anticipated interest rate cuts [1][3]. Silver Market - Silver prices have increased over 4% in a single day, surpassing $60 per ounce, driven by strong market expectations for an imminent interest rate cut by the Federal Reserve. This decline in interest rates reduces the opportunity cost of holding non-yielding assets like silver, attracting more investment [3]. - The tightness in the physical market and potential industrial demand, particularly from sectors like photovoltaics, further supports this price increase, positioning silver as a financial asset similar to gold [3]. Copper Market - In contrast, copper prices have retreated from previous highs, indicating market caution ahead of the anticipated interest rate cut. The prior increase in copper prices had largely priced in expectations of rate cuts and supply constraints, such as mine shutdowns [3]. - The market is concerned that an interest rate cut may signal insufficient future economic momentum, particularly regarding China's recovery as a major consumer, leading to a tug-of-war between monetary easing benefits and demand concerns [3]. Oil Market - Oil prices are declining due to tangible concerns over supply excess, with U.S. crude oil production reaching record highs while demand for refined products like gasoline and diesel weakens [4]. - This situation highlights that while monetary policy can influence asset prices broadly, the fundamental supply and demand dynamics of each asset ultimately determine their price levels [4]. Base Metals - The base metals market is also experiencing significant internal differentiation. For instance, zinc faces long-term supply surplus challenges, while demand from key sectors like construction remains weak, putting downward pressure on prices [4]. - Tin is caught between fragile supply chains and potential high-end demand from sectors like semiconductors, while lead prices are constrained by traditional consumption slowdowns and weak downstream support [4]. Investment Strategy - Investors should abandon the outdated notion of uniform commodity price movements and adopt a more nuanced analysis based on individual asset dynamics. The driving logic is shifting from macroeconomic factors to deeper industry-specific insights [5]. - For silver and gold, the focus should be on their financial and hedging attributes, with increased volatility expected. They are better suited for macro hedging rather than chasing industrial demand [6]. - For copper, short-term caution is advised following the realization of expectations, while the long-term potential as an "electrification metal" remains intact. Investors should wait for clearer signals regarding economic demand from China before making moves [6]. - For oil and base metals like zinc and lead, a cautious approach is recommended until clear signals of supply-side contraction or strong demand recovery emerge, as their price movements are more dependent on industry specifics rather than macroeconomic trends [6].