1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In 2026, the macro - economy will consolidate its bottom. It will be a year of weak recovery, featuring export support, stable investment, and weak consumption. Policy will remain positive, with fiscal policy staying active and a low - interest - rate environment continuing. In terms of asset allocation, stocks are preferred over commodities, and commodities over bonds [83]. - The Chinese economy is entering a new cycle from 2026, led by artificial intelligence, with new technologies evolving and being transformed into product advantages through China's industrial chain [84]. 3. Summary by Directory 3.1 Macro - economic Fundamentals - **Industrial Production**: Except for automobiles, the growth rate of major industrial products remains low. The increase in automobile production this year supports the growth of industrial added value. Next year, the growth rate of domestic automobile sales may decline, but the overall automobile industry will be supported by exports, and the growth rate of automobile industrial added value is likely to fall but not decline [6]. - **Fixed - asset Investment**: The decline in fixed - asset investment growth has accelerated, and it turned negative from January to September. In 2026, more powerful policies will be introduced to boost investment, and many projects postponed this year will start construction [9]. - **Consumption**: The growth rate of total retail sales of consumer goods has declined, and consumer confidence is hovering at a low level. The reasons include weak income and income expectations, high household leverage, imperfect social security, and a low proportion of household disposable income in GDP [14]. - **Inflation**: The inflation situation will remain weak for a long time. Downstream commodity consumption is poor, while service consumption such as tourism performs better. PPI faces downward pressure on production material prices, and the overall manufacturing scale keeps industrial product prices under long - term pressure [20]. - **Employment**: Unemployment has seasonally increased with the entry of college graduates into the labor market. The cumulative year - on - year growth of newly - added urban employment has flattened, and creating new jobs is becoming more difficult [26]. - **Manufacturing PMI**: Manufacturing PMI has been continuously weak. In the PMI sub - items, the sub - item of the purchase price of major raw materials is above the boom - bust line, and the sub - item of purchase volume fluctuates with the production sub - item, with a larger fluctuation range. Other sub - items are below the boom - bust line [30]. - **Inventory**: Production is significantly stronger than consumption, finished - product inventory is rising, and downstream demand is weaker [34]. - **Construction and Service Industry PMI**: The PMI of the construction industry and its important sub - items are at a low level in recent years, indicating the industry's downturn [38]. - **Foreign Trade**: The growth rate of imports and exports is better than expected. Exports are resilient, and China's share in global exports is increasing. New "new three items" (robots, artificial intelligence, and innovative drugs) are becoming new drivers of industrial upgrading and foreign trade growth [41][44]. - **Chip Industry**: The effect of chip import substitution has emerged in recent years. The growth rate of chip exports is much higher than that of imports, and a complete Chinese chip industry chain independent of the US is rising. It is expected to become a net exporter in 5 - 10 years [46]. 3.2 Macro - economic Highlights - **Automobile Industry**: Automobile production, sales, and exports will reach new highs this year. Although the growth rate of domestic sales may face pressure due to the withdrawal of subsidies, it may be maintained with the launch of new technologies and models. This year's automobile exports are expected to reach 750 - 800 million vehicles, with a year - on - year growth of about 18%, and the growth rate of overseas exports is expected to remain at a good level next year [51]. - **Industrial Enterprise Profits**: The profit growth rate of industrial enterprises above a designated size has rebounded. From January to August, the cumulative year - on - year growth rate of total profits of industrial enterprises above a designated size turned positive, and the year - on - year growth rate in August was 20%. With the implementation of "anti - involution" policies and interest - rate cuts, enterprise profits are expected to improve [54]. - **Stock Market and Economy**: When the M1 - M2 spread turns positive, PPI may also turn positive, indicating a possible bull market in both stocks and commodities. "Anti - involution" may end the decline of PPI. The growth rate of M1 is basically synchronous with the rise of the stock market [57]. - **Real Estate**: The data reflecting the scale of ongoing real estate projects has returned to the level of 2005, and housing prices are still falling month - on - month. The real estate market is in the process of bottom - building. The new housing start - up area may gradually stabilize, and there is a possibility of a retaliatory rise in housing prices in the future [60]. - **Stock Market and Asset Allocation**: There is still room for "deposit migration". The ratio of the total market value of the stock market to household deposits is low, and the trend of households allocating more assets to the stock market has just begun. A bull market can stimulate economic growth, assist economic transformation, improve the corporate financing environment, relieve debt pressure, and enhance international competitiveness [63][64]. - **Technological Progress and Stock Market**: Technologies such as artificial intelligence and robots are likely to be first applied in China. The chip industry is the last major short - board before China becomes a technological superpower. Technological innovation and manufacturing are the core of the "14th Five - Year Plan", and new technologies will promote productivity and expand industrial chain advantages [65]. 3.3 Policy Outlook for 2026 - **Fiscal Policy**: The government's leverage ratio is relatively low and there is room for further leverage. Loose fiscal policy is expected to last for a long time. Consumption subsidies are likely to continue in some form for 2 - 3 years, and other measures such as increasing the deficit scale and transfer payment intensity will also be taken [69]. - **Monetary Policy**: The 7 - day reverse repurchase rate has remained low for a long time, and the money supply will remain loose with room for further decline in interest rates. The Fed's interest - rate cuts provide space for China's central bank to cut interest rates, and domestic commercial banks have already lowered deposit rates [71][82]. - **Exchange Rate Policy**: The US dollar has opened up a downward space, and bank settlement and sales of foreign exchange have turned into a surplus. Overseas hot money is flowing into China, causing the RMB to face more appreciation pressure than depreciation pressure. The RMB's share in international trade is increasing [77][79]. 3.4 Main Conclusions and Suggestions - **Economic Outlook**: In 2026, the macro - economy will be in a weak recovery. Real estate investment will gradually stabilize, infrastructure investment growth will pick up, and exports will maintain a high growth rate. Policy will remain positive, and consumption will be a lagging variable [83]. - **Economic Cycle**: The Chinese economy is entering a new cycle, with artificial intelligence leading the way, and new technologies being transformed into product advantages [84]. - **Risk Analysis**: In 2026, there may be new Sino - US trade frictions, the risk of the bursting of the US artificial intelligence bubble and its spill - over effects, and the risk of a significant correction in the Chinese stock market due to high valuations [85].

Group 1 - The 2026 Capital Markets Conference hosted by CITIC Securities took place in Shenzhen from November 11 to 13, focusing on the theme "Striving for a New Journey" and featuring over a hundred top scholars, industry experts, and representatives from various investment sectors [1] - CITIC Securities' chief economist Mingming projected a GDP growth rate of 4.9% for China in 2025, with stronger growth anticipated in 2026, driven by fiscal expansion and improved local government finances [1] - Domestic consumption growth is expected to reach 3.9% in 2025, with an average growth rate of 4%-5% in 2026, supported by key industries such as automobiles, home appliances, and mobile phones [1] Group 2 - China's manufacturing value-added accounts for 26% of its economy, significantly higher than the 10% in the United States, indicating a relative lag in certain sectors [1] - Infrastructure investment growth is projected at approximately 3% in 2025, with an increase to 4% in 2026, highlighting the importance of policy support for infrastructure development [1] - The economic competition indicators between China and the U.S. are narrowing, with significant disparities in inflation, policy rates, and innovation metrics [2]

Macro Overview - The long-term growth potential of China's economy is significant, with a stable macroeconomic total expected by 2025, but structural differentiation is evident, necessitating policy solutions for weak domestic demand in 2026 [4] - Asset restructuring is crucial, with inflation expectations playing a vital role in wealth management for residents [5] - Global economic and monetary system restructuring is leading to changes in the pricing framework for assets like gold, the US dollar, and US Treasuries [6] Hong Kong Stock Market Strategy - Hong Kong stocks have substantial upward valuation potential, with the overall valuation still considered low despite a rapid recovery in 2025 [11] - The market is expected to attract a significant amount of incremental capital, with over 1.5 trillion yuan anticipated from domestic investors in 2026 [12] - The scarcity of quality assets in the Hong Kong market is a strong supporting factor for upward movement, particularly in sectors like internet, new consumption, and innovative pharmaceuticals [12] - The technology sector is projected to be the main focus for 2026, driven by the AI wave and supportive policies [13] Non-Banking Sector Regulations - The China Securities Regulatory Commission is seeking opinions on new guidelines for performance benchmarks for publicly offered securities investment funds, aiming to address systemic issues in performance comparison and management mechanisms [19][20] - The new regulations will enhance the selection, change, disclosure, and constraint of benchmarks, improving investment transparency and potentially increasing the proportion of index products in the market [21] Asset Overview - Equity markets are outperforming bonds and commodities, with significant gains in Asian markets, particularly Japan and South Korea [25][26] - The bond market shows a "bull steep" characteristic in China, while US Treasuries exhibit a "bear flat" trend due to hawkish signals from the Federal Reserve [27] - Commodity indices have seen declines, with gold and oil leading the downturn, while the US dollar index has risen [28]

Investment Rating - The report maintains a growth forecast for China's real GDP at 4.8% for 2025, aligning with consensus expectations [17][8]. Core Insights - The report highlights that while elevated US tariffs on Chinese goods will negatively impact real GDP growth, the growth of exports to other countries is expected to provide a partial offset, with an anticipated export volume growth of 7.5% in 2025 [7][14]. - The fiscal deficit is projected to widen by 1.9 percentage points of GDP in 2025 compared to 2024, with total social financing stock growth expected to rise to 9.0% [7][52]. - Inflation forecasts indicate a CPI of 0.0% and a PPI of -2.8% in 2025, which are below consensus expectations [7][44]. - The report emphasizes the importance of China's 15th Five-Year Plan, which will focus on security, technology, and boosting domestic consumption to create new growth engines [7][5]. Summary by Sections Macro Views for 2025 - Real GDP growth is forecasted at 4.8%, with domestic demand growth at 3.5% and consumption growth at 4.6% [8][5]. - Exports of goods are expected to grow by 4.9% in nominal USD terms, while imports are projected to decline by 0.6% [8][5]. Inflation and Fiscal Policy - CPI is expected to remain at 0.0%, while PPI is forecasted to decline by 2.8% [8][44]. - The augmented fiscal deficit is projected to be 12.5% of GDP in 2025, reflecting increased government expenditure [52][8]. Structural Economic Changes - The report notes a structural shift towards high-tech product exports, with a revised growth forecast for total goods export volume at 7.5% in 2025 [14][12]. - The anticipated appreciation of the CNY against the USD is also highlighted, indicating a strengthening currency [85][8]. Investment and Consumption Policies - Various easing measures are expected to support consumption and investment, including a consumer goods trade-in program and strategic infrastructure investments [66][7]. - The report outlines that the government will implement policies aimed at enhancing credit support for services and technological innovation [66][7].

Core Viewpoint - The article emphasizes the importance of focusing on "quantity" over "price" in the current economic environment, highlighting that the constraints on price are increasing while the clarity of quantity as a mainline is evident [4][25][26]. Group 1: Asset Perspectives - Equity investment should focus on identifying certainty from "quantity," with a low volatility environment expected to persist, and an upward movement in the market is still pending verification [16][18]. - The bond market is expected to see a defined interest rate range influenced by central bank policies, with a focus on long-term bond positioning [19][20]. - The currency exchange rate is anticipated to seek stability, with the RMB/USD exchange rate expected to remain within a narrow range due to policy interventions [20][21]. - Gold is viewed as a long-term strategic investment, with expectations of price increases driven by global order restructuring [21]. Group 2: Economic Analysis - The article discusses the relationship between exports and employment, indicating that a 1% shock in exports could impact approximately 1.053 million jobs, emphasizing the importance of stabilizing employment in the current economic climate [7][28]. - The analysis of external demand highlights the need for a balanced approach to internal and external economic pressures, with a focus on increasing domestic demand to counteract potential declines in trade surplus [40][41]. - The article outlines potential growth areas for exports, including new energy, metal products, and machinery, with a significant increase in exports to countries involved in the Belt and Road Initiative [12][55]. Group 3: Investment Opportunities - Investment strategies are shifting from construction-focused to equipment acquisition, driven by technological innovation and urban renewal projects, with significant government support for high-end equipment purchases [62]. - The article identifies key sectors for investment growth, including technology innovation, urban infrastructure updates, and industrial backup, with specific emphasis on the demand for advanced equipment in sectors like robotics and data processing [62].

Group 1 - The article emphasizes the reshaping of the global economic landscape and the gathering of various forces in the Chinese market, highlighting the importance of financial technology and digital transformation trends [1][2]. - It invites participation in the LSEG 2025 Market Outlook Forum, which aims to provide insights into market trends and opportunities for the year 2025 [1][2]. - The forum will feature discussions on macroeconomic outlook, capital market connectivity, asset allocation in a low-interest environment, and ETF investment trends [2]. Group 2 - LSEG is identified as a leading global financial market infrastructure provider, serving over 40,000 clients across more than 170 countries with financial data, analysis, news, and index products [3][4]. - The company has a rich history of over three centuries and employs 25,000 professionals from over 60 countries, focusing on promoting financial stability and sustainable growth [4]. - LSEG offers a unique open platform for data and analysis, which is crucial for making confident investment, trading, and risk decisions [6].