Market Outlook - The initial bull market's consolidation period is likely to extend due to the complexity of U.S. tariffs, shifting the short-term outlook from optimistic to high-level fluctuations[2] - The current market fluctuation is seen as an extension of the volatility since October 8, 2024, with potential for a policy and capital-driven breakthrough later this year[2] - The tariff impact from April has disrupted the profit expectations for A-shares, necessitating time for digestion, which may limit future upward movements[2] Economic Analysis - The economic conditions during the consolidation phase may be weaker than the lowest points of previous bear markets, but the market is unlikely to revert to a bear state[3] - Historical precedents indicate that prolonged consolidation periods can occur due to new economic pressures, similar to the 2013 liquidity crisis and the early 2020 pandemic[3] - The likelihood of a one-year consolidation period has increased, with a return to a bull market rhythm expected later this year[3] Scenario Projections - **Pessimistic Scenario (Low Probability)**: A sudden, larger shock than the April tariff impact could lead the market back to the lows seen in April[3] - **Neutral Scenario (High Probability)**: Gradual economic impacts from tariffs will lead to 1-2 quarters of narrow fluctuations before a return to a bull market driven by policy and capital inflows[3] - **Optimistic Scenario (Low Probability)**: Successful U.S.-China negotiations leading to significant tariff reductions could prevent further market downturns[3] Risk Factors - Key risks include unexpected downturns in the real estate market, significant volatility in U.S. equities, and the potential failure of historical patterns to hold[3]

Core Viewpoint - The breakthrough of DeepSeek technology is reshaping the narrative logic of the technology industry, leading to a wave of asset revaluation in the Chinese capital market, particularly in the AI sector, which is accelerating its growth trajectory [1] Group 1: Market Performance - Following the emergence of DeepSeek and Yushu Technology, Chinese tech stocks have entered a significant valuation recovery phase, with the Hang Seng Tech Index rising by 20.74% in Q1 2025, outperforming global markets [2] - In the A-share market, the Sci-Tech Innovation 100 index surged by 10.69% in Q1 2025, while the Sci-Tech Innovation 50 index increased by 3.42%, driven by the "AI+" trend [2] Group 2: Valuation and Pricing - The asset revaluation process is still in its early stages, with A-share valuations considered relatively low; the Shanghai and Shenzhen 300 index has a price-to-earnings ratio of only 12.3 times, significantly lower than major global indices [3] - The risk premium in the A-share market is currently 1.7 standard deviations above the long-term average, nearing historical extremes, indicating potential for valuation recovery [3] - Chinese AI development potential is not fully priced in, with leading tech companies' valuations significantly lower than their U.S. counterparts, particularly in the Hong Kong market where the Hang Seng Tech dynamic P/E ratio remains at historical lows [4] Group 3: AI Development - Domestic large models have narrowed the performance gap with international counterparts, with the release of DeepSeekR1 accelerating the progress of domestic models [5] - The demand for AI computing power is surging, with domestic AI chip shipments exceeding 820,000 units in 2024, capturing a 30% market share [6] - The application of AI is expanding rapidly across various sectors, with significant user engagement in consumer applications and increasing penetration in B2B scenarios [7] Group 4: Policy Support - National policies are driving the development of the AI industry, focusing on strategic planning, technological breakthroughs, and application scenarios, with local governments tailoring policies to enhance competitive advantages [8] - The A-share market's technology narrative is becoming clearer, with significant growth in sectors like biotechnology, renewable energy, and information technology, supported by favorable policies [9][11] Group 5: Future Outlook - The Chinese stock market is at a critical juncture, transitioning from narrative reinforcement to narrative realization, with potential for a growth stock bull market if technological advancements and industry resilience are sustained [1][11] - The A-share market's technology narrative is expected to evolve through three phases: narrative reinforcement, realization, and upgrade, with the current phase characterized by structural recovery and low valuation tech leaders [11]