Key Points Summary Core Viewpoints - The theme of the 2025 strategy report is "light at the end of the tunnel" and "progress will be made." The capital market has felt the policy signals behind this theme, indicating a positive trend despite challenges ahead [1][3]. Economic Environment - In 2024, the GDP growth rate was 5%, with strong export growth but low consumer spending and investment due to real estate drag. Industrial profits declined, and the manufacturing PMI orders decreased [2][27]. Policy Environment - There is an increased effort in counter-cyclical adjustments, focusing on stabilizing the capital market and improving its structure and quality. A joint plan was issued to promote long-term capital market investments, with consumer subsidy policies being expanded [3][75]. Investment Strategy - The capital market in 2025 faces complex and variable conditions, with external risks and internal factors intertwining. However, the resilience of the economy, strong policy support, breakthroughs in technology, and relatively low valuation levels enhance the market's risk resistance. The market will revolve around three main themes: "real returns," "real growth," and "real hedging," corresponding to dividend assets, technological innovation, and gold [4][16]. Market Performance Review - In January 2025, gold prices reached a new high, and major global stock markets showed strength. The Hang Seng Index rose by 0.8%, while A-shares experienced a decline of 2.3% [10][12]. Industry Performance - Only four of the Shenwan first-level industries rose in January, with a 12.9% industry rise ratio. The non-ferrous metals sector increased by 4.5%, while several sectors, including real estate and non-bank financials, saw declines exceeding 5% [14][16]. Recommended Industries - The report maintains previous recommendations for banks, securities, the Hang Seng Index, Hong Kong dividend ETFs, and gold. New recommendations include sectors such as electronics (semiconductors), communications, and robotics [7][9]. Fund Flow Analysis - As of January 27, 2025, southbound capital saw a record net inflow of 38233.8 billion HKD, with a single-month net inflow of 1255.9 billion HKD, marking a new high in three years [22][24]. Industrial Profitability - In 2024, the total profit of industrial enterprises decreased by 3.3%, with a profit margin of 5.39%. The pressure on enterprises remains significant, with rising accounts receivable and extended recovery periods [55][57]. PMI Index - The manufacturing PMI in January was 49.1%, indicating a slight decline, with new orders and export orders also decreasing. The non-manufacturing PMI was at 50.2%, reflecting a decrease in business activity [58][61]. Consumer and Investment Trends - Consumer retail sales grew by 3.5% in 2024, while fixed asset investment increased by 3.2%. The real estate sector continued to face challenges, with a 10.5% decline in development investment [51][41].