Core Viewpoint - The A-share bull market is far from over, with "Bull Market 1.0" expected to peak in spring 2026, followed by a potential "Bull Market 2.0" in the second half of 2026 [1][2] Group 1: Market Dynamics - Global competition is intensifying, necessitating a shift in mindset for A-shares to embrace competitive thinking, which will drive market dynamics [1] - The transition of Chinese residents' asset allocation towards equities is still in its early stages, indicating further potential for A-share liquidity improvement [1][2] Group 2: Bull Market Phases - "Bull Market 1.0" is anticipated to reach a peak in spring 2026, with a subsequent transition to "Bull Market 2.0" in the latter half of 2026 [2] - The second phase, "Bull Market 2.0," is expected to be a comprehensive bull market driven by improvements in fundamental cycles, emerging industry trends, and increased global influence of China [2][3] Group 3: Profit Forecasts - Predictions for 2026 indicate two significant milestones: the first effective rebound in profitability for all A-shares in five years and the first double-digit growth in net profit attributable to shareholders in five years [3] - Forecasted year-on-year growth rates for net profit attributable to shareholders are 7% for 2025 and 14% for 2026, with substantial quarterly growth expected [3] Group 4: Sector Trends - The transition from "Bull Market 1.0" to "Bull Market 2.0" will see high-dividend defensive stocks outperforming, while the latter phase will focus on cyclical recovery and growth sectors [3] - Key structural themes for 2026 include recovery trades in cyclical sectors, technology industry trends with opportunities in AI, and enhanced manufacturing influence [3]

Core Insights - The report emphasizes that the bull market is not over, with a significant shift in Chinese residents' asset allocation towards equities still in its early stages [3][34][51] - The transition from "following" to "leading" in external circulation is a key theme, highlighting the need for A-shares to embrace competitive thinking [3][12][20] - The report outlines a two-phase bull market, with "Bull Market 1.0" expected to peak in spring 2026 and "Bull Market 2.0" potentially starting in the second half of 2026 [4][6][7] Group 1: Competitive Landscape - Global competition is intensifying, and A-shares must adopt a competitive mindset to navigate this environment [3][20][22] - The shift in external circulation from "following" to "leading" reflects China's growing competitiveness and the need to enhance its global influence [3][12][19] - The report suggests that the A-share market can reflect the outcomes of competitive events, impacting pricing and risk preferences [3][22] Group 2: Asset Allocation Trends - The report introduces a "resident asset allocation migration degree indicator," indicating that the migration towards equities is still in its early phase, with significant potential for growth [34][36] - Historical data shows that the peak of equity allocation occurred in 2021, followed by a decline until 2024, with a rebound expected in 2025 [36][51] - The report highlights that the accumulation of profit-making effects in the A-share market is undergoing a qualitative change, which will improve conditions for capital inflow over time [3][34][51] Group 3: Bull Market Phases - "Bull Market 1.0" is characterized by a focus on technology sectors, particularly AI, which may face short-term adjustments but is expected to continue its long-term trend [4][6][7] - "Bull Market 2.0" is anticipated to be a comprehensive bull market driven by cyclical improvements in fundamentals, emerging industry trends, and increased asset allocation towards equities [4][6][7] - The report predicts that by mid-2026, a clearer visibility of supply-demand dynamics will emerge, supporting the transition to "Bull Market 2.0" [4][6][7] Group 4: Industry Outlook - The report identifies key sectors for investment, including technology, manufacturing, and emerging industries, which are expected to benefit from cyclical improvements and policy support [4][6][7] - The anticipated recovery in the manufacturing sector and the emergence of new demand sources are crucial for the overall market outlook [4][6][7] - The report suggests that the transition from "Bull Market 1.0" to "Bull Market 2.0" will involve a shift in investment focus from high-growth technology stocks to cyclical and value-oriented sectors [4][6][7]