Core Insights - The article discusses the changing liquidity landscape, indicating that liquidity in 2026 will be less abundant than in 2025, primarily driven by structural debt increases with the central government as the main leverager [1][18] - The focus for investors should shift towards fiscal policy rather than monetary policy, although structural characteristics of monetary policy remain significant [1][18] Economic Cycle Analysis Framework - Economic cycle analysis should not be confined to traditional macro asset allocation frameworks, as it emphasizes structural issues rather than aggregate concepts [19] - The economic cycle consists of long, medium, and short cycles, including the Kondratiev, Juglar, and Kitchin cycles, along with Kuznets and Minsky cycles related to real estate and debt [19][20] Phases of the Real Cycle - The real cycle is categorized into three main cycles: Kondratiev, Juglar, and inventory cycles [20] - The Kondratiev cycle, lasting about 60 years, focuses on technological and resource dynamics, with current consensus highlighting AI and its supporting infrastructure as key drivers [21][24] - The Juglar cycle, lasting 7-11 years, is driven by equipment investment and capital expenditure, with China currently in the early recovery phase of its sixth Juglar cycle starting in 2024 [23][25] Inventory Cycle Transition - The inventory cycle is transitioning from passive to active inventory replenishment, influenced by anti-involution policies [27] - Current indicators show a PMI output index of 49.7%, the lowest since December 2022, reflecting weak external demand and cautious exporter attitudes [28] Phases of the Financial Cycle - The financial cycle includes the real estate cycle and the debt cycle, with the real estate market still in a deep adjustment phase since 2020 [30] - The Minsky cycle is characterized by a "wide monetary + low interest rate" environment, with a gradual recovery in macro leverage and a focus on debt resolution strategies [31] Asset Allocation Principles for 2026 - The asset allocation strategy for 2026 emphasizes the resonance of cycles, prioritizing new productive forces while maintaining a defensive base with high-quality fixed-income assets [32][33] - The focus should be on sectors benefiting from technological advancements and policy guidance, particularly in high-end manufacturing and green energy [33]