Core Viewpoint - The concept of "stability" is undervalued in volatile markets, as articulated by Zhang Yonghe of Guotai Fund, emphasizing that it is not conservative but rather an active management strategy aimed at optimizing the investment experience and ensuring long-term stability [1][2]. Group 1: Market Conditions - The Shanghai Composite Index successfully broke the 4000-point barrier on October 28, marking the first time since August 18, 2015, but experienced slight fluctuations on the same day, indicating market volatility [4]. - The current market is characterized as a "structural market" rather than a typical bull market, with only 10% to 20% of stocks doubling in value since September 24, 2022, primarily in small-cap and AI-related sectors [5][6]. Group 2: Investment Strategy - The investment strategy focuses on controlling portfolio volatility to achieve stability during market fluctuations, with a neutral overall position that has resulted in significantly lower drawdowns compared to the market average [6][7]. - Zhang Yonghe emphasizes macroeconomic research as a core element of investment decisions, aiming to identify turning points and opportunities based on economic trends, corporate earnings, and liquidity conditions [7][8]. Group 3: Portfolio Management - The investment approach incorporates a strong contrarian mindset, suggesting that opportunities often arise when assets are overlooked by the market [9]. - The strategy involves dynamic portfolio management, adjusting asset allocations based on market conditions and the relative value of assets, ensuring a balance between different investment styles [10][13]. Group 4: Enhancing Investor Experience - The ultimate goal of a stable investment strategy is to enhance the investor's experience by minimizing significant or prolonged losses and maintaining a smooth upward trajectory in returns [15]. - Zhang Yonghe's philosophy aligns with the idea that a positive investment experience is paramount, allowing investors to feel secure in their equity market investments without the stress of timing the market [15].

Investment Rating - The report maintains a "Positive" investment rating for the real estate industry [13]. Core Insights - The policy goal of stabilizing the market has somewhat boosted market expectations, but since April, marginal downward pressure has increased, leading to a higher probability of relaxed industrial policies. The rapid decline in industry volume and price may have passed, with structural highlights in core urban areas and quality properties. The current stock positions are not far from the bottom, providing room for rebound [3][7]. - The report emphasizes the importance of brand recognition and investment precision as key factors for success in the real estate sector. It suggests a "two-part" structured pricing approach for real estate companies, focusing on the proportion of old inventory and the strength of new land acquisitions [11]. Market Performance - The Yangtze River Real Estate Index decreased by 0.04% this week, with an excess return of +0.48% relative to the CSI 300. Year-to-date, the index has increased by 16.04%, with a relative excess return of -1.29% compared to the CSI 300 [8][17]. - The report notes mixed performance in the real estate sector this week, with development and property management companies showing varied results, while rental properties primarily declined [8]. Policy Updates - The Ministry of Housing and Urban-Rural Development reported achievements in high-quality development during the 14th Five-Year Plan, with approximately 5 billion square meters of new residential sales and over 11 million units of various types of affordable housing planned [9][19]. - Local regulations in cities like Chengdu and Shenzhen have been optimized to enhance housing standards and ensure safety in high-rise residential projects [9][19]. Sales Data - New home and second-hand home registrations in sample cities saw a significant year-on-year decline due to high base effects. The new home transaction area in 37 cities dropped by 20.5% year-on-year, while second-hand homes in 17 cities increased by 8.0% year-on-year [10][20]. - As of October 10, the new home transaction area in 37 cities for the month showed a year-on-year decrease of 40.0%, while second-hand homes saw a decline of 22.6% [10][20]. Investment Opportunities - The report identifies structural opportunities in the real estate market, particularly in core urban areas benefiting from price relaxation. It highlights companies with low inventory, strong product quality, and stable cash flows as key investment targets. Recommended stocks include Jianfa International for its low old inventory and high new product contribution, and Greentown China for its significant new product contributions despite some old inventory drag [3][11].

Core Insights - Technology stocks have dominated market trends in recent years, yet some fund managers have achieved impressive performance without relying on them since September 24, 2022 [1] - Zhang Ronghe, a fund manager at Guotai Fund, has consistently outperformed mainstream indices and benchmarks, demonstrating a balanced investment approach [1][5] - As of September 14, 2023, Zhang's managed fund, Guotai Blue Chip Select A, achieved a return of 52.81% over the past year, while Guotai Central Enterprise Reform yielded a return of 37.12% during the bear market of 2023 [1] Fund Management Overview - Zhang Ronghe has 13 years of industry experience, with 4 years in investment management, specializing in macro strategy research [2][3] - He currently manages three funds: Guotai Central Enterprise Reform, Guotai Blue Chip Select, and Guotai Zhaoxiang Six-Month Holding Period Fund [4][6] - Since Zhang took over, the funds have shown significantly better metrics in terms of maximum drawdown and volatility compared to their peers [5] Fund Characteristics - Guotai Central Enterprise Reform focuses on investments benefiting from central enterprise reforms, with a performance benchmark of 80% of the CSI Central Enterprises Composite Index and 20% of the CSI Comprehensive Bond Index [7] - Guotai Blue Chip Select has a broader stock selection, including some Hong Kong stocks, and both funds lean towards large-cap value styles while still achieving substantial returns in a tech-dominated market [7][11] - The Guotai Zhaoxiang fund is a "fixed income plus" product, with an equity allocation around 15%, achieving a return of 11.55% since Zhang's management began [7] Investment Strategy and Market Outlook - Zhang's investment strategy emphasizes stability and a focus on sectors benefiting from policy support, such as public utilities and transportation [9][13] - The second quarter report indicates a low turnover rate and minimal structural changes in the portfolio, reflecting a cautious approach to market conditions [12] - Zhang predicts that 2026 will outperform 2025, with a focus on cyclical assets and sectors that are likely to benefit from domestic policy shifts [18][19] - He expresses confidence in the new fund, Guotai Qiming, which will invest in both A-shares and Hong Kong stocks, with a personal investment of 2 million yuan [15]