Report Industry Investment Rating No relevant content provided. Core Views of the Report - The Fourth Plenary Session of the 20th CPC Central Committee provides a favorable risk - preference environment for the bull market of Chinese - funded stocks. The overall tone of the plenary session rules out the probability of macro - tail risks and emphasizes the continuous and timely strengthening of macro - policies to achieve annual economic and social development goals [2][3]. - During the 15th Five - Year Plan period, the development of the science and technology industry will be placed in a relatively prominent position. The three important main lines of the 15th Five - Year Plan are national security, scientific and technological self - reliance and industrial innovation, and benefiting people's livelihood and promoting consumption [4][5][6]. - "Science and technology" is the main investment line during the 15th Five - Year Plan period. Strategic emerging industries such as artificial intelligence and biological manufacturing are key investment opportunities, and some new consumption tracks are also worthy of attention [8][9]. - Currently, the valuation of Chinese - funded stocks is in a reasonable range. Structurally, the valuation cost - performance of the technology sectors in A - shares and Hong Kong stocks is higher than that of the broader market indices. The high valuation of Chinese technology assets matches the high growth rate, and the valuation gap between Chinese and US technology assets is expected to narrow [10][14][18]. - The trend of emerging industries represented by the AI industry chain is becoming clearer. A - shares focus on upstream computing power hardware, while Hong Kong stocks focus on mid - stream Internet giants and downstream software applications. The performance realization path of the AI industry chain of Chinese - funded stocks generally follows the order of computing power chips → infrastructure giants' IaaS → application - end software/media [22][23][26]. - The emerging industry trend represented by innovative drugs is becoming clearer. The innovative drug sector has begun to release performance, and the shift from "local commercialization" to "going global" is the key driving force for the leap - forward development of the innovative drug sector [33][34][35]. - In the short term, the earnings season may increase the volatility of the Chinese - funded stock market. TACO trading can be "batch - wise" bought at low prices, with a focus on technology assets. In the medium term, Chinese - funded stocks maintain a barbell strategy, with A - shares for offense and Hong Kong stocks for defense [37][38]. Summary by Relevant Catalogs 1. Policy Environment and Investment Direction during the 15th Five - Year Plan - **Policy Timeline**: In October 2025, the Fourth Plenary Session of the 20th CPC Central Committee released a communiqué to set the direction for the 15th Five - Year Plan. In 2026, the central government will release a draft proposal for the plan, and the Two Sessions will review and release the "Outline" with specific quantitative targets. In the second half of 2026, ministries may start to promote the implementation of special and industry plans [2]. - **Policy Focus**: The Fourth Plenary Session emphasized the continuous and timely strengthening of macro - policies, aiming to achieve annual economic and social development goals, stabilize employment, enterprises, markets, and expectations, and resolve local government debt risks [3]. - **Investment Main Lines**: The three main lines are national security, scientific and technological self - reliance and industrial innovation, and benefiting people's livelihood and promoting consumption. The frequency of mentions of "science and technology" and "industry" in the Fourth Plenary Session communiqué has significantly increased compared to the Third Plenary Session, indicating that the 15th Five - Year Plan may prioritize the development of these two dimensions [5][6]. 2. Valuation Analysis of Chinese - Funded Stocks - **Forward PE**: The forward PE of the broader market indices of A - shares and Hong Kong stocks (Hang Seng Index/Shanghai Composite Index) has reached around the average + 1 STD in the past 10 years, while the forward PE of the technology sector indices (Hang Seng Information Technology Index/GEM Index) has only reached around the 10 - year average, indicating that the technology sectors in A - shares and Hong Kong stocks have higher valuation cost - performance [14]. - **PEG**: Based on the 3 - year EPS compound growth rate, the PEG of the Hang Seng Technology Index, Hang Seng Information Technology Index, and GEM Index is lower than that of the Nasdaq and S&P 500, showing that the high valuation of Chinese technology assets matches the high growth rate [18]. - **PB - ROE**: With the continuous improvement of the profitability of Chinese technology companies, the valuation gap between Chinese and US technology assets is expected to narrow due to factors such as the mapping of overseas AI assets, the huge domestic demand potential of the Chinese market, and long - term strategic policy support [19][21]. 3. AI Industry Chain Analysis - **Industrial Focus**: A - shares focus on upstream computing power hardware, including chips, PCBs, AI server assembly, and network solution providers. Hong Kong stocks focus on mid - stream Internet giants and downstream software applications, covering model development, deep - learning frameworks, and various AI - related application fields [22][23][24]. - **Performance Realization Path**: The performance realization path of the AI industry chain of Chinese - funded stocks generally follows the order of computing power chips → infrastructure giants' IaaS → application - end software/media. Upstream, the performance of A - share light modules, PCBs, and server OEMs driven by external demand is realized first, followed by GPU/chip manufacturing and AI infrastructure platforms driven by domestic demand. In the application layer, the payment willingness for AI products is relatively lagging, and the monetization business models in most fields are still being verified [26][27]. - **Market Performance**: Benefiting from the explosive growth of global AI computing power demand, some advantageous segments of the A - share AI industry chain (PCB/light module/server assembly segments) have achieved significant stock price increases driven by EPS. The capital expenditure of cloud service providers in China and the US is still rising, and the prosperity of the AI industry chain is expected to continue to climb [28][30][32]. 4. Innovative Drug Industry Analysis - **Performance Release**: The innovative drug sector has begun to release performance, with many innovative drug companies showing positive revenue year - on - year growth rates. In contrast, the traditional drug sector and some CXO companies have relatively poor performance [34]. - **Development Trend**: The shift from "local commercialization" to "going global" is the key driving force for the leap - forward development of the innovative drug sector. The innovative drug index still has about a 40% recovery space compared to the high point in 2021, indicating considerable growth potential [34][35]. 5. Investment Strategy for Chinese - Funded Stocks - **Short - Term Strategy**: In the short term, the earnings season may increase the volatility of the Chinese - funded stock market. TACO trading can be "batch - wise" bought at low prices, with a focus on technology assets such as the AI industry chain, innovative drugs, and self - controllable sectors. The Hang Seng Technology Index with higher odds and cost - performance is the top - recommended direction for Hong Kong stocks [37][38]. - **Medium - Term Strategy**: In the medium term, Chinese - funded stocks maintain a barbell strategy. A - shares are more suitable for offense, focusing on technology themes and anti - involution industries. Hong Kong stocks are more suitable for defense, including Internet, new consumption, innovative drugs, and banking and large - scale financial sectors [38].