Core Viewpoint - The report from CITIC Securities emphasizes the importance of focusing on sectors with growth potential as inflation improves, suggesting that fundamental factors may regain attention as market valuations stabilize and enter a slow bull phase [1]. Group 1: Market Conditions - Recent months have seen investors becoming less attentive to fundamental factors, but this may change as market valuations have completed their correction [1]. - The slow bull market requires both leading sectors and overall fundamental support, with a need to reverse deflationary trends to attract foreign investment in Chinese assets [1]. Group 2: Sector Focus - Key sectors to watch include AI, pig farming, new energy, new consumption, innovative pharmaceuticals, non-ferrous metals, basic chemicals, and non-bank financials [1]. - The ongoing market consolidation phase necessitates attention to sector rotation between high and low performers [1].

Group 1 - International oil prices have dropped by $12 per barrel since early 2025, potentially reducing Asia's oil burden from 3.1% to 2.3% of GDP if the trend continues [1][5] - The decline in oil prices is attributed to both demand and supply factors, with demand forecasts being continuously revised downwards and OPEC's plans to increase production impacting supply [2][5] - Asia's oil burden has already fallen below the pre-pandemic long-term average of 3.6% since 2023, with predictions that it could further decrease if Brent crude prices average $61 per barrel over the next 12 months [5] Group 2 - A sustained drop in oil prices by $10 per barrel could lead to a 0.4 percentage point decrease in overall inflation rates across Asia, with nearly 90% of economies currently within their central banks' comfort zones for inflation [7][10] - The overall current account balance in Asia could improve by 0.4 percentage points of GDP with each $10 drop in oil prices, benefiting countries like India, Indonesia, and the Philippines that have long-standing current account deficits [10][12] Group 3 - The combination of weaker oil prices, a softening dollar, and trade tensions suggests that Asian central banks may implement more interest rate cuts, with the potential for cuts exceeding current market expectations [12][14] - Countries such as Thailand, South Korea, India, and Japan are expected to benefit more from falling oil prices, while Malaysia and Australia, as net exporters, may not see similar advantages [14]