Core Viewpoint - The static PE valuation has become high after nearly a year of expansion, but the ERP remains at a reasonable level due to the decline in the risk-free interest rate. The long-term productivity upgrades and technological transformation outlined in the "14th Five-Year Plan" will continue to catalyze structural market trends. The improvement in the domestic demand sector's fundamentals is expected to rely on increased growth-stabilizing policies. Before confirming fundamental improvements, liquidity is anticipated to be the key driver of the market. The core themes for A-shares in the coming year are AI, self-sufficiency, and high-value exports [2]. Group 1 - The market is expected to see a new entry opportunity if adjustments occur, supported by the resilience of A-share liquidity and potential policy stimulus from the upcoming Central Economic Work Conference in December [2]. - A balanced allocation between dividends and technology is deemed necessary for short-term market defense, with a focus on large-cap stocks due to the influx of passive funds this year [2]. - The "14th Five-Year Plan" emphasizes investment in self-sufficiency, commercialization of emerging industries, and innovative monetary and fiscal policies, which are likely to positively impact A-shares [2]. Group 2 - Investors are advised to increase attention to self-sufficiency themes in both China and the U.S., particularly in military trade, innovative pharmaceuticals, semiconductor domestic substitution, AI infrastructure, commercial aerospace, 6G infrastructure, and industrial control/software [2]. - Technology sectors such as pharmaceuticals and military industries are expected to lead the market adjustments, alongside the resurgence of new energy (energy storage exports) since September [2].

Group 1 - The core drivers for the future rise of A-shares are policy support, liquidity, and industrial upgrading [1] - A-share valuations have become high after nearly a year of expansion, but the equity risk premium (ERP) remains at a reasonable level due to the decline in the risk-free interest rate [1] - The long-term total factor productivity upgrade and technological transformation outlined in China's 14th Five-Year Plan will continue to catalyze structural market trends, although improvements in the earnings fundamentals still depend on enhanced policies [1] Group 2 - Before confirming improvements in the fundamentals, liquidity remains the key driver for the market [1] - The core themes for A-shares in the coming year are expected to be AI, self-control, and high value-added exports [1]

Core Viewpoint - Nomura emphasizes China's focus on resilient, stable, and inclusive economic growth from 2026 to 2030, driven by significant investments and industrial policies, particularly in the semiconductor and AI sectors [2][6]. Group 1: Economic Outlook - Global economy shows significant resilience despite challenges such as rising tariffs and geopolitical tensions, supported by AI transformation and flexible trade adjustments [4]. - Asia (excluding Japan) is expected to face a challenging external environment while maintaining strong performance in the tech sector, driven by AI demand and a supercycle in storage chips [5]. - China's economic growth remains steady, but potential challenges include weak domestic demand and rising global trade barriers [8]. Group 2: A-Share Market Dynamics - Policy support, liquidity, and industrial upgrades are identified as core drivers for the future rise of A-shares, with AI and high-value exports being key themes for the upcoming year [6][2]. - Despite high valuations in A-shares, the equity risk premium remains reasonable, indicating potential for continued market support [6]. Group 3: AI and Technology Sector - The trend towards a self-sufficient AI supply chain in China is becoming increasingly evident, with significant investments in AI infrastructure and the development of large language models [10][11]. - The internet sector's focus will remain on strategic investments in AI by leading platforms and the competitive landscape in instant retail, with expectations of reduced competition intensity in the fourth quarter [11]. Group 4: Policy and Investment Focus - The Chinese government is likely to shift its policy focus towards stabilizing growth and alleviating price pressures, with fiscal expansion becoming a key agenda item [8].

Core Insights - Nomura emphasizes China's focus on resilient, stable, and inclusive economic growth from 2026 to 2030, driven by significant investments and industrial policies, particularly in semiconductors and artificial intelligence [1][5] - The core drivers for the A-share market's future growth are policy support, liquidity, and industrial upgrades, with AI and high-value exports identified as key themes for the upcoming year [4][1] Group 1: Global Economic Resilience - Despite rising tariffs, geopolitical tensions, and fiscal pressures, the global economy shows significant resilience, supported by the AI revolution, flexible trade adjustments, and moderate monetary and fiscal policies [2] - Economic inequality is becoming more pronounced, with low-income families and small businesses struggling, posing challenges for policymakers to maintain global economic stability [2] Group 2: Asian Economic Outlook - The technology sector in Asia (excluding Japan) is expected to perform well, driven by strong demand for AI and a supercycle in storage chips, while non-tech sectors face challenges due to limited spillover effects from AI and increased tariffs on labor-intensive industries [3] - The region's solid economic fundamentals and new growth drivers, such as supply chain shifts and increased AI investment, position India, the Philippines, and Malaysia as some of the fastest-growing economies in the next decade [3] Group 3: A-share Market Dynamics - A-share valuations have expanded over the past year but remain reasonable when considering the equity risk premium in a declining risk-free rate environment [4] - The "14th Five-Year Plan" emphasizes long-term productivity upgrades and technological transformation, which will catalyze structural market trends, although improvements in earnings fundamentals are still needed [4][7] Group 4: AI and Technology Sector Developments - The trend towards a self-sufficient AI supply chain in China is becoming more evident, with significant investments in AI infrastructure and a focus on developing large language models and generative AI applications [8] - The competitive landscape in the instant retail sector is expected to stabilize, potentially alleviating losses for companies expanding in this area [8] Group 5: Entertainment Sector Insights - The online entertainment sector, particularly online gaming and music services, is expected to remain resilient, while long-form video content may continue to lag due to shifts in consumer preferences towards short videos [9]

Group 1 - The core viewpoint of the article highlights that the trading volume in the Shanghai and Shenzhen markets has exceeded 3 trillion yuan for the first time since October of the previous year, indicating a significant increase in market activity [1] - According to Central European Fund, the market's profit-making effect is spreading from the technology sector to other areas, with trading activity remaining at historically high levels [1] - In light of the rising market enthusiasm, it is suggested to adjust the existing dividend sector in the barbell strategy towards the technology growth sector [1] Group 2 - The growth sector to focus on includes high-value-added overseas-related fields, particularly those leveraging short videos and algorithms to gain traffic and channel advantages, aimed at exporting the consumption aesthetics of Chinese youth [1] - Additionally, attention should be given to high-end manufacturing, which has global research, scale, and capitalization advantages, as well as the potential for capital investment and technological research and development in China [1] - Other areas of interest include innovative pharmaceuticals, robotics, and AI hardware themes [1]