Investment Rating - The report indicates a positive outlook for the Chinese equity market, particularly aligned with the 15th Five-Year Plan (FYP) [3][40]. Core Insights - The 15th FYP emphasizes high-quality, secure, and balanced growth, with a focus on technology, innovation, and improving people's livelihoods as key priorities for 2026-2030 [1][12]. - Historical analysis shows that aligning investment strategies with the FYP can yield significant alpha, with a potential 13% annualized alpha if portfolios are aligned with policy trends [2][18]. - The report identifies a universe of 35 GICS3 Industries that are expected to benefit from policy support, representing a total market cap of US$13 trillion, which is 66% of the full universe [3][40]. Summary by Sections 1. Historical Performance and Policy Alignment - MSCI China and CSI300 have delivered 8-10% total return CAGR since the 10th FYP, trailing nominal GDP growth of 11% [2][18]. - The report highlights that specific sectors mentioned in the 14th FYP significantly outperformed the benchmark, with average returns of 41% compared to -3% for the CSI300 [24][25]. 2. 15th FYP Portfolio Construction - The report screens for 50 mid-cap stocks across 21 sub-sectors, which have returned 68% in the past year, outperforming MSCI China by 33 percentage points [4][54]. - These stocks are expected to deliver a 30% EPS CAGR over the next two years, compared to 15% for MSCI China, indicating strong growth potential [4][54]. 3. Key Themes and Investment Opportunities - The report identifies several investment themes, including the return of private-owned enterprises (POEs), Going Global, AI, Anti-Involution, and Shareholder Returns, which are expected to outperform in a slower market [3][40]. - Emerging technologies such as 6G, bio-manufacturing, and hydrogen/nuclear fusion are highlighted as new areas of focus in the 15th FYP [12][15]. 4. Sectoral Analysis - The selected industries predominantly reside in Technology, Consumer, and Materials sectors, with a strong emphasis on tech-related industries expected to receive policy support [40][41]. - The report notes that the 15th FYP universe is expected to grow faster than the broader market, with higher profitability and growth capex intensity [40][39].