Summary of the Conference Call Transcript Industry and Company Overview - The conference call focuses on the **China Equity Strategy** and the implications of the **2026 National People's Congress (NPC)** government work report on the equity market in China [1][2]. Key Points and Arguments Economic Growth and Fiscal Policy - The NPC government work report indicates a **GDP growth target of 4.5-5.0%**, slightly lower than the ~5% indicated at the **Central Economic Work Conference (CEWC)** in December 2025 [2]. - The **augmented fiscal budget deficit** is set at **10.4% of GDP**, which is flat and does not suggest a significant macroeconomic growth pickup or reflation expectations [2]. - The annual **MSCI China earnings growth forecast** remains at **6%**, with notable divergence among sectors and industries [2]. Sector Focus and Priorities - There is a pronounced focus on **hardcore tech and innovation sectors**, including **IC/chip/semiconductors, aerospace, biotech/pharma**, and the **low-altitude economy** [3]. - Future industries highlighted for growth include **quantum technology, embodied intelligence, brain-machine interfaces**, and **6G technology** [3]. - The report aligns with preferred sectors in the China sector allocation framework, which includes **high-end industrials, AI and semiconductors, biopharma**, as well as **materials, insurance, and diversified financials** [3]. Policy Shifts - The emphasis on **anti-involution** continues, indicating a shift in policy priorities, while references to the **property market** have weakened [4]. - The urgency to stabilize the housing market has been toned down, with no explicit preference to "stop the price fall" [4]. - The report suggests a **lower primary inventory level of housing** is necessary before signs of stabilization can be expected, projecting at least another year for this to be achieved [4]. Market Preferences - The preference for the **A-share market** over offshore markets is reinforced due to policy support for A-share concentrated sectors and stocks [5]. - There was a record-high single-day net selling through Southbound at **US $2.8 billion** on March 5, 2026, indicating weaker momentum in Southbound flows [5]. - Potential support from the **National Team** for A-shares is anticipated if market volatility increases [5]. Other Important Content - The report emphasizes the importance of customized plans at the sector/industry level to improve earnings and margins in the long run [4]. - The divergence in sector performance is highlighted, suggesting that while some sectors may thrive, others may lag behind [2]. This summary encapsulates the critical insights from the conference call, focusing on the economic outlook, sector priorities, policy shifts, and market preferences in the context of China's equity strategy.