Core Viewpoint - China stocks demonstrated strong performance in 2022, with the MSCI China Index increasing by 31%, slightly below the 34% rise of the MSCI Emerging Markets Index, and there are expectations for continued growth in 2026, particularly for ETFs like the WisdomTree China ex-State-Owned Enterprises Fund (CXSE) which outperformed both indices last year [1][2]. Group 1: CXSE Fund Overview - The CXSE fund, valued at $504.3 million, is aligned with the WisdomTree China ex-State-Owned Enterprises Index and is expected to benefit from ongoing economic stimulation by Beijing, with a focus on growth companies [2]. - CXSE's growth profile is significant as it avoids state-controlled companies that typically operate in slow-growth sectors, instead focusing on sectors tied to China's growth and innovation narratives [3]. Group 2: Innovation and Sector Focus - There is optimism surrounding innovation and industrial upgrades in China, supported by strong policy backing and global competitiveness, which are expected to drive growth in these sectors as China aims for technological self-reliance [4]. - CXSE allocates over 64% of its investments to consumer discretionary, technology, and communication services sectors, linking it to China's dynamic consumer internet landscape and efforts to reduce tech import reliance [5]. Group 3: Market Perception and Future Opportunities - China's advanced capabilities and underappreciated innovation potential are gaining market recognition, with the government's 15th Five-Year agenda prioritizing tech innovation, which is anticipated to provide long-term support for equities [6]. - Consumer cyclical stocks, making up 29.06% of CXSE's allocation, are expected to be key growth drivers in 2026, particularly in services, experiences, and sports sectors, presenting vibrant opportunities for investors [7].

Core Insights - Guoyuan Securities identifies three emerging structural investment opportunities in China amidst global economic uncertainty and capital market volatility, emphasizing the resilience of China's economy [1] - The firm advises investors to focus on long-term trends in key sectors such as technological innovation, consumer upgrading, and the green transition [1] Group 1: Key Structural Themes - **Technological Self-Reliance and Industrial Chain Security**: Achieving independence in critical technological areas is a national priority, leading to sustained policy and capital support for sectors like semiconductors, high-end software, industrial base equipment, and artificial intelligence [2] - **Consumer Upgrading and the Rise of Domestic Brands**: The expansion of China's middle-income group is shifting consumption patterns towards quality, personalization, and experiential consumption, driving the growth of domestic brands and high-quality products [3] - **Green Economy and Sustainable Development**: China's "dual carbon" goals are reshaping the energy structure and industrial landscape, creating opportunities in next-generation power systems, the new energy vehicle supply chain, energy-efficient technologies, and the circular economy [3] Group 2: Professional Guidance - Guoyuan Securities emphasizes the importance of professional services to create lasting value for clients, utilizing dynamic risk assessment models and diversified asset allocation strategies [4] - The firm aims to be a trusted long-term partner, helping clients navigate market challenges and achieve wealth preservation and appreciation [4]