Core Insights - The report highlights the significance of the upcoming "Two Sessions" in March 2026, which is expected to influence China's policy direction for the year and the next five years, thereby impacting capital market trends [1] - Historical analysis indicates a "Two Sessions Effect" in A-shares, characterized by pre-session index increases, small-cap outperformance, and excess returns in the TMT sector before and after the sessions [1][2] - The report categorizes years based on total policy expectations, noting that strong expectations lead to significant market impacts, while stable expectations result in structural market trends [2][3] Market Trends - Historically, the A-share index tends to rise in the 20 trading days leading up to the Two Sessions, with an 81% win rate and an average increase of 2.40% [4] - During the sessions, the market experiences uncertainty, leading to a win rate drop to 50%, but post-session, the win rate increases again to 75% with an average increase of 2.44% in the following 20 trading days [4][5] - Small-cap indices, represented by the CSI 2000 and CSI 1000, show significant outperformance before the sessions, with win rates of 80% compared to larger indices [4][5] Sector Performance - The consumer and TMT sectors are expected to perform well, with high win rates and positive returns due to policy announcements and economic targets set during the sessions [4][5] - Specific sectors such as social services, beauty care, and textiles are highlighted for their strong performance before and after the sessions, benefiting from cyclical economic policies [4][5] - The report emphasizes the importance of structural highlights in 2026, particularly in expanding domestic demand and fostering new productive forces, such as commercial aerospace and AI applications [6][7] Policy Focus - The report indicates that the 2026 Two Sessions will focus on structural adjustments rather than aggressive total policy measures, with a notable emphasis on expanding domestic demand and optimizing real estate policies [5][6] - The central government's focus on high-quality development and nurturing new productive forces is expected to shape the market landscape, with significant attention on sectors like commercial aerospace and AI [6][7] Investment Strategy - The report suggests that due to the low probability of exceeding total policy expectations, market movements will be stable, with a focus on price increases and AI-related sectors [8] - Key investment areas include AI and related fields, cyclical sectors like chemicals and construction materials, and emerging industries highlighted in government reports [8]

Group 1 - The report indicates a generally optimistic outlook for the A-share market before and after the Spring Festival, suggesting that long-term investors should hold stocks while short-term traders should adjust their positions based on risk preferences [2][10] - The report highlights that the market is currently in a slow bull phase, with expectations of improved liquidity and policy support after the holiday, which could create new investment opportunities [3][11] - Key sectors showing strength include electric grid equipment, liquid cooling, and semiconductors, while media and consumer sectors are experiencing adjustments, indicating a phase of stock selection and market competition [9][12] Group 2 - The semiconductor sector is identified as a long-term investment opportunity, with a projected growth of 10.10% in 2023, driven by digital transformation and geopolitical factors [8] - The report emphasizes the importance of focusing on stocks with strong performance and growth expectations within the semiconductor sector, while advising caution against high-flying stocks lacking fundamental support [8][11] - The report notes that the market's trading volume has been around 2 trillion yuan, reflecting a cautious sentiment among investors, which suggests that a careful approach to investment is necessary [3][6]

Group 1 - The three major indices collectively rose, with the ChiNext Index and the Sci-Tech 50 Index both increasing by over 1%. The total trading volume in the Shanghai and Shenzhen markets reached 2.16 trillion yuan, an increase of 159.7 billion yuan compared to the previous trading day [1] - The computing power industry chain experienced a collective surge, with significant gains in computing power leasing concepts. Major companies like Dazhi Technology and Capital Online saw their stocks hit the daily limit [1] - The Ministry of Industry and Information Technology announced plans to develop national computing power interconnection nodes, aiming to enhance the efficiency and service level of public computing resources and promote high-quality development in the computing power sector [1] Group 2 - The CPO concept saw rapid gains, with leading company Tianfu Communication's stock rising by 11.61% to a historical high of 322 yuan per share, bringing its market capitalization to 250.33 billion yuan [2] - The computing power chip concept also rose in the afternoon, with companies like Chipone Technology experiencing over a 10% increase in stock price [2] - The electric grid equipment sector showed strong performance, with companies like Siyuan Electric and Sifang Co. reaching new highs, while other companies in the sector also saw significant stock price increases [2]

Market Overview - On February 12, the three major indices collectively rose, with the ChiNext Index and the Sci-Tech Innovation 50 Index both increasing by over 1% [1] - The total trading volume in the Shanghai and Shenzhen markets reached 2.16 trillion yuan, an increase of 159.7 billion yuan compared to the previous trading day [1] Index Performance - Shanghai Composite Index: 4134.02 (+2.03, +0.05%) [2] - Shenzhen Component Index: 14283.00 (+122.06, +0.86%) [2] - ChiNext Index: 1816.15 (+27.93, +1.56%) [2] - CSI 300: 4719.58 (+5.76, +0.12%) [2] - CSI 500: 8423.57 (+97.76, +1.17%) [2] Industry Developments - The Ministry of Industry and Information Technology announced plans to develop national computing power interconnection nodes, aiming to enhance the efficiency and service level of public computing resources [3] - Major domestic internet companies, including Tencent, Alibaba, and Baidu, are increasing efforts to attract users to AI applications, which is expected to significantly boost active user numbers in AI applications [3] - The demand for AI applications is driving growth in the domestic computing power industry chain, presenting key development opportunities [3] Stock Highlights - Tianfu Communication, a leader in the CPO concept, saw its stock rise by 11.61% to 322 yuan per share, reaching a market capitalization of 250.33 billion yuan [3] - Chip companies related to computing power also experienced gains, with Chipone Technology rising over 10% [3] - The liquid cooling server concept showed strong performance, with Chuanrun Co. achieving two consecutive trading limits in four days [3] - The electric grid equipment sector saw collective strength, with companies like Siyuan Electric and Sifang Co. reaching new highs [3] Individual Stock Movements - Double Good Energy, a solar energy company, saw its stock price hit the limit up within 10 minutes, with a total market value of 20.1 billion yuan, following the announcement of three overseas orders for high-efficiency heat exchangers [4] - Newly listed company N Haisheng experienced a maximum increase of 244.94%, triggering a trading halt, with over 300 million yuan in transactions [4]

Group 1 - The A-share market showed a mixed performance with the Shanghai Composite Index rising by 0.05% to 4134.02 points, while the Shenzhen Component and ChiNext Index increased by 0.86% and 1.32% respectively, with the total trading volume reaching 2.14 trillion yuan, an increase of 157.5 billion yuan from the previous trading day [1] - The computing power industry chain experienced a collective surge, with significant gains in computing power leasing concepts, highlighted by Dazhi Technology achieving four consecutive trading limits and companies like Capital Online and Yuke Technology hitting the daily limit [1] - The CPO (Optical Module) concept saw rapid growth, with Tianfu Communication and other companies reaching historical highs, supported by a report from CITIC Securities indicating that Lumentum has secured several hundred million dollars in CPO-related orders, predicting an industry boom by mid-2027 [2] Group 2 - The electric grid equipment sector collectively strengthened, with companies like Siyuan Electric and Sifang Co. reaching historical highs, driven by the State Council's issuance of guidelines to establish a unified national electricity market by 2035 [3] - The non-ferrous metals sector showed repeated activity, with Xianglu Tungsten and Zhangyuan Tungsten achieving consecutive trading limits, influenced by a significant reduction in nickel ore production quotas from the world's largest nickel mine, leading to a rebound in nickel and cobalt prices [3] - The commercial aerospace concept stock, Jili Rigging, faced a sharp decline, hitting the daily limit down due to a clarification that it had not signed a significant project, reflecting a broader weakness in the commercial aerospace and media sectors [4]

Market Overview - The three major indices collectively rose, with the ChiNext Index and the Sci-Tech 50 Index both increasing by over 1% [1] - The Shanghai Composite Index rose by 0.05%, the Shenzhen Component Index increased by 0.86%, and the ChiNext Index gained 1.32% [2] - The total trading volume in the Shanghai and Shenzhen markets reached 2.14 trillion yuan, an increase of 157.5 billion yuan compared to the previous trading day [1][6] Sector Performance - The computing power industry chain experienced a collective surge, with concepts related to computing power leasing performing strongly [2] - Notable stocks included Dazhi Technology, which achieved four consecutive trading limit increases, and companies like Capital Online and Yuke Technology, which hit the daily limit [2] - The CPO concept saw rapid gains, with Tianfu Communication and Robot Technology reaching historical highs [2] - The liquid cooling server concept was active, with Chuanrun Co. achieving two trading limits in four days and Dayuan Pump Industry hitting the daily limit [2] - The electric grid equipment sector also performed well, with companies like Siyuan Electric and Sifang Co. reaching new highs, while Wangbian Electric and Shun Sodium Co. hit the daily limit [2] Declining Sectors - The consumer sector collectively weakened, with significant declines in film and television, tourism and hotels, retail, and food and beverage sectors [3] - Notable declines included Hengdian Film and Television and Haixin Food, which both hit the daily limit down [3]

Group 1 - The Shanghai Composite Index rose by 0.09%, while the ChiNext Index fell by 1.08% [1] - The chemical, building materials, non-ferrous metals, oil and gas, and coal sectors showed strong gains, while AI applications, computing hardware, space photovoltaics, commercial aerospace, and consumer sectors experienced adjustments [1] - In the ETF market, Japanese stocks continued to perform strongly, with Huaxia Fund's Nikkei ETF and E Fund's Nikkei 225 ETF rising by 4.85% and 3.46% respectively [1] Group 2 - The film and television sector saw significant declines, with film ETFs dropping by 5.9% and 5.8% [2] - The media sector also declined, with media ETFs falling by 2.8% [2] - The AI hardware sector showed negative performance, with the ChiNext AI ETF down by 2% [2]

Core Viewpoint - Morgan's Hong Kong Stock Connect Ningyuan Growth Mixed Fund will be launched on February 12, focusing on opportunities in technology, consumer, and high-dividend sectors in the Hong Kong market [1] Group 1: Fund Overview - The fund aims to actively manage and identify opportunities in sectors such as AI applications, the internet, humanoid robots, new consumption, pharmaceuticals, and non-ferrous metals [1] - Morgan Asset Management has over a century of experience in asset management and believes that active management can yield long-term excess returns [1] - As of the end of 2025, Morgan's Hong Kong Selected Stock Connect Mixed Fund (Class A) achieved a return of 35.21%, compared to a benchmark return of 17.81% during the same period [1] Group 2: Investment Strategy - The fund manager, Zhao Longlong, emphasizes a three-tier investment management system: 1. Stock selection focuses on "picking the best among the best" through micro and macro analysis [2] 2. Industry allocation is based on product positioning, performance benchmarks, and risk-return characteristics, aiming for balanced and dynamic adjustments [2] 3. Portfolio construction seeks to maintain relative diversification and avoid high concentration risks [2] Group 3: Market Outlook - By the end of January 2026, the number of eligible stocks in the Hong Kong Stock Connect exceeded 550, primarily in technology manufacturing, consumption, cyclical, and financial sectors [2] - The Hong Kong market is expected to continue providing quality assets that complement A-shares, attracting global capital to competitive Chinese enterprises [2] - The valuation of the Hong Kong market remains attractive compared to major global markets, offering high cost-performance for allocation [2]

Investment Rating - The report maintains an "Accumulate" rating for the industry, indicating a forecasted increase of over 10% relative to the benchmark index in the next 6 to 12 months [27]. Core Insights - The overall market performance of the Beijing Stock Exchange (BSE) shows a decline, with the BSE 50 index dropping by 3.59% to close at 1531.55 points as of January 30, 2026. In comparison, the Shanghai and Shenzhen indices showed minor fluctuations [4][10]. - The average market capitalization of the 292 constituent stocks on the BSE is 3.207 billion yuan, with a total industry market value of 936.302 billion yuan and a circulating market value of 580.261 billion yuan [4][10]. - The report highlights the top-performing sectors for the week, including Oil and Petrochemicals (33.99%), Media (4.97%), Agriculture, Forestry, Animal Husbandry, and Fishery (4.69%), Transportation (2.28%), and Communications (2%) [4][17]. Summary by Sections BSE Market Overview - As of January 30, 2026, the BSE has 292 constituent stocks, with an average market capitalization of 3.207 billion yuan. The BSE 50 index experienced a decline of 3.59% during the week, while the Shanghai Composite Index and other indices showed minimal changes [4][10]. - The average daily trading volume for the BSE was 28.731 billion yuan, reflecting a 7.20% increase from the previous week, with a turnover rate of 5.88% [15]. New Stocks on BSE - One new stock, Meidele (920119.BJ), was issued during the week. Additionally, several companies are at various stages of the IPO process, including Huadian Guangda, which has been accepted for review [5][22]. Key News from BSE - The BSE released a revised guideline for sustainable development reporting on January 30, 2026, aimed at enhancing the quality of information disclosure among listed companies. This includes new application guidelines focusing on pollutant emissions, energy use, and water resource utilization [6][24]. - The first IPO of the year was accepted for Beijing Huadian Guangda Environmental Co., which specializes in new catalytic materials for air pollution control, aiming to raise approximately 260 million yuan [6][24]. Investment Strategy - The report suggests focusing on sectors expected to perform well in 2026, including Data Centers, Robotics, Semiconductors, Consumer Goods, and Military Information Technology. Specific companies highlighted include KLT, Suzhou Axis, and Hualing Co. [25].

Investment Rating - The industry investment rating is maintained at "Overweight" [1][27]. Core Insights - The report highlights that the overall performance of the Beijing Stock Exchange (BSE) is expected to show significant results in 2026, with a focus on high-quality development and investment opportunities in various sectors [6][25]. Summary by Sections BSE Market Overview - As of January 30, 2026, the BSE has 292 constituent stocks with an average market capitalization of 3.207 billion [4][10]. - The BSE 50 Index experienced a decline of 3.59%, closing at 1531.55 points, while the Shanghai and Shenzhen indices showed minor fluctuations [4][10]. - The average daily trading volume for the week was 28.731 billion, an increase of 7.20% from the previous week, with a turnover rate of 5.88% [4][15]. Sector Performance - The top five performing sectors on the BSE for the week were: - Oil and Petrochemicals: 33.99% - Media: 4.97% - Agriculture, Forestry, Animal Husbandry, and Fishery: 4.69% - Transportation: 2.28% - Communication: 2% [4][17]. New Stocks - One new stock was issued during the week, Meidel (920119.BJ), with updates on the status of other companies in the review process [5][22]. Key News - The BSE released a revised "Guidelines for the Preparation of Sustainable Development Reports" to enhance the quality of sustainability disclosures among listed companies [6][24]. - The first IPO of the year was accepted, with Beijing Huadian Guangda Environment Co., Ltd. aiming to raise approximately 260 million by issuing up to 32.2 million shares [6][24]. Investment Strategy - The report suggests focusing on the following sectors for investment in 2026: 1. Data Centers: KLT and Shuguang Data Creation 2. Robotics: Suzhou Axis, Audiwei, JunChuang Technology, and Fuheng New Materials 3. Semiconductors: Hualing Co. and Kaide Quartz 4. Consumer Goods: Taihu Snow, Boshenglong, Lusi Co., Kangbiter, and Thunder God Technology 5. Military Information Technology: Chengdian Guangxin and Xingtuzhihui [6][25].