Group 1 - The report highlights the strong performance of the wind power hydraulic lubrication leader, Chuanrun Co., which is advancing into AIDC liquid cooling, benefiting from the rising industry demand [4] - The company has a solid global layout in high-end energy equipment manufacturing, focusing on offshore wind power and liquid cooling, with overseas revenue reaching 43.64 million yuan in the first half of 2025, a year-on-year increase of 375.7% [4] - The liquid cooling technology is expected to gain traction due to stricter energy consumption regulations for data centers, with NVIDIA's next-generation Rubin chip adopting a fully liquid cooling solution, enhancing market potential [5][6] Group 2 - The asset allocation report emphasizes the continuity of the policy framework for 2026, with a focus on expanding domestic demand and managing financial risks in real estate and local debts [8][9] - The macroeconomic environment is supported by a strong fiscal policy and moderate monetary easing, which is expected to stabilize the equity market [9] - The report outlines a shift towards more execution-oriented industrial policies, enhancing visibility for commercial applications and orders in various sectors [9] Group 3 - The AI demand is projected to exceed expectations, with Shengquan Group positioned to benefit from the high-performance resin market, which is expected to see rapid growth [11] - The company is the largest domestic supplier of electronic chemical materials, with a comprehensive product matrix for high-frequency and high-speed copper-clad laminates [12] - Shengquan Group is expanding its production capacity with new projects set to come online in 2026, including 2000 tons/year of PPO/OPE resin and 1500 tons/year of hydrocarbon resin [12] Group 4 - The automotive industry report discusses the competitive landscape of Robotaxi in the US and China, highlighting Waymo and Tesla as key players in the US market [16][17] - In China, companies like Pony.ai and WeRide are leading the Robotaxi sector, with significant advancements in operational areas and regulatory support for autonomous driving [18] - The report suggests investment opportunities in leading Robotaxi companies and related technologies, emphasizing the acceleration of commercialization in both markets [19] Group 5 - The macroeconomic commentary on the government work report for 2026 outlines a growth target of 4.5%-5%, with a focus on expanding domestic demand and optimizing supply [20][22] - The report emphasizes the importance of employment, with a target of over 12 million new urban jobs, aligning with the economic growth objectives [23] - The fiscal policy remains proactive, with a projected budget expenditure of 30 trillion yuan for 2026, reflecting a commitment to sustainable growth [25][26] Group 6 - The report indicates a strong emphasis on technology innovation as a driver for new economic momentum, with significant increases in R&D investment expected [36][37] - The focus on high-level self-reliance in technology is set to support the development of new industries and enhance the digital economy's contribution to GDP [37][38] - The report outlines plans for substantial investments in modernizing the industrial system, with a focus on high-quality development and technological advancements [38]

Market Overview - The Hong Kong stock market continued to rise last Friday, with the Hang Seng Index and the Hang Seng China Enterprises Index closing at 25,757.29 points and 8,628.13 points, up 1.7% and 2.1% respectively [1] - The total turnover in the Hong Kong market was HKD 292.8 billion, a decrease of 9.0% from HKD 321.9 billion the previous Thursday, indicating a more cautious approach from some investors [1] - The healthcare, consumer discretionary, and consumer staples sectors rose by 3.7%, 2.9%, and 2.8% respectively, while materials fell by 2.1% [1] Company Performance - JD Logistics (2618 HK) and JD Group (9618 HK) led the blue-chip stocks with increases of 23.0% and 10.0% respectively, while China Hongqiao (1378 HK) and Henderson Land (12 HK) saw declines of 3.0% and 2.2% [1] - Weisheng Holdings (3393 HK) announced a positive profit forecast, expecting a year-on-year net profit growth of approximately 42%-50% to RMB 1.0 billion - 1.06 billion for FY25, exceeding previous market consensus [5] Industry Dynamics - The government work report for 2026 emphasizes expanding consumer demand through income increases and enhancing the supply of quality products and services, aiming to alleviate residents' concerns and unlock consumption potential [4] - The automotive sector saw significant gains, with Geely Group's chairman advocating for a qualitative development approach in the new energy vehicle industry, leading Geely Automobile (175 HK) to outperform peers with a 7.9% increase [4] - The pharmaceutical industry experienced a notable rebound, as the government work report identified biomedicine as a "new pillar industry," signaling strong policy support for its accelerated development alongside other key sectors [4]

Core Viewpoint - The market is experiencing a "scarcity revaluation" as it shifts towards a more rational assessment of AI technology, leading to a reevaluation of the value of heavy asset companies in the context of macroeconomic changes [1] Group 1: Market Trends and AI Impact - The perception of AI technology has shifted towards a more rational examination, with increasing concerns about "creative destruction" potentially disrupting existing industry dynamics [1] - The software sector in the US has seen a decline of over 30% from its peak, reflecting capital outflows from light asset industries that are easily replaceable by AI [1] - The previous low-interest-rate environment allowed growth assets to enjoy valuation premiums, but rising geopolitical risks and supply chain localization trends are increasing capital costs, highlighting the value of tangible production capabilities [1] Group 2: HALO Concept and Investment Focus - The "HALO" (Heavy Assets, Low Obsolescence) concept has gained significant attention, focusing on assets that are less likely to be replaced by AI and can withstand technological shocks, shifting investment logic from growth chasing to certainty and scarcity [2] - The HALO trading theme has deepened and expanded, with the energy sector in the S&P 500 rising over 25%, and various heavy asset sectors in the A-share market, such as oil, coal, and basic chemicals, showing strong performance [2] Group 3: Sectors Resistant to AI Replacement - Key sectors that are difficult to replace by AI include heavy asset industries with stable cash flows and those providing core support for AI technology, such as infrastructure and upstream strategic resources [3] - Typical HALO sectors are characterized by high barriers to entry, significant capital expenditures, and long asset renewal cycles, making them less susceptible to technological disruption [4] Group 4: Detailed Analysis of HALO Sectors - A detailed analysis indicates that typical HALO sectors in the A-share market are concentrated in the upstream, including energy raw materials like coal, basic chemicals, and non-ferrous metals, which have high fixed asset ratios and stable profitability [5] - Midstream manufacturing sectors such as utilities, power equipment, and transportation also exhibit high asset density and benefit from rigid demand, with many fixed assets accounting for over 30% of revenue [5] Group 5: AI "Shovel Sellers" and Infrastructure - The rapid advancement of AI technology is driving demand in hard tech sectors like computing power and semiconductors, which require significant upfront capital and have high technical barriers, aligning with HALO trading principles [6] - Upstream resource products are essential for AI industry chain construction and are expected to benefit from the rapid expansion of computing power demand, while being less susceptible to technological disruption [6] Group 6: Investment Strategy for HALO Trading - HALO trading is expected to continue enjoying scarcity revaluation premiums, with a focus on sectors that are less likely to be replaced by AI, such as utilities, transportation, and basic chemicals, which are currently undervalued [7] - The supply-demand dynamics, price increases, and geopolitical factors are expected to support market performance in these sectors, while hard tech sectors within the AI industry chain still hold long-term growth potential [8]

Investment Rating - The report suggests a cautious but moderately positive outlook for the new stock market, indicating potential structural activity despite short-term disruptions from overseas events [1][2][12]. Core Insights - The new stock market experienced increased volatility due to overseas disturbances, with the average decline of new stocks since 2025 being approximately -3.3%, and only about 17.0% of new stocks achieving positive returns [1][12][29]. - Despite the current market challenges, there is an expectation for structural activity in specific sectors, particularly those benefiting from upcoming policies and technological advancements [2][12]. - The report emphasizes the importance of risk control and market timing in the current environment, suggesting that recent disturbances may present opportunities for quality new stocks [2][12]. Summary by Sections New Stock Market Overview - The new stock market has shown significant fluctuations recently, with the average decline of new stocks since 2025 at -3.3%, compared to a previous average increase of 3.7% [12][29]. - The report notes that the overall market risk appetite is likely to remain suppressed due to ongoing overseas tensions, affecting the new stock market's performance [2][12]. Recent New Stock Performance - Last week, there were no new stock subscriptions, and the performance of newly listed stocks was relatively subdued, with an average first-day increase of less than 120% [5][27]. - The report highlights a structural differentiation in performance, with some stocks experiencing significant gains while others faced declines [27][30]. Upcoming New Stock Subscriptions and Listings - This week, one new stock is set to be listed, and there are plans for one stock to open for subscription and two stocks for inquiry [34][35]. - The anticipated new stock, 觅睿科技, is expected to have a price-to-earnings ratio of 14.8X based on projected profits [34][38]. Suggested Stocks for Attention - The report recommends monitoring specific stocks such as 丰倍生物, 禾元生物-U, and 恒坤新材, which are expected to show structural activity despite the current market conditions [39][40].

Group 1 - The report indicates that the new stock market is experiencing increased volatility due to overseas disturbances, but there are still potential structural opportunities within specific sectors [1][2][12] - The average decline of new stocks listed since 2025 is approximately -3.3%, with only about 17.0% of these stocks showing positive returns, a significant drop from the previous week's 75.8% [1][29] - Despite the current market challenges, there is an expectation for structural activity in the new stock sector, particularly as external policies and events are anticipated to increase in March [2][12] Group 2 - The report highlights that the focus remains on sectors with long-term growth potential, such as AI, commercial aerospace, and energy exports, suggesting that investors should seek out sub-sectors with higher elasticity to new developments [3][12] - The upcoming new stocks include MiRui Technology, which is involved in the development and sales of intelligent network cameras and IoT video products, indicating a focus on technology-driven sectors [4][38] - The report suggests a flexible investment approach, emphasizing the importance of rhythm and risk control in light of external disturbances, while still identifying potential investment opportunities in both new and existing stocks [8][39]

Investment Rating - The industry investment rating indicates a positive outlook, with expectations for the industry index to outperform the CSI 300 index by more than 10% [28] Core Insights - In March, the main sectors are expected to see a slowdown in capital inflow, while the micro-market is likely to maintain its strength [10][12] - Geopolitical risks, particularly from the Israel-Iran situation, have influenced A-share movements, with a notable decline in the ETF risk preference index, indicating a downward trend in market risk appetite [11] - The rise in oil prices has not been accompanied by a corresponding drop in equity assets, suggesting that underlying risks may still persist [11] - The report recommends focusing on sectors benefiting from price increases, particularly agriculture, forestry, animal husbandry, and transportation [11] Summary by Sections 1. Weekly Insights - The main sectors are experiencing a decrease in capital inflow, with a potential shift towards smaller market capitalizations [10] - The micro-market is expected to continue its strong performance due to structural capital inflows from newly issued and existing quantitative products [12] 2. Timing - The A-share index has shown a slight decline of 0.93% over the past week, indicating a marginal upward trend in daily movements [14] - The activity level of informed traders has decreased, reflecting a cautious outlook for the market [15] 3. Industry Monitoring - Significant net inflows were observed in the oil, transportation, and non-ferrous metal sectors, with net inflows of 31.2 billion, 25.3 billion, and 23.4 billion respectively [19] - Conversely, the electronics, computer, and power equipment sectors experienced notable net outflows of 84.7 billion, 45.5 billion, and 38.0 billion respectively [19] 4. Style Monitoring - The report highlights a shift in market preferences, with value stocks outperforming growth stocks this week [25] - High-quality earnings assets have shown continued excess returns, while high turnover stocks have underperformed the market average [25]

Quantitative Models and Construction Methods 1. **Model Name**: Five-Dimensional Industry Allocation Model - **Model Construction Idea**: The model is designed to identify industry allocation opportunities by analyzing five dimensions of market data. - **Model Construction Process**: The specific construction process of the model is not detailed in the report, but it is used to recommend industries based on the latest results. For example, the model suggests focusing on the diffusion of price increase logic to low-level sectors, such as agriculture, forestry, animal husbandry, fishery, and transportation industries[1][11]. - **Model Evaluation**: The model is effective in identifying structural opportunities in the market under specific conditions, such as geopolitical risks and market volatility[11]. 2. **Model Name**: Industry Rotation Strategy Based on Consensus Forecast Net Profit FTTM QoQ - **Model Construction Idea**: This model uses the quarter-on-quarter (QoQ) change in forward twelve-month (FTTM) consensus forecast net profit as an industry screening indicator to construct an industry rotation strategy. - **Model Construction Process**: - The model selects industries based on the QoQ change in FTTM consensus forecast net profit. - Historical backtesting was conducted over the period from 2019 to 2025. - **Model Evaluation**: The model demonstrates strong effectiveness during earnings seasons, with the highest median excess return in April compared to other months[13]. --- Model Backtesting Results 1. **Five-Dimensional Industry Allocation Model**: No specific backtesting results or numerical values are provided in the report. 2. **Industry Rotation Strategy Based on Consensus Forecast Net Profit FTTM QoQ**: - Backtesting period: 2019-2025 - Median excess return in April: 2.4%, the highest among all months[13] --- Quantitative Factors and Construction Methods 1. **Factor Name**: BARRA Style Factors - **Factor Construction Idea**: The BARRA style factors are used to analyze market preferences and style shifts during periods of market adjustment. - **Factor Construction Process**: - The factors include turnover, financial leverage, earnings volatility, earnings quality, profitability, investment quality, long-term reversal, EP value, BP value, growth, momentum, non-linear market capitalization, market capitalization, volatility, dispersion, and dividend yield. - The performance of these factors is monitored weekly to assess their impact on market trends[21][22]. - **Factor Evaluation**: The factors provide insights into market style preferences, such as the preference for value over growth and the performance of high-quality earnings assets during the week[25]. --- Factor Backtesting Results 1. **BARRA Style Factors**: - Turnover: -0.3% - Financial Leverage: -0.1% - Earnings Volatility: 0.0% - Earnings Quality: 0.3% - Profitability: -0.2% - Investment Quality: 0.2% - Long-Term Reversal: -0.4% - EP Value: 0.2% - BP Value: 0.2% - Growth: 0.0% - Momentum: 0.7% - Non-Linear Market Capitalization: -0.5% - Market Capitalization: -0.2% - Volatility: -0.2% - Dispersion: -1.4% - Dividend Yield: 0.0%[22][25]

Core Insights - The report highlights that the ongoing geopolitical conflicts in the Middle East are the primary variable affecting market risk appetite, leading to a decline in global equity markets, a strengthening dollar, and a significant rise in oil prices. The trading logic is focused on defensive demand and rising energy prices, with a need to monitor the duration of oil supply constraints and their potential long-term impact on supply-demand dynamics [2][12][16]. - A combination of rising commodity prices and declining interest rates is seen as favorable for a bull market. Historically, instances of rising commodity prices coinciding with falling stock markets are rare, with only three occurrences since 1968. Overall, both US and A-shares benefit from rising commodity prices, unless inflation pressures lead to significant liquidity tightening [2][4][25]. - The report suggests that the current domestic deflationary pressures reduce concerns about negative inflation impacts, and interest rates are unlikely to rise significantly in the absence of further positive signals in the fundamentals. The combination of rising ROE and declining interest rates creates a conducive environment for the stock market [2][4][25]. Market Changes This Week - This week, major A-share indices experienced declines, with the Shanghai Composite Index down by 0.93%, and the ChiNext Index down by 2.45%. The sectors leading the gains included oil and petrochemicals (+8.06%), while media (-6.97%) and non-ferrous metals (-5.47%) faced significant losses [32][33]. - Global stock markets also saw declines, with the S&P 500 down by 2.02%. In the commodity market, NYMEX crude oil surged by 36.18%, while LME copper fell by 3.61% [33][34]. Policy and Economic Outlook - The report indicates that the policy tone from the Two Sessions is generally stable, with limited expectations for unexpected easing policies in the short term. The economic growth target for 2026 has been adjusted to a range of 4.5%-5%, with other policy targets remaining consistent with 2025 [3][14]. - The report emphasizes that structural support policies aligned with long-term economic quality improvement and transformation are expected to be implemented effectively, particularly in sectors like services, AI commercialization, and new infrastructure [3][13]. Investment Recommendations - The report suggests focusing on sectors such as non-ferrous metals, oil and petrochemicals, and basic chemicals, which are expected to benefit from the current market dynamics. The energy security narrative is likely to strengthen due to ongoing geopolitical tensions, creating opportunities in these sectors [28][31]. - The report also highlights the potential for structural support policies to continue benefiting sectors aligned with long-term economic development logic, such as technology and consumption [27][31].

Report Industry Investment Rating - Not mentioned in the report Core Viewpoints - The high valuation of the convertible bond market exacerbates asset volatility, and it fails to show the "traditional attributes" of being offensive and defensive. It is recommended to screen individual bonds based on price and premium rate. Pay attention to investment opportunities in AI computing power chains, embodied intelligence, autonomous driving, innovative drugs, two - wheeled vehicles, and the real estate chain [2][18] Summary by Directory Market Trends (2026/3/2 - 2026/3/6) - **Stock Market**: Geopolitical conflicts led to a decline in the A - share market at the beginning of the week, and a rebound in the second half. The oil and gas sector was strong, while high - level technology and precious metal sectors were under pressure. The Shenwan primary industries showed that most industries closed down, with oil and petrochemicals, coal, and public utilities leading the gains, and media, non - ferrous metals, and computers performing poorly [7][8] - **Bond Market**: Affected by geopolitical conflicts and market risk - aversion, bond yields declined slightly at the beginning of the week. After the government work report was released, the bond market was stable. The 10 - year Treasury bond rate closed at 1.781% on Friday, down 0.67bp from the previous week [8] - **Convertible Bond Market**: Most convertible bond issues closed down. The CSI Convertible Bond Index fell 2.07% for the week, the median price dropped 1.22%, and the arithmetic average parity decreased 3.38%. The overall market conversion premium rate increased 1.82% compared with the previous week. The top - rising convertible bonds were Hongbai, Hangyu, Yitian, Shengxun, and Outong, while the top - falling ones were Liyang, Songlin, Tianzhun, Fuxin, and Weidao. The total trading volume of the convertible bond market last week was 29.2381 billion yuan, with an average daily trading volume of 7.3095 billion yuan, an increase from the previous week [8][12][16] Views and Strategies (2026/3/9 - 2026/3/13) - The fermentation of the US - Iran conflict has disturbed market risk preferences and liquidity expectations. The high - valuation characteristic of the convertible bond market exacerbates asset volatility. In the week, it did not show the "traditional attributes". Most institutions reduced their convertible bond holdings in February. Currently, the overall allocation value of convertible bond assets is poor, and it is recommended to screen individual bonds. Pay attention to investment opportunities in semiconductor equipment and materials, computing power leasing, power equipment for computing power support in the AI computing power chain, embodied intelligence, autonomous driving, as well as the catch - up opportunities in innovative drugs, two - wheeled vehicles, and the real estate chain [2][18] Valuation Overview - As of March 6, 2026, for equity - biased convertible bonds, the average conversion premium rates in different price ranges are at high percentile values since 2010 and 2021. For debt - biased convertible bonds, the average YTM of bonds with a parity below 70 yuan is at a low percentile value. The average implied volatility of all convertible bonds and the difference between the implied volatility and the long - term actual volatility of the underlying stocks are at high percentile values [19] Primary Market Tracking - Last week, Changgao Convertible Bond was announced for issuance, and no convertible bonds were listed. Changgao Convertible Bond has a scale of 759 million yuan, and the funds are to be used for production base projects. Next week, no convertible bonds are announced for issuance or listing. Currently, there are 100 convertible bonds to be issued, with a total scale of 163.96 billion yuan [26][27]

Group 1 - The core viewpoint is that the market sentiment for high valuation sectors may continue to cool, while the relative advantage of low valuation factors will gradually manifest [1][3][4] - The ongoing situation in the Middle East is shifting from short-term intense conflict to sustained small-scale chaos, which may impact global energy prices and economic concerns [2][15] - The policy design aimed at enhancing corporate quality and efficiency is expected to be the main theme for the next five years, reflecting a shift from traditional production scale expansion to improving profitability [9][22] Group 2 - The emotional sentiment in high valuation sectors has shown signs of decline, with significant fluctuations in investor sentiment indices observed during the spring market [3][16] - There is a potential shift in market styles between large and small caps, as well as between high and low valuation stocks, which may be accelerated by the Middle East conflict [4][17] - The revaluation space for Chinese resources and traditional manufacturing industries remains substantial, especially if return on equity (ROE) returns to reasonable levels [6][19] Group 3 - The current market configuration suggests a focus on sectors with competitive advantages and high barriers to overseas capacity reset, such as chemicals, non-ferrous metals, and renewable energy [11][22] - The report emphasizes the importance of profit margin recovery in various industries, as many sectors are still below historical profit margin levels [8][21] - The recommendation includes increasing exposure to low valuation factors, particularly in industries like insurance and brokerage, which are currently rare [11][22]