Core Insights - The article emphasizes the importance of understanding industry trends and the potential investment opportunities arising from them, particularly in sectors benefiting from AI and improved supply-demand dynamics in lithium battery materials [1][2]. Group 1: Investment Environment - The A-share market is currently experiencing a positive upward trend, with both A-shares and Hong Kong stocks seen as attractive investment options due to their high yield potential compared to low-risk assets [1][2]. - The economic adjustment in sectors like real estate is nearing completion, reducing its impact on the economy, while China's trade dependency on the U.S. has significantly decreased, with successful expansion into emerging markets [2]. Group 2: Market Dynamics - The policy environment has been exceptionally supportive of the capital market, with strict limits on financing and an increased focus on dividends and share buybacks by listed companies, enhancing investor returns [2]. - Despite a general market recovery, valuations in key sectors such as Hong Kong internet, consumer electronics, and lithium remain reasonable, with companies increasingly prioritizing shareholder returns [2]. Group 3: Investment Focus - The investment strategy focuses on three main lines: technology, new energy, and cyclical sectors. Technology is seen as early-stage development benefiting from AI, while new energy, particularly lithium materials, is expected to enter a new growth cycle due to rising demand [3]. - The cyclical sector is in a stable phase, with strong performance in non-ferrous metals driven by improved supply-demand fundamentals, particularly in copper and aluminum [3]. Group 4: Research and Team Dynamics - The company has reduced the weight of left-side positioning in its investment portfolio to better manage liquidity and enhance investment experience, while maintaining long-term holdings in high-quality companies with strong competitive positions [4]. - The research team has been structured to enhance collaboration across sectors like AI, energy, and consumer goods, improving research depth and efficiency [4][5]. - The dual role of the research head as a fund manager facilitates direct communication of investment ideas to researchers, promoting effective research transformation and timely opportunity identification [5].

Core Viewpoint - A Chinese research team has achieved a breakthrough in the extraction and separation of lithium resources from salt lakes, overcoming key technical challenges and enabling large-scale industrial application of lithium carbonate production [1] Group 1: Technological Advancements - The research team has developed a green and efficient extraction technology that addresses the limitations of traditional lithium extraction methods, such as poor selectivity for monovalent ions, low separation efficiency, high acid-base consumption, and significant solvent loss [1] - A new lithium-specific extraction agent has been synthesized, which enhances environmental protection, safety, and cost control in the extraction process [1] Group 2: Industrial Application - The world's first industrial demonstration line for extracting lithium from brine mother liquor has been established, capable of producing battery-grade lithium carbonate at a scale of 10,000 tons [1] - The extraction line achieves a lithium recovery rate of over 98%, generating an additional output value of over 600 million yuan, which supports the high-quality development of China's salt lake lithium industry [1] Group 3: Global Positioning - Experts have evaluated the new technology as reaching an internationally leading level, indicating its potential to significantly enhance the efficient recovery and high-value utilization of salt lake lithium resources [1]

Group 1: Market Liquidity and A-Share Performance - The improvement in market liquidity has been a direct catalyst for the recent rise in A-shares, with margin trading balances increasing by over 125 billion yuan in just half a month, leading to a more than 35% increase in trading volume across the A-share market [3][13][22] - Historical data shows that similar situations, where the A-share market rose by nearly 10% over 16 trading days with trading volume expanding by over 30%, have occurred six times in the past decade, predominantly at the beginning of the year [3][18][22] - The recent surge in the commercial aerospace index has led to a significant increase in turnover rates and trading volume proportions, indicating a potential structural overheating in the market [3][22] Group 2: AI Impact on Employment and Economic Policy - The U.S. job market continues to face pressure, with December's non-farm payrolls adding only 50,000 jobs, below expectations, and a downward revision of 76,000 jobs for October and November [4][26][33] - The adoption of AI by large U.S. companies has significantly suppressed employment growth, particularly in the information, finance, and professional services sectors, which have collectively lost 344,000 jobs over the past three years [4][26][33] - The Federal Reserve's extended rate-cutting cycle is expected to benefit commodity markets, as inflation concerns related to AI investments are easing [4][40][41] Group 3: Domestic Economic Recovery and Policy Optimization - The Producer Price Index (PPI) for industrial enterprises in December showed a year-on-year increase, indicating a shift from price drag to price support for corporate revenues [5][56] - The Consumer Price Index (CPI) has also risen, with the core CPI maintaining its highest level in five years, reflecting a smoother transmission of prices from enterprises to consumers [5][56] - The ongoing anti-involution policies are expected to enhance corporate profitability, with regulatory measures aimed at preventing monopolistic practices and promoting fair competition [5][62] Group 4: Rebalancing and Investment Recommendations - The report suggests a positive outlook for A-shares, driven by improved liquidity and favorable domestic and international economic conditions [6][63] - Recommended investment areas include industrial resource products like copper, aluminum, and lithium, as well as sectors benefiting from the recovery of domestic manufacturing and consumer spending [6][63] - The report emphasizes the importance of capturing opportunities in sectors such as aviation, duty-free, and food and beverage, which are expected to benefit from increased consumer income and tourism recovery [6][63]

Investment Rating - The report rates the mechanical industry as "Overweight" [5] Core Insights - The mechanical equipment index increased by 5.98% during the week of January 5 to January 9, 2026, outperforming the CSI 300 index, which rose by 2.79% [8] - China has submitted applications for 203,000 new satellites covering 14 satellite constellations, indicating a significant expansion in the commercial space sector [5] - The CES 2026 showcased advancements in humanoid robots, with companies like Upward and Boston Dynamics unveiling new models, highlighting the industry's shift towards diversification and automation [5] Summary by Sections Weekly Market Summary - The mechanical equipment sector's performance was ranked 10th among 31 first-level industries, with a weekly increase of 5.98% [8] - The mechanical industry index has risen by 53.09% since the beginning of 2025, compared to a 24.57% increase in the CSI 300 index [10] Key Macro Data - The manufacturing PMI for December 2025 was reported at 50.1%, indicating stable growth in the sector [15] - The production index and order index for December 2025 were 50.8% and 51.7%, respectively, suggesting positive trends in manufacturing activity [21] Sub-industry Data Summary Engineering Machinery Industry - Excavator sales in December 2025 reached 23,095 units, a year-on-year increase of 19.2% [36] Machine Tool and Industrial Robot Industry - Industrial robot production in November 2025 was 70,188 units, reflecting a year-on-year growth of 20.6% [41] Rail Transit Industry - The cumulative production of EMUs from January to November 2025 was 1,722 units, with November production showing a year-on-year increase of 24.1% [45] Oilfield Equipment Industry - The global active drilling rig count was 1,813 units as of November 2025, with Brent crude oil averaging $63.34 per barrel on January 9, 2026 [53] Semiconductor Equipment Industry - Semiconductor sales in November 2025 reached $75.28 billion, with a month-on-month increase of 3.53% [76] Key Company Earnings Forecast - The report recommends several companies for investment, including: - Humanoid Robots: Hengli Hydraulic, Changying Precision, and others [5] - Chip Equipment: Keri Technology [5] - Commercial Aerospace: Plit [5] - AI Infrastructure: Ice Wheel Environment, Hanzhong Precision, and others [5] - Engineering Machinery: Sany Heavy Industry, XCMG, and others [5] - Export Chain: Honghua Digital Science, Juxing Technology, and others [5]

Investment Rating - The report maintains a positive outlook on the electric new sector, particularly highlighting "space photovoltaic" as the strongest main line for 2026 [2][6]. Core Insights - The space photovoltaic sector is gaining market recognition due to its significant value, inflation trends, and high barriers to entry, with expectations for continued market expansion [2][6]. - The report emphasizes the importance of energy storage and lithium battery price increases, as well as the growth potential in wind power and green hydrogen under the "14th Five-Year Plan" [2][3][12]. - The cancellation of export tax rebates for photovoltaic products is expected to create a "rush" for shipments, which may help mitigate the impact of seasonal demand fluctuations in Q1 [9][10]. Summary by Sections Photovoltaics & Energy Storage - The space photovoltaic sector is recognized as a core branch of commercial aerospace, with its advantages becoming increasingly acknowledged by the market [2][6]. - The cancellation of export tax rebates is set for April 1, 2026, which is anticipated to lead to a surge in shipments to counteract seasonal demand dips [9][10]. - The report suggests actively participating in the space photovoltaic market, as the trend is expected to continue [2][6]. Wind Power - The report forecasts continued growth in domestic wind power installations in 2026, with an expected increase in offshore and onshore installations [12][13]. - The global wind power demand is projected to maintain a long-term positive outlook, driven by AI and electrification trends [13][14]. - Key recommendations include focusing on manufacturers with improved profitability and those benefiting from domestic and international market expansions [12][32]. Lithium Batteries - The report notes a reduction in the export tax rebate for battery products from 9% to 6% starting April 1, 2026, with a complete cancellation set for January 1, 2027 [16][17]. - Price negotiations for lithium iron phosphate (LFP) have seen significant increases, with most customers accepting a processing fee hike of 1,000 yuan per ton [16][20]. - The lithium battery sector is expected to experience continued demand growth, particularly in the context of rising prices and expanding production capacities [18][33]. Hydrogen and Fuel Cells - Bloom Energy has secured a $2.65 billion order, indicating strong demand for solid oxide fuel cells (SOFC) and validating their commercial viability [29][30]. - The report highlights the potential for green hydrogen and related technologies to experience significant growth, driven by policy support and increasing demand [30][31]. - Key investment opportunities include companies involved in green methanol production and hydrogen fuel cell components [30][32]. Grid & Industrial Control - Significant investments in grid infrastructure are planned, with Southern Power Grid expecting over 20% growth in Q1 2026 [23][24]. - The report identifies opportunities in the industrial control sector, particularly for companies involved in robotics and automation technologies [28][24]. - Recommendations include focusing on companies that are well-positioned to benefit from technological advancements and increased demand in the automation market [28][32].

Investment Ratings - The report maintains a "Buy" rating for both the power equipment and environmental protection sectors [1]. Core Insights - The report highlights several recent developments in the new energy supply side, including a meeting by four ministries to regulate competition in the power and energy storage battery industries, a significant drop in polysilicon futures prices, and the planned cancellation of export tax rebates for photovoltaic products starting April 1, 2026 [3]. - The report emphasizes that the "anti-involution" efforts in the new energy sector are complex and challenging, with the government aiming to maintain international competitiveness while balancing market and policy adjustments [3]. - Investment recommendations include focusing on domestic computing power, hydrogen energy, and energy storage upstream sectors, with specific companies suggested for investment based on their market positioning and growth potential [3]. Summary by Sections New Energy Supply Side - Recent events include a meeting to regulate competition in the power and energy storage battery industries, a decline in polysilicon futures, and adjustments to export tax rebates for photovoltaic products [3]. - The report suggests that the direction of "anti-involution" in the photovoltaic industry will remain unchanged, focusing on execution and coordination [3]. Investment Recommendations - The report advises caution in pursuing high-flying stocks in commercial aerospace and related sectors due to significant price increases detached from fundamental performance [3]. - It recommends focusing on companies like Sifang Co., Shenghong Co., and others in the AI power sector, as well as those involved in hydrogen energy and energy storage [3]. - The report highlights the importance of monitoring the domestic energy storage market and the upcoming bidding situation for energy storage projects [5][6]. Wind Power - The report notes that the newly installed capacity for onshore wind power in 2024 is expected to reach 75.8 GW, a year-on-year increase of 9.68%, while offshore wind power is projected to decline by 40.85% [7]. - The report indicates a significant increase in domestic wind power installations, with a total of 82.50 GW added from January to November 2025, representing a year-on-year growth of 59.42% [7]. Lithium Battery Sector - The report discusses the impact of the cancellation of export tax rebates on lithium batteries, which is expected to create pressure on smaller battery manufacturers while benefiting larger firms [19]. - It highlights the anticipated demand for lithium batteries in 2026, with a total production estimate of approximately 210 GWh in China, despite a seasonal decline [20]. - The report emphasizes the importance of monitoring supply chain dynamics and pricing trends in lithium battery materials, particularly lithium carbonate and other components [21].

Group 1 - The recent improvement in market liquidity has driven the A-share market's rise, with historical patterns suggesting a strong performance in the upcoming period [1][5] - The A-share market has seen a significant increase in trading volume, with a 35% growth in total trading volume and a 10% rise in the overall A-share index over the past 16 trading days [2][14] - There is a notable structural overheating in the market, particularly in the commercial aerospace index, which has seen a sharp increase in turnover and trading volume [2][14] Group 2 - AI's negative impact on the U.S. employment market is becoming evident, with December's non-farm payrolls falling short of expectations and a downward revision of previous months' data [3][20] - The prolonged interest rate cut cycle by the Federal Reserve is expected to benefit commodity markets, as the demand for resources related to AI and new energy industries is increasing [3][33] - Geopolitical tensions are altering inventory behaviors among market participants, leading to increased stockpiling and a rise in copper and silver inventories [3][35] Group 3 - Domestic policies aimed at reducing "involution" are being implemented, with industrial prices showing signs of recovery, leading to improved corporate profitability [4][43] - The recent regulatory focus on the photovoltaic industry has raised concerns about the commitment to anti-involution policies, but the overall direction remains focused on improving corporate fundamentals [4][49] - The government is actively working on regulatory frameworks to support innovation while preventing monopolistic practices, which is expected to enhance corporate profitability in the long run [4][51] Group 4 - The report maintains an optimistic outlook for the A-share market, suggesting that the combination of improved liquidity, AI investments, and domestic policy support will lead to a favorable investment environment [5][52] - Recommended sectors include industrial resource products like copper, aluminum, and lithium, as well as equipment exports and consumer sectors benefiting from recovery trends [5][52]

Group 1 - The central economic work conference has identified the "in-depth rectification of 'involutionary' competition" as a key task for economic work in 2026, continuing the "anti-involution" actions into the new year [1] - The Ministry of Industry and Information Technology, along with three other departments, held a meeting targeting irrational behaviors such as blind construction and low-price competition in the power and energy battery industry, aiming to regulate industry competition order [1] - "Involutionary" competition is characterized by low price, low quality, and low-level competition, which disrupts market signals, reduces resource allocation efficiency, and erodes long-term competitiveness of enterprises, ultimately hindering high-quality development [1] Group 2 - Since the 2024 central economic work conference proposed "comprehensive rectification of 'involutionary' competition," China has implemented a series of institutional constructions to guide key industries like steel, photovoltaics, and electric vehicles from low-quality involution to innovation and efficiency [2] - The National Development and Reform Commission plans to research and formulate regulations for the construction of a unified national market, while the State Administration for Market Regulation aims to promote amendments to foundational laws such as the pricing law to enhance the legal and policy tools against "involutionary" competition [2] - To effectively address "involutionary" competition, industries and enterprises must accelerate reforms, eliminate outdated momentum, and shift towards efficiency and innovation, thereby creating a true "moat" for their development through technology, branding, and service upgrades [2]

Core Viewpoint - The recent announcement by the Ministry of Finance and the State Taxation Administration regarding the adjustment of export tax rebate policies for photovoltaic and other products reflects the optimization and transformation of the country's support for the new energy industry, which will further promote high-quality development in the photovoltaic and lithium battery sectors [1] Photovoltaic Industry - The announcement states that from April 1, 2026, the value-added tax export rebate for photovoltaic products will be completely canceled, marking the first comprehensive cancellation since the industry was included in the export rebate policy in October 2013 [2] - The export rebate policy for the photovoltaic industry began in October 2013, allowing companies to enjoy a rebate rate of up to 50%. However, due to increasing competition, the rebate policy has been gradually optimized, with a previous reduction from 13% to 9% announced on November 15, 2024 [2] - The China Photovoltaic Industry Association noted that since 2024, the industry has faced fierce competition in overseas markets, leading to a "volume increase and price decrease" trend, where some companies engaged in low-price competition, effectively turning the export rebate into a subsidy for foreign buyers [2] - The cancellation of the export rebate is seen as a policy to promote high-quality development in the industry, with the adjustment expected to help stabilize export prices and reduce the risk of trade frictions [3] - The industry has begun to show signs of improvement, with upstream prices recovering to reasonable levels and downstream prices trending upward [3] Lithium Battery Industry - The announcement also includes a phased reduction in the export rebate for battery products, decreasing from 9% to 6% from April 1, 2026, and completely canceling it by January 1, 2027 [5] - The adjustment aims to guide the battery industry away from pure scale expansion and alleviate the pressure of homogenized competition, encouraging companies to enhance product technology and value [5] - Major battery exporters include companies like CATL and Guoxuan High-Tech, with CATL reporting a gross margin of 23% for domestic business and 29% for overseas business in the first quarter of 2025 [5] Short-term Market Dynamics - There is an expectation of a "rush to export" phenomenon in the short term as companies accelerate production and order fulfillment before the policy takes effect, potentially leading to a spike in export data [6] - The demand for lithium carbonate may see a short-term boost due to increased battery orders before the rebate cancellation, although the long-term impact may suppress demand due to increased costs [6] - Current inventory levels for lithium carbonate are rising, with a reported weekly inventory of approximately 110,000 tons as of January 8, indicating a shift towards marginal accumulation [6]

Core Viewpoint - Morgan Asset Management's China equity investment team anticipates structural opportunities in the market for 2026, driven by the transition of old and new growth dynamics and the development of industries such as AI, high-end manufacturing, new energy, and new consumption [2][3]. Group 1: Market Outlook - The Chinese equity market is at a critical juncture for transitioning growth dynamics, with structural opportunities emerging from macroeconomic volatility and industry trends [2]. - Morgan Asset Management emphasizes long-term investment value and aims to provide insights into macro policy, market trends, and sector-specific strategies for investors [2]. Group 2: Investment Strategies - Investment Director Du Meng believes that the value of Chinese equity assets is set for re-evaluation, with a focus on stable growth in industry demand and cash flow sustainability [5]. - The AI sector is viewed as a significant trend, with expectations of transformative innovations, and investment strategies will involve active participation and dynamic adjustments [5][10]. - The lithium battery industry is highlighted as a promising sector for 2026, driven by a balanced supply-demand state, new demand from energy storage, and attractive valuations [7][8]. Group 3: Sector Focus - The AI industry is recognized as a major trend, with a focus on companies with technological barriers and high order visibility in the computing hardware segment [10][11]. - The consumption sector is expected to show potential, particularly in new consumption driven by younger demographics, while traditional sectors may face challenges [10][19]. - The financial sector is seen as having significant opportunities, supported by favorable policies and a shift towards institutional investment [26][29]. Group 4: ETF and Index Investment - The global ETF market continues to grow, with significant inflows and a focus on differentiated solutions, particularly in the Asia-Pacific region [30][32]. - Morgan Asset Management's strategy in the ETF space emphasizes a "boutique buyer" model, aiming to provide unique value and long-term viability in its offerings [33].