1. Report's Investment Rating for the Industry - No investment rating for the industry is provided in the report. 2. Core Viewpoints of the Report - In December 2025, China's exports continued high - growth, imports rebounded significantly, and the trade surplus expanded. The Fed's January rate - cut probability decreased, and the RMB showed an appreciation trend. The central bank adjusted the structural monetary policy tool rate and commercial real - estate credit policies, aiming to improve capital activation and support the real economy [8][10]. 3. Summary According to Relevant Catalogs 3.1 National Economic Accounting - GDP quarterly data from 2023 to 2025 are presented, showing the performance of different industries, including agriculture, forestry, animal husbandry, fishery, industry, and services. The contribution rates and pulling effects of the three industries on GDP are also provided [13][18]. 3.2 Industry Analysis - **Industrial Sector**: The growth rate, added - value of major industries, and production of key products are analyzed. The profit situation of industrial enterprises shows mixed results, with some industries growing and some declining. The inventory of industrial enterprises is at a relatively high level, and enterprises still have the intention to reduce inventory [28][43][53]. - **Price Index**: In December 2025, the national consumer price index (CPI) increased year - on - year, and the industrial producer price index (PPI) decreased year - on - year but the decline narrowed. The prices of different categories in CPI and PPI showed different trends [60][68]. 3.3 Real Estate Market - In January - November 2025, real estate development investment, construction area, new - start area, completion area, sales area, and sales volume all declined year - on - year. The prices of new and second - hand residential properties in major cities also showed different degrees of decline [122][126][130]. 3.4 Foreign Trade and Investment - In December 2025, China's total import and export volume reached a record high. Exports to ASEAN and the EU increased, while exports to the US decreased. The export of key products and the import of key commodities are presented in detailed tables [93][100][101]. 3.5 Fixed - Asset Investment - From January - November 2025, national fixed - asset investment (excluding rural households) decreased year - on - year. Private fixed - asset investment also declined. Investment in different industries showed different trends, with the second - industry investment growing and the third - industry investment declining [114]. 3.6 Domestic Trade - The growth of service retail sales and social consumer goods retail sales is analyzed, and the year - on - year changes in retail sales of different industries above the quota are presented [158][165]. 3.7 Transportation - The transportation volume of goods and passengers by different means, the subway passenger flow in major cities, and the freight rates of shipping routes are analyzed [168][173][179]. 3.8 Banking and Currency - The new social financing scale, social financing scale stock, new RMB loans, and money liquidity are analyzed. The central bank emphasizes reasonable interest - rate control to promote the decline of the real - economy financing cost [183][194][200]. 3.9 Bond Market - The issuance of interest - bearing bonds and the yields of long - and short - term treasury bonds are analyzed [213][216]. 3.10 Foreign Exchange and Gold - The RMB exchange rate against the US dollar and the US dollar index are presented. China's gold reserves increased, and the foreign exchange reserves reached a new high [220][223]. 3.11 Fiscal and Employment - The central and local general public budget revenues and expenditures are analyzed, and the urban surveyed unemployment rate and new urban employment are presented [232][236][242]. 3.12 Business Climate Survey - The global and Chinese manufacturing and non - manufacturing PMI are analyzed. In December 2025, China's manufacturing PMI returned to the expansion range, and the non - manufacturing business activity index also rebounded [245][248][256]. 3.13 US Macroeconomy - The US real GDP growth rate, employment situation, treasury bond yields, retail sales, and the Fed's asset structure and federal funds rate are analyzed [263][266][274].

Core Viewpoint - The meeting emphasized the need for all levels and departments to align their thoughts and actions with the decisions of the central government, focusing on achieving a strong economic start in the first quarter of the year [2][3]. Economic Analysis and Measures - The meeting analyzed the economic situation for the first quarter and discussed specific measures to achieve a "good start" [2]. - Departments reported on the economic operation and proposed initiatives to ensure a strong economic performance [2]. Key Focus Areas - Industrial Stability: Emphasis on stabilizing and expanding production in key industries such as automotive, electronics, and pharmaceuticals, while fostering new growth areas like low-altitude economy and artificial intelligence [3]. - Service Sector Enhancement: Strategies to support platform enterprises, promote healthy real estate market development, and enhance the wholesale sector [3]. - Investment Expansion: Utilizing special bonds and new policy financial tools to boost investments in industrial, urban renewal, and infrastructure projects [3]. - Consumption Upgrade: Encouraging consumption through policies like trade-in programs and enhancing the supply of quality goods and services [3]. - Foreign Trade and Investment: Proactive measures to adapt to external changes and support enterprises in exploring international markets [3]. Project Management and Execution - A strong focus on project management, with an emphasis on accelerating project initiation and construction, ensuring timely funding, and enhancing project maturity [4]. - The need for a clear project recruitment strategy and resource allocation to support major projects [4]. Leadership and Accountability - City leaders are tasked with monitoring their respective areas, ensuring the implementation of policies, and addressing challenges faced by enterprises [5]. - A call for a proactive approach to risk management, particularly in safety, transportation, and market supply, to ensure economic stability [5]. Economic Monitoring and Policy Adjustment - Establishing a robust economic monitoring system to identify issues and adjust policies accordingly, with tailored strategies for key industries and enterprises [6]. - The importance of enhancing the business environment and reducing transaction costs to improve enterprise satisfaction [6].

Economic Indicators - The GDP weekly high-frequency prosperity index as of January 10 is 5.9%, a significant increase from the revised value of 5.0% the previous week, indicating a positive economic outlook[1][7]. - The service sector is the main driver of this increase, attributed to enhanced contributions from the financial industry and active travel performance[1][7]. Production and Demand - High-frequency indicators for both the service and industrial sectors have improved compared to the previous week[1][10]. - External demand remains strong, while internal demand, particularly in infrastructure, shows better-than-seasonal performance[1][18]. - The construction sector's physical workload is exhibiting a trend of exceeding seasonal expectations, with a notable increase in the operational rates of asphalt and cement facilities compared to the previous year[1][29]. Real Estate Market - The real estate market shows a significant decline, with new home sales in 30 major cities dropping to 125.2 million square meters, a 49% decrease week-on-week and a 36% decrease year-on-year[1][45]. - Land transaction volumes have also decreased, with a year-on-year decline of 31.03% in land sales across 100 cities[1][45]. Price Trends - Consumer prices are fluctuating, with agricultural product prices showing a mixed trend; the wholesale price index for agricultural products decreased by 0.13% week-on-week[1][52]. - The average wholesale price of pork has increased by 1.45% week-on-week, while vegetable prices have continued to decline, with a 2.8% drop in the average price of 28 monitored vegetables[1][55][59].

Core Viewpoint - The Hong Kong stock market experienced a significant surge, with major indices rising over 1%, driven by a "technology + dividend" strategy, particularly highlighted by the Hong Kong Large Cap 30 ETF (520560) which saw a jump of over 2.1% during trading [1] Group 1: Market Performance - The Hong Kong stock market indices all rose over 1%, with the Hong Kong Large Cap 30 ETF (520560) showing a mid-session increase of over 2.1% and closing up 1.93% [1] - Key stocks such as BYD, Alibaba, and China Life saw gains exceeding 4%, while China Petroleum and Tencent also contributed to the upward trend [1] Group 2: AI and Dividend Strategies - The AI sector in Hong Kong is gaining traction, with companies like MiniMax and Zhiyu Huazhang entering the capital market, leading to a surge in AI applications [2] - Several banks have launched new asset enhancement activities, allowing users to earn rewards, indicating a focus on dividend strategies in the market [2] Group 3: Investment Rationale - Analysts highlight four main reasons for investing in Hong Kong stocks: global interest rate cuts increasing capital availability, significant net inflows from mainland investors, rising valuations for monopolistic and leading global stocks, and structural differentiation within the market [3] - The Hong Kong stock market is expected to attract more overseas capital due to the appreciation of the Renminbi and anticipated declines in the US dollar index [2][3] Group 4: Investment Strategy - GF Securities recommends a "barbell strategy" for investing in Hong Kong stocks, combining stable value assets with growth-oriented assets, emphasizing the Hong Kong Large Cap 30 ETF (520560) as a flexible investment tool [4] - The ETF includes a mix of high-growth technology stocks like Alibaba and Tencent, alongside stable dividend-paying stocks such as China Ping An and China Construction Bank [4][5]

Group 1 - The report indicates that global markets mostly rose during the week of January 5-9, 2026, with the Hang Seng Index declining by 0.4% and the Hang Seng Tech Index down by 0.9% [1] - The healthcare sector led gains with a 10.1% increase, while telecommunications and information technology sectors faced declines of 2.3% and 1.6%, respectively [1] - The report highlights a significant inflow of southbound funds, totaling 32.65 billion HKD, although its proportion of total trading volume decreased from 51% to 45% [1][2] Group 2 - Investors show strong consensus on which Hong Kong stocks to buy, but there is a lack of consensus regarding potential short-term risks [3] - The report notes that expectations for a delay in the Federal Reserve's interest rate cuts could impact the rebound of Hong Kong stocks, with predictions suggesting only 1-2 rate cuts in 2026 [3] - Key risk factors include the potential ruling on the IEEPA Act and upcoming earnings reports from US tech companies, which could influence market sentiment [3][4] Group 3 - The report recommends maintaining a barbell strategy for overall portfolio allocation, suggesting a focus on value dividends as a base and aggressive positions in AI technology, non-ferrous metals, and innovative pharmaceuticals [4] - Upcoming events to watch include the JPM Healthcare Conference and key economic data releases from China and the US, which could impact market dynamics [5]

Core Insights - The report indicates a downward trend in major indices for December compared to November, with the Hang Seng Technology Index decreasing by 1.48%, the Hang Seng Index by 0.88%, the Hang Seng China Enterprises Index by 2.37%, and the Hang Seng Composite Index by 1.26% [5][11] - The report highlights that the Hang Seng Materials sector saw the highest increase at 11.52%, while the Hang Seng Healthcare sector experienced the largest decline at -9.68% [5][13] Index Performance - In December, the Hang Seng Index had a PE (TTM) of 11.55 times, placing it in the 55.53% percentile since 2002; the PB was 1.25 times, in the 43.04% percentile; and the dividend yield was 3.85%, in the 78.28% percentile [6][16] - The Hang Seng China Enterprises Index had a PE (TTM) of 10.31 times, in the 64.28% percentile; the PB was 1.13 times, in the 47.88% percentile; and the dividend yield was 3.92%, in the 61.28% percentile [6][16] Fund Flow in Hong Kong Stock Connect - In December, the net inflow of funds through the Hong Kong Stock Connect was 20.828 billion RMB, a decrease of 90.226 billion RMB from November, with a cumulative net inflow of 452.957 billion RMB since inception [7][22] - The top three stocks with net inflows were Xiaomi Group-W, Meituan-W, and Agricultural Bank, while the top three with net outflows were China Mobile, Tencent Holdings, and Alibaba-W [23][24] A/H Share Premium Index - The Hang Seng A/H Share Premium Index at the end of December was 123.46, up from 120.90 at the end of November, placing it in the 42.72% percentile since 2006 [8][24] Market Assessment - The report notes that the Federal Reserve announced a 25 basis point rate cut on December 11, lowering the target range for the federal funds rate to 3.50%-3.75%, while signaling a potential pause in future rate cuts [9][28] - China's manufacturing PMI, non-manufacturing business activity index, and composite PMI output index were reported at 50.1%, 50.2%, and 50.7%, respectively, indicating an overall recovery in economic activity [9][28] - The report suggests focusing on cyclical sectors and cultural tourism consumption sectors in the Hong Kong market [9][28]

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]

Employment Data - December non-farm employment increased by 50,000, below the expected 65,000, indicating a continued slowdown in job growth[3] - Private sector jobs added 37,000 in December, with an average of 43,000 jobs added in November and December, down from 57,000 in Q3[3] - Traditional service industries contributed the most to job growth, with leisure and hospitality adding 47,000 and education and healthcare adding 41,000 jobs respectively[11] Unemployment Trends - The unemployment rate unexpectedly fell by 0.1 percentage points to 4.4%, with the previous value revised down to 4.5%[4] - Labor force participation rate decreased to 62.4%, indicating a potential tightening in the labor market[4] - The U6 unemployment rate also dropped by 0.3 percentage points to 8.4%, but remains at a high level since 2022, suggesting challenges for marginal workers[15] Wage Growth - Average hourly earnings increased by 0.3% month-on-month in December, matching expectations, while year-on-year growth rose to 3.8%, above the expected 3.6%[20] - Wage growth has shown resilience, maintaining a range of 3.6%-3.9% since the second half of 2026[20] - Retail and financial sectors saw the highest year-on-year wage growth at 4.8% and 4.7% respectively, while transportation and healthcare lagged behind[26] Market Expectations - Following the December non-farm data, market expectations for a Fed rate cut in January dropped to 5%, with a 73.4% chance of at least one cut by June[5] - The stock market indices continued to rise, and the dollar index increased, while gold prices surpassed $4,500 per ounce, indicating a "shoe dropping" market reaction[5] - The labor market's oversupply situation is becoming more evident, with job openings falling to 7.146 million, the lowest since 2021, and the labor supply-demand gap widening to -635,000[17]

Group 1 - The core viewpoint of the article highlights a continued slowdown in non-farm employment growth, with December's addition dropping to 50,000, below the expected 65,000, and a downward revision of 76,000 for October and November combined [2] - The private sector added 37,000 jobs in December, with an average of 43,000 jobs added in November and December, indicating a persistent trend of slowing job growth [2] - The leisure and hospitality sectors contributed significantly to job growth, adding 47,000 and 41,000 jobs respectively, while manufacturing continued to show negative job growth, indicating weak demand in the sector [5] Group 2 - The unemployment rate unexpectedly fell by 0.1 percentage points to 4.4%, with the labor force participation rate decreasing to 62.4%, suggesting a complex labor market dynamic [6] - The number of job vacancies in November dropped to 7.146 million, the lowest since 2021, indicating a growing mismatch between labor supply and demand [8] - Average hourly earnings in December increased by 0.3% month-on-month, with a year-on-year growth of 3.8%, reflecting resilience in wage growth despite broader economic challenges [9][12] Group 3 - The market's expectation for a Federal Reserve interest rate cut in January decreased significantly from 14% to 5%, indicating a shift in market sentiment following the release of the non-farm data [17] - The overall labor market conditions suggest an increasing supply-demand imbalance, which may continue to exert pressure on the employment market moving forward [17]

Group 1 - The Shanghai Municipal Political Consultative Conference's Economic and Financial Committee conducted a special research on "Analysis of Shanghai's Economic Operation in 2025 and Suggestions for Economic Development in 2026" [2] - In 2025, the committee organized over 170 meetings and activities, producing multiple high-quality research reports and special reports, demonstrating high participation from committee members [2] - The committee's research covered various topics, including the blueprint for the 14th Five-Year Plan, the impact of artificial intelligence on the financial industry, and the optimization of the business environment [2][3] Group 2 - The committee initiated two key research topics focusing on optimizing the modern industrial system and enhancing the competitiveness of the international financial center, resulting in two comprehensive reports with forward-looking suggestions [3] - The committee's efforts included in-depth visits to over 30 enterprises in high-end manufacturing, software information, finance, and technology innovation sectors, providing important references for the municipal government [3] Group 3 - The committee emphasized the importance of financial industry transformation, conducting inspections on the application and impact of artificial intelligence in Shanghai's financial sector [4] - A specialized consultation meeting on "Cultivating New Productive Forces" focused on high-end industrial clusters such as commercial aircraft, commercial aerospace, and low-altitude economy, leading to actionable recommendations [5] Group 4 - The committee aimed to enhance governance effectiveness by creating more diverse and open platforms for participation [6] - The "Finance Discussion Hall" brand activity facilitated direct communication between government departments and representatives from various enterprises, addressing key pain points and expectations [7] Group 5 - Cross-sector collaboration was highlighted, with discussions on topics such as the "14th Five-Year Plan," tariff challenges, and the gathering of international financial institutions, showcasing the committee's role in fostering cooperation [7]