Group 1 - The report anticipates that A-shares will continue their upward trend in January, supported by improved fundamentals due to accelerated local government special bond issuance and a recovery in government investment [2][4][12] - The earnings forecast for listed companies is expected to show a significant year-on-year increase due to a low base from the previous year, with January being a key period for earnings announcements [4][14][22] - The report highlights a focus on sectors such as commercial aerospace, AI applications, and semiconductor equipment, as well as cyclical resource sectors like industrial metals, which are expected to be the main battlegrounds in January [12][16][22] Group 2 - The liquidity environment is projected to remain stable, with net inflows of incremental funds expected, particularly from foreign and insurance capital [3][15][21] - The report emphasizes the importance of monitoring the performance of sectors with high earnings growth or improvement, particularly in TMT (Technology, Media, Telecommunications) and cyclical resource sectors [5][17][54] - The report suggests that the market is likely to experience structural inflows of funds, with a focus on large-cap growth stocks and indices such as CSI 300 and STAR Market 50 [16][18][21] Group 3 - The report indicates that January is a critical month for earnings disclosures, with potential volatility in stocks that may not meet expectations, particularly in high-growth sectors [48][51] - The analysis of historical data suggests that sectors with stable earnings, such as home appliances, automobiles, and non-bank financials, have a higher probability of achieving excess returns during this period [51][54] - The report notes that the upcoming year is significant due to the initiation of the 14th Five-Year Plan, which historically correlates with increased infrastructure investment and economic stabilization [23][26][29] Group 4 - The report discusses the global commodity market, indicating a potential upward trend in prices driven by demand recovery and policy expectations, particularly in industrial metals [30][35][36] - The analysis highlights the impact of geopolitical factors and supply chain security on commodity prices, emphasizing the importance of resource nationalism and strategic resource management [42][43][46] - The report suggests that the demand for industrial metals will be supported by new technological needs, particularly in AI and renewable energy sectors, which are expected to drive significant growth [38][40][47]

Market Review - The South Korean Composite Index, Hong Kong's Hang Seng Tech Index, and Taiwan Weighted Index led global gains, while US stock indices declined during the week of December 29, 2025, to January 2, 2026. In the A-share market, cyclical and growth sectors performed well, with oil and petrochemicals, military industry, and media leading gains, while utilities lagged behind. On January 2, 2026, the Hong Kong stock market opened strong, with the Hang Seng Tech Index surging 4%, particularly in semiconductor, AI computing, and internet giants, indicating a recovery in market risk appetite. In commodities, base metals and crude oil rose, while precious metals fell, with COMEX silver and gold down 6.39% and 4.63%, respectively. The offshore RMB strengthened against the US dollar, surpassing 6.97 on Friday [1][2][3]. Market Outlook - The market is expected to maintain a bullish trend into 2026, driven by several positive factors. The macro policy cycle is favorable, with multiple departments rolling out supportive industrial policies and investment plans as 2026 marks the start of the 14th Five-Year Plan. Coordinated fiscal and monetary policies are creating a friendly liquidity environment. Institutional funds, particularly in stock ETFs, have shown significant inflows, indicating a strong willingness to invest as foreign capital returns due to currency appreciation. The narrowing decline in PPI suggests a mild recovery in corporate profits, which will support market sentiment [2][4][5]. Key Focus Areas 1. **Overseas Developments**: The selection of a new Federal Reserve Chair is a key focus, with the December meeting minutes indicating a majority support for further rate cuts, though there are significant policy path divergences. The probability of a rate cut in January is low at 17%, with potential candidates like Hassett and Waller advocating for further easing [2][3]. 2. **PMI Data**: Both manufacturing and non-manufacturing PMIs returned to expansion territory in December 2025, with manufacturing PMI at 50.1% and non-manufacturing PMI at 50.2%. This improvement in production and new orders supports the spring market rally [3][4]. 3. **Policy Measures**: The government has implemented a series of targeted policies to boost market confidence, including a 295 billion yuan investment plan and early release of subsidies and local debt limits. The real estate sector is also seeing policy adjustments to lower transaction costs, which may stabilize market expectations [4][5]. 4. **Institutional Investment Trends**: There has been a notable net inflow of institutional funds into stock ETFs, particularly those related to the A500 index, indicating a proactive approach to the upcoming spring market rally. The favorable policy outlook and stable currency are expected to attract further foreign investment [5]. Industry Focus - The focus for industry investment should be on emerging growth sectors supported by policy, such as AI computing, robotics, and energy storage, as well as sectors benefiting from price increases and "anti-involution" trends, including chemicals and non-ferrous metals [5].

Investment Rating - The report recommends a positive investment outlook for the technology sector, specifically highlighting key stocks for January 2026 [6]. Core Insights - The report identifies several key companies within the technology sector, including Eastcompeace, Jincheng Electronics, Xinyi Technology, Tax Friend, Haiguang Information, Giant Network, and Perfect World, as potential investment opportunities [6][8][9][10][11][12][13][14]. Summary by Category Electronics - **Eastcompeace**: The company is entering a growth phase driven by AI technology breakthroughs, leading to increased capital expenditure from cloud vendors and a surge in demand for data servers. The acquisition of Solstice Optoelectronics enhances its position in optical communication [8]. - **Jincheng Electronics**: The company reported a revenue of 889 million yuan in Q3 2025, a year-on-year increase of 25.4%. The semiconductor business is expected to grow significantly, with an order backlog of approximately 1.791 billion yuan [9]. Communication - **Xinyi Technology**: As a leading manufacturer of high-speed optical modules, the company has made significant inroads with major clients like Amazon and is expected to see substantial profit growth from 2025 to 2027, with projected net profits of 94.97 million yuan, 166.16 million yuan, and 217.76 million yuan respectively [10]. - **Huafeng Technology**: The company is positioned to benefit from the high demand for AI applications and is expected to see net profits grow from 3.53 million yuan in 2025 to 8.73 million yuan by 2027 [10]. Computer - **Tax Friend**: The company is a leader in the financial IT sector, leveraging AI and big data to provide comprehensive solutions for businesses. It aims to enhance its product offerings and customer engagement through innovative AI-driven solutions [11]. - **Haiguang Information**: The company is a key player in the domestic high-end CPU market, expected to benefit from the growing demand for AI computing power. It aims to establish a comprehensive AI computing platform [12]. Media - **Giant Network**: The company is experiencing stable commercialization with new game releases and updates expected to drive user engagement and revenue growth [13]. - **Perfect World**: The company is preparing for the launch of its new game "Yihuan," which has shown strong pre-launch interest, and is also focusing on expanding its esports business [14].

Core Viewpoints - The A-share market is expected to see a spring rally, with thematic growth breaking through despite mixed signals from the global economy and domestic indicators [2] - The manufacturing PMI for December rose by 0.9 percentage points to 50.1, indicating a return to expansion [3][4] - The "old-for-new" policy and optimization of real estate policies are expected to further support domestic demand [2] Recent Dynamics - The manufacturing PMI increased to 50.1, with production and new orders indices both above 50, indicating improved business conditions [3][4] - The construction PMI rose significantly by 3.2 percentage points to 52.8, reflecting a strong recovery in the construction sector [4] - The service sector PMI also showed slight improvement, rising to 49.7, indicating a gradual recovery [4] Policy Tracking - The 2026 "old-for-new" policy aims to support the replacement of old vehicles and appliances, with a focus on smart products and mid-to-high-end automobiles [5][6] - The reduction of the personal housing sales value-added tax rate is expected to enhance the activity in the second-hand housing market [6] - The central bank's measures to strengthen the digital RMB management system are set to enhance financial services [6] Market Performance - The A-share market showed mixed performance, with the Shanghai Composite Index slightly up by 0.13%, while the ChiNext Index fell by 1.25% [15] - Key sectors such as oil and petrochemicals, defense, and media led the gains, with increases of 3.92%, 3.05%, and 2.13% respectively [13][15] - The average daily trading volume in the A-share market rose to approximately 2.1 trillion yuan, reflecting an 8.3% increase week-on-week [15][17]

- The report discusses the "Three-Dimensional Timing Framework" which includes liquidity, divergence, and prosperity as key factors for market timing[8][12][13] - The "ETF Hot Trend Strategy" is constructed by selecting ETFs with both highest and lowest prices in an upward trend, and further selecting those with the highest turnover rate in the past 5 days relative to the past 20 days to form a risk parity portfolio[29] - The "Three-Strategy Fusion" combines industry rotation strategies based on fundamental rotation, quality low volatility, and distressed reversal to achieve factor and style complementarity, reducing the risk of a single strategy[32][33][34] Model Backtesting Results - The "ETF Hot Trend Strategy" achieved a return of 43.6% year-to-date, with an excess return of 22.4% compared to the CSI 300 Index[29] - The "Three-Strategy Fusion" ETF rotation strategy had a return of 12.18% and a Sharpe ratio of 0.74 as of December 31, 2025, with a year-to-date return of 27.29%[37][38] Factor Construction and Performance - The "Beta Factor" recorded a positive return of 1.47% for the week, indicating a preference for high-beta stocks[50] - The "Growth Factor" recorded a positive return of 0.26% for the week, reflecting market attention to high-growth stocks[50] - The "Liquidity Factor" recorded a positive return of 0.16% for the week, indicating market preference for highly liquid stocks[50] Alpha Factor Performance - The "3-Month Average Trading Volume" factor showed the best performance with an excess return of 0.68% for the week[54][56] - The "3-Month Trading Volume Standard Deviation" factor also performed well with an excess return of 0.65% for the week[54][56] - In large-cap indices, the "Single Quarter ROA YoY Change" factor had an excess return of 28.46% in the CSI 300 Index[57][58] - In small-cap indices, the "Consensus Earnings Change (FY1)" factor had an excess return of 21.95% in the CSI 800 Index[57][58] Multi-Style Enhanced Strategy - The "Dividend Enhancement Strategy" performed well with an excess return of 0.68% for the week and an annualized excess return of 14.44% year-to-date[62][63]

Group 1 - The short-term performance of A-shares after the New Year is mainly influenced by policies, external events, liquidity, and overseas market trends [1][6] - Since 2010, in 16 years, the Shanghai Composite Index has risen in 11 instances during the 10 trading days before the holiday and has shown similar patterns after the holiday [1][6] - Positive policies and external events are core influencing factors for post-holiday A-share performance, with examples including the resolution of the "fiscal cliff" in the US in January 2013 and the easing of US-China trade tensions in early 2019 [1][6] Group 2 - Current observations suggest that the A-share spring market is ongoing, with potential for a strong but volatile performance post-New Year [1][6] - There is a likelihood of further positive policy implementation after the holiday, including the rollout of guidelines for equipment updates and trade-in policies, as well as local government meetings to stimulate consumption [1][6] Group 3 - External risks post-holiday are expected to be limited, with a high probability of a Federal Reserve rate cut in January and stable US-China relations, although tensions with Japan may persist [2][7] - Liquidity is anticipated to further loosen, with potential for accelerated capital inflow into the stock market [2][7] Group 4 - The economic recovery remains weak, with industrial profits continuing to decline, but there is potential for recovery in certain sectors, particularly in technology and cyclical industries [2][7] - Historical trends indicate that industries driven by upward policies and trends before the holiday are likely to maintain their strength afterward [3][8] Group 5 - Recommendations for post-holiday investment include focusing on technology, certain cyclical sectors, and consumer industries, with specific mention of machinery, military, new energy, media, computing, electronics, telecommunications, and pharmaceuticals [4][9] - Current PEG ratios for growth sectors like power equipment and media are relatively low, indicating potential for investment [4][9]

Core Viewpoint - The market experienced narrow fluctuations before the New Year, with most broad indices slightly declining. Looking ahead, the rise of Hong Kong stocks and the A50 index during the New Year period suggests a high probability of a "good start" for A-shares after the holiday. However, the sustainability of the three driving factors behind the recent A-share rally (A500 ETF volume and price increase, strong performance of optical modules, and booming commercial aerospace) remains uncertain post-holiday, necessitating a dual-preparation strategy in the short term. From a mid-term perspective, the market is expected to rise further before March [1][4][10]. Market Overview - The major indices showed slight declines before the New Year, with a narrow range of fluctuations observed [7]. - Sector performance indicated strength in petrochemicals and commercial aerospace, while robotics and soft technology sectors also saw gains [7]. - Market sentiment improved with a rise in trading volume in Shanghai and Shenzhen, although stock index futures contracts were generally at a discount [7]. - Fund flows showed an increase in margin trading balances, with the securities ETF experiencing the highest net inflow [7]. Market Attribution - The Ministry of Finance announced a continuation of a more proactive fiscal policy for 2026 [9]. - The official release of the 2026 national subsidy plan was noted [9]. - A reduction in the value-added tax rate from 5% to 3% for individuals selling homes purchased for less than two years was implemented [9]. - The China Securities Regulatory Commission issued new regulations on the management of sales expenses for publicly raised securities investment funds [9]. Investment Strategy - Based on the outlook for the Year of the Horse, the recommendation is to maintain current holdings and avoid chasing prices, especially for those that have seen significant gains this year. If a situation similar to the "golden pit" of early 2025 arises, it is advised to increase allocations at lower prices [5][11]. - Sector focus should be on high-tech sectors that have recently undergone sufficient adjustments, such as the Hang Seng Technology and Sci-Tech 50 indices [5][11]. - Industry attention should be directed towards the brokerage sector, which has shown significant lag and market share expansion, as well as robotics-related machinery and automotive sectors, AI application-related media and computing sectors, and sectors benefiting from the Spring Festival retail surge, including electronics and chemicals [5][11]. - Individual stock selection should prioritize low-priced, lagging stocks within the aforementioned sectors and industries [5][11].

- Short-term volume models for some broad-based indices turned bullish[1][3][11] - Feature-based institutional model turned bullish[1][3][11] - Feature-based volume model remained neutral[1][3][11] - Intelligent algorithm model for CSI 300 remained neutral, while for CSI 500 turned bullish[1][3][11] - Mid-term limit-up and limit-down model turned bullish[1][3][12] - Up-down return difference model turned bullish for all broad-based indices[1][3][12] - Calendar effect model remained neutral[1][3][12] - Long-term momentum model turned bullish for some broad-based indices[1][3][13] - Comprehensive A-share V3 model turned bullish[1][3][13] - Comprehensive A-share Guozheng 2000 model turned bullish[1][3][13] - Mid-term turnover amplitude model for Hong Kong stocks turned bullish[1][3][14] - Hang Seng Index up-down return difference model remained neutral[1][3][14]

Macro Economic Overview - The report indicates a downward trend in the Shanghai Composite Index, which fell by 0.59% this week, while the CSI 300 index futures decreased by 0.06% [1][11] - The report highlights a mixed performance in commodity futures, with coking coal futures down by 0.76% and iron ore futures up by 2.00% [1][11] - The yield on ten-year government bonds increased by 1 basis point to 1.85%, while active ten-year government bond futures dropped by 0.36% [1][11] Asset Allocation Recommendations - The recommended order for asset allocation is equities > commodities > bonds > currency, reflecting a positive outlook on A-shares and stable bond yields [2][4] - The report suggests that the U.S. dollar's safe-haven status is weakening, prompting international capital to seek alternatives, with RMB assets being a top choice due to their stability and growth potential [2][4] - The report anticipates that commodity prices will be influenced by supply pressures in oil and demand dynamics in cyclical goods, while agricultural products will be affected by supply factors [2][4] Key Economic Indicators - The manufacturing PMI for December was reported at 50.1, indicating a slight expansion, while the non-manufacturing PMI was at 50.2, returning to the expansion zone [18] - The report notes that the upcoming National People's Congress will convene on March 4, 2026, which may influence economic policies [18][19] Market Performance Insights - The report details a significant decline in the real estate market, with a notable drop in transaction volumes for new homes in major cities, indicating potential market stabilization due to recent policy changes [36][41] - The automotive sector is experiencing a downturn, with wholesale and retail sales of passenger vehicles showing negative growth for four consecutive weeks [36][41] Bond Market Analysis - The yield on ten-year government bonds has risen to 1.85%, with a noted increase in the yield of ten-year policy bank bonds to 2.00% [46] - The report highlights a significant rise in yields for low-rated credit bonds, indicating a shift in market sentiment [46]

Core Insights - The article emphasizes the importance of brand elevation strategies to combat market pressures such as price competition and declining sales, suggesting that companies should focus on enhancing quality, service, and emotional value rather than engaging in price wars [1][3][4]. Price Anxiety Resolution - Price anxiety cannot be resolved through lowering prices, as this leads to a cycle of competitive price reductions. Instead, companies should focus on elevating product quality and service to enhance perceived value [1][2][3]. Sales Pressure Solutions - Sales pressure cannot be alleviated through promotions alone, as consumers may switch to competitors offering better deals. Investing in brand development is crucial for creating a loyal customer base that chooses the brand for its inherent value [3][4][5]. Traffic Issues and External Solutions - Internal traffic issues arise from rising costs and competition for the same target audience. Companies should focus on expanding their reach and educating potential customers about their brand to overcome these challenges [4][5][6]. Importance of Brand Awareness - Effective marketing requires a broad reach to educate potential consumers about the brand's core values. Without significant brand awareness, achieving sales goals becomes increasingly difficult [5][6][7]. Media and Advertising Effectiveness - Reducing marketing expenditures significantly impacts brand activity and sales. Continuous advertising is essential for maintaining brand presence and consumer engagement [6][7][8]. Long-term Brand Strategy - Companies should focus on long-term brand building rather than short-term promotional tactics. A strong brand presence leads to sustainable sales growth and market share [11][12][13]. Consumer Engagement and Touchpoints - Effective media strategies should prioritize high engagement and frequent touchpoints to create lasting consumer memories and influence purchasing behavior [9][10][11]. Brand Value and Market Positioning - Brands must focus on creating a strong market presence and consumer recognition to achieve long-term profitability. This involves identifying core business strengths and eliminating non-essential offerings [14][15][16]. Scenario Creation for Demand - Brands should create scenarios that resonate with consumer needs and emotions to stimulate demand and drive sales growth [15][16][17]. Competitive Strategy - Companies should differentiate themselves from competitors by focusing on unique value propositions rather than merely improving product quality or reducing prices [25][26][27]. Brand Influence on B2B - A strong consumer brand can positively influence B2B relationships, enhancing dealer confidence and driving sales through increased visibility and market presence [27][28][29]. The Matthew Effect in Branding - Strong brands naturally attract more consumer attention and loyalty, leading to a self-reinforcing cycle of growth and market dominance [28].