中国股票策略 - 四大投资主题分析-China Equity Strategy_ A tale of four investment themes

Summary of Key Points from the Equity Research Report Industry Overview - Chinese Stock Market: Since June 2025, both onshore and offshore Chinese stocks have experienced a rise, primarily driven by abundant liquidity from various sources including deposit migration, mutual funds, insurance funds, and the National Team's ETF purchases [3][10][11]. Core Investment Themes 1. China Buys China: - Domestic investors have significantly increased their participation in the stock market, with non-bank deposits rising by RMB4.4 trillion since April 2025 and margin financing exceeding RMB2.1 trillion, reflecting a 15% increase since May 2024 [3][11][20]. - Newly opened A-share accounts are nearing 2.5 million, indicating heightened retail investor activity [11][19]. - Total household savings are approximately 1.88 times the A-share floatable market cap, suggesting potential for further investment inflows into the stock market [12][25]. 2. AI Innovation: - AI infrastructure stocks have outperformed other segments within the AI value chain, with a 22.2% increase since July 2025, driven by a capex upcycle among cloud service providers [4][49]. - The disparity in capex spending strategies between US and Chinese companies highlights a focus on self-reliance in chips and national computation networks in China [46][59]. - Rising AI penetration is evident, with 68% of A-share companies mentioning "AI" in their 2024 annual reports [59]. 3. Going Global: - The extension of the China-US tariff truce indicates ongoing trade negotiations, with overseas revenue for CSI300 companies rising to 11.7% of total revenue, up 1.4 percentage points year-on-year [5][67]. - The healthcare sector has shown strong business development momentum, with total deal values in 1H25 exceeding USD60 billion, surpassing the entire year of 2024 [68][79]. 4. Anti-Involution: - The anti-involution campaign, or supply-side structural reform 2.0, aims to address price competition and overcapacity across various industries, including traditional sectors like steel and emerging sectors like solar and lithium batteries [6][88]. - Industries such as steel (+16.7%), solar (+13.5%), and lithium batteries (+11.9%) have shown strong market performance since the campaign's implementation [6]. Market Projections - Index Targets: The end-2025 targets for major indices have been raised, with SHCOMP expected to reach 4,000, CSI300 at 4,600, and SZCOMP at 13,000, indicating a potential upside of 5-7% [7][10]. Additional Insights - Liquidity Drivers: Key factors contributing to market liquidity include strong buybacks, a recovery in mutual fund issuance (up 137% year-on-year), and increased stock allocations from insurance funds [20][28]. - Sector Performance: Financials, healthcare, and IT sectors have seen significant inflows through the Southbound channel since July 2025 [31][32]. - Underweight Industries: Banks and non-bank financials are notably underweight in active stock-focused mutual funds, suggesting potential for reallocation and growth in these sectors [36][42]. This comprehensive analysis highlights the current trends and future outlook for the Chinese stock market, emphasizing the importance of domestic investment, AI innovation, global expansion, and structural reforms in shaping market dynamics.