中国每周动态：离岸人民币涨 1%、A 股持平；英首相访华；12 月工业利润增长但营收下滑

Summary of Key Points from the Conference Call Industry Overview - The report discusses the performance of the Chinese stock market, specifically the MXCN and CSI300 indices, which saw a gain of 1% and remained flat (+0.1%) respectively this week [1][1]. - Industrial profits in China increased by 4.9% year-over-year (yoy) in December, while revenue fell by 5.7% yoy [1][1]. Core Insights - Economic Meetings: President Xi met with UK Prime Minister Keir Starmer to discuss a long-term strategic partnership [1][1]. - Monetary Policy: The Federal Open Market Committee (FOMC) maintained the federal funds rate target range at 3.5-3.75% during its January meeting [1][1]. - Market Sentiment: The People's Bank of China (PBoC) Q4 surveys indicated lower loan demand but a slight increase in consumer willingness and improved employment sentiment [1][1]. - Investment Flows: Southbound Connect recorded US$0.3 billion in inflows this week, with a year-to-date total of US$9 billion [3][3]. Earnings and Valuations - Forward P/E Ratios: The MXCN and CSI300 have 12-month forward price-to-earnings (P/E) ratios of 12.8x and 14.7x respectively [8][8]. - Earnings Growth Projections: The I/B/E/S consensus estimates for 2025/26 EPS growth are 4%/14% for MXCN and 14%/15% for CSI300 [8][8]. - Sector Performance: Energy and Materials sectors were revised upwards, while Health Care and Growth sectors lagged behind [7][7]. Market Expectations - GDP Growth: More than half of investors expect China's annualized real GDP growth to average between 4-5% from 2026 to 2030 [9][9]. - House Prices: Most respondents believe that Chinese house prices will bottom out in 2028 or later [11][11]. - PPI Inflation: The majority expect China's Producer Price Index (PPI) deflation to end in 2027 or later [14][14]. - Currency Forecast: Most respondents anticipate the USDCNY to settle between 6.80-7 by year-end, with the current rate at 6.96 [15][15]. Investment Themes - Preferred Investment Themes: AI is identified as the most favored investment theme for 2026, with 68% of respondents supporting this view [28][28]. - Return Expectations: Nearly half of the respondents expect approximately a 10% return for MSCI China in 2026, with another half expecting over 20% [20][20]. Fund Performance - Mutual Fund Performance: In January, emerging market (EM) and Asia funds gained around 9-10%, while China-focused funds rose only 5% [31][31]. - China Fund Allocations: China's active allocation in mutual funds globally was flat in December, ending at 6.6%, which is in the 18th percentile over the past 10 years [33][33]. Profit Alerts - Profit Alerts: 42% of profit alerts for CY/4Q25 indicate a positive outlook, compared to 34% in CY/4Q24 [44][44]. - Sector-Specific Alerts: Positive profit alerts were concentrated in Materials, Tech Hardware, and Capital Goods sectors [46][46]. Market Rotation - A-H Share Rotation: The A-H rotation model suggests that H shares are likely to modestly outperform A shares in the next three months [51][51]. Policy and Regulation - Policy Stance: Recent analysis indicates that policy towards private-owned enterprises (POEs) has turned less accommodating [53][53]. This summary encapsulates the key insights and data points from the conference call, providing a comprehensive overview of the current state and expectations for the Chinese market and economy.