China Merchants Securities suggests focusing on incremental information from the newly issued 15th Five-Year Plan outline, highlighting four key areas for investor attention.
Domestic Policy Focus: Key incremental details in the 15th Five-Year Plan outline. Point 1: The document is slightly shorter, but references to technology have increased significantly. Overall, the 15th Five-Year Plan outline has a slightly reduced length and number of chapters compared to the 14th Five-Year Plan. In terms of word frequency, mentions of technology, investment, and consumption have risen. Notably, the term "technology" saw the largest increase, mentioned approximately 31 more times. Point 2: Two major changes in primary objectives. The core goals of the 15th Five-Year Plan largely align with the 14th Plan, with minor differences in green ecology and public welfare. For green ecology, the target "reduction in energy consumption per unit of GDP" has been adjusted to "share of non-fossil fuels in total energy consumption." Furthermore, cumulative carbon dioxide emissions per unit of GDP are required to decrease by 17% during the 15th Plan period, a slight reduction from the 18% target in the 14th Plan. Regarding public welfare, the order of the surveyed urban unemployment rate and the growth in per capita disposable income has been swapped, with the unemployment rate now listed first among welfare indicators. Additionally, a new anticipatory indicator for the number of registered nurses per thousand people has been added. Point 3: Changes in major projects. The number and proportion of major engineering projects related to the development of new quality productive forces have increased substantially. In terms of specific sectors, there is a new focus on cultivating and developing new industries and tracks, mentioning ten specific areas including integrated circuits, embodied intelligence, and bio-manufacturing. Furthermore, for frontier technology research, two new areas—controlled nuclear fusion and deep space exploration—have been added. Clinical medicine and health has been changed to major disease prevention and innovative drug research and development. Regarding infrastructure, new infrastructure has been added, encompassing a national integrated computing power network and satellite internet. In green and low-carbon development, items like clean coal substitution, zero-carbon industrial parks, zero-carbon transport corridors, and energy-saving and carbon reduction in key industries are now listed separately. Point 4: Other significant content changes. In the industrial sector, traditional industries now include promoting the resolution of structural contradictions in key industries, specifically highlighting steel, petrochemicals, and shipbuilding. The phrasing for future industries is largely consistent with the proposal, but a new management plan for innovative development of new industries has been added, emphasizing optimized management of the low-altitude economy and promoting legislation for biopharmaceuticals, intelligent driving, and the low-altitude economy. Structurally, the Digital China initiative is now a standalone section, with a focus on computing power arrangements. On consumption, key points include "promoting the healthy development of the property and stock markets" and "steadily raising the minimum wage standard."
Market trends following the issuance of outlines from the 11th to the 14th Five-Year Plans: The probability of market gains is relatively high after the outline is issued, with small-cap styles tending to outperform. A review of market performance following the issuance of the previous four outlines shows that from one week after issuance until the end of that month, markets have a high probability of rising. In terms of style performance, average returns for indices like the CSI 1000 tended to be higher than those for the CSI 300 after the outline's release.
Which sectors have historically outperformed? Looking at sector performance, within one week after the Five-Year Plan outline issuance, sectors like building materials and social services showed a high probability of gains; social services and defense/military industries had relatively higher average returns. From the outline's issuance until the end of the month, coal and building materials had a high probability of increases; real estate, defense/military industries, and social services sectors exhibited higher average returns.
How have sectors emphasized in the outlines from the 11th to the 14th Plans performed? Overall, a review shows that sectors heavily emphasized in the outlines often achieved significant excess returns. Examples include technology and industrial transformation highlighted in the 14th Plan, and supply-side reforms emphasized in the 13th Plan.
Which sectors are recommended for focus going forward? First, focus on the new emphasis on deep space exploration. Second, pay attention to computing power. Third, monitor sectors addressing structural industrial contradictions (steel/petrochemicals/shipbuilding). Fourth, prioritize areas related to new infrastructure (computing power/low-altitude/satellite, etc.).
Risk warnings include incomplete policy understanding, economic data and policies falling short of expectations, and tightening of overseas policies.
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