Prominent analyst Zhang Yidong, after joining Guotai Haitong, has led his team in releasing a fresh market outlook. He advocates holding stocks through the holiday period, seizing opportunities presented by recent market adjustments to build positions, and preparing for the spring rally anticipated in February-March.
Concurrently, Zhang Yidong maintains that the fundamental logic supporting a long-term bull market for gold remains unchanged. He suggests Federal Reserve policy in 2026 will likely lean towards easing rather than tightening. He also views the recent optimism surrounding Japan's market surge as potentially speculative froth. Subsequently, investors should be wary of the potential for Prime Minister Takachi's administration to accelerate constitutional revisions and military expansion in Japan, which could elevate geopolitical risks and, ultimately, reinforce gold's upward trajectory.
Zhang Yidong recently left Industrial Securities and has now officially joined Guotai Haitong. He is slated to serve as a member of the Executive Committee of Haitong International Securities, Head of Equity Research, and Chief Economist. He will oversee the Equity Research and Equity Sales & Trading departments, focusing on integrating cross-border research operations and participating in the thematic trends of "Investing in China" and "Chinese Investment."
Zhang Yidong pointed out that the RSI indicator for COMEX gold futures recently reached an overbought high of 89.46. Following the nomination of a new Fed Chair and the发酵 of hawkish policy expectations, gold prices experienced a significant correction, with speculative sentiment noticeably cooling. The RSI has now stabilized around a neutral level of 55, indicating a reduction in speculative froth.
However, the long-term bullish thesis for gold remains intact. Factors such as heavily indebted major economies and great power rivalry continue to drive turbulence and restructuring within the international monetary system, a process far from conclusion.
Regarding Chinese equities, Zhang Yidong's team recommends holding stocks through the Spring Festival holiday to capture potential "holiday bonuses." They advise using recent market pullbacks as opportunities to position for the spring rally expected in February-March. Historical trends suggest that if the market is weak before the holiday, it often strengthens afterwards as funds回流 and risk appetite recovers.
Meanwhile, the proportion of short-selling turnover in the Hong Kong market overall is approximately 19%, with the Hang Seng Tech Index's short-selling ratio quickly rebounding to 21%, potentially indicating a short-term reversal from oversold conditions.
In terms of specific investment directions, first, replenish exposure to the technology sector. Based on the industrial guidance of the "15th Five-Year Plan," carefully select structures during market volatility. Second, continue holding value assets as a core portfolio component and moderately increase exposure to leaders in cyclical industries showing improving景气度.
The speculative fervor in gold has cooled, with the RSI indicator retreating to neutral levels. Earlier, speculative trading was overheated. From late January, the RSI for COMEX gold futures entered overbought territory above 70, peaking at 89.46 on January 29th. After the new Fed Chair nomination on January 30th, the market interpreted their policy stance as relatively hawkish, causing some assets to give back gains based on easing expectations. Gold, being previously expensive and crowded in positioning, was significantly affected, correcting over 10% in a single day. Subsequently, the RSI retreated and stabilized around the neutral 55 level. A discrepancy in macro expectations provided a chance for market sentiment to cool, reducing speculative froth.
The long-term bull market logic for gold remains unchanged. Historically, long-term trends in gold prices are often driven by major historical events and geopolitical shifts. Gold is highly sensitive to significant changes in the international格局 and geopolitical turmoil. The backdrop of the last major gold bull market in the 1970s was great power rivalry. Currently, we are in a period of unprecedented global transformation; the restructuring of the international order is the core logic truly driving this gold super-cycle. From a long-term trend perspective, the end of this gold cycle will not be determined by Fed monetary policy, but rather by when a new stable equilibrium can be achieved in the turbulent international situation. Factors like US real interest rates and the Dollar Index primarily influence short-term gold fluctuations. The main contradiction or key variable determining gold's long-term price appreciation has now shifted to the reshaping of the global order and格局, particularly the ongoing turbulence and restructuring of the international monetary system fueled by high debt in major economies and great power competition.
Looking ahead to 2026, Fed policy is likely easier to loosen than tighten. Concerns regarding balance sheet reduction expectations under the new Fed Chair are also speculative froth and are beginning to subside. Analysis suggests that in 2026, the Fed's short-term policy focus should be on interest rate cuts, not balance sheet reduction. Implementing significant balance sheet reduction will be challenging for the Fed due to political constraints, as it conflicts with the Trump administration's objective of reducing debt costs. Meaningful reduction may await the next presidential term. Market constraints also exist, given the Fed only recently began expanding its balance sheet again in December to alleviate money market liquidity shortages. Previous analysis indicated that, in a global context, the US might currently be at the forefront of experiencing lower inflation. When measured by the 3-month annualized seasonally adjusted rate (3M SAAR), US core inflation has run below the Fed's 2% target for two consecutive months and is lower than in most developed markets, which could open the door for rate cuts, potentially exceeding expectations in both pace and magnitude.
The analysis further suggests that the new Fed Chair in 2026 might adopt a more dovish stance relative to the incumbent, which would be favorable for gold. Supporting this view, a key official recently stated they do not expect the Fed to act quickly to reduce the balance sheet, noting it could take up to a year for decisions regarding the balance sheet. The official emphasized that adjustments depend on the Fed's own preferences, and if shifting to an "ample reserves" framework, a relatively large balance sheet would actually be necessary. This provides crucial policy guidance, indicating a cautious and wait-and-see approach from monetary authorities regarding balance sheet management, offering a extended buffer period for market liquidity expectations.
The optimism following the Japanese election and the subsequent stock market rebound, fueling憧憬 of Japanese prosperity, might also represent speculative froth. The ruling party's strong majority empowers the Takachi cabinet significantly, enhancing its ability to execute pro-growth policies—including active fiscal measures, promoting corporate investment, strengthening defense, and improving infrastructure—which has boosted market expectations for prosperity. However, the current era is characterized not by peace and development as the main themes, but by great power rivalry, with leading nations challenging the international order and emphasizing strategic competition. Therefore, investors should subsequently be cautious of the potential for the Takachi administration to accelerate constitutional revision and military expansion in Japan. The accompanying long-term potential for rising geopolitical risks could ultimately reinforce gold's long-term upward trend.
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