The three major stock indices collectively declined, with the Shenzhen Component Index falling over 1% and the ChiNext Index retreating from intraday highs to close down nearly 2%. The combined trading volume for the Shanghai and Shenzhen markets reached 3.65 trillion yuan, an increase of 49.6 billion yuan compared to the previous session. From a sector perspective, previously high-flying concepts like commercial aerospace and controlled nuclear fusion saw significant pullbacks, while pharmaceuticals and AI applications bucked the trend with gains. Gold continued its upward trajectory.
Since the beginning of the year, the A-share market has demonstrated overall strength with ample liquidity, achieving record-high trading volumes. We believe that investors' generally optimistic expectations for the first half of 2026 are supporting the market trend for several reasons: (1) frequent catalysts in the technology sector, including high-profile IPOs in AI/semiconductors, AI application innovations, and commercial aerospace test flights; (2) positive feedback between narratives about incremental capital from institutions and retail investors entering the market and the actual market performance; (3) currency appreciation enhancing the overall attractiveness of A-shares; (4) relatively optimistic earnings expectations due to low base effects.
Looking ahead, ample liquidity, the high growth momentum in AI and its spillover effects are likely to continue supporting the market's upward trend this year. Concurrently, the Sino-US trade tensions that emerged last year are showing signs of easing and becoming more predictable, thereby reducing the impact of external risks. Of course, following a rapid market ascent and breakthrough, there may be periodic corrections. Based on this outlook, we suggest investors consider broad-based products like the CSI A500 ETF (159338) that bundle leading companies across various sectors in a single trade. Additionally, considering a barbell strategy combining technology and high-dividend stocks as a satellite strategy could help capture market growth while mitigating volatility.
During today's session, spot gold in London broke through the $4,600 per ounce barrier. Reports indicate that Citi has raised its 0-3 month target price to $5,000 per ounce under its baseline scenario, while State Street suggests there's a greater than 30% probability gold could hit this level this year. We believe short-term geopolitical risks are pushing up gold's risk premium, and the next factor warranting investor attention is a potential shift in the geopolitical paradigm. Meanwhile, the "de-dollarization" narrative has gained additional catalysts, such as the investigation into Fed Chair Powell. Finally, a potential new Fed Chair might cooperate with the administration to implement more aggressive-than-expected interest rate cuts.
Recently, escalating geopolitical risks in multiple regions have boosted the risk premium for gold. Large-scale domestic conflicts in Iran have continued and intensified. According to foreign media, the US administration is discussing potential intervention measures, including embargoes and military strikes, with some officials suggesting President Trump may favor military action as a first step. If the US intervenes militarily, conflicts in the Middle East could escalate further. Previously, Trump announced immediate 25% tariffs on any country engaging in commercial dealings with Iran. Russia-Ukraine peace talks are struggling between "security guarantees" and "territorial concessions," while Trump is applying maximum pressure on Russia by signing large-scale sanctions legislation. In Gaza, Hamas has refused to disarm and has begun constructing new military facilities. The US-proposed peace plan faces implementation hurdles, potentially reigniting conflict between Israel and Hamas.
Some overseas investment institutions have begun trading the "Donroe trade" (a reference to a Trump-era version of the Monroe Doctrine), anticipating that the current US administration's international interventionism will extend beyond Venezuela to potentially include regions like Colombia, Cuba, and Greenland. Consequently, they are preemptively trading financial products linked to these areas. If this materializes, new geopolitical risks could further drive gold prices higher.
The US Department of Justice's initiation of a criminal investigation into Fed Chair Powell has raised market concerns about the Federal Reserve's independence, which is expected to fuel the "de-dollarization" narrative and thereby boost overall demand for alternative assets like gold. Although the DOJ stated the investigation concerns fund usage for the Fed building renovation, Powell's statement last Sunday suggested the real reason is that "the Fed has not set interest rate policy according to the President's preferences." We view the investigation as a warning from Trump to his potential nominee for the next Fed Chair, incentivizing that individual to align more closely with the administration's demands—namely, more aggressive rate cuts to stimulate the economy. If this occurs, the opportunity cost of holding gold could decline more than expected.
Based on the above reasoning, we believe gold's price trajectory will likely continue to trend upward with fluctuations, suggesting investors might consider buying on dips to average down costs. Investors could consider direct exposure to physical gold through the VAT-exempt Gold Fund ETF (518800), or the Gold Stock ETF (517400) which covers companies across the entire gold industry chain.
The pharmaceutical sector led gains today, with the Innovative Drug ETF - Guotai (517110) rising 2.69% and the Biopharma ETF (512290) advancing 1.57%, primarily driven by:
Several overseas innovative drug business development deals and catalysts materializing: 1) Rongchang Biologics & AbbVie: Reached an out-licensing agreement for a PD1*VEGF bispecific antibody, involving a $650 million upfront payment, up to $4.95 billion in milestones, and double-digit sales royalties. 2) 3SBio & Pfizer: SSGJ-707 is set to initiate five global multi-center Phase III clinical trials in 2026. 3) Haisco Pharmaceutical: PDE3/4 inhibitor deal finalized, with a $108 million upfront payment, up to $955 million in milestones, and up to 12% sales royalties.
CXO leader's earnings forecast exceeded expectations: WuXi AppTec released its 2025 earnings pre-announcement, forecasting full-year revenue of RMB 45.456 billion, a 15.84% year-on-year increase; adjusted net profit attributable to shareholders of RMB 14.957 billion, surging 41.33% year-on-year, surpassing market expectations. Revenue from continuing operations grew approximately 21.4% YoY, TIDES business scaled rapidly, and the order backlog reached RMB 59.88 billion, up 41.2% YoY.
Continuous global catalysts for AI in healthcare: OpenAI announced the integration of a health dialogue module, ChatGPT Health, into ChatGPT. Through a partnership with b.well, ChatGPT Health gained health data connectivity infrastructure, enabling users to share medical records. It also connects with apps like Apple Health, MyFitnessPal, and Weight Watchers to provide real-time health services. Additionally, overseas company Tempus AI reported better-than-expected earnings, with diagnostic revenue hitting $955 million, a 111% YoY increase, underscoring ongoing global catalysts for AI in medical technology.
The underlying investment thesis for the pharmaceutical sector remains intact: strengthening global competitiveness, continued successful overseas expansion, and commercialization profit realization. Recent catalysts like small nucleic acids have already boosted sector sentiment. With the upcoming JPMorgan Healthcare Conference next week, investors can watch for earnings pre-announcements from innovative drug companies in mid-to-late January, potentially revealing catalysts for both innovative drug and CXO segments. By late Q1, anticipation may build for the AACR and ASCO conferences. Furthermore, the performance of commercial-stage companies during the earnings season is promising, possibly featuring positive earnings pre-announcements. Interested investors could monitor the STAR Board Innovative Drug ETF (589720), Innovative Drug ETF - Guotai (517110), and Biopharma ETF (512290).
The power grid sector performed relatively well this afternoon, primarily catalyzed by the upcoming "Two Sessions" of the State Grid this week. Additionally, Trump's requirement for data centers to build their own power supply systems, coupled with the ongoing power shortage in North America, continues to unfold.
Domestically, the approval pace for ultra-high voltage (UHV) projects has accelerated significantly since the end of June 2025. As of December 10, 2025, five UHV projects ("two DC, three AC": Shandong Yanwei, Southeast Tibet-Greater Bay Area, West Inner Mongolia-Beijing-Tianjin-Hebei, Panxi, Zhejiang Loop) have been approved, with recent approvals for five DC back-to-back projects including Xiang-Qian. The construction of large-scale renewable energy bases creates demand for new energy integration. Combined with China's vast territory necessitating long-distance transmission, this is expected to further drive UHV grid construction. During the "15th Five-Year Plan" period, UHV DC projects are projected to maintain an annual approval rate of 3-4 lines, while UHV AC projects are expected to see about 2 large projects approved annually.
Internationally, the ongoing global energy transition drives demand for renewable grid integration, urgently requiring grid construction to ensure new energy absorption. Underdeveloped regions, with relatively落后的 infrastructure, hold significant potential. The two major Chinese grid companies are steadily exploring international markets, participating in grid construction in countries along the "Belt and Road" initiative, potentially driving exports of power equipment. The explosive growth of AI Data Centers (AIDC) in North America creates new electricity demand, which clashes with the slow growth of US power generation capacity and its aging grid, resulting in a power gap. China's complete grid industry chain, leading delivery efficiency, and rich overseas experience position it as a potential major supplier to fill this gap.
Interested investors could consider the Grid ETF (561380), which provides exposure to listed companies involved in power generation, transmission, distribution, consumption, and related power equipment, offering a one-stop solution for sector investment opportunities.
Risk Warning: Investors should fully understand the differences between regular fund investment plans and savings methods like lump-sum deposits. Regular investment is a simple strategy promoting long-term investing and cost averaging, but it does not eliminate the inherent risks of fund investing, guarantee profits, or serve as an equivalent substitute for savings. Equity ETFs/LOFs/Structured Funds are investment fund products characterized by higher expected risk and return, with risk/return profiles exceeding those of hybrid funds, bond funds, and money market funds. Funds investing in STAR Market and ChiNext stocks face specific risks related to investment targets, market rules, and trading mechanisms; investors should note this. Short-term sector/fund performance data is presented solely as supplementary material for analysis and is for reference only, not a guarantee of future fund performance. Mentioned stock performance is for reference, not a stock recommendation or fund performance prediction/guarantee. The above views are for reference only and do not constitute investment advice or promises. When purchasing fund products, please comply with investor suitability regulations, complete a risk assessment beforehand, and purchase products matching your risk tolerance. Funds carry risks; invest cautiously.
Featured Author: Guotai Fund
MACD golden cross signals formed, these stocks are performing well!
Massive information, precise interpretation, all in the Sina Finance App
Editor: Yang Hongbu
Comments