Core View: The Trump administration's hegemonic policies are exacerbating international geopolitical tensions, creating a favorable environment for gold. We recommend a tactical overweight position in A/H-shares, U.S. equities, and gold, while advocating an underweight stance on U.S. Treasuries and crude oil.
Summary ▶ Multiple factors support Chinese equity performance; overweight A/H-shares is advised. As the economic work conference approaches and 2026 marks the beginning of the 15th Five-Year Plan, a further expansion of the broad fiscal deficit and more proactive economic policies are anticipated. The Fed's expected December interest rate cut, coupled with a steadily appreciating Renminbi, provides favorable conditions for monetary easing in China early in 2026. Reforms are boosting risk appetite in Chinese markets. Chinese equities offer a comparatively higher risk-reward ratio versus other major asset classes. ▶ Uncertainty surrounding the new Fed Chair appointment is intensifying market speculation on U.S. monetary policy, suggesting an underweight position in U.S. Treasuries. A cooling U.S. labor market, weaker energy prices, and moderated wage growth are helping to reduce inherent inflation stickiness, giving the Fed more room to adjust policy. Despite strong U.S. economic resilience, the Fed's policy guidance is expected to remain cautious. While U.S. Treasury yields are projected to decline moderately, the heightened uncertainty over the Fed leadership is increasing policy博弈, resulting in a lower risk-reward ratio for Treasuries relative to risk assets. ▶ Gold demonstrates strong resilience and safe-haven attributes amid geopolitical upheaval; an overweight position is recommended. Rising global geopolitical uncertainty and persistent central bank gold purchases are supportive of long-term gold prices. Although inflows from speculative trading have temporarily increased gold's volatility, the metal's price remains robust against the backdrop of the Trump administration's hegemonic actions, which are further eroding U.S. international credibility. ▶ Short-term原油博弈 may intensify; an underweight position in crude oil is advised. Investor expectations for oil supply and demand are relatively aligned, and OPEC+ production adjustments have been moderate. Geopolitical events in South America could amplify U.S. influence on global oil prices, while the Trump administration's policy direction also leans towards lower oil prices. Consequently, crude oil prices are expected to remain under pressure and face intense short-term博弈.
Risk Warning: Analytical dimensions have limitations; model design involves subjectivity; discrepancies exist between historical and projected data; market consensus expectations may adjust; quantitative models have inherent limitations.
01 Review of Major Asset Performance and Asset Allocation Views This weekly report reviews significant events or data from the past week (January 12, 2026, to January 18, 2026) that garnered high market attention and impacted major asset classes, providing necessary commentary and timely updates to our tactical active allocation views. These tactical views reflect our expectations for the relative risk-reward ratio of specific assets over the next 1-3 months. 1.1. Review of Major Asset Performance
1.2. Review of Recent Key Events Uncertainty regarding the Federal Reserve Chair candidate has increased again. On January 16, 2026, Donald Trump indicated he might keep Kevin Hassett, Director of the National Economic Council and a leading candidate for Fed Chair, in his current role. Trump stated that if Hassett resigned from the NEC, the administration would lose one of its most influential voices on economic matters. Previously, Hassett was considered a front-runner for the new Fed Chair position. Trump imposed tariffs on 8 European nations and demanded the purchase of Greenland. U.S. President Donald Trump announced on January 17, 2016, that the U.S. would impose a 10% tariff on goods imported from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland starting February 1. Trump stated the tariff rate would increase to 25% from June 1 until an agreement was reached for the "comprehensive and total purchase of Greenland" by the U.S. Recently, European countries including Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland announced troop deployments to Greenland to participate in the "Arctic Endurance" military exercise initiated by Denmark on the island. 1.3. Pricing Analysis of Key Events The Fed Chair candidate remains unconfirmed, with Warsh's monetary policy stance leaning hawkish. Following Trump's hint that Kevin Hassett might remain in his current position, markets broadly increased the perceived probability of Kevin Warsh becoming the new Fed Chair. Overall, Warsh's monetary policy views are considered hawkish: he believes the Fed has strayed from its core mandate of price stability and must undergo reforms to regain credibility. He has critically opposed常态化量化宽松 and advocates controlling inflation by reducing the balance sheet, thereby creating room for lower interest rates. Although the Fed Chair candidate is not yet confirmed, the rising probability of Warsh's appointment reflects a market expectation gradually shifting towards tighter monetary policy. The Trump administration's multi-pronged pressure on other countries regarding the Greenland purchase could intensify international geopolitical tensions. Considering that Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland are all NATO members, they share formal, explicit alliance ties with the U.S. in security and military terms. The Trump administration's actions significantly undermine U.S. international credibility, exemplify hegemony, and may further aggravate international geopolitical tensions. Among equity assets, (1) multiple factors support Chinese equity performance. The year 2026 marks the start of the 15th Five-Year Plan, with expectations for further expansion of the broad fiscal deficit and more proactive economic policies. The Fed's anticipated December rate cut and a steadily appreciating Renminbi provide favorable conditions for monetary easing in China early in 2026. Reforms are boosting risk appetite in Chinese markets. Among bond assets, the ongoing cooling of the U.S. labor market, weaker energy prices, and slower wage growth facilitate a decline in inherent inflation stickiness, broadening the Fed's scope for policy adjustment. Strong U.S. economic resilience suggests the Fed's policy guidance will likely remain cautious. U.S. Treasury yields are expected to decline moderately, but rising uncertainty over the new Fed Chair is intensifying monetary policy博弈, resulting in a lower risk-reward ratio for Treasuries relative to risk assets. Among commodities, (1) rising global geopolitical uncertainty enhances gold's resilience and safe-haven attributes. Increased global geopolitical uncertainty and sustained central bank gold buying support the long-term price floor for gold. Amid volatility in global risk assets and high博弈 surrounding AI industry trends, gold prices remain robust. (2) Short-term原油博弈 may intensify. Investor expectations for oil supply and demand are relatively aligned, and OPEC+ production adjustments have been moderate. Geopolitical events in South America could increase U.S. influence on global oil prices, and the Trump administration's policy direction favors lower prices. Crude oil prices are thus expected to stay under pressure and face intense short-term博弈. 1.4. Tactical Allocation Views on Key Assets Multiple factors support Chinese equity performance; overweight A/H-shares is recommended. The year 2026 marks the beginning of the 15th Five-Year Plan, with expectations for further expansion of the broad fiscal deficit and more proactive economic policies. The Fed's expected December interest rate cut and a steadily appreciating Renminbi provide favorable conditions for monetary easing in China early in 2026. Reforms are boosting risk appetite in Chinese markets. The Fed's monetary policy guidance is expected to be relatively cautious; underweight U.S. Treasuries is advised. A cooling U.S. labor market, weaker energy prices, and moderated wage growth are helping to reduce inherent inflation stickiness, giving the Fed more room to adjust policy. Strong U.S. economic resilience suggests the Fed's policy guidance will remain cautious. While U.S. Treasury yields are projected to decline moderately, their risk-reward ratio relative to risk assets is low. Gold demonstrates strong resilience and safe-haven attributes amid geopolitical upheaval; an overweight position is recommended. Rising global geopolitical uncertainty and persistent central bank gold purchases support the long-term price floor for gold. Although speculative trading inflows have temporarily increased gold's volatility, its price remains robust against the backdrop of the Trump administration's hegemonic actions, which are further eroding U.S. international credibility. Short-term原油博弈 may intensify; an underweight position in crude oil is advised. Investor expectations for oil supply and demand are relatively aligned, and OPEC+ production adjustments have been moderate. Geopolitical events in South America could amplify U.S. influence on global oil prices, while the Trump administration's policy direction also leans towards lower oil prices. Consequently, crude oil prices are expected to remain under pressure and face intense short-term博弈. Based on the research framework outlined in the "Brief Analysis of the Active Macro Asset Allocation Research System" published in April 2025, and incorporating analysis of incremental information, our tactical asset allocation views are updated as follows:
02 Tactical Asset Allocation Portfolio Tracking The details of our constructed tactical asset allocation model portfolio are as follows: 1. Rebalancing Method: We review the portfolio asset allocation and marginal changes in views weekly. If rebalancing trades are executed, the trade date is the next trading day after the review date. In the absence of significant view changes, we typically review the portfolio's performance monthly and adjust asset allocation weights based on actual conditions. However, when our active views experience marginal changes, we make不定期 adjustments to the portfolio's allocation weights based on the significance of the change and its drivers to maintain portfolio flexibility. 2. Comparison Benchmark: The strategic asset allocation calculated based on a macro-factor risk parity model serves as the portfolio benchmark. The major asset class weights are: Equities 45% (A-shares 7.5%, H-shares 7.5%, U.S. equities 15%, European equities 5%, Japanese equities 5%, Indian equities 5%), Bonds 45% (Long-duration Chinese government bonds 10%, Short-duration Chinese government bonds 12.5%, Long-duration U.S. Treasuries 10%, Short-duration U.S. Treasuries 12.5%), Commodities 10% (Gold 5%, Crude oil 2.5%, Nanhua Commodity Index 2.5%). 3. Deviation Rules: The upper and lower deviation limits for major asset classes are set at ±10%. The weights for internal sub-assets are primarily determined by the results of the Black-Litterman tactical asset allocation model, supplemented by subjective analysis. 2.1. Tactical Asset Allocation Portfolio 2.1.1. Portfolio Performance Last week, the tactical asset allocation portfolio achieved a return of 0.58%. As of January 18, 2026, the tactical portfolio has generated a cumulative excess return of 4.24% and a cumulative absolute return of 17.15% relative to the benchmark portfolio.
The latest weights and performance of the constituents covered by the tactical asset allocation portfolio are as follows.
03 Risk Warnings Analytical dimensions have limitations: The research framework is based on analyst views, and the analytical dimensions may not fully capture all market pricing factors. Model design involves subjectivity: The selection of factors and their weights in the macro-factor model combines objective and subjective elements. The objective part derives from quantitative backtesting, while the subjective part stems from experience and judgment, potentially introducing bias. Discrepancies exist between historical and projected data: The historical and projected data used in this report may not precisely represent actual market expectations. Market consensus expectations may adjust: The report's conclusions are based on neutral assumptions regarding market consensus. Should unexpected events occur, leading to adjustments in market expectations and corresponding macro factors, the model's conclusions might change. Quantitative models have inherent limitations: These conclusions are derived solely from quantitative models and do not necessarily align with the views of other research teams within the institute. For perspectives from other research teams on the aforementioned sectors, please refer to relevant published research reports.
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