Three characteristics illustrate the structure of the 2025 global bull market: (1) Market Structure: "20/80 Divergence." In the US, Germany, Japan, and South Korea stock markets, the proportion of declining stocks in 2025 reached 56%, 51%, 29%, and 35% respectively; In contrast, the A-share market exhibited some characteristics of a broad-based rally, with only 18% of stocks declining.
(2) Leading Sectors: Technology and Resources, corresponding to two macro narratives: one is the AI industry cycle and the de-dollarization cycle, with most leading sectors having strong profit support.
(3) Market Cap Concentration: Reaching New Highs. In major global equity markets, market cap concentration (top 10 companies' share) mostly falls between 30%-50%, and has been increasing in recent years; The market cap concentration of Chinese listed companies (including A-shares + H-shares of Chinese companies) is currently only 18%; The concentration of the non-financial portion is even lower, at just 17%.
What are the globally leading assets in 2025 trading on? – The Scarcity of High Growth. (1) After the economic cycle flattened, high-growth assets have become increasingly scarce. In A-shares, companies with profit growth >20% account for 36%, compared to a historical average of around 45%.
(2) High-growth assets overseas are also scarce. The proportion of US-listed companies with profit growth >30% is 32%, lower than the historical average of 35%; meanwhile, the proportion with negative growth is 45%, higher than the historical average of 38%.
(3) Globalization is a source of sustained growth. High growth from globalization was mainly concentrated from the mid-to-late 1980s to 2010, and in non-US countries after 2020. From 1986-2010, the annualized revenue growth for listed companies in the US/Japan/Germany/UK/France was +7.6%/+2.0%/+5.4%/+7.8%/+7.5%, while the annualized overseas revenue growth was +9.2%/+4.0%/+6.4%/+8.7%/+9.1%.
(4) The proportion of overseas revenue for A-shares has continuously increased over the past 20 years, but remains low compared to major developed countries. The overseas revenue share for major equity markets can be divided into three tiers: first, Europe (export-oriented/major出海大国), with a central overseas revenue share around 60%; second, the US and Japan (also with strong domestic demand support), with a central share around 30%; third, China (a major domestic and external demand economy), with a central share around 15%.
Is the fundamental "rope" still effective? – Prosperity Pricing Becomes More Extreme. In 2025, prosperity pricing in A-shares has become more extreme and exclusive. (1) In previous years, overall, the most effective financial indicators were: ROE, net profit/revenue growth, PB, and dividend yield; (2) Various pricing factors showed明显的轮动, but typically, two or more prominent styles emerged each year; (3) However, in 2025, the effectiveness of the prosperity factor (growth rate) is significantly stronger than other financial factors.
Will 2026 move towards extremity or convergence? – Not yet extreme, and after extremity, it could be "bull market convergence." (1) Is the current market pricing a "Goldilocks" scenario? It seems so, yet not entirely. The current US market's涨跌结构 is extreme – a major index rally + over half of stocks declining – resembling the latter half of the "Goldilocks" period in 1998-1999.
(2) What potential "exit" signals might exist? ① Degree of dispersion in sector gains, ② Degree of valuation dispersion, ③ Market cap share, ④ Turnover share, are none particularly effective "exit" signals. Among these, after extreme US stock valuation dispersion in the past, there were only two typical bear market convergences (end of the 1881 rate hike cycle/recession; end of the 2000 rate hike cycle/recession), while the other 12 instances were bull market convergences. In bull market valuation收敛, high-valuation sectors often still perform well and do not underperform the catch-up of low-valuation sectors.
(3) The true "exit" signal for a bubble might come from a renewed rise in inflation and interest rates, thereby suppressing future fundamentals. During a rate-cutting cycle, especially combined with mid-term elections, monetary and fiscal policy have more room for counter-cyclical measures, making a recession scenario less likely.
(4) Clues to the 2026 pricing logic: Can scarce high growth persist (if yes, move towards extremity) -> Is there a broader recovery (if yes, move towards relative equilibrium) -> Under recovery, is US inflation controllable (if yes, move towards equilibrium) -> Is there a significant recovery in Chinese domestic demand (if yes, move towards convergence).
(The two red dashed boxes in the figure above represent the pricing logic chains we believe have a higher probability; other logic chains are primarily for contingency planning.) Report Body Three characteristics illustrate the global bull market structure. This year's global equity market performance shows significant structural characteristics. We analyze it from three angles.
(A) Market Structure: "20/80 Divergence" The上涨结构 of global stock markets shows "20/80 divergence." As of November 2025, the proportion of declining stocks in the US, Germany, Japan, and South Korea stock markets for 2025 reached 56%, 51%, 29%, and 35% respectively; In contrast, the A-share market has some普涨特征, with only 18% of stocks declining. The divergence is even more severe in some countries or regions. For example, in Taiwan, China, the proportion of declining stocks this year reached 69%; in Vietnam and India, the proportions were 53% and 74% respectively.
(B) Leading Sectors: Different Paths, Same Destination The leading sectors are primarily of two types: one is the technology sector, the other is resources and energy. Behind this lie the pricing of two macro narratives: one is the accelerating AI industry cycle and火热investment, the other is the de-dollarization cycle and the repricing of resource products. Furthermore, behind the global bull market, valuation has contributed a significant portion, but most leading sectors have strong profit support. For example, from January-November 2025, the top-performing US tech sector rose 26.7%, with profit growth of 26.4% and a valuation contribution of 0.9%; the top-performing South Korean tech sector rose 143.0%, with profit growth of 90.9% and a valuation contribution of 27.3%.
(C) Market Cap Concentration: Towards New Highs Trend-wise, after 2020, the weight and market cap share of major companies in most countries' equity markets have continued to rise, now reaching new highs or接近历史高位. In contrast, the market cap concentration of A+H shares has been trending lower in recent years, with the previous peak occurring in 2007-2008, when the heavyweight stocks were PetroChina, ICBC, CCB, China Life, and Shenhua, etc. In major global equity markets, market cap concentration (the share of the top 10 locally listed companies by market cap) mostly falls between 30%-50%. Export-oriented countries or regions have higher concentration. For example, the top 10 share in Singapore reaches 60%, in Taiwan, China it reaches 58%, and countries like Italy, France, and Poland also have top 10 shares above 50%. Surprisingly, the share of the top 10 companies in the US is only 34%, ranking relatively low. Although US tech companies have continued to lead gains in recent years, compared globally, the concentration of US listed companies is not high. Additionally, developing countries have relatively lower market cap concentration, such as Vietnam's 44%, Malaysia's 33%, and India's 21%. However, China (including A-shares + H-shares of Chinese companies) has the lowest market cap concentration, currently only 18%; the non-financial portion's concentration is even lower, at just 17%.
What are the globally leading assets trading on? – The Scarcity of High Growth. After the economic cycle flattened, high-growth assets have become increasingly scarce. Looking at A-shares, companies with net profit growth greater than 20% account for 36% of the market; the 10-year historical average is about 42%, and the 20-year average is about 45%. In this context, the "20/80 divergence" in gains and the increase in heavyweight market cap concentration have their internal logic.
The US economic cycle has also flattened. US fundamentals have shown strong resilience since the pandemic, with no clear recession on the downside and no robust recovery on the upside; in other words, the economic cycle has also flattened. Since the second half of 2022, the supporting factors of the US economy have transitioned through: government spending (H2 2022-2023) -> construction investment (H2 2022-2023) -> goods consumption (since early 2023) -> residential investment (H2 2023-H1 2024) -> services consumption/goods consumption, equipment investment (since 2024).
High-growth assets overseas are also scarce. Although the US bull market has lasted for 3 years, companies with high profit growth remain scarce. Currently (as of Nov 2025), the proportion of US-listed companies with net profit growth >30% is 32%, lower than the historical average of 35%; simultaneously, the proportion with negative growth is 45%, higher than the historical average of 38%. Germany's profit structure is also weak. Currently (as of Nov 2025), the proportion of German listed companies with net profit growth >30% is 31.7%, and the proportion with negative growth reaches 47.7%, both weaker than historical averages, especially as the overall profit situation in 2025 did not improve compared to the previous year. Japan's profit structure is relatively better. Currently (as of Nov 2025), the proportion of Japanese listed companies with net profit growth >30% is 35.5%, and the proportion with negative growth reaches 37.6%, both slightly better than historical averages.
Globalization is a source of sustained growth. High growth from globalization was mainly concentrated from the mid-to-late 1980s to 2010, and another period is in non-US countries after 2020. From 1986-2010, the annualized revenue growth for listed companies in the US/Japan/Germany/UK/France was +7.6%/+2.0%/+5.4%/+7.8%/+7.5%, while the annualized overseas revenue growth was +9.2%/+4.0%/+6.4%/+8.7%/+9.1%.
In the major national equity markets, the top 10 non-financial companies by market cap are mostly highly globalized, with overseas revenue shares of 60% or even over 90%, concentrated in sectors like technology, manufacturing, resources, and discretionary; sectors like finance and staples are typically lower. In contrast, for non-financial A-shares, the overseas revenue share of large-cap companies remains relatively low, which is also an important reason for the low market cap concentration in A-shares.
The proportion of overseas revenue for A-shares has continuously increased over the past 20 years, but remains low compared to major developed countries. The overseas revenue share for major national equity markets can be divided into three tiers: First, Europe (export-oriented/major出海大国), with a central overseas revenue share around 60%; Second, the US and Japan (also with strong domestic demand support), with a central share around 30%; Third, China (a major domestic and external demand economy), with a central share around 15%.
Is the fundamental "rope" still effective? – Prosperity Pricing Becomes More Extreme. In 2025, prosperity pricing in A-shares has become more extreme and exclusive. (1) In previous years, overall, the most effective financial indicators were: ROE, net profit/revenue growth, PB, and dividend yield; (2) Various pricing factors showed明显的轮动, but typically, two or more prominent styles emerged each year; (3) However, in 2025, the effectiveness of the prosperity factor (growth rate) is significantly stronger than other financial factors.
In 2025, prosperity pricing in A-shares has become more extreme. The underlying pricing logic lies in the aforementioned "scarcity of high growth" – the scarcer it is, the more extreme the pricing becomes.
This year, prosperity pricing is also prominent in overseas markets. Market focus has concentrated on technology and resources, which are also the directions with high profit growth.
Moving Towards Extremity or Convergence? – "The Spring May Not Have Reached Its Limit" (A) Is the Current Market Pricing a "Goldilocks" Scenario? Is what the market is pricing now a "Goldilocks" scenario? It seems so, yet not entirely. (1) The most typical US "Goldilocks" economy was from 1995-2000, driven by the information technology revolution, presenting a perfect combination of high growth, low inflation, low unemployment, and温和利率, with a broad-based market rally in the first half and acceleration in the latter half. Two other often-mentioned periods are: (2) 2015-2019, post-financial crisis, with温和经济增长, stable inflation, falling unemployment, and the Fed gradually raising rates to a neutral range, seen as a温和版 "Goldilocks," with a普涨 market; (3) 2024-2025 (to date): After the rate-hike cycle ended, with inflation falling, no recession, and strong employment resilience, but judging from market performance, the上涨结构 of this phase is not typical of "Goldilocks" characteristics. The market's涨跌结构 is very extreme – a major index rally (gains over 15%) + over half of the overall market declining – coexisting, more resembling the latter half of the "Goldilocks" period in 1998-1999.
In other countries' stock markets, taking Japan and Germany as examples, the extreme上涨结构 (major index rally + broad-based stock decline) basically also existed only during two periods: 1995-2000, and 2023-2025. So, is this market structure moving towards extremity or convergence? Or, for the sectors forming the main structure, when might signals for "exit" or "switch" appear? (B) What Potential "Exit" Signals Might Exist? First, from the perspective of sector divergence: The degree of dispersion in sector gains is not an effective "exit" signal. Based on US historical experience: (1) The dispersion of sector gains has a fluctuation range, currently around the 80th percentile historically; (2) However, large divergence in sector gains does not mean the market is about to fall; on the contrary, past收敛 of sector gain dispersion was mostly achieved through a普涨 bull market; (3) There were only two typical bear market convergences: one in 1881 (fighting inflation/end of rate hikes/recession) and one in 2000 (dot-com bubble/end of rate hikes/recession).
Second, from the perspective of sector valuation: The degree of valuation dispersion is also not an effective "exit" signal. The divergence and收敛 of US sector valuations also show some规律性特征: (1) Valuation divergence and收敛 have a clearer operating range; (2) The current dispersion of P/E is only at the 34th percentile historically, still some distance from extreme values; (3) After past extreme valuation divergence,收敛 always occurs, but the mode can be either bull market收敛 or bear market收敛; (4) Historically, there were also only two typical bear market convergences: one in 1981 and one in 2000; the other 12 instances were bull market convergences.
Thus, whether sector valuation divergence is extreme or not is not an effective "exit" signal – if not extreme, it can move further towards extremity, like the current situation; after extremity, valuation dispersion can also be smoothed out through bull market收敛. Furthermore, in fact, during "bull market收敛," high-valuation sectors, in most cases, continue to outperform low-valuation sectors, relying on more sustained high growth.
Whereas, in "bear market收敛," high-valuation sectors will significantly underperform low-valuation sectors, because the high profit growth has been interrupted. Therefore, the inability of prosperous sectors' profit trends to continue is the signal that triggers "收敛" or "exit."
Third, from a market trading perspective: Market cap share and turnover share are not effective "exit" signals. Especially during phases with industry cycles, the upper limits of market cap share and turnover share often continuously刷新新高. Currently, the market cap share of the major US tech sector is 39% (hardware 20%, software 19%), almost at an all-time high; The turnover share of the major tech sector is 41% (hardware 21%, software 20%), also at a historically high-medium level, but still some distance from the average level of 1995-2000.
Fourth, from a liquidity perspective: For the market, the true "exit" signal for a bubble might come from a renewed rise in inflation and interest rates, thereby suppressing fundamentals. Historically, US recession cycles usually occur at the end of rate-hike cycles; during rate-cutting cycles, monetary and fiscal policy have more room for counter-cyclical measures, making recession scenarios less likely.
Since 2025, most global central banks have shifted to a dovish stance. However, this shift is not due to economic stimulus needs, but rather a gradual exit from the restrictive interest rate policies implemented post-pandemic to combat high inflation. Looking ahead to 2026: The Fed is expected to cut rates twice in 2026; the ECB may hold steady due to growth spurred by German fiscal stimulus; the BOJ, due to inflation concerns and increased Yen depreciation pressure, might be the only major central bank to hike rates; most emerging markets are also in easing cycles, but may only ease slightly, reflecting supported external demand but weak internal demand.
Important Changes This Week Unless otherwise specified, data in this section is sourced from Wind. (A) Midstream Industries 1. Downstream Demand Real Estate: As of Jan 3, the cumulative transaction area of commercial housing in 30 major cities fell 72.15% year-on-year; the month-on-month change was -98.74%, the year-on-year change for the month was -72.15%, and the week-on-week change was -10.50%. NBS data shows, from Jan-Nov, new housing starts were 535 million sqm, cumulative同比下降20.50%, a 0.70% drop from the Jan-Oct growth rate; November single-month starts were 44 million sqm, down 27.73% YoY; Jan-Nov national real estate development investment was 7,859.09 billion yuan, nominal同比下降15.90%, a 1.20% drop from the Jan-Oct growth rate; November single-month new investment nominal同比下降31.36%; Jan-Nov national commercial housing sales area was 787.02 million sqm, cumulative同比下降7.80%, a 1.00% drop from the Jan-Oct growth rate; November single-month new sales area同比下降17.93%. Automobiles: Passenger Vehicles: From Dec 1-28, national passenger vehicle retail sales were 1.928 million units, down 17% compared to the same period last December, down 3% from the previous month's period; year-to-date cumulative retail sales were 23.411 million units, up 4% YoY; From Dec 1-28, national passenger vehicle wholesale sales were 2.134 million units, down 19% compared to the same period last December, down 19% from the previous month's period; year-to-date cumulative wholesale sales were 28.899 million units, up 8% YoY. New Energy: From Dec 1-28, national passenger vehicle NEV retail sales were 1.192 million units, up 5% compared to the same period last December, up 1% from the previous month's period; year-to-date cumulative retail sales were 12.664 million units, up 18% YoY; From Dec 1-28, national passenger vehicle NEV wholesale sales were 1.261 million units, down 4% compared to the same period last December, down 16% from the previous month's period; year-to-date cumulative wholesale sales were 15.017 million units, up 25% YoY. 2. Midstream Manufacturing Steel: Rebar spot price fell 0.18% WoW to 3,322.00 yuan/ton; stainless steel spot price fell 0.42% WoW to 13,399.00 yuan/ton. As of Dec 31, the rebar futures closing price was 3,122 yuan/ton, down 0.45% WoW. Data from the Steel Network shows that in mid-December, the average daily output of key steel enterprises was 1.803 million tons, down 1.42% from early December. November cumulative crude steel output was 891.665 million tons, down 4.00% YoY. Chemicals: As of Dec 20, styrene price rose 269.67% from Dec 10 to 6,603.60 yuan/ton; methanol price rose 339.47% from Dec 10 to 2,107.70 yuan/ton; PVC price fell 342.30% from Dec 10 to 4,378.90 yuan/ton; butadiene rubber price rose 326.08% from Dec 10 to 10,425.00 yuan/ton. 3. Upstream Resources International Commodities: WTI rose 1.02% WoW to $57.32; Brent rose 0.78% WoW to $60.80; LME metal price index rose 1.00%; the CRB commodity index fell 0.87% WoW to 297.82; the BDI index rose 0.27% last week to 1,882.00. Coal & Iron Ore: Iron ore inventory rose this week; coal prices fell. The price of Qinhuangdao Shanxi Superior Blend (5500) FOB fell 5.14% as of Dec 29, 2025, to 682.20 yuan/ton; port iron ore inventory rose 2.23% WoW to 158.60 million tons; raw coal output in November rose 4.93% to 426.793 million tons. (B) Stock Market Characteristics Market Performance: The Shanghai Composite Index rose 0.13% this week. The top three gaining sectors were Petroleum & Petrochemicals (Shenwan) (+3.92%), National Defense (Shenwan) (+3.05%), and Media (Shenwan) (+2.13%); the bottom three losing sectors were Utilities (Shenwan) (-2.72%), Food & Beverage (Shenwan) (-2.26%), and Power Equipment (Shenwan) (-2.18%). Dynamic Valuation: The overall A-share PE (TTM) increased from 19.49x last week to 19.51x this week; PB (LF) remained at 1.81x. The A-share overall excluding financials PE (TTM) decreased from 29.36x last week to 29.35x this week; PB (LF) remained at 2.49x. The ChiNext PE (TTM) decreased from 52.36x last week to 52.10x this week; PB (LF) decreased from 4.37x last week to 4.34x this week. The STAR Market PE (TTM) increased from 99.25x last week to 99.35x this week; PB (LF) remained at 5.24x. The CSI 300 PE (TTM) increased from 13.56x last week to 13.60x this week; PB (LF) remained at 1.44x. From a sector perspective, the sectors with the largest expansion in PE (TTM) percentile this week were Banks, Household Appliances, and Petroleum & Petrochemicals. The sectors with the smallest expansion were Utilities, Pharmaceuticals & Biology, and Food & Beverage. Furthermore, from a PE perspective, among Shenwan primary sectors, Petroleum & Petrochemicals, Nonferrous Metals, Utilities, Beauty & Personal Care, Social Services, Household Appliances, Agriculture, Forestry, Animal Husbandry & Fishery, Food & Beverage, Communications, and Non-Bank Financials are valued below historical median. Real Estate, Commercial Trade & Retail, and Computers are valued above the historical 90th percentile. From a PB perspective, among Shenwan primary sectors, Basic Chemicals, Building Materials, Building Decoration, Utilities, Transportation, Real Estate, Environmental Protection, Beauty & Personal Care, Social Services, Household Appliances, Textiles & Apparel, Commercial Trade & Retail, Agriculture, Forestry, Animal Husbandry & Fishery, Food & Beverage, Pharmaceuticals & Biology, Computers, Media, Banks, and Non-Bank Financials are valued below historical median. Electronics is valued above the historical 90th percentile. The equity risk premium decreased from 1.57% last week to 1.56% this week; the stock market yield remained at 3.41%. Margin Financing Balance: As of Tuesday, Dec 30, the margin financing and securities lending balance was 2,555.281 billion yuan, up 0.47% WoW. AH Premium Index: The A/H share premium index decreased to 120.89 this week, from 123.15 last week. (C) Liquidity From Dec 28 to Jan 3, the central bank had 3 reverse repos mature, totaling 152.6 billion yuan; and conducted 3 reverse repos, totaling 1,323.6 billion yuan. The net drain (including treasury cash) from open market operations was 1,171.0 billion yuan. As of Dec 31, 2025, R007 rose 54.22 BP WoW to 2.1559%; the SHIBOR overnight rate fell 2.00 BP to 1.3270%; the term spread fell 1.97 BP WoW to 0.4719%; the credit spread fell 2.85 BP WoW to 0.4813%. (D) Overseas US: On Monday, announced Dec 19 crude oil inventories were 1,989 thousand barrels, previous 4,490 thousand barrels; On Wednesday, updated Dec 27 initial jobless claims were 199,000, previous 215,000; Dec 26 crude oil inventories were 5,109 thousand barrels, (previous 1,989 thousand barrels). Eurozone: On Friday, announced the final December Manufacturing PMI was 48.8, previous 49.2. UK: No important data released this week. Japan: No important data released this week. Overseas Markets: S&P 500 fell 1.03% last week to close at 6,858.47; FTSE 100 rose 0.82% to close at 9,951.14; DAX rose 0.82% to close at 24,539.34; Nikkei 225 fell 0.81% to close at 50,339.48; Hang Seng rose 2.01% to close at 26,338.47. (E) Macro New Project Planned Investment: China's November cumulative yoy change in planned total investment of newly started fixed asset investment projects for the year was -6.70%. PMI and Major Components: China's December PMI was 50.10%; Production Index was 51.70%; New Orders Index was 50.80%; Finished Goods Inventory Index was 48.20%; Raw Materials Inventory Index was 47.80%.
Data Releases Next Week Next week's highlights: US December ISM Manufacturing PMI; Eurozone December: CPI: MoM; Eurozone December: CPI: YoY; US December ADP Employment Change: Seasonally Adjusted; US December ISM Services PMI; Eurozone November Unemployment Rate: Seasonally Adjusted; US December Unemployment Rate: Seasonally Adjusted; US December Nonfarm Payrolls Change: Seasonally Adjusted. Monday, Jan 5: US December ISM Manufacturing PMI. Wednesday, Jan 7: Eurozone December: CPI: MoM; Eurozone December: CPI: YoY; US December ADP Employment Change: Seasonally Adjusted; US December ISM Services PMI. Thursday, Jan 8: Eurozone November Unemployment Rate: Seasonally Adjusted. Friday, Jan 9: US December Unemployment Rate: Seasonally Adjusted; US December Nonfarm Payrolls Change: Seasonally Adjusted.
Risk Warnings Geopolitical conflicts exceeding expectations, causing原油等大宗商品 prices to rise beyond expectations, further creating significant upward pressure on global inflation; Recurring overseas inflation and US economic resilience causing the pace of global liquidity easing to be slower than expected, particularly regarding the Fed's rate cut pace and the extent of US Treasury yield declines being lower than expected; Domestic稳增长 policy strength falling short of expectations, leading to weak economic recovery, listed company profitability lingering at low levels for an extended period, further causing a decline in market risk appetite, etc.
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