The upcoming "Two Sessions" are expected to set pragmatic economic targets that align with the broader goal of enhancing quality and efficiency, while also creating room for structural reforms, technological innovation, and risk mitigation. Macroeconomic policies are likely to maintain continuity, with an emphasis on strengthening coordination. Fiscal policy is anticipated to remain appropriately forceful, with spending structures optimized to bolster consumption, human capital investment, and social welfare. The dual focuses on major projects and new initiatives are set to continue with further refinements. Monetary policy is expected to stay moderately accommodative, working in tandem with fiscal measures to support stable growth and reasonable price increases. The use of reserve requirement ratio cuts, interest rate reductions, and other tools will be flexible and efficient, while structural monetary policy instruments are likely to be continuously improved.
Expanding domestic demand is projected to be the top priority for the year. Policies will aim to foster a virtuous cycle where new demand guides new supply, and new supply creates new demand, enhancing interaction between consumption and investment. On the consumption front, efforts will focus on stabilizing and expanding employment through multiple channels, implementing urban and rural income growth plans, and deepening initiatives to boost consumer spending. Service consumption is expected to be a key lever. Regarding investment, emphasis will be placed on optimizing government investment structure, increasing the proportion directed toward livelihoods, advancing key projects, and stimulating private investment.
Accelerating the cultivation of new growth drivers and achieving high-level sci-tech self-reliance will hold greater importance. The central role of enterprises in technological innovation will be underscored, alongside reforms to improve the transformation of scientific achievements. The "Artificial Intelligence Plus" initiative is poised to become a major engine for new growth momentum. Addressing "involution-style" competition is anticipated to be a significant topic in reform efforts. Mitigating risks in key areas, such as stabilizing the property market and resolving local government debt, will remain ongoing tasks. The government work report is also expected to outline further部署 in areas including opening-up, coordinated development, green transformation, and social welfare. The draft outline for the 15th Five-Year Plan will be reviewed, drawing attention to medium- to long-term reforms and部署.
Around the time of the "Two Sessions," the A-share market may be primarily driven by policy catalysts, with capital rotating around policy-themed sectors, leading to rapid shifts in market hotspots and styles. By mid-to-late March, market focus is likely to transition from policy expectations to earnings delivery, as corporate annual and quarterly reports are released. Over the medium to long term, the government work report and the subsequent 15th Five-Year Plan outline are expected to provide a clear investment roadmap, supporting the market's steady operation.
In terms of allocation opportunities, two main themes are highlighted. The first involves the "anti-involution" concept, driven by improved supply-demand dynamics and earnings recovery, alongside dividend assets with valuation safety margins. Recent geopolitical tensions, including escalated U.S.-Iran relations, may provide intermittent support for oil prices, while precious metals serve as safe-haven assets. Sectors such as non-ferrous metals (precious metals), petroleum and petrochemicals, basic chemicals, steel, cement, building materials, and finance are worth attention. The second theme centers on technology and growth sectors. Against the backdrop of global transformation and a shift toward new productive forces, key areas like semiconductors, artificial intelligence, new energy, defense, and aerospace under the 15th Five-Year Plan warrant focus. Additionally, consumption themes may present opportunities under domestic demand expansion policies, particularly in undervalued sub-sectors with earnings support.
Risks to consider include external uncertainties, potential policy disappointments, and market sentiment or liquidity adjustments.
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