As we stand at the temporal juncture reflecting on the past, we have navigated volatility and witnessed trends; looking forward, the 2026 investment landscape is gradually unfolding. We now present the "2026 Investment Outlook," inviting you to access the professional insights from fund managers, hoping these perspectives provide you with the confidence and direction to navigate the unknown.
The keyword we propose for 2026 is "continuity," as the core logic supporting the strength of capital markets and the rise in international gold prices in 2025 has not fundamentally changed. Concurrently, policy support for capital markets remains persistent. Specifically: First, the Federal Reserve is expected to continue its interest rate cutting cycle, with the US Dollar Index likely weakening further. US stocks face risks of periodic corrections after high-level fluctuations. The market widely anticipates at least two 25-basis-point rate cuts from the Fed in 2026, possibly even three. For US equities, periodic adjustments are expected in 2026; however, supported by genuine computing power investment and commercial application in this AI revolution, the correction magnitude may be relatively limited, presenting more structural and periodic characteristics rather than a systemic decline. Second, domestic growth-stabilizing policies are expected to advance and gradually show effects, with room for improvement in macroeconomic data. Since the second half of 2025, consumption growth rates once decelerated. The Central Economic Work Conference explicitly emphasized efforts to boost consumption, expand domestic demand, and enhance consumption capacity through measures like trade-in programs and increasing household income. As relevant policies are implemented, consumption growth is anticipated to recover in 2026, with price levels potentially improving gradually. CPI is expected to operate in positive territory, approaching the policy target of around 2%, thereby helping the economy gradually exit deflationary pressures. Third, the trend of household savings shifting towards capital markets is expected to accelerate further. Currently, China's household deposit scale exceeds 165 trillion yuan, with deposit rates continuously declining. Against the backdrop of improved capital market performance and enhanced wealth effects, more household funds may enter capital markets via funds or direct investments. Equity fund sales scale is projected to continue rising in 2026, providing sustained incremental fund support for this slow-bull, long-bull market. Fourth, the real estate market overall remains in an adjustment phase, but transaction volumes in first-tier cities are expected to improve, with core area housing prices potentially stabilizing gradually. The era of real estate as the primary vehicle for household wealth creation has largely ended; future important channels for household wealth growth will shift more towards capital markets. Given genuine rigid demand and core locations, real estate warrants moderate attention, but non-core areas require greater caution. Fifth, the central bank is expected to continue implementing supportive monetary policies, maintaining low interest rates and a reasonably ample liquidity environment. Amid the Fed's rate cuts, China's monetary policy has relatively ample operational space; tools like RRR cuts and structural rate reductions can help stabilize economic expectations and support stable capital market operations. Sixth, fiscal policy will continue to exert force, stabilizing investment and promoting consumption through resolving local debt risks, increasing infrastructure and livelihood investments, and enhancing subsidies for low- and middle-income groups. Major engineering projects and new infrastructure construction are expected to be key drivers for investment. Seventh, technology stocks will remain a crucial investment theme, while sectors like new energy, consumption, defense, and non-ferrous metals may see rotational performance, with market styles likely becoming more balanced compared to 2025. The 2026 market is expected to evolve from a structural bull market to a broader rally, with overall wealth effects potentially strengthening. Eighth, against rising global uncertainties and questions about US dollar credibility, the long-term upward logic for gold remains unchanged. While gold prices may experience periodic volatility at high levels, the medium to long-term uptrend is expected to continue. Appropriately allocating to gold assets can enhance portfolio stability. Ninth, the Renminbi exchange rate is expected to continue its appreciation trend, with the attractiveness of Chinese assets to foreign capital likely increasing persistently. During Renminbi appreciation phases, foreign capital's willingness to allocate to A-shares, H-shares, and RMB bonds typically improves, aiding the valuation repair of Chinese assets. Tenth, A-shares and H-shares are expected to continue their slow-bull, long-bull trend, with significantly increased investment opportunities and enhanced investor获得感 (sense of gain). A slow-bull, long-bull market helps stimulate consumption through wealth effects and plays a vital role in stabilizing growth.
Overall, 2026 may see Chinese capital markets enter a phase coexisting with opportunities and challenges but generally positive. With rising risks in US stocks and global capital reallocation, more international funds are expected to flow into A-share and H-share markets. Supported by persistent policies, gradual improvement in economic fundamentals, and optimized capital structure, the overall valuation of Chinese assets is poised for repair, creating more stable and sustainable long-term returns for investors.
Looking ahead to 2026, fundamentals in many industries, particularly emerging growth sectors, are expected to improve further. With medium-to-long-term risk-free rates remaining low, market liquidity is likely to stay relatively loose. This implies that key catalysts for equity markets remain effective, with many sectors expected to offer decent potential investment returns. Sector-wise, we are relatively optimistic about the big tech industry and sectors related to economic recovery.
The big tech rally is expected to persist in 2026 but may show differentiation, requiring more selective investment. Sub-sectors representing technological upgrades are anticipated to perform better, while areas lagging in technological progress may face higher risks. Future focus will be on robotics and AI directions with significant technological upgrades. 2026 is expected to be the inaugural year for large-scale robotics production; within AI, computing power, optical communication, liquid cooling, and power supply directions deserve attention. Additionally, investments in energy storage and Hong Kong-listed internet sectors are also monitored.
The economy is expected to recover further in 2026. Industries benefiting from "anti-involution" policies, those experiencing efficiency gains from technological progress, or sectors rising with the economic cycle are worth attention. We are relatively optimistic about leading white-chip stocks in these directions. Key focuses include photovoltaics, pig farming, aviation, express delivery, and chemicals under the "anti-involution" theme.
Reviewing global capital markets, the substantial appreciation of AI-related assets in recent years has been driven by earnings rather than valuation. Leading companies' profit growth has even outpaced market cap growth, resulting in lower valuations despite price increases. From an absolute valuation perspective, major AI companies' valuations are relatively healthy, even low, in both domestic and overseas markets. We believe AI remains the most attractive global investment direction, with global AI infrastructure being the area most likely to deliver excess returns currently. The previous "prioritize hardware over software" investment strategy can be continued. Within AI infrastructure, we prefer structured directions with more potential for alpha, for the following reasons: First, optical communication's growth potential is highly likely to exceed the broader market. This is due to increasing interconnection bandwidth per chip, driving market size growth faster than chip shipment volume growth, and optical communication's expansion into scale-up networks previously dominated by copper, which have much larger bandwidth scales than the scale-out networks optical communication traditionally occupied. This shift could lead to non-linear positive changes in expectations for the optical communication industry. Second, the liquid cooling industry is expected to see continued penetration rate increases starting next year. Additionally, we observe changes in the liquid cooling supply chain structure, with manufacturers emerging within our investable universe capable of capturing significant shares in the global liquid cooling market.
The world is currently in an AI industrial revolution, with AI computing power being the core driver. AI infrastructure construction is projected to continue strong growth in 2026. Although overseas cloud providers' capital expenditure relative to operating cash flow is relatively high, overall overinvestment risks are controllable. Furthermore, with the growth of domestic AI computing chip companies and the release of advanced process capacity, the development of domestic AI computing chips is expected to accelerate. AI hardware is also forecast to enter a rapid growth phase in 2026. As the AI large model industry iterates quickly, scenarios like human-computer voice interaction will develop rapidly, significantly enhancing user experience and further spurring demand for AI terminals. Multiple AI hardware products, such as AI phones, AI PCs, and AI glasses, are expected to be launched by domestic and international companies in 2026.
At the industry level, recent financing and capitalization processes for domestic humanoid robot manufacturers have significantly accelerated, with several leading companies planning listings via IPOs or tender offers. We believe the robotics industry is in a phase of continuous positive iteration, with commercial closure potentially arriving sooner. From an investment perspective, the current window is characterized by前置 (front-loading) of the T-chain and capitalization of the domestic chain. Capital is positioning early for next year's main themes, with recent market volume increases enhancing the probability of recovery. The ATR volatility of the CSI Robotics Index bottomed in early December; volume expansion following the "low volatility at lows" pattern provides a significant signal. From a spring rally perspective, high-level筹码 (chips/positions) in the robotics sector have been sufficiently digested, upward resistance is minimal, and it possesses ample market cap capacity. A clearer robotics supply chain system will provide more definite guidance for the market. We still recommend focusing on new alpha opportunities in the A-share robotics sector. Additionally, the launch of Tesla's third-generation robot and increased volume from domestic robots will bring structural investment opportunities next year.
Semiconductor equipment is the core industry supporting chip manufacturing and packaging/testing. With the global semiconductor industry entering a strong recovery cycle, WSTS predicts AI computing power and advanced process capacity expansion will drive semiconductor equipment market sales to exceed $130 billion in 2026. As the world's largest single market, mainland China's semiconductor equipment market, driven by AI large models pushing memory technology towards 3D and capacity expansion projects from major domestic memory manufacturers like CXMT and YMTC, is poised for a new round of high-growth opportunities for the domestic semiconductor equipment industry chain.
Gold: We remain optimistic about gold's long-term upward trend and short-term benefits from US rate cuts. The fundamental logic lies in the long-term weakening of US dollar credibility amid dramatic global changes, worldwide capital chasing the safest assets, and China's pursuit and layout for RMB internationalization's long-term goals. Compared to other assets, gold's absolute and relative volatility is lower, so we will maintain our allocation to gold assets. We recommend investors use dollar-cost averaging to smooth investment costs when participating in gold investments.
Rare Earths: Global rare earth demand is entering a phase where old and new drivers resonate. Demand growth from new energy vehicles, wind power, robotics, and other fields will accelerate rare earth resource development and application. Combined with the rigidity of medium and heavy rare earth supply, the scarcity of strategic resources is increasingly prominent. Demand expansion and rare earth supply constraints jointly drive a supply-demand inflection point appearing in 2025. Under the shortage pattern of praseodymium-neodymium oxide, price centers are必然 (inevitably) rising, and the value of rare earths as strategic minor metals will continue to increase.
Since 2025, the cumulative increase in London gold prices has exceeded 70%, marking the best annual performance since 1990. The core logic behind this strong gold rally lies in the deep resonance between short-term drivers and medium-to-long-term supporting factors. Short-term, the持续推进 (continuous advancement) of the Fed's rate-cutting cycle combined with rising global risk aversion constitutes the core driver. Long-term, the world is in a period of deep evolution of century-long changes, with economic restructuring accelerating and geopolitical博弈 (games) intensifying, laying a solid medium-to-long-term foundation for gold's rise. Against this backdrop, the long-term logic supporting gold's strength can be归结为 (attributed to) two core dimensions: First, major global economies普遍 (generally) adopt a policy mix of "fiscal expansion + monetary easing" to counter economic downward pressure and address development imbalances. Under this policy direction, market concerns about global debt expansion and the stability of fiat currency systems continue to升温 (heat up). As a natural hard currency not reliant on any sovereign credit, gold's strategic value in global asset allocation becomes increasingly prominent. Second, with the loosening of the US dollar's long-term credit foundation and central banks' strategic need for forex reserve diversification, a sustained large-scale global gold purchasing wave has emerged, building a solid "bottom support" for gold prices. Specifically, the PBOC has increased gold holdings for 13 consecutive months, with a cumulative increase of about 24 tons this year. However, both the total increase and gold's proportion in official reserve assets (under 9%) are significantly below the global average, indicating substantial room for future improvement. In contrast, the National Bank of Poland has purchased over 80 tons net this year, explicitly raising its gold reserve allocation target to 30%. Central banks in emerging markets like Kazakhstan and Azerbaijan are also accelerating gold purchases. These long-term supporting factors possess significant sustainability and are expected to continuously助推 (propel) gold prices maintaining a strong运行格局 (operating pattern) in the medium to long term.
Looking ahead to 2026, we believe the pharmaceutical investment主线 (main theme) still revolves around布局 (positioning) based on innovation upgrades and domestic demand improvement. First, regarding innovation upgrades, the vigorous innovative drug行情 (market trend) in 2025 not only renewed focus on pharmaceuticals but also allowed tangible industry changes to be better perceived by the secondary market. For 2026, we believe investment opportunities around innovative drugs and devices won't cease, but investors will seek more certainty, reflected in the increased importance and difficulty of stock selection, consistent with our previous view that innovative industry investment entered a structural phase in Q4 2025. Additionally, increased R&D investment due to factors like more out-licensing and improved external liquidity will boost景气度 (sentiment) in the innovation R&D industry chain. After a low period, the CRO industry,伴随着 (accompanied by) the clearance of redundant capacity, improved demand, and continuous iteration of new technologies and molecules, is expected to see gradually improving景气度 (sentiment). Regarding domestic demand improvement, unfavorable fundamental factors in traditional Chinese medicine, consumer healthcare, and medical devices are being gradually digested. Specifically, the TCM industry began seeing cost-side improvements from falling herbal material prices in H2 2025; 2026 is expected to bring improvements in financial statements and sell-through after inventory destocking completes. TCM companies feature low debt-to-asset ratios, high ROE, ample cash flow, and high dividend payout ratios. The sector's overall valuation is at historical lows, offering long-term配置价值 (allocation value) as a红利类 (dividend-like) asset. Furthermore, segments within consumer healthcare and medical devices are gradually recovering景气度 (sentiment), entering high-赔率 (odds) allocation ranges. Under policies guiding domestic demand expansion and consumption promotion, we expect overall marginal improvement in domestic demand in 2026.
Looking ahead to 2026, consumption is expected to witness substantive changes in both aggregate and structural aspects, warranting increased attention. Aggregate-wise, Chinese households accumulated significant excess savings from 2022-2024. As these excess savings陆续到期 (gradually mature), with利率 (interest rates) substantially lowered and policy support increasing, household expectations改善 (improve), we believe部分 (some) household savings will convert into consumption, bringing aggregate elasticity, especially in discretionary consumption. After years of valuation adjustments, discretionary消费 (consumption) is in a valuation洼地 (depression); renewed demand elasticity could become a catalyst for valuation repair. Structurally, in recent years, generational changes and the emergence of new consumer groups and demands have created structural景气 (prosperity) in certain消费细分领域 (consumer sub-sectors), such as IP潮玩 (IP trendy toys), gaming, and consumer出海 (overseas expansion). This景气趋势 (prosperity trend) is expected to continue in 2026, providing opportunities for bottom-up selection of quality stocks. Overall, we are optimistic about investment opportunities in the consumption sector in 2026, with Q4 2025 potentially being a window for gradual positioning.
Some sectors have already reflected部分 (some) expectations after their 2025 performance, and overall market volatility is expected to increase in 2026. The process of debt monetization in some countries is ongoing, so we remain strategically optimistic about commodities and gold, but the upward path may be曲折 (tortuous), requiring利用好 (utilizing) market fluctuations rather than being used by them. Other sectors with strategic logic but insufficient market演绎 (narrative) this year, like securities and defense, should be held为主 (primarily). Also,关注 (monitor) sectors at low levels, such as部分医药 (some pharmaceuticals, excluding innovative drugs), consumption, and light industry. Overall, equity markets still offer relatively prominent opportunities compared to other asset classes, but systemic risks from over-exuberance in某些板块 (certain sectors) and potential liquidity tightening due to global risk spillover from a possible downturn in highly-valued US stocks cannot be ruled out.
We remain strategically optimistic about the Hong Kong market. Key factors affecting it include Fed monetary policy, domestic economic fundamentals, tech trends, and geopolitics. While the process may involve some曲折,复杂性 (complexity), the overall trend remains positive. Additionally, the Hong Kong market's overall valuation is still low, both vertically and horizontally, maintaining valuation attractiveness among global emerging markets. Sector-wise, we are optimistic about non-bank financials and internet leaders with good景气度 (momentum) and爆发力 (explosive potential).
Non-Bank Financials: Industry fundamentals remain in a mid-term warming trend. Internet Leaders: Deeply benefit from the rapid development and penetration of the AI era, offering high growth potential.
Looking ahead to 2026, nominal GDP growth is expected to slightly回升 (rebound) driven by stabilizing real economic growth and mildly improving inflation. Combined with moderately loose monetary policy, pure bonds will likely show a range-bound震荡走势 (fluctuating trend) with a cap and floor, while convertibles are expected to continue outperforming pure bonds, supported by underlying stocks and scarce supply. Specifically, the Central Economic Work Conference set the tone for shifting from超常规逆周期 (super-regular counter-cyclical) to跨周期和逆周期相结合 (combining cross-cycle and counter-cyclical measures). The urgency for大幅扩张 (large-scale) fiscal expansion has decreased; monetary policy continues适度宽松 (moderately loose), but RRR and rate cuts emphasize灵活性高效 (flexibility and efficiency). With limited overall宽松空间 (easing space), the timing of RRR/rate cuts may determine interest rate节奏 (rhythm).短端 (Short-end) coupon assets appear safer; long-end rates are suitable for布局 (positioning) on highs. Convertibles should focus on sectors like dividends, high-tech, gold, and non-ferrous metals结合正股 (combined with underlying stocks). Risks include monitoring the impact of policies like the urban-rural income increase plan, consumption promotion, and深入整治 (deep rectification) of "involutionary" competition on growth and inflation; significant超预期 (exceeding expectations) could lead to bond market over-adjustment.
Equities: Listed company profits generally align with industrial enterprise profit trends, which have been in an upward space since mid-last year, with inventory also entering an上升周期 (up cycle). Combined with rising PMI, market fundamentals are improving. Recent policies have exceeded market expectations; focus on the fiscal deficit ratio and special bond quota at the Two Sessions next March. Additionally, the equity risk premium is around the 60th percentile historically, indicating stocks still offer some attractiveness. We continue看好 (to be optimistic about) the equity market in 2026. Base equity allocations are in non-ferrous stocks like gold and copper miners;弹性配置 (flexible allocations) are in the relatively看好 (favored) major consumption and tech sectors, with tech focusing on communications and semiconductors benefiting from AI development.
Gold: We remain看好 (optimistic about) gold's medium-to-long-term trend, but short-term, prices may face some downward pressure. The two fundamental long-term drivers for gold's rise remain solid: global fiscal deficits are expected to expand further, and the US economy's resilience has vulnerabilities, including unsustainable US debt potentially undermining dollar hegemony. After gold's new highs, we still recommend a certain allocation比例 (proportion) in investment portfolios, not only to hedge equity risk but also to potentially deliver considerable capital gains long-term.
Fixed Income: Calculated based on the ChinaBond Total Wealth Index, from 2011 to present, bonds have delivered around 4% annualized returns with 1.7% annualized volatility, showing good性价比 (cost-performance). Fixed income, as a压箱底 (core) asset, is highly suitable. 2025 saw significant fixed income回调 (pullbacks), especially long-duration bonds, leading to improved性价比 (cost-performance). Combined with reduced pressure from equities on fixed income, after RRR/rate cuts, extending duration is recommended.
Risk Disclosure: This material is for reference only, does not constitute any investment advice or legal document. The fund manager承诺 (commits) to managing and utilizing fund assets with honesty,信用 (credit), and diligence, but does not guarantee fund profitability or minimum returns. Past performance does not predict future results. Performance of other funds managed by the manager does not guarantee this fund's performance. China's fund operation history is short and may not reflect all stages of stock market development. Investors should carefully read the基金合同 (Fund Contract),招募说明书 (Prospectus),基金产品资料概要 (Fund Product Summary)等法律文件 (and other legal documents) before investing, understand the fund's risk-return characteristics, and assess suitability based on investment objectives, horizon, experience, and financial situation. The fund manager may adjust investment strategies and asset allocation ratios per market conditions within the基金合同 (Fund Contract) terms, potentially leading to lower-than-expected returns. Markets involve risks; invest cautiously. Market views are time-sensitive.
MACD golden cross signals have formed, and these stocks are performing well!
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