Global market risk appetite continues to climb, favoring equity asset performance. A tactical overweight position in A/H-shares, U.S. stocks, and gold is recommended, while an underweight position in U.S. Treasuries and crude oil is advised.
Multiple factors support the performance of Chinese equities, recommending an overweight position in A/H-shares. As the economic work conference approaches and 2026 marks the start of the 15th Five-Year Plan, a further expansion of the broad fiscal deficit and more proactive economic policies are anticipated. The Federal Reserve's expected December interest rate cut and the stable appreciation of the Renminbi provide favorable conditions for monetary easing in China early in 2026. Reforms are boosting risk appetite in the Chinese market. Chinese equities offer a comparatively higher risk-reward ratio relative to other major asset classes.
A gradually emerging "Goldilocks" backdrop is beneficial for U.S. stock performance, recommending an overweight position. The U.S. economy shows considerable resilience, endogenous inflation stickiness is gradually weakening, and investors continue to value the development trend of the AI industry. With market risk appetite moderately increasing and the "Goldilocks" scenario becoming more apparent, corporate earnings expectations are likely to continue supporting an upward trend in U.S. equities.
The Federal Reserve's monetary policy guidance may be relatively cautious, recommending an underweight position in U.S. Treasuries. The ongoing cooling of the U.S. labor market, combined with weaker energy prices and slower wage growth, facilitates a reduction in endogenous inflation stickiness, broadening the scope for the Fed to adjust monetary policy. Despite the economy's resilience, the Fed's guidance is expected to be prudent. The central tendency for U.S. Treasury yields is expected to decline moderately thereafter, but their risk-reward ratio remains low compared to risk assets.
Against a backdrop of significant geopolitical shifts, gold demonstrates strong resilience and safe-haven attributes, recommending an overweight position. Rising global geopolitical uncertainty and continued gold purchases by central banks support a higher long-term price floor for gold. Although inflows of speculative trading funds have temporarily increased gold's volatility and suppressed its safe-haven appeal, gold prices remain highly resilient amidst global risk asset fluctuations and intense speculation on the AI industry trend.
Short-term trading dynamics in crude oil may intensify, recommending an underweight position. Investor expectations regarding crude oil supply and demand are relatively aligned, and OPEC+'s production adjustments have been moderate. Geopolitical events in South America could amplify U.S. influence on global oil prices, while the policy direction of the Trump administration also leans towards lower oil prices. Crude oil prices are expected to remain under pressure and may face intense short-term trading volatility.
Risk Warning: Analytical perspectives have limitations; model design involves subjectivity; discrepancies exist between historical and projected data; market consensus expectations may adjust; quantitative models have inherent limitations.
This weekly report reviews significant market events and data from the previous week (January 5, 2026, to January 11, 2026) that impacted major asset classes, providing necessary commentary and promptly updating our tactical active allocation views. Tactical allocation views reflect expectations for an asset's risk-reward ratio relative to others over the next 1-3 months.
The U.S. labor market is cooling moderately. The December unemployment rate was 4.4%, below market expectations of 4.5% and the previous reading of 4.5%. Seasonally adjusted non-farm payrolls added 50,000 people, below expectations of 60,000 and the previous figure of 56,000. December ADP employment change was 41,000, below the expected 47,000 but higher than the previous -29,000. Initial jobless claims for the week ending January 3 were 208,000, below expectations of 210,000 but higher than the prior 200,000. November JOLTs job openings were 7.146 million, below expectations of 7.600 million and the previous 7.449 million.
U.S. economic growth retains resilience. The December ISM Non-Manufacturing PMI was 54.4, above expectations of 52.3 and the previous 52.6. The December ISM Manufacturing PMI was 47.9, below expectations of 48.3 and the prior 48.2. The preliminary January University of Michigan Consumer Sentiment Index was 54.0, above expectations of 53.5 and the previous 52.9.
The U.S. labor market is cooling moderately while economic growth remains resilient. A "Goldilocks" economic scenario—characterized by high growth, low inflation, and low interest rates—is gradually appearing. Historically, such macro environments support corporate profit growth and provide central banks more flexibility to adjust policy, which boosts market risk appetite and benefits equity assets. Among equity assets, (1) multiple factors support Chinese equity performance. The start of the 15th Five-Year Plan in 2026 suggests potential fiscal expansion and more proactive policies. The Fed's expected rate cut and RMB appreciation facilitate monetary easing in China, while reforms boost risk appetite. (2) The emerging "Goldilocks" backdrop favors U.S. stocks. Strong economic resilience, easing inflation pressures, and focus on AI trends support moderate risk appetite and corporate earnings expectations. Among bond assets, a cooling labor market and weaker energy/wage growth reduce inflation stickiness, giving the Fed more policy space. Given economic strength, Fed guidance may be cautious. U.S. Treasury yields may decline gently, but their risk-reward profile is less attractive than risk assets. Among commodities, (1) rising geopolitical uncertainty supports gold's resilience and safe-haven role. Central bank buying underpins long-term prices. Despite speculative volatility, gold stays resilient amid swings in risk assets and AI speculation. (2) Crude oil may see intensified short-term trading. Supply-demand expectations are aligned, and OPEC+ adjustments are moderate. South American events could increase U.S. price influence, and Trump administration policies favor lower prices, suggesting oil will stay under pressure with potential for volatile trading.
Multiple factors support Chinese equity performance, recommending an overweight in A/H-shares. The start of the 15th Five-Year Plan in 2026 suggests potential fiscal expansion and more proactive policies. The Fed's expected December cut and RMB stability aid Chinese monetary easing early in 2026. Reforms boost domestic market risk appetite.
The emerging "Goldilocks" backdrop favors U.S. stock performance, recommending an overweight. Strong U.S. economic resilience, easing endogenous inflation, and sustained investor focus on AI trends support moderate risk appetite and corporate earnings expectations.
The Federal Reserve's monetary policy guidance may be relatively cautious, recommending an underweight in U.S. Treasuries. A cooling labor market and weaker energy prices/wage growth reduce inflation stickiness, giving the Fed policy flexibility. Strong economic resilience suggests prudent Fed guidance. Yields may decline moderately, but the risk-reward ratio is low versus risk assets.
Amid significant geopolitical shifts, gold shows strong resilience and safe-haven attributes, recommending an overweight. Rising global uncertainty and central bank gold purchases support long-term prices. Although speculative inflows increase volatility temporarily, gold remains resilient during swings in risk assets and AI speculation.
Short-term crude oil trading may intensify, recommending an underweight. Supply-demand expectations are relatively consistent, and OPEC+ adjustments are moderate. South American events may increase U.S. influence on prices, and Trump administration policies lean towards lower oil, suggesting continued price pressure and potential for volatile trading.
Based on the research framework published in the "Active Major Asset Allocation Research System Analysis" in April 2025 and incorporating incremental information analysis, our tactical asset allocation views are updated as follows.
Details of the constructed tactical asset allocation model portfolio are as follows: 1. Rebalancing Method: The portfolio's asset allocation and marginal changes in views are reviewed weekly. Any rebalancing trades occur on the next trading day after the review date. Absent significant view changes, the portfolio is typically reviewed monthly, with weights adjusted as needed. When active views change marginally, portfolio weights are adjusted irregularly based on the change's significance and drivers to maintain flexibility. 2. Benchmark: The strategic asset allocation, calculated using a macro-factor risk parity model, serves as the benchmark. Major asset weights are: Equities 45% (A-shares 7.5%, H-shares 7.5%, U.S. stocks 15%, European stocks 5%, Japanese stocks 5%, Indian stocks 5%), Bonds 45% (Long-duration Chinese gov't bonds 10%, Short-duration Chinese gov't 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 Limits: Allowable deviation for major asset classes is ±10%. Weights for sub-assets are primarily based on Black-Litterman tactical asset allocation model results, supplemented by subjective analysis.
Last week, the tactical asset allocation portfolio yielded a return of 1.59%. As of January 11, 2026, the portfolio achieved a cumulative excess return of 4.10% and a cumulative absolute return of 16.48% relative to the benchmark portfolio.
The latest weights and performance of the securities covered in the tactical asset allocation portfolio are as follows.
Analytical perspectives 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 weights for the macro-factor model combines objective and subjective elements; the objective part comes from quantitative backtesting, while the subjective part derives from experience and judgment, potentially introducing bias. Discrepancies exist between historical and projected data: The historical and expected data used in the report may not precisely represent actual market expectations. Market consensus expectations may adjust: Report conclusions are based on neutral assumptions regarding market consensus; if unexpected events cause market expectations and corresponding macro factors to change, model conclusions may be altered. Quantitative model 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 teams on the mentioned sectors, please refer to relevant published research reports.
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