The first quarter witnessed significant market volatility, largely influenced by the Middle East conflict. As we enter the second quarter, whether the market can initiate a new upward trend has become a key concern.
Reviewing Q1, January saw a remarkable 17-day rally with trading volume surging rapidly, peaking at nearly 4 trillion yuan daily—a historic high. However, the market subsequently cooled, a trend that persisted around the Spring Festival. Post-holiday, there were widespread expectations of a spring rally, as investors who profited in 2025 might share their gains during social visits, potentially attracting more capital. Unfortunately, the sudden joint U.S.-Israel strike on Iran on February 28th, which escalated into a Middle East conflict, disrupted the normal rhythm of the A-share market. The anticipated spring rally failed to materialize, and the market briefly fell below the 4,000-point threshold, approaching 3,800 points. During this period of shaken investor confidence, I participated in a live dialogue with Professor Liu Jipeng. After an hour of intense discussion, we concluded that the Middle East conflict does not fundamentally impact the long-term bull market, as this rally has its own underlying logic and will not be terminated by regional tensions. I predicted that Trump, facing significant pressure in April and a mid-term election at year-end despite his tough rhetoric, would seek a dignified exit from the war. Our discussion centered on whether the defense of 4,000 points signaled a "bull pause" or a "bear arrival," and we unanimously agreed it was the former. As expected, after a series of强硬 statements, Trump announced plans to end the war within two weeks, relieving global markets. International oil prices fell sharply, gold rebounded significantly, and global capital markets celebrated, with A-shares reclaiming the 4,000-point level and restoring investor confidence. The slow, long-term bull market is expected to continue into the second quarter.
This bull market carries significant historical使命; it is not merely a typical rally but a crucial engine for economic growth, akin to a "fourth horse" pulling the economy—a view gaining broad acceptance. Recent Q1 economic data from the National Bureau of Statistics showed China's GDP growth at 5%, with温和 inflation and retail sales growth recovering to 2.4%, indicating a rebound from Q4 last year. However, economic recovery remains modest. To genuinely boost consumption, stimulate investment, and enhance domestic demand, a sustained bull market is essential. This rally肩负 three key missions: First, increasing household wealth through market gains to offset the negative wealth effect from years of housing price declines, thereby promoting consumption—investors naturally spend part of their stock market profits; second, generating a wealth effect to stabilize the property market. While real estate is still adjusting nationwide, core areas in first-tier cities like Beijing and Shanghai show signs of stabilization and recovery, with transaction volumes rising noticeably in Q1. A bull market lasting several years could channel some investor gains into real estate, aiding market stability; third, fostering new quality productive forces through market development. Following new listing standards on the STAR Market, the ChiNext board has implemented reforms, introducing a fourth set of criteria allowing unprofitable tech firms with annual revenue over 200 million yuan to list. Key metrics include a market cap of at least 3 billion yuan, revenue of 2 billion yuan, and a three-year revenue CAGR of 30% for emerging industries, or a market cap of 4 billion yuan, revenue of 2 billion yuan, and R&D spending exceeding 1 billion yuan (15% of revenue) for future industries. These innovative firms represent economic direction; though early-stage, they can list with substantial revenue and growth or high R&D. Support from the STAR and ChiNext boards is strengthening, likely yielding more tech leaders.
Globally, the AI revolution is underway, with U.S. tech stocks showing泡沫 after years of gains. Buffett has significantly reduced U.S. stock holdings over two years, with Berkshire Hathaway's equity exposure below 50% and cash reserves at $350 billion. Recently, Buffett stated that even with a 5%-10% market pullback, U.S. stocks are not attractive enough for entry. He typically reduces positions before peaks and enters during downturns as a "savior." Having attended Berkshire's annual meeting in Omaha seven times over the past decade, I have introduced Buffett's value investing理念 to domestic investors, with some media dubbing me the "Chinese Buffett"—an overstatement, but I am committed to advocating value investing. Over the past year, I developed a value investing theory tailored to China's market, gaining broad acceptance. This approach combines Buffett's principles of "good industry, good company, good price" with A-share realities: interpreting policies, as macro and industry policies significantly impact markets, favoring supported sectors; and managing positions, as retail-dominated A-shares often experience mispricing, with exaggerated swings. In the past decade, my fund successfully timed market tops and bottoms twice and four times respectively,实践 this theory.
This May, I will attend my eighth Berkshire meeting in Omaha. Though Buffett, at 95, will not answer questions on stage, his presence in the board area offers immense inspiration. Each meeting is震撼, with nearly 40,000 global investors traveling over 20 hours to gather—a testament to the unparalleled recognition of value investing. Under Buffett's 61-year leadership, Berkshire achieved nearly 20% annualized returns, totaling 60,000-fold growth, proving value investing's long-term efficacy. With Greg Abel as the new CEO, it remains uncertain if he can replicate this success, but Buffett's理念 will endure, enlightening更多 investors. Value investing may be the best path for ordinary investors to avoid losses. Though Charlie Munger has passed, his wisdom lives on. Their philosophy inspires all. As an advocate, I hope to share these insights widely, guiding更多 toward value investing for wealth growth.
For A-shares' slow bull market, maintain confidence and patience. Q2 offers ample opportunities, with "tech + heavy assets" as key themes likely to become more pronounced.
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