Amidst a rapidly rising market that saw the Shanghai Composite Index break through 4100 points at the beginning of 2026, followed by a period of consolidation, the future direction of the market has become a focal point of attention. On the afternoon of January 21, the well-known private equity firm Zhong Ou Rui Bo held its 2026 Annual Investment Strategy Conference online. Wu Weizhi, Chairman and Chief Investment Officer of Zhong Ou Rui Bo, addressed market concerns with a presentation titled "How Much Further Can This Bull Market Run?". Wu, the originator of the unique "Four Seasons Asset Allocation Theory," believes the current market exhibits typical summer bull market characteristics—active trading, accelerated sector rotation, and a broadening赚钱 effect, yet it has not reached a state of full-blown泡沫 or extreme euphoria, suggesting there is still room and time for further growth. Wu Weizhi contends that, compared to global major markets, the current rally in Chinese stocks is more of a "catch-up" than a "bubble," whether viewed from a valuation or performance perspective. From the current vantage point, Wu is optimistic about opportunities in five major "hard asset" categories: "Technology Innovation+", Pharmaceuticals & Biotech, Supply-Side Reversals in Resources, Gold, and High-Dividend-Yield Assets. The current bull market is showing summer characteristics, and a "slow bull" or "long bull" market is taking shape. Wu Weizhi reviewed the performance of Japanese real estate and stock markets after their peaks from the 1990s to the present. He believes that since 2012, the Japanese stock market has ended its bear market and embarked on a "slow bull" trend. Japan's emergence from a "long bear" market involved conventional proactive fiscal and monetary policies, but most importantly, the Bank of Japan's direct purchases of Japanese equity ETFs. In contrast, China implemented supportive policy measures earlier and more proactively to stabilize and revive the stock market. Since September 2024, the stock market has continued its positive trajectory with notable success. Compared to Japan back then, China currently enjoys a stronger economic foundation. For instance, the overall advantage of Chinese manufacturing far surpasses that of Japan in its heyday. Even during the turbulent and challenging global trade environment of 2025, China's trade surplus reached a record high, demonstrating the formidable competitiveness of Chinese enterprises and manufacturing on the global stage. In new economic sectors like semiconductors and the internet, the upward economic trend is significantly stronger than it was in Japan. From a valuation perspective, Wu Weizhi argues that despite the significant rebound in the A-share market in 2025, it remains undervalued compared to global markets. Based on valuations at the end of the third quarter of 2025, the dynamic price-to-earnings ratio of the CSI 300 Index was approximately 14 times, substantially lower than the US S&P 500 Index (around 29 times) and the Nasdaq Index (around 42 times). Historically, from 2021 to 2024, the Wind All-A Index fell by nearly 30%, significantly underperforming major global markets. This evidence suggests the current rise in Chinese stocks is more a "catch-up" than a "bubble." Wu Weizhi believes the foundation for a bull market in Chinese stocks is solid: firstly, the advantage of Chinese manufacturing is difficult to shake; secondly, China's technological strength is underestimated; thirdly, with cautious capital expenditure globally, the value of heavy assets built by Chinese companies across various industries in the past will be reassessed; and fourthly, there is strong policy support for the market. He stated that unlike the past pattern of short bulls and long bears, the A-share market is expected to usher in a "slow bull" or "long bull" market. Therefore, investors should patiently hold Chinese "hard assets." There are numerous investment opportunities in a bull market, and the focus should be on five major "hard asset" directions. Wu Weizhi indicated that a bull market sees all sectors flourish, and Zhong Ou Rui Bo will invest across five dimensions: "Technology Innovation+", Pharmaceuticals & Biotech, Supply-Side Reversals in Resources, Gold, and High-Dividend-Yield Assets. Among these, the first four categories are currently performing well, while high-dividend-yield assets can be used to hedge against market volatility. In the "Technology Innovation+" sector, internet platform companies, after undergoing anti-monopoly rectification, now have reasonable valuations, ample cash flow, increased dividends, and AI-powered new businesses, giving them "utility-like" attributes. AI terminals (e.g., AI glasses, humanoid robots, L3+ autonomous driving) are reaching the tipping point for mass production, while domestic substitution in computing power (GPU, optical modules, servers) is accelerating due to autonomous control imperatives. Intensified competition between China and the US in areas like commercial aerospace, low-orbit satellites, and deep-space exploration is spawning a "hard tech" investment theme. In Pharmaceuticals & Biotech, innovative drug R&D is entering a harvest period, with frequent global out-licensing deals in cutting-edge areas like ADC, bispecific antibodies, and GLP-1. Several Biotech companies are expected to reach profitability inflection points. After four years of deep industry adjustment, valuations are at historical lows, and the normalization of医保 negotiations has, conversely, strengthened the pricing power of leading enterprises. Regarding Supply-Side Reversals in Resources, critical metals like cobalt, nickel, rare earths, and silver are facing emerging supply gaps due to severely insufficient capital expenditure over the past five years, combined with rigid demand growth from new energy, defense, and AI hardware sectors. These traditional "heavy assets" are being revalued as scarce and strategically important "hard assets." For Gold assets, their value as a non-credit asset for allocation is rising against the backdrop of global "de-dollarization," normalized geopolitical conflicts, and ongoing central bank purchases. If the Federal Reserve continues to cut interest rates, declining real interest rates will provide further support for gold prices. Concerning High-Dividend-Yield Assets, sectors like utilities, telecom operators, and banks can provide stable cash flow in a declining interest rate environment. Although they may lack short-term弹性 during beta-driven rallies, they still hold significance as portfolio "ballast," especially during periods of rising volatility.
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