Investors are increasingly focused on generating Alpha returns amidst a volatile market environment. Invesco Great Wall, together with its parent company Invesco, recently hosted the "2026 Alpha Insights Investment Strategy Conference," bringing together Invesco's global research team, AI industry experts, and fund managers to dissect global macroeconomic trends and asset allocation strategies.
The conference aimed to identify the key Alpha investment themes for the latter half of the year. Zhao Daizhong, Executive Vice President of Invesco Great Wall, stated that generating excess returns increasingly requires a global perspective. He noted that geopolitical dynamics, Federal Reserve policy, and the new technological revolution, particularly AI, have deeply integrated the industrial chains of North America, Japan, South Korea, and China, leading to heightened interconnectedness in global capital markets.
For Invesco Great Wall, building this global vision is supported by its parent company, Invesco, which provides the research team with a unique advantage for cross-market validation in industry analysis. Building on this, the firm has developed its Alpha Insights research matrix, transforming its global perspective into tangible investment insights. This conference was the second in the Alpha Insights series, following the first event in January, which proactively identified investment opportunities from the new technological revolution. This session delved deeper into uncovering Alpha returns to help investors navigate a turbulent market.
Global Economic Outlook: Moderate Slowdown, but No Peak for Global Equities
As a leading global asset manager, Invesco provides in-depth, long-term research on the global economy. Brian Levitt, Invesco's Chief Global Market Strategist, delivered a keynote speech offering a valuable international perspective on the global macroeconomic outlook for the second half of the year. Levitt argued that the global economy is not overly leveraged and that the market is experiencing a moderate slowdown rather than an extreme downturn. "The global economy is still expanding. While oil prices and interest rates may create some headwinds, this is a slowdown, not a recession," he said. "Equity markets are performing reasonably well across different economic environments, and during a slowdown, investors can pay particular attention to quality stocks and large-cap stocks."
Regarding the AI industry, Levitt believes the investment expansion cycle is far from over. As long as corporate earnings and fundamental data like AI service orders continue to improve, optimism remains warranted. Furthermore, the efficiency gains from AI present significant investment potential in the financial and healthcare sectors. He emphasized that despite market volatility and uncertainty, global equity markets and various industry indices have not reached all-time highs and are only in a "moderate slowdown," not an extreme scenario, suggesting the overall robust trend may persist. He advised investors to focus on long-duration assets, particularly opportunities in the US and Chinese stock markets, as well as long-term government bonds.
New Narratives for Chinese Companies Going Global
Driven by macroeconomic trends and technological waves, the global industrial chain is rapidly restructuring. The overseas expansion of Chinese companies has become a core theme that cannot be ignored in global asset allocation. In a panel discussion titled "Change and Allocation: The Global Coordinates of Chinese Assets," speakers offered both domestic and foreign perspectives to deconstruct the logic behind investing in Chinese companies going global.
Christopher Hamilton, Head of APAC (ex-Japan) Client Investment Solutions at Invesco, believes the China story has shifted from a focus on scale to a focus on innovation. "In the long run, the US might be Beta, while China could be Alpha," he stated. "Resilience is the key word when viewing the Chinese economy. Global investors are likely still under-allocated to China, which will play a core role in future portfolios." He recommends actively investing in companies with growth potential and resilient supply chains, noting that China's technology and AI sectors are worthy long-term investment areas.
Zhou Hanying, Director of the International Investment Department at Invesco Great Wall, pointed out that going global remains a medium-to-long-term theme for A-shares. The evolution from the "new three items" (electric vehicles, lithium batteries, photovoltaics) to the "new-new three items" (robotics, AI, innovative drugs) reflects an upgrade in China's global expansion model 鈥?shifting from selling products to selling technology standards, solutions, and ecosystems. Regarding valuation, the "new three items" can still be assessed using traditional frameworks like PE, PB, and DCF, with a focus on 10-20x valuations. However, the "new-new three items" require a risk-adjusted option pricing approach, cautioning against mistaking trading volume for value realization.
Ke Haidong, a fund manager at Invesco Great Wall, noted that highlights from the mid-year reporting season are concentrated in the supply chain and capital goods sectors. On the supply chain side, AI infrastructure is a key driver, and power equipment is benefiting from orders exceeding expectations due to power shortages in North America. On the capital goods side, sectors like engineering machinery, shipping, and energy storage are performing well, driven by AI infrastructure, supply chain restructuring, and energy transition. In consumer goods, he is optimistic about new energy vehicles, heavy trucks (which are less affected by trade frictions), and the CXO segment of biomedicine. He suggests a "barbell" investment strategy: on one end, allocate to technology growth driven by the spillover of engineering talent; on the other, capture opportunities in consumer goods and capital goods from consumption upgrades and industrialization along the Belt and Road Initiative.
The AI Transition: From 'Answering Well' to 'Doing Well'
AI is arguably the most prominent theme for investors, from its role in the global expansion of Chinese companies to its position as a core driver of industrial chain restructuring. As market debates intensify over whether to invest in AI, given capital expenditure, crowding, and valuation concerns, a keynote speech by Zhipu AI provided an on-the-ground perspective. The company stated that 2026 is a critical year for AI to move from simple conversations to long-form tasks, transitioning from "answering well" to "doing well."
Zhipu AI argued that the next generation of high-value data will come from long-task data and real enterprise workflow data, not just publicly available internet data. Enterprise workstream data is becoming a core, untapped resource for the next phase of AI development. Converting this data into a format learnable by models is key to unlocking its value. Furthermore, valuable data supply relies not only on labeling but also on the model team's "data aesthetic," research judgment, and the ability to produce high-quality data at scale. The company outlined a five-step process for enterprise AI implementation: selecting the right scenario, redefining human-model division of labor, integrating with enterprise data, establishing verification mechanisms, and using continuous feedback to improve models, tools, and processes. Zhipu AI plans to continue upgrading its foundational models and focus on building deployable task units with enterprises to solve engineering challenges and bring AI into production.
AI at a Crossroads: A Dialogue Between 'Hype' and 'Rationality'
While AI development progresses rapidly, its pricing in the capital markets reflects a multi-faceted debate. In a panel discussion at the AI crossroads, Invesco Great Wall's technology investment team presented a balanced perspective, with voices of both "hype" and "rationality" colliding to offer investors a more complete picture of AI's investment potential. Notably, the firm's technology-focused team has generated significant excess returns in the tech-heavy first half of the year, building a reputation for understanding technology and investing in it.
Jiang Shan, Head of the Mixed Asset Investment Department at Invesco Great Wall, positioned himself as the voice of "hype." He stated that the recent market correction has only strengthened his conviction in AI's secular trend. He believes AI fundamentals haven't changed much and the key future observation points will be on model companies, specifically revenue realization and data center ROI. He is more bullish on optical communications and semiconductors, noting that the global semiconductor cycle has already begun and that A-share semiconductor stocks are moving from a cycle of opposition to US-listed AI plays to one of high synchronization, potentially transitioning from thematic trading to fundamental realization.
Meng Qi, a fund manager at Invesco Great Wall, offered a voice of "rationality." Strategically, he sees excessive exuberance in the market. Tactically, he has selectively reduced positions, cutting some "pigs flying in the wind" and cyclical stocks while retaining high-moat long-term holdings. He believes that while the AI narrative is grand, it is still cyclical. Stock prices are driven by factors like crowding, supply, and demand. Currently, AI stock crowding is relatively high. He expects supply-side conditions to improve next year, but demand needs new application scenarios beyond coding to emerge. A market correction to a reasonable range would be a good time to selectively buy. For the second half of the year, he is more optimistic about consumer goods going global, especially the motorcycle sector.
Lu Zhehao, a research analyst at Invesco Great Wall, responded to questions about an AI "bubble" from a capital expenditure perspective. He argued that negative free cash flow does not necessarily signal a peak. He provided arguments from both the training and rental sides: On the training side, the trend of increasing model parameters continues. On the rental side, the rental price for the most advanced B200 computing power continues to rise. A disclosed lease contract from xAI implies an investment payback period of only 1.5 to 2 years, indicating demand significantly outstrips supply. The supply chain suggests that capital expenditure for 2027 is largely locked in by formal orders, with high growth certainty. Current valuations have already priced in pessimistic expectations for a decline in capital expenditure in 2028, but no negative signs have been seen. He favors optical communication leaders in allocation.
Chen Jiawen, an analyst at Invesco Asia Pacific, discussed how global capital will be reallocated across the AI supply chain. She noted that deleveraging by leveraged ETFs and hedge funds in the South Korean market is largely complete, and the first wave of mechanical selling is nearly finished. After the "hype," foreign capital is reassessing value created by the sell-off. Their approach is clear: focus on global supply chain champions rather than just domestic ones, particularly in areas with extending order backlogs; and increase allocations to assets with scarcity that "can't be bought overseas," such as domestic supply chains. While there is broad consensus on long-term demand growth, barriers on the supply side will be key to maintaining future valuations.
Liu Lisi, a fund manager at Invesco Great Wall, addressed the logic of "burning cash" on computing power. He argued that the market for AI replacing knowledge workers is vast, suggesting that demand for computing power will be a long-term and sustained trend. For cloud companies, investing in computing power is easier to manage than building models and is a crucial way to "stay in the game." Even if their own models fail, accumulating hardware could prove beneficial if open-source models succeed. As for the negative free cash flow, he sees it as a transitional characteristic of shifting to a cloud computing business model. It does not yet involve leverage, and taking on leverage is a normal preparatory step for future revenue growth.
Reconstruction and Response for 'Fixed Income +' in a Volatile Market
While AI offers a core path to Alpha, the "fixed income +" strategy is also gaining popularity in the current environment of falling interest rates and rising volatility, offering a balance of offense and defense. By the end of the second quarter, the total size of the "fixed income +" market reached a new all-time high. Invesco Great Wall, a major player in fixed income, leads the industry with over RMB 300 billion in "fixed income +" assets under management.
Li Yiwen, General Manager of the Mixed Asset Investment Department at Invesco Great Wall, predicted that the divergence between domestic and international economic conditions will narrow in the second half. While negative growth in broad fiscal expenditure weighed on the economy in the first half, it is expected to pick up in the second half as the base effect lowers and lagging fiscal tools are implemented more quickly, leading to marginal economic improvement. Regarding inflation, domestic price pressures are moderate due to oil prices, and overseas inflation will also moderate due to high interest rates, so there is no need for excessive concern.
Peng Chengjun, General Manager of the Fixed Income Department at Invesco Great Wall, provided his view on the bond market for the second half: there are no major factors that could change the trend. Returns will primarily come from coupon income and limited capital gains. If volatility increases due to trading structure or sentiment, it could be a good opportunity for contrarian trading. In terms of selection, government bonds and local government bonds are relatively preferable. Credit bonds are crowded after three years of intense debt restructuring, but private sector financing demand has not reversed, so this crowding will likely persist. The potential for year-end window dressing for the next year is limited.
Zou Lihu, Head of the Mixed Asset Investment Department at Invesco Great Wall, indicated that the domestic market is presenting unique equity opportunities, mainly supported by extremely low interest rates. He is bullish on four areas: leaders going global that have been oversold; the cyclical sector is entering an interesting zone; upstream resources are at the beginning of a decade-long wave; and the dividend-paying sector.
Chen Ying, a fund manager at Invesco Great Wall, provided a more granular map of investment opportunities. She believes that under a K-shaped divergence, the AI supply chain and upstream resources remain the two main themes. On the AI side, she favors optical communications, domestic computing power, the memory expansion chain, and semiconductor equipment and materials. Hong Kong-listed Hang Seng Tech and cloud companies are also attractively valued, with consumer electronics worth watching next year. On the upstream side, she is most bullish on copper under supply constraints, and for energy storage, she focuses on the commercial and industrial storage segment, where demand is more sustainable. She also recommends style rebalancing based on odds, making contrarian allocations in chemicals, home appliances, and high-quality export chain targets with 10-15x valuations.
From macro trends and overseas expansion to AI industry analysis and "fixed income +" diversification, the conference agenda consistently pointed to a core theme: re-evaluating the long-term value of Chinese assets through a global lens. Amid deep global market linkages and a surge in cross-border asset allocation, Chen Jiafei, Head of Institutional Business for Greater China and Southeast Asia at Invesco, offered a firm conviction on the long-term value of Chinese assets. She stated that Chinese assets will occupy an irreplaceable strategic position in global investment portfolios over the long term. Going forward, Invesco will leverage its global platform and research resources, combined with Invesco Great Wall's deep experience and long-term accumulation in the Chinese market, to continue building a bridge connecting China with global markets. This will help domestic and international investors seize global opportunities while enabling global investors to gain a deeper understanding of China's development potential and investment value.
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