Sinolink Securities has released a research report stating that investment activity is broadening from a singular focus on AI to encompass a wider range of real economic sectors. The anticipated relatively smooth path of future US interest rate cuts is also expected to provide a favorable tailwind for the recovery of the global manufacturing cycle. Within this process, the capacity value of Chinese assets is likely to be repriced, and returning capital flows are expected to stimulate domestic consumption and inflation cycles. Specific allocation recommendations include: First, the revaluation logic for physical assets is shifting from liquidity and US dollar credit to industrial low inventory and stabilizing demand: copper, aluminum, tin, crude oil and oil tanker shipping, rare earths, and gold. Second, Chinese equipment export chains with global comparative advantages and confirmed cyclical bottoms—power grid equipment, energy storage, engineering machinery, wafer manufacturing—along with domestic manufacturing sectors showing signs of a bottom reversal—petrochemicals, printing and dyeing, coal chemicals, pesticides, polyurethane, titanium dioxide, etc. Third, capturing the consumption recovery channel driven by capital inflows, easing balance sheet reduction pressures, and increasing inbound personnel trends: aviation, duty-free, hotels, and food & beverage. Fourth, non-bank financial institutions benefiting from capital market expansion and a bottoming out of long-term asset-side returns. The main views of Sinolink Securities are as follows:
Global Assets: Rebalancing Continues The bank previously noted that the current market rotation from high to low valuations is based on synchronized domestic and external recovery. As AI-related trading gradually enters its second phase, differentiation within the technology chain may become the norm. Looking at global market performance during the Spring Festival period (2026/2/16-2026/2/20), global risk assets tended to rise, but with internal divergence: (1) The rebalancing of global equity styles continued: sectors such as industrials, financials, and energy continued to gain market favor. While industrial metals experienced high volatility as crowded trades were digested, equity markets in resource-rich countries like Brazil advanced strongly. (2) Internal differentiation within tech assets: With the launch of AI code scanning tools, software stocks, particularly in cybersecurity, faced continued selling pressure, while segments with genuine supply-demand tightness, such as memory, saw strong rebounds. The market's focus is no longer on whether AI is a bubble, but on identifying the real industrial impacts, key constraints, and tight links as AI transitions from a thematic to a macroeconomic factor.
In commodity markets, crude oil performed most notably. Short-term geopolitical premiums were boosted by renewed US-Iran tensions, while medium-term, the increasing importance of the "petrodollar" cycle could provide support for rising oil prices.
Manufacturing Cycle Gains Further Traction This week's US Q4 2025 GDP data, although overall growth was below expectations, was primarily dragged down by government spending fluctuations. Investment, particularly in AI, showed strong performance. More importantly, growth rates in non-AI and residential investment have begun to bottom out and rise, indicating that the recovery in investment activity is spreading from a singular AI driver to a broader range of real sectors. February S&P Manufacturing PMI data echoed this trend: figures from Europe exceeded expectations across the board, with Germany's PMI returning to expansion territory after three years and hitting a new high. The US remained in expansionary territory, with firms' future business outlook expectations rising to a more than one-year high. Signals of a global manufacturing recovery are accumulating.
Furthermore, a recent US Supreme Court ruling that found former President Trump's tariffs under IEEPA unconstitutional suggests that, barring the use of alternative tariff tools, effective tariff rates could decline. This would likely ease domestic inflationary pressures and support a recovery in global exports. Looking ahead, the primary pressure to curb inflation in the US is shifting from the Federal Reserve to being shared by more sectors, suggesting the path for US rate cuts may remain relatively smooth. This provides a clearer macroeconomic backdrop for the theme of global manufacturing recovery. For investors, focusing on the more certain theme of global manufacturing cycle recovery may be preferable to grappling with the complex question of "who will ultimately prevail" in the tech chain. While the Trump administration retains other alternative tools and has recently announced new tariffs and trade investigations, implying ongoing trade disruptions, the upper limit of their impact on asset pricing has become more visible.
Commodities: Transitioning from Financial Over-trading to Industrial Pricing Recently, prices of commodities, particularly industrial and precious metals, have experienced high volatility due to multiple macroeconomic and industry-specific disruptions. For industrial metals, the phase of asset allocation-driven demand and resulting speculative crowding mentioned earlier appears to have temporarily subsided. Price signals are expected to revert to reflecting genuine industrial supply and demand. Looking forward: On one hand, geopolitical premiums for industrial metals persist amid rising resource nationalism, and tail risks from supply disruptions are unlikely to dissipate soon, suggesting a long-term trend towards higher desired inventory levels. On the demand side, tech giants' actual investments in AI show no signs of slowing, with the "BIG7" capital expenditure guidance for 2026 remaining significantly above market expectations. Concurrently, signals of increased investment in traditional global cycles and emerging markets are becoming more apparent, potentially providing new demand-side support. Historical patterns suggest that the currently low copper-to-gold and aluminum-to-gold ratios indicate metals could exhibit greater upward elasticity during a manufacturing upcycle.
For gold, the Trump administration's increased focus on "cost of living" issues in 2026, alongside a shift in the primary responsibility for inflation control from the Fed to the government, reduces the necessity for monetary tightening, which is favorable for commodities including gold. Simultaneously, the Supreme Court's ruling against IEEPA tariffs brings US fiscal and debt issues back into the spotlight. Pressures from potential tariff refunds and the administration's potential tax cut aspirations make significant near-term improvement in US debt sustainability unlikely. As gold volatility subsides further, it may present an opportunity for allocation-focused capital to reaffirm a higher price floor.
Grasping the Key Theme: Global Physical Assets vs. Chinese Assets The core of the market style rebalancing is not the existence of an AI bubble, but the evolving major contradictions and shifting tight links resulting from AI's macroeconomic impact combined with monetary policy and major power policy choices. Investment activity is diversifying from a sole AI driver to broader real sectors. The prospect of a relatively smooth US rate cut path provides a supportive environment for the key theme of global manufacturing cycle repair. In this context, the capacity value of Chinese assets is poised for re-rating, and returning capital flows will foster internal consumption and inflation cycles. For commodities, after the recent period of high price volatility, industrial fundamentals are expected to outweigh monetary attributes in driving prices. Gold, as a risk hedge, is likely to provide more robust portfolio protection as US debt sustainability concerns resurface.
Focus areas include: First, physical assets whose revaluation logic is shifting from liquidity/dollar credit to industrial low inventory and demand stabilization. Second, Chinese equipment export chains with global comparative advantages and confirmed cycle bottoms, plus domestic manufacturing sectors experiencing a bottom reversal. Third, consumption recovery channels benefiting from capital inflows, reduced quantitative tightening pressure, and increasing visitor arrivals. Fourth, non-bank financials gaining from capital market expansion and a bottom in long-term asset returns.
Risk warnings: Slower-than-expected domestic economic recovery; significant downturn in overseas economies.
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