On December 19, at the "Alpha Summit" jointly hosted by Wall Street News and CEIBS, Liu Chenming, Assistant Director and Chief Strategist of GF Securities, delivered a speech titled "Breaking Free from the Cage: Overcoming Historical Constraints—2026 Annual Strategy."
Liu noted that 2025 witnessed a unique phenomenon where global assets, particularly AI tech stocks and commodities (gold, copper), surged simultaneously. This is not a contradiction but reflects the market's pricing of the core issue—global debt. Debt resolution relies on either technological progress (AI-driven productivity growth) or inflation (commodity-driven debt dilution), forming two sides of the same macroeconomic logic.
Liu emphasized that China's equity market profit structure has undergone a qualitative shift, evolving from the traditional "80/20" split (80% domestic demand, 20% emerging industries) to a "60/40" ratio (60% traditional domestic demand, 40% emerging industries and global expansion). Notably, overseas business segments exhibit higher profitability, bolstering market resilience.
Looking ahead to 2026, Liu expects a clearer recovery trend in A-share ROE. With restrained valuations, stronger regulatory oversight, and inflows from long-term capital (e.g., national team funds and insurance capital), the market will transition from a "fast bull" to a healthier "slow bull" phase. Key sectors like AI, semiconductors, and commodities face significant supply constraints, suggesting sustained industry momentum.
Key Insights:
1. **Debt Resolution Paths**: Without default, debt can be resolved via real growth exceeding real interest rates (growth-driven), unexpected inflation (inflation-driven), or fiscal tightening. Both AI and gold benefit from these scenarios. 2. **A-Share Profit Shift**: Emerging industries now contribute 40% of profits (up from 20% a decade ago), while traditional domestic demand (real estate, infrastructure, consumption) has declined to 60%. This challenges the notion of stocks as a pure "economic barometer." 3. **Copper's Rally**: Mirroring gold's 2024 breakout, copper prices may enter a new uptrend amid low global inventories and fiscal/monetary easing, making it a focal point for asset allocation. 4. **Capital Inflows**: Despite weak mutual fund sales, high-net-worth individuals are shifting deposits into alternatives (e.g., hedge funds and index-enhanced strategies) seeking 5%-10% annual returns amid low fixed-income yields. 5. **Market Concentration**: The top 10 A-share firms (ex-financials) account for only 17% of market cap (vs. 34% in the U.S.), reflecting liquidity convergence toward globally competitive tech leaders amid structural economic shifts. 6. **Year-End Opportunity**: December-January offers a critical accumulation window ahead of the "spring rally" (February-March). Sectors like Hang Seng Tech, domestic computing, and semiconductors, post-adjustment, present attractive entry points.
**Market Review: Tech and Commodities Lead Performance** Globally, tech and resource sectors outperformed in 2025, driven primarily by earnings growth rather than valuation expansion. In the U.S., China, Japan, and South Korea, AI-related tech stocks showed healthy gains underpinned by fundamentals.
**Macro Logic: AI and Commodities as Dual Solutions to Debt** The simultaneous rise of AI (growth) and gold (inflation hedging) reflects market pricing of debt-resolution paths. With fiscal austerity politically unfeasible, growth (via AI-driven productivity) and inflation (via commodities) emerge as viable solutions.
**China's Structural Shift: From Domestic to Global** A-shares' profit structure now leans 40% toward advanced manufacturing, tech, and global expansion—segments with higher-margin overseas revenue (20%+ vs. 14% domestic). This divergence explains the market's resilience despite domestic headwinds.
**2025 Outlook: Manufacturing Recovery and Commodities** Global manufacturing PMI recovery, fueled by loose fiscal/monetary policies and low inventories, may support China's export chain and commodities. Copper's breakout resembles gold's 2024 trajectory, signaling sustained demand.
**Valuation and Capital: Foundations of a "Slow Bull"** A-shares' valuation remains reasonable, with ROE recovery expected in 2025. Incremental capital will likely come from long-term institutional investors and high-net-worth individuals, favoring a gradual uptrend over a speculative surge.
**Industry Trends: Supply Constraints Extend Cycles** AI, semiconductors, and commodities face prolonged supply bottlenecks, differentiating this cycle from past产能-driven downturns. Current pullbacks in key sectors (e.g., Hang Seng Tech, chips) present strategic entry points.
**Conclusion** The 2026 market outlook hinges on structural shifts—profit rebalancing, industrial trends, and capital flows—rather than macro volatility. Investors should prioritize high-conviction sectors and adopt a disciplined, patient approach.
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