Xijing Research Institute President Zhao Jian stated that the global market has entered an era of systemic shifts in foundational logic. He warned that investors continuing to view the new world through old frameworks will pay a heavy price amidst the turbulent waves of the times.
Three Key Macro Factors: The Tech Narrative Rescued U.S. Stocks
Zhao Jian pointed out that the core contradictions currently determining the trajectory of the global and Chinese economies are concentrated in three macro factors: technology, geopolitics, and monetary policy. Together, these form a new coordinate system for asset pricing.
Technology is the most decisive force among them. Zhao Jian recalled that in 2022, the U.S. stock market experienced its longest bear market in over a decade, falling for 11 months with a 30% decline. "Just as the U.S. stock market was about to trigger a financial crisis, ChatGPT emerged," he noted. He believes ChatGPT not only saved the AI industry but also rescued the U.S. stock market and economy. The massive liquidity released globally since the pandemic has been channeled entirely into the core field of AI. First-quarter 2026 reports show that listed companies across the AI industry chain saw average profit and revenue growth of 80% to 100% year-over-year, supporting the fundamental stability of global capital markets.
Geopolitics has entered an "active period." Zhao Jian used tectonic plates as an analogy: "During active periods, volcanic eruptions and earthquakes occur frequently. In recent years, the global geopolitical plate has entered an active period, with local conflicts becoming the new normal." He specifically noted that the global defense industry is replenishing inventories—NATO requires member states to increase defense spending from 2% to 5% of GDP. "Five percent represents a state of readiness, close to a state of war," he said. Russia's military-industrial sector's share of GDP has risen from around 3% to approximately 11%, driving significant demand in the defense supply chain.
On the monetary front, the world has entered a phase of highly expanded deficits. Zhao Jian stated bluntly, "The biggest bubble is not a tech bubble, nor is it gold; it's currency." U.S. debt is unstoppably heading toward breaking through $40 trillion, while China, post-September 24th, has completed a monetary policy revolution—providing "300 billion for 300 billion, 500 billion for 500 billion." This represents a paradigm shift in policy alignment with the Federal Reserve and the Bank of Japan.
He added, "The technology variable determines the direction for us to increase positions, while geopolitical fluctuations provide the timing. In the past two years, my macro allocation returns, especially those from the Trump shock—last year's tariff war, we bravely added positions; otherwise, tech stocks would have risen too sharply. March this year also provided allocation opportunities. From a value investing perspective, these negative shocks are opportunities to allocate to long-term value stocks. Therefore, in value investing, we should be thankful for negative shocks regarding timing; otherwise, there would be no cost-effective opportunities to add positions to good stocks."
AI Reshapes Global Supply-Demand Curve, Structural Silicon-Based Inflation and Carbon-Based Deflation Coexist
Zhao Jian pointed out that technology is reshaping the global aggregate supply curve. While figures like Elon Musk say AI brings long-term deflation, the current stage of AI involves building computing infrastructure, with annual capital expenditures in the trillions of dollars driving demand and employment, thus leaning more towards inflation in the short term. It causes inflation in silicon-based assets—AI, semiconductors, rare metals, and power—while "old-economy assets" continue to experience stagflation, showing significant structural divergence.
Zhao Jian emphasized that AI has become a "civilizational-level change." He cited that the latest model from Anthropic has been described as "like a super-virus," with even Microsoft and the U.S. government hesitant to allow its widespread use. The profit model of AI is also vastly different from the internet era—in the previous cycle, companies like Amazon and JD.com incurred losses for many years, whereas OpenAI achieved $1 billion in revenue in its first month, became profitable in less than a year with extremely low costs. "Investing in AI itself is value investing," he concluded.
Macro Rebalancing is Underway; Value Investing Timing Should Appreciate Negative Shocks
Zhao Jian specifically noted that AI is widening the global power gap, with the U.S. becoming increasingly arrogant due to its technological advantage—this is the "arrogance of technology." China must support technological innovation through its capital markets to narrow the AI gap. To some extent, these two major gaps are gaps in capital markets—the core of capital markets is the mobilization power of social capital; investing money in AI tech companies and semiconductor firms will drive innovation.
Macro Judgment: The Darkest Hour Has Passed, a Deflationary Bottom is Forming
Zhao Jian stated that before September 24th, Chinese assets were extremely pessimistic. The policy package introduced on that date represents a "monetary policy revolution in sync with the Federal Reserve," marking the starting point for the revaluation of Chinese assets. The current market shows extreme divergence: the silicon-based world, export chains, and tech chains are booming, while the property chain and infrastructure chain remain under pressure. However, he pointed out that rebalancing forces are accumulating—prices are recovering, property prices in first-tier cities are stabilizing, computing power expenditures are strong, and new forms of consumption are thriving. There is still significant room for international capital to increase its allocation to Chinese assets. "Amidst such turbulent waves, maintaining strategic resolve and holding onto good assets is the way to achieve good returns."
Comments