On November 28, 2025, the Analyst Conference and the 7th Sina Finance "Golden Kylin" Best Analyst Awards Ceremony were grandly held. Li Chao, Chief Economist and Co-Director of the Research Institute at Zheshang Securities Co.,Ltd., and his team won first place in the macroeconomic category.
Li Chao shared his forward-looking views on China's economy and capital markets in 2026. As the inaugural year of the 15th Five-Year Plan, Li Chao believes the core theme for 2026 will be "high-quality development." Understanding future policy and economic evolution requires his pioneering "Four-Layer Analytical Framework."
**Understanding China's Core: The Four-Layer Analytical Framework** Li Chao emphasized that analyzing China's economy must go beyond a singular focus on GDP growth. He proposed a multidimensional decision-making framework: 1. **U.S.-China Rivalry**: The primary consideration in current policymaking. 2. **Social Stability**: The foundation for economic development. 3. **Structural Transformation**: The core path to high-quality development. 4. **Economic Growth**: Maintaining reasonable growth under the above conditions.
Li Chao noted that only through this framework can one accurately grasp the underlying logic of China's policies and economy. He predicts that amid structural transformation, China will continue to rely on its strong "export value-for-money advantage" to sustain growth, alleviating excessive concerns about 2026 fundamentals. Market confidence is gradually strengthening as it adapts to transformation-related challenges.
**2026 Market Outlook: "Setting Sail with Confidence," Liquidity-Driven Bull Market Expected** Li Chao expressed clear optimism for 2026 capital markets, encapsulated in his strategic theme "Setting Sail with Confidence." He highlighted that the latter three characters of the Chinese title all contain the "water" radical, hinting at a market driven by liquidity.
He analyzed that global experience shows even during recessions or deflation, declining long-term interest rates can fuel "dual bull markets" in stocks and bonds, primarily due to liquidity easing boosting asset valuations. In contrast, China's significant rate cuts have yet to fully reflect in equities, mainly due to prolonged risk aversion stemming from U.S.-China tensions and structural transformation uncertainties.
"However, confidence has been steadily rising since 2025, and we expect this trend to continue in 2026," Li stated. "The market is owed a bull run." He believes a liquidity-driven rally is imminent as confidence recovers.
**Investment Strategy: Focus on "Declining Rates," Dynamic Allocation Between Tech and Dividends** Li Chao outlined two key investment directions benefiting from lower rates: 1. **Tech Stocks**: Lower rates increase willingness to price distant future cash flows, elevating valuation ceilings. These thrive in high-risk-appetite environments. 2. **Dividend Stocks**: When bond yields become unattractive, stable high-dividend equities serve as substitutes, undergoing value re-rating. These are defensive plays during low-risk sentiment.
He advised a tactical approach: favor dividend stocks during U.S.-China tensions and tech stocks during cooperation phases, as geopolitical dynamics critically influence risk appetite and sector outperformance.
In conclusion, Li Chao urged investors to embrace optimism for 2026, deeply understand the "Four-Layer" policy logic, and capitalize on structural opportunities under accommodative liquidity—navigating the "Setting Sail" journey with precision.
Comments