Haitong Strategy's 25-year outlook: improvement in both fundaments and A-shares continue their upward trend.

Key conclusions: The continuous implementation of capital market support policies such as the "Guo Jiu Tiao" at the beginning of the year, and the clear shift in macro policies after September 24, have significantly boosted market confidence and rapidly repaired sentiment. Looking ahead to 2025, the allocation power of residents and long-term institutions will drive improvement in the funding environment, and incremental policies will improve both micro and macro fundamentals, leading to a continued upward trend in A-shares. In the mid-term, the main themes in the stock market will become clear, focusing on industries benefiting from both policy and technological advantages, such as tech manufacturing and mid-to-high-end manufacturing with supply and demand advantages. In addition, attention should be paid to areas benefiting from mergers and acquisitions and dividend assets. Kunpeng starts to soar - A-share outlook for 2025 Looking back at 2024, the Chinese economy and stock market have continued to advance. In our analysis, "Reference to the 99-Year 519 Thoughts on the current market trends and economic recovery," we proposed that a better way to break out of difficulties may be to first repair the balance sheet, then restore real demand. The warm breeze of current policies has already begun, and positive changes may be brewing, with the stock market transitioning from a bear market to a bull market. Looking ahead to 2025, with policy implementation taking the lead, improvement in corporate profits and the funding environment are expected to follow. Similar to Kunpeng spreading its wings and waiting to soar, the stock market is poised to enter a new chapter driven by fundamentals. 1. Leading policies for sentiment restoration Recent comprehensive policy measures have alleviated market concerns about the macroeconomic operation and capital market development, significantly boosting market sentiment. Taking a longer-term view, positive changes have been brewing since the beginning of the year, with a series of deepening reforms and the gradual rollout of policies to improve the stability and health of the macroeconomic and capital market environment. Since September 24, there has been a clear shift in the tone of macro policies. Various departments, including the central bank, the financial regulatory authority, the securities regulatory commission, and the Ministry of Finance, have held a series of press conferences, attracting high market attention. The comprehensive policy measures cover fiscal/monetary policies, real estate, domestic demand, and capital markets, focusing on repairing the balance sheets of residents and directly addressing current market concerns. Specifically: - In terms of fiscal/monetary policies, efforts to strengthen countercyclical policies are ongoing. Fiscal policy is a focal point for the market, with Minister of Finance Lian Weifen and others announcing on October 12 that incremental fiscal policies will focus on debt-for-equity swaps, banks, real estate, and people's livelihoods. The fourteenth session of the twelfth National People's Congress Standing Committee held from November 4 to November 8 approved the proposal to increase the limit on local government debt by replacing implicit debt with 10 trillion yuan in resources, of which 6 trillion yuan will be added to the limit of local government debt over three years, and 4 trillion yuan will be used for debt-for-equity swaps from new local government special bonds, with 800 billion yuan allocated annually from 2024, for five consecutive years. In addition, 2 trillion yuan of implicit debt from shantytown renovation due in 2029 and beyond will still be repaid according to the original contract. This debt restructuring measure helps to reduce the risks and interest payment pressure of local government's implicit debt, providing some room for broad fiscal policy at the local government level. The Ministry of Finance also stated that more vigorous fiscal policies will be implemented next year. Recent monetary policy tightening includes the announcement of interest rate cuts and reserve requirement ratio cuts by the central bank on September 24, a 0.5 percentage point reduction in the reserve requirement ratio for deposits on September 27, and a 0.2 percentage point cut in the 7-day reverse repo operation rate on October 18. Central bank Governor Pan Gongsheng stated on October 18 that he expects to further reduce the reserve requirement ratio by 0.25-0.5 percentage points before the end of the year based on market liquidity conditions. On October 21, the 1-year and over 5-year LPR rates were cut by 25 basis points to 3.1% and 3.6% respectively, marking the largest reduction in LPR rates this year and supporting the recovery of credit demand in the real economy. - In terms of real estate policies, incremental policies are driving stability in the real estate fundamentals. The real estate sector and its related industries account for over 25% of GDP, making real estate an important component of the macro economy. In this context, the September 24 press conference proposed several policies to support the real estate sector, including lowering interest rates on existing home loans to levels near those for new home loans, unifying the minimum down payment ratio for first homes and second homes, and increasing the central bank's fund support ratio for re-lending in public housing. The Political Bureau meeting on September 26, for the first time, emphasized the need to "promote the stabilization of the real estate market," signaling a complete turnaround in real estate policies. Subsequently, various policies to stabilize the real estate market have been speeding up. At a press conference on October 17, Minister of Housing and Urban-Rural Development Ni Hong announced plans to add 1 million units for renovations of urban villages and dilapidated housing through monetized resettlement initiatives, and to increase the credit scale of "white-listed" projects to 4 trillion yuan by the end of the year. Demand-side policies at the local level continue to be optimized, with first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen recently announcing measures to optimize their real estate policies, with Guangzhou fully canceling home purchase restrictions. - In terms of stock market policies, several new tools have been introduced to support the stable development of the stock market. Equity assets are an important direction in the allocation of residents' assets and can often bring significant wealth effects. The press conference on September 24 proposed a series of policy measures to deepen capital market reforms and support the stable development of the stock market, including the creation of two new monetary tools and promoting mergers and acquisitions and the entry of medium- to long-term funds into the market. Subsequently, related policy measures have been gradually implemented: In support of mergers and acquisitions, the China Securities Regulatory Commission issued the "Guiding Opinions on Deepening Market Reforms for Mergers and Acquisitions of Listed Companies" on September 24, implementing the layout of the new "Guo Jiu Tiao" policy for active mergers and acquisitions markets. In terms of promoting the entry of medium- to long-term funds, on September 26, the central financial office and the CSRC jointly issued the "Guiding Opinions on Promoting the Entry of Medium- to Long-Term Funds into the Market," emphasizing the improvement of various policies and systems to support the entry of various medium- to long-term funds into the market. In terms of currency support tools, on October 18, the central bank formally launched a 500 billion yuan first-phase securities, fund, and insurance company swap and lending operation, completing the first pledged repo transaction on October 21 to inject incremental liquidity into the market. On October 18, the central bank formally established a 300 billion yuan stock repurchase and additional loan facility to support the repurchase and increase of stock by listed companies. Since the beginning of the year, positive changes have been brewing, with capital market reforms supporting the stable development of the stock market. As mentioned earlier, on September 2Since the beginning of the year, the policy orientation has clearly shifted. In fact, if we extend the time dimension, we can see signs of the policy shift beginning at the start of the year. A series of policies focusing on capital market reform, such as the new "nine measures" of the country, have been successively introduced. Mid-to-long term reform plans focusing on capital market reform have gradually been established. Specifically:This year, on 3/6, Wu Qing, the chairman of the China Securities Regulatory Commission (CSRC), clearly stated the regulatory strategy of "strengthening the foundation, strict supervision and control" in his first public statement after taking office. He proposed to improve the quality of listed companies and enhance the intrinsic stability of the capital market through the "five pillars" of "funds, systems, mechanisms, institutions, and regulation". On 3/15, the CSRC released four policy documents focusing on issues such as initial public offerings, listed company supervision, institutional supervision, and self-construction of the CSRC system, implementing the regulatory requirements of "strengthening the foundation and strict supervision". Following the two "National Nine Articles" in 2004 and 2014, on April 12th of this year, the State Council once again issued the "Opinions on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of the Capital Market" (New "National Nine Articles"). The core ideas and main tasks of the previous "National Nine Articles" have changed significantly in different stages of development. The new "National Nine Articles" focuses on establishing and improving regulatory systems, nurturing long-term capital, promoting financial services to entities, and other directions for reforming the capital market. In coordination with multiple detailed policies implemented by the CSRC, it forms a "1+N" reform system for the capital market. On one hand, this is beneficial for improving the regulatory system, enhancing the quality of listed companies, and on the other hand, it helps maintain market order and promote the development and growth of long-term investments. Overall, as the capital market reform system of "1+N" gradually improves, the institutional environment of the capital market will become healthier, thus promoting high-quality development of the capital market and better serving the goal of building a strong financial country and China's modernization. The positive policies have significantly boosted market sentiment, but there is still room for improvement in the medium to long term. We pointed out in the publication "Analysis of the Stock Market and Economic Recovery Thinking from September 24 to October 6, 1999" that the current market trend since September 24 is similar to the market trend in 1999. Both are the first wave of upward movement driven by policy efforts, which can be characterized as a reassessment of assets. By the end of September, A-shares were already in a large bottom area based on valuation, price-to-earnings ratio, risk premium, and stock-bond yield ratio. In the background of a series of positive policies recently introduced, market confidence has been significantly boosted. Since September 24, the Shanghai Composite Index and the Wind A-share Index have increased by 33.1% and 40.5% respectively. In the short term, market sentiment has already significantly improved, with trading activities showing an increase. Looking at investor behavior, retail investors have been a driving force in this market trend. The number of new accounts opened on the Shanghai Stock Exchange reached 6.85 million in October, significantly higher than the monthly average of 2 million since the beginning of the year. In terms of fund flows, leveraged funds have flowed in significantly since September 24, with a net increase of over 470 billion yuan in leverage balance by November 14, and a net inflow of 107.5 billion yuan on October 8, reaching a historical high. In the medium to long term, there is still room for further improvement in market sentiment. Looking at the A-share market from a longer-term perspective, market sentiment is still historically low. In terms of valuation, the P/E ratio of A-shares is 18.8 times, which is in the 49th percentile since 2005, and the P/B ratio is 1.60 times, which is in the 14th percentile. Looking at major asset price indicators, the risk premium of A-shares (1/A-share P/E ratio - 10-year government bond yield) is 3.4%, which is in the 22nd percentile since 2005, and the stock-bond yield ratio of A-shares (A-share dividend yield/10-year government bond yield) is 1.04, which is in the 2nd percentile since 2005, indicating that the current stock market still has a high cost-efficiency ratio. We believe that the future drive to further boost market sentiment may come from the continuous improvement of fundamentals under policy efforts. As mentioned earlier, policies have been implemented since the beginning of the year, and as subsequent policies take effect, macro and micro fundamentals are expected to improve. 2. Improvement in Fundamentals, Profit Recovery As we mentioned earlier, the policy orientation has clearly shifted since September 24, with a significant improvement in market sentiment under the stimulus of positive policies. Looking ahead to next year, we believe that under the backdrop of continued policy efforts, the capital and fundamental environment may see positive changes, providing support for the upward trend of A-shares. The following analysis delves into this in detail. In 2025, the capital environment of A-shares is expected to further improve, with incremental funds likely coming from residents and long-term institutional investors. Over the years, two main trends have been observed in the development of the capital environment of A-shares. Firstly, from the perspective of mutual funds, allocative forces are becoming more evident. In the second half of 2015 and during the bear market in 2018, the share of equity-oriented (equity + mixed) funds in A-shares declined significantly. However, since 2022, amidst a weak market environment, the share of equity-oriented funds has increased from 5.7 trillion shares in 21/12 to 6.3 trillion shares in 24/09. This indicates that the allocative power of A-shares is more stable than before. Further analysis reveals that passive investment tools in the mutual fund industry have gradually become stabilizers of the industry during its development in recent years, and are the main source of incremental funds. By Q3 24, the size of passive equity funds has grown from 2.23 trillion yuan in Q4 23 to 3.69 trillion yuan, not far from the size of actively managed equity mutual funds at 3.75 trillion yuan during the same period. Secondly, another trend in the A-share market in recent years is the increasing influence of long-term institutions; by the first half of 24, insurance funds had invested about 3.8 trillion yuan in stocks and securities funds, showing an increase of approximately 300 billion yuan from the end of 23. Taking into account insurance, mutual funds, and foreign capital, the combined stock holdings account for nearly 33% of the free float market value of A-shares, approximately one-third of the total. This indicates that after many years of development, the institutionalized path of A-shares has been deepening and solidifying. Comparatively analysing with the United StatesWith the visit of foreign peers, the strength of our country's institutions such as funds and insurance in the equity market still has a large room for development. Currently, policies are being rectified and support is increasing to encourage institutions to enter the market. At the Central Political Bureau meeting on September 26, it was emphasized the need to guide medium and long-term funds into the market, and on the same day, the central financial office and the China Securities Regulatory Commission jointly issued the "Guidance on Promoting Medium and Long-Term Funds into the Market." On November 7, the Chairman of the Shanghai Stock Exchange, Qiu Yong, stated that they will accelerate investment infrastructure construction and actively encourage various types of medium and long-term funds to allocate assets through index investment. We believe that under the continued support of the capital market and reform policies, the long-term institutionalization trend of A shares will further continue, providing additional sources of funding for A shares. In addition, at a press conference held by the State Council Information Office on the morning of September 24, People's Bank of China Governor Pan Gongsheng mentioned that they are studying the sovereign wealth fund. Overall, with the boost of policies generating positive sentiment and confidence, the trend of institutions encouraging long-term funds to enter the market and the increasing power of resident allocation, the funding of A shares is expected to improve overall by 2025.In the past, the implementation of bottoming policies and the improvement of the fundamentals require a process, with the improvement of the fundamentals lagging behind the appearance of the policy bottom. As mentioned earlier, since 9/24, counter-cyclical policies have been continuously strengthened, which may indicate that the policy bottom has appeared. Historical experience shows that the implementation of bottoming policies helps with the repair of macro and micro fundamentals, but there is a certain lag between the implementation of policies and the improvement of macroeconomics and corporate profits. The improvement of the fundamentals often lags behind the appearance of the policy bottom. In 2008, to cope with the impact of the global financial crisis, policies were continuously strengthened in the second half of the year. In September, the central bank announced interest rate cuts and reserve requirement reductions, and in November, the State Council proposed a 4 trillion yuan infrastructure investment plan to stimulate total demand, followed by the release of several tax reduction policies. With the strengthening of policies, macroeconomic data started to turn around from 09/03, and micro corporate profits also improved. The cumulative year-on-year net profit attributable to shareholders of A shares increased from -26.2% in 09Q1 to 61.4% in 10Q1. In 2012, to address the rapid decline in economic growth, a new round of economic stimulus policies were gradually introduced. From 11/12 to 12/06, the central bank reduced reserve requirements and interest rates multiple times, while fiscal policies began to take effect in the second half of 2012, with policies such as the allocation of funds for shantytown renovation, approval of infrastructure projects, and tax reductions. With policy stimulus, macroeconomic data started to improve from 12/08, and micro corporate profits gradually stabilized. The cumulative year-on-year net profit attributable to shareholders of A shares hit a low of -2.1% in 12Q3 and rebounded to 14.5% in 13Q3. From 2015 to 2016, as economic data continued to weaken, fiscal policies gradually intensified in the second half of 2015, including the three-year shantytown renovation plan and reduction of real estate deed taxes, while monetary policy also strengthened with 2.5 trillion yuan of new credit issued in 01/16. After a period of implementation of this round of policies, macroeconomic fundamentals started to recover, and micro corporate profits improved. The cumulative year-on-year net profit attributable to shareholders of A shares hit a low of -4.7% in 16Q2 and then rose to 19.7% in 17Q1. In 2018 and 2019, as China's economy slowed down due to the China-US trade friction, policies to stimulate the economy were introduced at the end of 2018. In early 2019, the central bank reduced reserve requirements to drive temporary economic recovery. However, due to the impact of the epidemic, the economy weakened again. In early 2020, fiscal policies started to be implemented, with strong stimulus measures such as special national bonds and fiscal subsidies, while monetary policy remained supportive. As a result, the fundamentals quickly recovered, with the cumulative year-on-year net profit attributable to shareholders of A shares hitting a low of -24.0% in 20Q1 and rising to 53.2% in 21Q1. Drawing on history, after a period of bottoming policies, the fundamentals often see improvement. The 12th session of the 14th National People's Congress Standing Committee held on November 4-8 pointed out that the total hidden debts that local governments need to digest by 2028 will decrease by 12 trillion yuan, indicating that policies are gradually intensifying. Looking ahead, after the implementation of this round of fiscal policies, how will the economy and profits evolve? The domestic economy is gradually warming up, and with the gradual implementation of incremental policies, it is expected that the economy and profits will continue to improve. As analyzed earlier, since September 24, there has been a clear shift in macroeconomic policy tone, with a series of policy combinations being gradually implemented, and the effects of the policies have been gradually reflected in recent economic data. Firstly, the PMI rebounded seasonally in October, entering the expansion zone for the first time since May. Compared to the same period in recent years, this month's PMI performance is stronger than the average level of the past three years, mainly due to the push of incremental policies to repair domestic demand margins and boost manufacturing sentiment. Secondly, exports rebounded significantly in October, with a year-on-year increase of 12.7%, compared to a 2.4% increase in September, which may be related to slight economic recovery in key trading partners and the elimination of factors such as typhoons. Finally, high-frequency data shows significant improvements in the real estate and consumption sectors. In terms of consumption, thanks to the policy of replacing old cars with new ones, residents' enthusiasm for car consumption remains high, with retail and wholesale averaging year-on-year increases of 34.3% and 52.3% respectively, rebounding significantly. In absolute terms, the average manufacturer's retail sales quantity in the four weeks is at historical highs compared to the same period in the past. In the real estate sector, monthly real estate sales surged seasonally, with the average daily new housing transaction area in the top 30 cities in the past week reaching 480,000 square meters, a year-on-year increase from -17.9% to 10.5%, and the absolute sales value also exceeding 2013 levels. In terms of city-tier levels, the year-on-year sales growth of new houses in first-tier and second-tier cities has significantly rebounded, but the marginal weakness of new home sales in third-tier cities. Second-hand homes sales have also rebounded, showing a year-on-year strengthening, with similar trends in new and second-hand homes, and the proportion of second-hand homes remains stable compared to the previous week. Looking ahead to next year, with continuous policy support from monetary and fiscal policies, domestic demand is expected to continue to boost, and we predict that the year-on-year growth rate of actual GDP in 2025 will be around 5%. At the micro level, the year-on-year net profit attributable to shareholders of A shares in 24Q3 was -0.6% (compared to -3.3% in 24Q2), showing signs of recovery, while for A shares excluding financials, it was -7.3% (-6.1%), still bottoming. In the future, the economic recovery is expected to drive corporate profit growth, and we predict that the year-on-year growth rate of A-share net profit attributable to shareholders in 2025 is expected to reach 5-10%. Combining the analysis above, with the support of passive funds and long-term funds, A shares may attract significant incremental funds, and with the expected improvement in corporate profits, A shares are expected to continue their upward trend in 2025. 3. Focus on manufacturing while considering dividends Since 9/24, the essence of the stock market rally has been the emotional recovery rally brought about by the policy shift, as well as the first wave of upward momentum after the bottom. Looking back at history, the first wave of rebounds in the market after the bottom mainly comes from loose policies and emotional recovery, while the trend of the fundamentals is not clear yet, so sectors with large declines and low valuations in the previous period often experience significant recoveries. As the fundamentals are verified later, there will be a main trend with performance support, such as the new energy trend from the second half of 2019 to 2021. Looking ahead to next year, as policies gradually take effect, the macro and micro fundamentals may improve, the mid-term main trend of the market will gradually become clear, and technology manufacturing and high-end manufacturing with better fundamentals may become the industry main trend in the stock market next year. The double benefits of policies and technology, combined with the cyclical recovery of industries, can lead to a main trend in technology manufacturing. China has entered a critical stage of economic transformation, upgrading, and momentum transition. General Secretary Xi emphasized the need toBy actively cultivating high-tech strategic emerging industries to accelerate the formation of new quality productivity, promote industrial structure upgrade, and provide sustainable momentum for economic growth, we expect the technology industry to remain a focus of policy support. In addition, the technology industry is currently in a new upswing cycle, with the new generation of information technology represented by artificial intelligence accelerating its application in various fields. Therefore, we believe that the fundamentals of the technology sector may be more favorable by 2025, combined with Haitong industry analysts' forecasts, the net profit growth of electronic companies in 24/25 is expected to be 30%/35%, communication is expected to be 20%/30%, and computer is expected to be -5%/15%. It may be beneficial to focus on areas that benefit from policy support and AI applications within the technology sector.Under the impetus of fiscal policy, areas such as digital infrastructure, cultural innovation, and semiconductors will benefit. At a press conference on October 12th, the Ministry of Finance emphasized that there are still other policy tools under study and that there is still substantial room for central government borrowing and deficit increases. We expect that with the gradual strengthening of fiscal policy, digital infrastructure, cultural innovation, and other technology fields will also be the focus of fiscal support: 1. Digital Infrastructure: As a convergence point for short-term stability and long-term economic structural adjustment, digital infrastructure is expected to become a key focus of fiscal expenditure. Speeding up the construction of a national integrated computing power network will accelerate the development of data center and other computing digital infrastructure. According to the China Information Service Infrastructure Research Institute's "White Paper on the Development of China's Data Center Industry (2023)", it is expected that during the 14th Five-Year Plan period, the compound growth rate of China's data center industry scale will reach 25%. In addition, the recent launch of demonstration projects for "vehicle-road-cloud integration" in major cities nationwide is expected to accelerate related roadside infrastructure construction. According to the Forward Industrial Research Institute, by 2028, China's market for vehicle-road coordination industry will reach 244.8 billion US dollars, with a compound annual growth rate of 13% from 2023 to 2028. 2. Cultural Innovation: Against the backdrop of fiscal support, cultural innovation is expected to receive greater funding and policy support. According to the State-owned Assets Supervision and Administration Commission, by 2027, central state-owned enterprises will achieve 100% cultural innovation substitution. We expect that technological breakthroughs combined with policy support will accelerate the development of domestic cultural innovation, with significant growth potential in areas such as domestic operating systems. 3. Semiconductors: As a basic component of hard technology manufacturing, the localization rate of semiconductors is still low. In 2022, China's import share of high-end chips accounted for as high as 73% of total chip imports, indicating a large space for localization substitution. Looking ahead, we believe that with policy support and increased research and development investment and technological breakthroughs by local enterprises, the domestic substitution of semiconductor and other technology manufacturing sectors may accelerate. The development of AI technology applications benefits areas such as autonomous driving, humanoid Siasun Robot & Automation, and AR/VR. At present, we are in a new wave of technology led by artificial intelligence, with AI accelerating its penetration into various aspects of the economy and society. With the acceleration of AI applications, we expect that areas such as autonomous driving, humanoid Siasun Robot & Automation will also benefit: 1. Autonomous Driving: With the dual forces of policy and technology, the future scale of the autonomous driving industry is expected to grow steadily. On October 23rd, the Ministry of Industry and Information Technology announced that it will deepen the smart connected car access and on-road pilot programs and "vehicle-road-cloud integration" pilot projects, steadily promote the industrialization of autonomous driving technology. According to EO Intelligence, the compound annual growth rate of China's smart transportation market from 2025 to 2030 is 35%. 2. Humanoid Siasun Robot & Automation: With technological breakthroughs, applications of humanoid Siasun Robot & Automation may accelerate. With the rising cost of labor, the demand for Siasun Robot & Automation to handle dangerous work in the future may continue to grow. According to the China Industry Research Institute citing data from Markets and Markets, the compound annual growth rate of the global humanoid Siasun Robot & Automation market from 2024 to 2028 is 50%. 3. AR/VR: Benefiting from leading companies such as Meta accelerating their deployments, the iteration of microdisplays and waveguide technologies, as well as the rich application ecosystem, AR glasses are expected to become an important carrier of AI and a new variable for industry development. According to Vist Information, it is expected that the global sales volume of AR/VR will reach 550,000 units and 7.97 million units in 2024, an increase of 8% and 6% from 2023. In addition, mergers and acquisitions may become a new way for technology companies to go public, and the investment heat of technology stocks is expected to rise. In September 2024, the China Securities Regulatory Commission released the "Opinions on Deepening the Reform of the M&A Market of Listed Companies", further increasing regulatory tolerance and opening up space for cross-industry mergers and acquisitions. It is expected to stimulate market vitality and promote more high-quality M&A transactions. Combined with the current IPO market environment in China, we believe that high-quality companies in sectors such as semiconductors, artificial intelligence, and new energy will achieve rapid listing through mergers and acquisitions, thereby integrating industry chain resources and enhancing market competitiveness. High-end manufacturing supply in sectors such as home appliances, automobiles, and machinery is advantageous, and external demand is resilient, leading to the future economic outlook remaining positive. China's exports have been strong this year, thanks to solid demand within ASEAN countries. Looking ahead, sectors such as home appliances and automobiles with a strong supply and demand balance in high-end manufacturing are expected to perform steadily amid trade disturbances. China's exports have been strong this year, driven by robust domestic demand in ASEAN countries, which has been a significant factor contributing to China's exports in high-end manufacturing. From export data, China's cumulative year-on-year export growth rate from January to September this year reached 6.2%, significantly higher than the 0.6% in December 2023. From January to August this year, China's cumulative export amount accounted for 16.5% of the global share, also at a high level. Southeast Asia is a major export destination for China, with China exporting 16.2% of its goods to Southeast Asia from January to September this year, predominantly importing high-end manufacturing products such as electrical and electronic equipment. Further analysis shows that China's exports to ASEAN are not simply transshipment, but are driven by strong demand within ASEAN. Overall, while the import share from the United States has mainly declined from China from 2022 to 2024, the import share from ASEAN has remained stable over the past three years. Structurally, from 2022 onwards, China's exports of household appliances and passenger cars to Southeast Asia and the United States' imports of household appliances and passenger cars from Southeast Asia have not significantly increased simultaneously. In the future, strong domestic demand in Southeast Asia is expected to continue supporting China's exports. In 2023, the population and GDP of the 10 ASEAN countries accounted for 8.7% and 3.6% of the global total, with a per capita GDP of around 5611 US dollars, comparable to China in around 2010, indicating that they are currently in a phase of rapid industrialization and consumption upgrade, with high demand for imported high-end manufacturing products. China's advantages in high-end manufacturing supply are evident, and demand remains robust, with the future expected to continue to show resilience. Strong demand from ASEAN for China's goods reflects China's strong competitiveness in high-end manufacturing. Currently, China's manufacturing sector has cluster advantages, an engineering dividend, and technological accumulation.Tired, related industries and products are continuously increasing their market share in the global market. For example, in the automotive sector, new energy vehicles' power batteries, motors, and other core components have gradually taken the lead, with Chinese companies holding over 60% of the market share in power batteries in 2023. In the mechanical sector, in 2023, China's completed shipbuilding volume, new orders, and hand-held orders accounted for 52.6%, 64.5%, and 51.1% of the global total respectively. From the demand perspective, the demand from emerging countries is strong and highly dependent on China, leading to an increase in China's exports. Apart from Southeast Asia, Russia and the Middle East have become major contributors to China's exports in recent years, and regional trade cooperation has provided strong support for China's exports, with exports to countries participating in the Belt and Road Initiative accounting for 46.3% of China's total foreign trade value in 2023. In addition, with the dust settling on the US election, Sino-US trade may be affected. In our article "Under which manufacturing sectors are more stable under Sino-US disturbances?", we pointed out that the disruptions in Sino-US relations have a smaller impact on industries such as household appliances and automobiles and can be hedged through the European Union, ASEAN, and other means. Under the advantages of supply and demand, their prosperity is expected to continue.In addition, the policy strengthens dividend supervision, and high dividend sectors with high cost-effectiveness in a low interest rate environment may have absolute returns. On April 12, 2024, the State Council issued the "New Nine Regulations", which emphasized the strengthening of cash dividend supervision for listed companies. We believe that future policies are expected to enhance the initiative and sustainability of dividend distribution by listed companies. In the medium to long term, in addition to policy requirements for listed companies to strengthen dividends, high dividend assets with solid fundamentals and long-term returns still have good cost-effectiveness. Risk warning: The implementation progress of stable growth policies may be slower than expected, and domestic economic recovery may also fall short of expectations. This article is republished from the WeChat public account "Haitong Strategy", edited by GMTEight: Liu Xuan.