Haitong's A-share outlook for 2025: Incremental policies implemented to drive improvement in macro and micro fundamentals, A-shares continue upward trend.

Haitong released a research report stating that since the beginning of the year, the continuous implementation of capital market support policies such as the "Nine Articles of the State," the market sentiment has been significantly boosted, and emotions have quickly recovered. Looking ahead to the next 25 years, the allocation power of residents and long-term institutions will drive improvements in the funding environment, and incremental policies will drive improvements in macroeconomic fundamentals, leading to the continuation of the upward trend in A-shares. In the medium term, the main industry trends in the stock market will become clearer, with a focus on technology manufacturing benefiting from dual policy and technical advantages, as well as mid-to-high-end manufacturing with supply and demand advantages. Additionally, attention should be paid to areas benefiting from mergers and acquisitions and dividend assets. Haitong's main points are as follows: 1. Policy first, emotional recovery Recent comprehensive policy measures have alleviated concerns about the macroeconomic operation and capital market development, and market sentiment has been significantly boosted. Taking a longer view, positive changes have been brewing since the beginning of this year. A series of deepening reforms and policies to improve the capital market system have been successively introduced, creating a positive environment for the stable and healthy development of the macroeconomy and capital markets. Since 9/24, the macroeconomic policy stance has clearly shifted. Since 9/24, the People's Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the Ministry of Finance, and other departments have held a series of press conferences, attracting high market attention. The comprehensive policy package covers fiscal/monetary, real estate, domestic demand, capital market, and other dimensions, focusing on repairing the balance sheets of residents, directly addressing current market concerns. Specifically: In terms of fiscal/monetary policy, the macro prudential policy is being strengthened. Fiscal policy is a focal point for the market. On 10/12, the Minister of Finance, Blue Fa'an, and others introduced that incremental fiscal policies will focus on debt conversion, banking, real estate, livelihood, and other aspects. From 11/4 to 11/8, the 14th Session of the Standing Committee of the 12th National People's Congress approved the "State Council's Proposal for Reviewing the Increase in the Limit of Local Government Debt to Replace Outstanding Implicit Debt," which directly increased local government debt resources by 10 trillion yuan, of which 6 trillion yuan is the increased limit of local government debt to be implemented over three years; and 4 trillion yuan will be used from the new local government special bonds for debt conversions, starting in 24, for five consecutive years at 800 billion yuan annually. In addition, implicit debts of 2 trillion yuan due after 29 years for shantytown renovation will still be repaid according to the original contracts. This debt conversion measure helps reduce the risk of local government implicit debt and the pressure of interest payments, providing a certain space for the general fiscal situation of local governments. The Ministry of Finance also pointed out that next year, a more vigorous fiscal policy will be implemented. Recently, monetary policy has also been strengthened. At the press conference on 9/24, the People's Bank of China announced interest rate and reserve requirement reductions, and on 9/27, the People's Bank of China reduced the deposit reserve ratio by 0.5 percentage points and lowered the 7-day reverse repurchase operation rate by 0.2 percentage points. On 10/18, the governor of the People's Bank of China, Pan Gongsheng, stated that he is expected to further reduce the deposit reserve rati . Real estate policy initiatives have driven stabilization in the real estate market fundamentals. Currently, the real estate and related industries account for more than 25% of GDP, making real estate an important component of the macroeconomy. Against this backdrop, policies to support the real estate market were announced at the press conference on 9/24, including guiding existing house loan rates down to the level of new house loan rates; unifying the minimum down payment ratio for first-time and second-time house loans; and increasing the central bank's funding support ratio in refinancing for affordable housing to 100%. The Politburo meeting on 9/26 first proposed to "promote the stabilization of the real estate market," marking a complete shift in real estate policies. Subsequently, various stable real estate policies accelerated their implementation. At the press conference on 10/17, the Minister of Housing and Urban-Rural Development, Ni Hong, announced the addition of 1 million sets of urban village renovation and dilapidated house renovation through monetization resettlement methods, and by the end of the year, the credit scale for the "white list" projects will be increased to 4 trillion yuan. Demand-side policies at the local level continue to be optimized, with first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen successively issuing real estate optimization policies, with Guangzhou fully lifting purchase restrictions. Regarding stock market policies, multiple new tools have been introduced to support stable development of the stock market. Equity assets are an important direction for residents' asset allocation, and stable development in the stock market, as an important source of residents' property income, often brings significant wealth effects. The press conference on 9/24 proposed multiple policy measures to deepen capital market reforms and support the stable development of the stock market, including the creation of two new monetary tools, promoting mergers and acquisitions, and facilitating the entry of medium- and long-term funds into the market. Subsequently, related policy measures have been successively implemented: in support of mergers and acquisitions, on 9/24, the China Securities Regulatory Commission released the "Opinions on Deepening Market Reforms of Listed Company Mergers and Acquisitions," implementing the deployment of the new "Nine Articles" for active mergers and acquisitions markets. Regarding promoting the entry of medium- and long-term funds into the market, on 9/26, the Central Financial Work Committee and the China Securities Regulatory Commission jointly issued the "Guiding Opinions on Promoting the Entry of Medium- and Long-Term Funds into the Market," emphasizing efforts to improve various supporting policies and systems for the entry of medium- and long-term funds into the market. In terms of monetary support tools, on 10/18, the People's Bank of China officially launched the first phase of a 500 billion yuan securities, funds, and insurance company swap facilitation operation and completed the first pledge-style repurchase transaction on 10/21, injecting incremental liquidity into the market. On 10/18, the People's Bank of China officially established a 300 billion yuan stock repurchase and increased re-lending quota to support stock buybacks and share ownership by listed companies. Positive changes have been brewing since the beginning of the year, and capital market reform measures have been introduced to support the stable development of the stock market. As mentioned earlier, the policy stance has clearly shifted since 9/24, and in fact, if the bank takes a longer-term perspective, signs of policy shift beginning at the beginning of the year may already be evident, with a series of policies focusing on capital market reforms such as the new "Nine Articles" already in place and gradually establishing a medium-to-long-term reform plan focusing on capital market reforms. Specifically: On 3/6 this year, Wu Qing, chairman of the China Securities Regulatory Commission, made his first public statement after taking office, clearly stating the supervisory approach of "strengthening foundations and strict supervision," proposing to improve the quality of listed companies by enhancing the five pillars of "funds, systems, mechanisms, institutions, and supervision" and strengthening the capital market.Internal stability. On March 15, the China Securities Regulatory Commission issued four policy documents, involving issues such as initial public offering and listing admission, supervision of listed companies, institutional supervision, and the construction of the CSRC system, implementing the regulatory requirements of "two strengths and two strictness". Following the two "Guo Jiu Tiao" policies in 2004 and 2014, on April 12 of this year, the State Council once again issued the "Several Opinions on Strengthening Regulation, Preventing Risks, and Promoting the High-Quality Development of the Capital Market" (new "Guo Jiu Tiao").The core ideas and main tasks of each "State Nine Major Policies" have undergone distinct changes in different development stages in history. The requirements of the past two "State Nine Major Policies" for the capital market have shifted from initially focusing on development and improvement, to emphasizing the construction of a multi-tiered capital market system. Both have promoted the stable and healthy development of the capital market and have also facilitated the development of the stock market. The new "State Nine Major Policies" this time focus on establishing sound regulatory systems, nurturing the introduction of long-term funds, promoting financial services to entities, and other directions for capital market reform. In coordination with multiple detailed policies implemented by the China Securities Regulatory Commission, they form 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 develop and expand long-term investments. Overall, as the "1+N" reform system for the capital market gradually improves, the institutional environment of the capital market will become more sound, which will promote high-quality development of the capital market and better serve the goal of a financial powerhouse and modernization in China. Under the positive policy boost, market sentiment has significantly recovered, but there is still room for improvement in the medium to long term. The market trend since September 24th is similar to the May 19th, 1999 trend. Both are the first wave of the rise from the bottom driven by policy thrust. This year, by late September, from valuation, price-to-book ratio, risk premium, stock-bond yield ratio, and other indicators, A shares are already in a large bottom area. In the recent backdrop of a series of positive policies, market confidence has been significantly boosted, and A shares have seen rapid recovery, with the Shanghai Composite Index and the Wande full A index reaching 33.1% and 40.5% respectively since September 24th. In the short term, market sentiment has recovered significantly since September 24th, with trading volume heating up noticeably. Looking at the trading indicators, the weekly turnover rate (annualized) has increased from a low of 214% in mid-September to the current 656%, and the proportion of margin trading in the weekly trading volume has increased from a low of 7.3% to 11.0%. Since the start of the trend, the daily average trading volume of all A shares has reached 2.0 trillion yuan, significantly higher than the daily average of 558.4 billion yuan in early September. In addition, investor behavior is a window to observe changes in investor sentiment, and retail investors are an important driving force behind this round of market trends. Looking at the number of new accounts opened, in October, the Shanghai Stock Exchange added 6.85 million new accounts, significantly higher than the average monthly account opening of 2 million since the beginning of the year. In terms of fund inflows, margin funds have flowed in significantly since September 24th, with a net increase of over 470 billion yuan as of November 14th, and a net purchase of 107.5 billion yuan on October 8th, reaching a historical high. In the medium to long term, there is still room for further boosting market sentiment. Looking at A-share market sentiment from a longer-term perspective, it is still at historically low levels: in terms of valuation, the PE ratio of all A shares is 18.8 times, in the 49th percentile from low to high since 2005, and the PB ratio is 1.60 times, in the 14th percentile. Looking at the price-to-value ratio of major asset classes, the risk premium rate of A shares (1/all A shares PE - 10-year Treasury yield) is 3.4%, in the 22nd percentile from high to low since 2005, and the stock-bond yield ratio of A shares (all A shares dividend yield / 10-year Treasury yield) is 1.04, in the 2nd percentile from high to low since 2005, indicating that the current stock market still has a relatively high price-performance ratio. In the future, further boosting market sentiment may come from continued policy support. As mentioned earlier, policies have taken the lead this year, and with the subsequent implementation of policies, improvements in macro and micro fundamentals are expected to follow. 2. Improvement in funding, profit recovery As mentioned above, since September 24th, the policy orientation has clearly shifted, and market sentiment has significantly recovered under positive policy boosts. Looking ahead to next year, with continued policy efforts, the funding and fundamentals may undergo positive changes, potentially providing support for the upward trend in A-shares. The following section elaborates on this. In 2025, the funding situation for A-shares is expected to further improve, with incremental funding coming from the strength of residents and long-term institutional investors. Looking back at the development of A-share funding in recent years, two main characteristics stand out. Firstly, from the perspective of public funds, the trend of allocation-oriented forces has gradually emerged. In the second half of 2015 and during the bear market in 2018, the share of equity-oriented (stock + hybrid) funds in A-shares notably decreased. However, since 2022, under a weak market backdrop, the share of equity-oriented funds has continued to rise from 5.7 trillion at the end of 21/12 to 6.3 trillion at the end of 24/09, indicating that the strength of allocation-oriented funds in A-shares is more stable than in the past. Further analysis by the bank reveals that in recent years, passive investment tools in the development of public funds have gradually become stabilizers of the industry and are the main source of incremental funds. As of 24Q3, the scale of passive equity fund assets has grown from 2.23 trillion in 23Q4 to 3.69 trillion, which is not far from the size of active equity-oriented public funds of 3.75 trillion during the same period. Additionally, another characteristic of A-share funding in recent years is the further strengthening of long-term institutional forces. By the first half of 24, insurance funds invested in stocks and securities funds reached 3.8 trillion, an increase of about 300 billion from the end of 23. From the perspective of insurance, public funds, and foreign capital, the shareholding in the free float market value of A-shares is already close to 33%, or about one-third of the total share, indicating that after years of development, the institutionalization of A-shares has made significant progress. Comparing with peers in the US, China's institutional strength in the equity market, including funds and insurance companies, still has considerable room for growth. Currently, policies are being implemented to support institutional participation in the market. The central Political Bureau meeting on September 26th pointed out the need to guide long-term funds into the market and on the same day, the central Finance Bureau, along with the China Securities Regulatory Commission, jointly issued the "Guidelines on Promoting the Entry of Long-term Funds into the Market". On November 7th, the chairman of the Shanghai Stock Exchange, Qiu Yong, expressed the intention to accelerate investment-side construction and actively encourage various long-term funds to allocate assets through index-based investment. Under the sustained support and reform policies for the capital market, the trend towards institutionalization of A-shares will continue to provide further incremental funding sources. In addition, at a press conference held at the State Council Information Office on the morning of September 24th, China's central bank governor Pan Gongsheng stated that the government is studying the establishment of a stabilization fund. Overall, as policies continue to develop, the strengthening of both funding and fundamentals in A-shares can be expected in the future.With the warming of emotions and confidence, and the trend of institutions encouraging long-term funds to enter the market as well as residents' increasing allocation strength, A-shares are expected to see overall improvement in funding by 2025.The bottom-up policy efforts in the past have shown that it takes time for the fundamentals to improve, with the improvement in fundamentals lagging behind the appearance of the policy bottom. The bank pointed out earlier that since 9/24, countercyclical policies have continued to increase, signaling that the policy bottom has already appeared. Historical experience shows that bottom-up policy efforts help in the repair of both macro and micro fundamentals, but there is a certain time lag between the implementation of policies and the improvement in macroeconomic conditions and corporate profits. Fundamentals often lag behind the appearance of the policy bottom. In 2008, in response to the impact of the global financial crisis, policy measures were continuously strengthened in the second half of 2008. In September, the central bank announced interest rate cuts and reserve requirement ratio cuts, and in November, the State Council proposed a four trillion yuan infrastructure investment plan to stimulate total demand, followed by the release of multiple tax reduction and fee reduction policies. With the policy efforts, macroeconomic data showed a turning point from 09/03 onwards, and micro corporate profits also improved synchronously. The cumulative year-on-year growth rate of net profit attributable to shareholders of A-shares improved from -26.2% in 09Q1 to 61.4% in 10Q1. In 2012, in response to the rapid decline in economic growth, a new round of economic stimulus policies were introduced in 2012. From November 2011 to June 2012, the central bank lowered the reserve requirement ratio and interest rates several times, and in the second half of 2012, fiscal policies began to exert force with the approval of shantytown renovation funds, infrastructure projects, and tax reduction policies. With the policy stimulus, macroeconomic data began to improve in 12/08, and micro corporate profits gradually stabilized, with net profit attributable to shareholders of A-shares showing a cumulative year-on-year growth rate of -2.1% in 12Q3, reaching a peak of 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 a three-year plan for shantytown renovation, reduction of real estate deed taxes, and monetary policies also strengthened, with an additional 2.5 trillion yuan in credit issued in 2016. After a period of time of this round of policies being implemented, macroeconomic fundamentals began to recover, micro corporate profits also improved, with net profit attributable to shareholders of A-shares showing a cumulative year-on-year growth rate of -4.7% in 16Q2, rebounding to 19.7% in 17Q1. In 2018 and 2019, under the backdrop of Sino-US trade frictions, China's economic growth rate declined. By the end of 2018, the policy environment was favorable, and in early 2019, the central bank lowered the reserve requirement ratio, promoting a phased recovery in the economy. However, due to the impact of the epidemic, the economy weakened again. In early 2020, fiscal policies began to exert force, with strong stimulus policies such as special government bonds and fiscal subsidies being implemented, while monetary policy remained steady and loose. As a result, the fundamentals quickly recovered, with net profit attributable to shareholders of A-shares showing a cumulative year-on-year growth rate of -24.0% in 20Q1, rising to 53.2% in 21Q1. Drawing lessons from history, the bottom-up policy efforts have often been followed by an improvement in fundamentals after a period of time. The 12th session of the 14th National People's Congress Standing Committee meeting from November 4-8 pointed out that by 2028, local hidden debts to be absorbed will decrease by 12 trillion yuan, indicating that policies are gradually being implemented. Looking ahead, how will the economy and profits evolve after this round of fiscal policy efforts? The domestic economy has already shown marginal signs of warming, and with incremental policies gradually being implemented, it is expected that the economy and profits will continue to improve. As analyzed earlier, the macroeconomic policy direction has significantly changed since September 24, with a series of policy combinations being introduced one after another, and the policy effects have gradually been reflected in recent economic data. Firstly, the PMI rebounded seasonally in October, entering the expansion range for the first time since May this year. Compared with 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 a package of incremental policies promoting the marginal recovery of domestic demand, spreading the prosperity of the manufacturing industry. Secondly, exports surged in October, with the export amount in October year-on-year reaching 12.7%, a significant increase from 2.4% in September, possibly due to slight recovery in key trading partners and factors such as typhoons being eliminated. Lastly, high-frequency data shows significant improvements in real estate and consumption. In terms of consumption, thanks to the policy of replacing old cars with new cars, residents' enthusiasm for car consumption remains high, with the average values of retail and wholesale year-on-year growth rates rebounding to 34.3% and 52.3% respectively. In terms of absolute values, the average factory retail quantity for four weeks is at the highest level compared to the same period in history. In the real estate sector, end-of-month real estate sales show a seasonal rebound, with the daily new housing transaction area in the 30 major cities last week reaching 480,000 square meters, with a year-on-year growth rate rebounding from -17.9% to 10.5%, and the sales value exceeding that of 2023. Looking at cities of different levels, first-tier and second-tier city sales year-on-year growth rates have significantly rebounded, while third-tier city new home sales have weakened. Second-hand home sales have also shown a simultaneous recovery, with year-on-year growth rates improving gradually, showing similar trends to new homes, and the proportion of second-hand homes remains stable compared to the previous week. Looking ahead to next year, with continued efforts in monetary and fiscal policies, domestic demand is expected to continue to be boosted, with the bank predicting that the actual year-on-year GDP growth rate in 2025 could be around 5%. At the micro level, the net profit attributable to shareholders of A-shares in the third quarter of 2024 was -0.6% (compared to -3.3% in the second quarter of 2024), showing signs of improvement, while excluding financials, A-share net profits were -7.3% (-6.1%), still exploring the bottom. In the future, the recovery of the macro economy is expected to drive the recovery of corporate profits, with the bank predicting that the year-on-year growth rate of A-share net profits in 2025 could reach 5-10%. Combining the analysis above, with the support of passive and long-term funds, abundant incremental funds may flow into A-shares, coupled with the expected improvement in corporate profits, A-shares are likely to continue their upward trend in 2025. 3. Focus on manufacturing while considering dividends Since 9/24, the essence of the stock market situation is an emotional recovery rally triggered by the policy shift, as well as the first wave of upward momentum after the bottom. Looking back at history, the first rebound after the market bottom is mainly driven by loose policies and emotional recovery, while the trend of fundamentals is not yet clear. Therefore, sectors with large declines and low valuations tend to experience significant recoveries. As the fundamentals are verified later on, a trend line supported by performance will emerge, as seen in the new energy sector from the second half of 2019 to 2021. Looking into next year, as policies gradually take effect, macro and micro fundamentals may improve, and the medium-term trend line in the market will gradually become clearer, with technology manufacturing and high-end manufacturing with better fundamentals becoming the industry mainstays in the stock market next year. The combination of policy and technological benefits combined with the cyclical recovery of industries may lead to a trend in technology manufacturing. China has entered a key stage of economic transformation and upgrading, as emphasized by President Xi. Positive nurturing of high-tech industries is essential.The emerging industry is accelerating the formation of new productive forces, promoting the upgrade of industrial structure, and providing sustained momentum for economic growth. The industry predicts that the technology industry will still be a key area supported by policies. In addition, the technology industry is currently in a new upward cycle, with the new generation of information technology represented by artificial intelligence accelerating its application in various fields. Therefore, the fundamentals of the technology sector may be more favorable by 2025, in combination with the forecasts of industry analysts at Haitong, with the net profit growth rate of electronic companies in 24/25 expected to be 30%/35%, communication 20%/30%, and computers -5%/15%. It may be beneficial to focus on areas benefiting from policy support and AI applications within the technology sector.Under the impetus of fiscal policy, areas such as digital infrastructure, cultural and creative industries, and semiconductors will benefit. At a press conference on October 12th, the Ministry of Finance emphasized that there are other policy tools currently under study, and there is still considerable room for central government borrowing and deficit expansion. The bank predicts that with the gradual strengthening of fiscal policy, digital infrastructure, cultural and creative industries, and other technological fields will also be the focus of fiscal support: 1. Digital Infrastructure: As a convergence point for short- to medium-term stable growth and long-term economic structural adjustment, digital infrastructure is expected to become a key focus of government spending. Firstly, the construction of a national integrated computational power network will accelerate under the background, and the construction of computational digital infrastructure such as data centers will speed up. According to the "China Data Center Industry Development White Paper (2023)" by the China Telecommunications Infrastructure Research Institute, it is expected that the compound growth rate of China's data center industry scale during the 14th Five-Year Plan period will reach 25%. Secondly, the recent launch of demonstration projects in major cities for "cloud integrated transportation" is expected to accelerate related roadside infrastructure construction under favorable policies. According to projections by the Prospective Industry Research Institute, the market for the integrated transportation industry in China will reach 244.8 billion USD in 2028, with a compound annual growth rate of 13% from 2023 to 2028. 2. Cultural and Creative Industries: With the backing of fiscal policies, the cultural and creative industries are expected to receive greater funding and policy support. According to the State-owned Assets Supervision and Administration Commission, by 2027, central SOEs will complete 100% substitution of cultural and creative industries. The bank predicts that technological breakthroughs combined with policy support are expected to accelerate the development of domestic cultural and creative industries, with significant growth potential in areas such as domestic operating systems. 3. Semiconductors: As a basic component of hard technology manufacturing, the domestication rate of semiconductors is still relatively low, with high-end chip imports accounting for as much as 73% of overall chip imports in 2022. Looking ahead, with policy support and increased research and development investment and technological breakthroughs by local companies, the pace of domestication in semiconductor and other technology manufacturing fields may accelerate. The development of AI technology applications, such as autonomous driving, humanoid robots, and AR/VR, is expected to benefit. Currently, we are in a new wave of technological advancement led by technologies such as artificial intelligence, with AI rapidly permeating various aspects of the economy and society. With the accelerated application of AI, the bank predicts that fields such as autonomous driving and humanoid robots will also benefit: 1. Autonomous Driving: With the dual force 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 stated that it will further carry out pilot programs for intelligent connected vehicles to enter the market and operate on the road, as well as the integration of "cloud integrated transportation," in order to 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 expected to be 35%. 2. Humanoid Robots and Automation: With technological breakthroughs, the application of humanoid robots and automation may accelerate. With rising labor costs, there is expected to be continued growth in the demand for humanoid robots and automation to handle dangerous work. According to data cited by China Industry Research Institute from Markets and Markets, the compound annual growth rate of the global humanoid robot and automation market from 2024 to 2028 is expected to be 50%. 3. AR and VR: Due to the acceleration of leading companies such as Meta expanding their presence, the iteration of microdisplays and waveguide technologies, and the rich application ecology, AR glasses are expected to become an important carrier for AI and a new variable in the industry. According to WitsView, it is estimated that the global sales volume of AR/VR will reach 550,000 units/7.97 million units in 2024, an increase of 8%/6% from 2023. Additionally, mergers and acquisitions are expected to become a new route for technology companies to go public, and the investment enthusiasm for tech stocks is expected to rise. In September 2024, the China Securities Regulatory Commission issued the "Opinions on Deepening the Market Reform of Listed Company Mergers and Acquisitions," further increasing regulatory tolerance and opening up space for cross-industry mergers and acquisitions, which is expected to stimulate market vitality and promote more high-quality mergers and acquisitions. Considering the current IPO market environment in China, high-quality companies in areas such as semiconductors, artificial intelligence, and new energy are expected to achieve rapid listing through mergers and acquisitions, thereby integrating industrial chain resources and enhancing market competitiveness. High-end manufacturing supply in sectors such as home appliances, automobiles, and machinery is dominant, and external demand is resilient, suggesting that future economic conditions will continue to be favorable. China's exports have performed well this year, driven by strong demand within ASEAN. Looking ahead, sectors such as home appliances, automobiles, and other high-end manufacturing industries with strong supply and demand advantages are expected to continue to perform well, demonstrating resilience under trade disruptions. China's export performance this year has been strong, driven by strong demand within ASEAN, which has greatly boosted exports of high-end manufacturing products. Looking at export data, China's cumulative year-on-year export growth from January to September this year reached 6.2%, significantly higher than the 0.6% in December 2023; China's cumulative export value accounted for 16.5% of the global total from January to August this year, also at a high level. Southeast Asia is a major export destination for China, with China's exports to Southeast Asia accounting for 16.2% from January to September, primarily for imports of high-end manufacturing products such as electrical and electronic equipment. Further analysis shows that China's exports to ASEAN are not just simple transshipments, but are due to strong domestic demand within ASEAN. Overall, China's import share from the U.S. has mainly been decreasing from 2022 to 2024, whereas its import share from ASEAN has remained relatively stable over the past 3 years. Structurally, China's exports to Southeast Asia in the home appliance and passenger car industries since 2022 have not significantly increased at the same time as imports from Southeast Asia. In the future, strong domestic demand in Southeast Asia is expected to continue to support 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, respectively, with a per capita GDP of about 5,611 USD, which is comparable to China around 2010. As a result, they are currently undergoing rapid industrialization and consumption upgrades, leading to high demand for imports in the high-end manufacturing sector. China's advantages in high-end manufacturing supply are evident, with stable demand, and are expected to continue to demonstrate resilience in the future. ASEAN's strong demand for China reflects China's strong competitiveness in high-end manufacturing. Currently, China's manufacturing sector has cluster advantages, engineering talent dividends, and technological accumulations.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. In 2023, Chinese companies had a market share of over 60% in the power battery market.In terms of machinery, the completion volume of shipbuilding in 2023, new orders received, and hand-held orders respectively account for 52.6%, 64.5%, and 51.1% of the global total. From the perspective of demand, the demand from emerging countries is strong and highly reliant on China, which may contribute to China's export growth. In addition to Southeast Asia, Russia and the Middle East have become the main contributors to China's exports in recent years. Regional trade cooperation has also exerted a strong pull on China's exports, with trade with countries participating in the "Belt and Road" initiative accounting for 46.3% of China's foreign trade value in 2023. Furthermore, with the dust settling on the U.S. elections, Sino-U.S. trade may be affected. An analysis on "Which manufacturing sectors are more resilient under Sino-U.S. disruptions?" points out that the disruption caused by Sino-U.S. relations on sectors like household appliances and automobiles is relatively small, and can be hedged through the EU, ASEAN, etc., with the prospect of continued prosperity under the advantage of supply and demand. In addition, the policy strengthening dividend regulation, 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 Measures", emphasizing the strengthening of cash dividend regulation for listed companies, with follow-up policies expected to enhance the enthusiasm and sustainability of listed companies' dividends. In the medium to long term, apart from policy requirements for listed companies to strengthen dividends, high dividend assets with solid fundamentals and long-term returns still offer good cost-effectiveness. Risk warning: Slow progress in the implementation of growth-stabilizing policies; domestic economic recovery falling short of expectations.