China Securities Co., Ltd.: It is expected that the A-share market will continue to rise during the year-end period. AI+ will be the main trend in the medium term.

China Securities Co., Ltd. released a research report stating that interest rates in the bond market are rapidly decreasing, and the bull market trend in both stocks and bonds in the Chinese capital market continues. Recent data shows improvement in real estate sales, and overall policies still have room for further easing. The bank believes that loose monetary policies are likely to be further enhanced early next year, and measures such as reserve requirement ratio cuts and interest rate reductions are anticipated. Funds are expected to further flow into the A-share market, and specific policies from various ministries are also expected to be gradually implemented, with the New Year market trend expected to continue. Focus on sectors that are poised to benefit from potential policy support, with AI+ as a key industry theme worth continuous monitoring. Focus industries include non-bank financial institutions, real estate chains, media, retail, tourism, consumer electronics, and construction, among others. Key themes to watch include AI+ and the initial public offering economy. Key points by China Securities Co., Ltd. are as follows: The Fed's interest rate cut has been implemented, and inflation decline remains to be observed. The Federal Reserve announced a 25 basis point interest rate cut during the December FOMC meeting, while maintaining a hawkish stance. The dot plot indicates a more cautious pace for future interest rate cuts, with uncertainty regarding the speed of core PCE inflation decline. There is uncertainly regarding the U.S. inflation and economic data in 2025, which is one of the external disruptive factors affecting the A-share market. Improvement in real estate sales with room for policy enhancement. On the domestic policy front, the Ministry of Commerce is accelerating the issuance of documents to promote the development of the IPO economy, promoting consumer upgrades and new consumption patterns; the central bank maintained LPR rates unchanged, but market expectations for interest rate cuts early next year are high, leading to a rapid decline in bond market interest rates. Recent signals of improvement in the real estate industry include a rebound in indicators such as land area transaction shares in mid-December, with room for policy enhancement and attention on the subsequent intensity of policy implementation. Amid a background of low interest rates and asset scarcity, insurance funds may accelerate the allocation of equity assets. Continued downward pressure on medium and long-term interest rates may exacerbate the mismatch between assets and liabilities for insurance institutions. With the steady progress of the industry's "New Year's Day" in 2025, robust growth in renewal premiums, and the continuous decline in medium and long-term interest rates, insurance funds may accelerate the allocation of equity assets at the end of the year. With an active market, the focus is on policy directions and AI+ industry themes. This week, market trading volume decreased, margin balance slightly declined, and short-term speculative sentiment cooled down. However, artificial intelligence remains a major theme in the market, with the policy-driven effect of "Artificial Intelligence+" becoming increasingly prominent, and the AI hardware sector performing strongly. Emerging consumer trends also attract attention, such as the introduction of the "gift-giving" feature in WeChat Mini Program for gray testing, injecting new vitality into holiday consumption. Overall, there is significant rotation in thematic investments, with a recommendation to focus on segmented areas supported by policies, such as AI hardware and consumer upgrades. Risk Analysis The effect of domestic demand support policies is lower than expected; stock market selling pressure exceeds expectations; geopolitical risks; and unexpected fluctuations in the U.S. stock market.