Institutional Research Weekly: Looking optimistic for three major investment trends in 2025, with higher certainty in the short end of the bond market.

Equity Market 1. Qianhai Kaiyuan Fund: Optimistic about three main investment themes by 2025 Wu Guoqing of Qianhai Kaiyuan Fund pointed out that the market in 2025 should be more optimistic compared to 2024. He is bullish on three main investment themes. Firstly, dividend strategy, as government bond yields continue to decline, the value of dividend investment is still prominent, and companies with high dividend yields will be more favored. Secondly, safe-haven assets, such as gold, are expected to rise in price in the future, and the defensive nature of gold in a weak market makes it a valuable investment. The third theme is thematic investment, with a focus on industries like low-altitude economy and human-like Siasun Robot & Automation, which are still in their early stages of growth and have high investment value. 2. Huashang Fund: Favorable liquidity environment to boost risk appetite Li Qian of Huashang Fund stated that looking ahead to 2025, with policy stimuli, economic growth is expected to continue. Monetary policy is shifting to moderately loose, and central banks overseas are still on a path of interest rate cuts, creating an overall favorable liquidity environment. Despite uncertainties from overseas disturbances, coordinated policy efforts and increased counter-cyclical adjustment may help drive stable economic growth. The overall macro liquidity environment in 2025 may be conducive to an increase in market risk appetite, focusing on domestic demand, technology, and dividends. 3. Huaxia Fund: Range-bound market in 2025 as A-share valuation rises Zhai Yuhang of Huaxia Fund forecasted that the A-share market in 2025 may become more complex. In terms of market structure, the current trend seems to favor growth stocks on the surface, but in essence, trading reflects the reversal characteristics contained in growth stocks. This indicates that the market has fully recognized the challenges facing the current economy and believes that there will be a turnaround in 2025 based on the information conveyed by policies. With valuations already rising significantly, growth and value stocks in 2025 are likely to be in a range-bound state. Industry Research 1. Invesco Great Wall Fund: 2025 is expected to be a year of recovery for the healthcare sector Qiao Haiying of Invesco Great Wall Fund stated that from a funding perspective, the entire healthcare market currently revolves around medical insurance fund payments, and there is a need to break away from the current stock funding market and explore incremental funding markets. Incremental funding mainly comes from two aspects: one is going overseas; the other type of incremental funding mainly comes from self-diagnosis, self-consumption of self-funded markets. 2025 is expected to be a year of recovery, and discussions on commercial health insurance and reform of the payment side will also contribute to market recovery and dispel the pessimistic sentiment towards the industry. 2. Fuguo Fund: Focus remains on domestic consumption and technology Fuguo Fund stated that looking ahead to this year, the focus will be on domestic consumption and technology. On one hand, the Central Economic Work Conference prioritizes "vigorously stimulating consumption, improving investment efficiency, and comprehensively expanding domestic demand" as the top tasks for this year's economic work. On the other hand, "leading technological innovation to develop new production forces, constructing a modern industrial system" ranks second among this year's key tasks. It is expected that new quality productivity focusing on "high-end manufacturing + technology" will receive continuous policy support, and attention can be focused on the "consensus" on industries mentioned intensively in local congresses, especially on new directions. 3. Zhonggeng Fund: Computer and media sectors strengthening with multiple positive factors Zhonggeng Fund stated that the computer and media sectors saw strong gains last week, with domestic computing power and creative concepts benefiting from the continued promotion of domestic substitution logic. Companies like AIGC and Little Red Book topics saw significant gains, combined with improved liquidity in the market recovery process, leading to increased inflow of incremental funds into the sectors. The home appliance sector saw relatively lower gains, as last week's home appliance sector saw a significant decline under the updated favorable policies on trading in old appliances, with the market showing a positive response to the policies. Following this, it is advisable to track the effects of the trading-in-old-appliances policy and the demand for smart home appliances and high-end appliances. Macroeconomics and Fixed Income 1. Jiashi Fund: Rational expectation of bond market returns in 2025 Li Yuang of Jiashi Fund believes that bond returns mainly come from interest and capital gains, and the central bank may lower interest rates and reserve requirements at the right time, creating space for capital gains in the bond market. However, with bond yields currently at low levels, market participants' strategies are becoming homogenized, leading to increased market volatility due to crowded trades. While pursuing returns, investors need to strengthen risk management and position control to manage expectations. 2. Boshi Fund: Exchange rate uncertainty may bring temporary disturbances to the bond market Zhang Liling of Boshi Fund stated that under the direction of loose policies, it is still necessary to be vigilant about the exchange rate uncertainty that may bring temporary disturbances, which could constrain the extent of monetary policy loosening and create temporary resistance to the downward trend of bond yields. In addition, as the coupon rates continue to decline, the influence of market trading power is becoming more significant, leading to possible increased volatility in the bond market in the short term. Therefore, it is important to closely monitor the extent of the decline in market yields and potential regulatory measures by the central bank on trading behavior to prevent possible temporary volatility risks. 3. GuotouUBS Fund: Short end benefits from stronger certainty of monetary loosening Li Dafu of GuotouUBS Fund remarked that looking ahead to 2025, overall bond market risks are controllable, and the trend of oscillating decline will continue, but short-term gains have led to extreme and crowded trading at the long end, potentially overextending the market for the whole year. In comparison, the short end is favored due to the stronger certainty of monetary loosening. With declining yields in money market funds, short-term bond funds may absorb some of the savings demands flowing out of money market funds. Additionally, with the realization of interest rate cuts and the downward movement of funding rates, it is advisable to actively seek leverage and credit bond arbitrage opportunities. Asset Allocation 1. GuotouUBS Fund: Investments in a "unstable" global economy background Wang Yanjie of GuotouUBS Fund stated that looking ahead to 2025, the global macroeconomic landscape will become more complex. Trump's tenure has shifted the global economic prospects from "uncertain" to "unstable." Technological innovations like artificial intelligence will continue to lead the market, and corporate profits will become a major focus of investment. For A-shares, a cautious optimistic attitude is maintained: given the current economic uncertainties and complexities, it is crucial to focus on stable and reliable investments, while adjusting investment strategies to adapt to changing market conditions.Given the complex and changing economic environment, it is suggested that investors adopt a cautious defensive strategy at the start of 2025, focusing on positioning high dividend stocks with sustainable cash flow and undervalued high-quality value stocks.If the momentum of credit expansion is strong in the first quarter of 2025, coupled with the stabilizing economic fundamentals, the A-share market is expected to return to an upward trajectory in the second half of the year. Currently, the inflection point of valuation repair has appeared, with profit growth as the core drive. The darkest moment of valuation decline has passed, and future market performance will rely more on the endogenous growth momentum of corporate profit. Gold, as a core option for strategic asset allocation, is also the preferred tool for hedging geopolitical turmoil and systemic financial risks. Currently, as the Federal Reserve is about to start a rate-cutting cycle, coupled with the strong demand for gold from emerging market central banks, it provides solid support for the price of gold. This article is reprinted from the "Wind Wand" WeChat public account, GMTEight Editor: Liu Xuan.