Industrial: Technology companies are the main focus, with a secondary focus on domestic demand. Grasp the core assets of this round of AI technology market.

Industrial released a research report stating that the current Chinese bull market has just found the main backbone of the market in "AI technology breakthrough and progress in the field of Siasun Robot & Automation", just entering the main uptrend of the market. This phase, due to overseas risks, has caused a profit-taking adjustment, which is favorable for the sustainability of the bull market in the medium term. In the first quarter, the Hong Kong stock market is still in a relatively favorable environment. It is recommended that investors take advantage of the "Golden Pit" formed by short-term fluctuations. Investors with a contrarian mindset can seize the opportunity to buy the current new core assets represented by AI. The report suggests that the focus of investment should be on the "technology bull market", supplemented by the "domestic demand bull", firmly grasping the core assets of this round of AI technology market. The main viewpoints of Industrial are as follows: The essence of the market: "Technological breakthrough" establishes the main uptrend and backbone of the bull market Establishment of fundamental logic: Technology bull market. This bull market started after the "924" conference in 2024. After experiencing ups and downs in the fourth quarter, the breakthrough in AI technology represented by DeepSeek and progress in the field of Siasun Robot & Automation in early 2025 have found the fundamental logic for this bull market a technology-driven bull market. Drawing from history, the market may continue for several years. 1) Internet 1.0 era: The rapid increase in internet penetration rate and the wave of technological revolution drove the Nasdaq bull market for several years. In 1995, after the US internet penetration rate exceeded 10%, it quickly rose, approaching 50% by 2000. The turning point was in 2000 when internet companies failed to find effective business monetization models, coupled with the Fed raising interest rates in 1999-2000, ultimately leading to the bursting of the internet bubble and the collapse of the "market dream" valuation system. 2) Mobile internet era: Technological and market evolution can be divided into two stages. The first stage was from the "iPhone moment" in 2010 to when China's smartphone penetration rate exceeded 50% in 2013; the second stage was the outbreak of mobile internet applications in 2013, with e-commerce, mobile payments, and other business models gradually taking root. A turning point appeared in 2021, as the mobile internet wave entered maturity, with mobile internet traffic growth slowing to around 30%, coupled with the introduction of intensive regulatory policies, the growth logic of the internet industry fundamentally changed, with the performance of Chinese internet stocks such as NETDRAGON declining steadily from early 2021 to last year. 3) New energy vehicle era: The steep growth curve of penetration rate from 2020 to 2022 ignited the entire industry chain market. After the global new energy vehicle penetration rate exceeded 5% in 2020, it entered an acceleration mode, leading to a comprehensive market for both new energy vehicles and related industries. A turning point occurred in 2022 when the penetration rate reached 45%, followed by significant differentiation in sub-sectors. A technology bull market needs to rebuild the valuation system to weather overseas risks by staying strong. The AI field is currently in a typical period of technological diffusion, with the path to commercialization not entirely clear. This makes conventional valuation systems such as PE, PEG, PS indicators insufficient in interpretation. The report recommends rebuilding the valuation system, focusing on AI technology penetration rate, capital expenditures, application prospects and business value in various industries, and the synergies brought by technological advancements. 1) Private technology companies represented by NETDRAGON, with the breakthrough in AI technology, are experiencing a recovery in growth and their valuation systems should return to those of technology growth stocks. Following this, there may be diversification among these companies, those actively embracing AI are likely to increase their research-related capital expenditures and achieve cost reduction through AI. As their growth potential rises, they may transition from current value stock or consumer stock valuation levels to that of technology growth stocks. 2) The catalyst for short-term market volatility is the "Trump variable", but the root cause is investors' "fear of highs", a shadow cast by the continuous downward revaluation of Hong Kong stocks over the past four years. Since mid-January, the Hong Kong stock market has outperformed global markets, with the Hang Seng Index's PE and risk premiums indicating market sentiment nearing historical highs. When faced with the "Trump variable", Hong Kong stock investors have adopted a mindset of "taking profit". Although the expected PE valuation of the Hang Seng Index is near the median of the past 10 years, considering the valuation system restructuring brought by the technological breakthrough, one should not fear highs. The risk premium indicator of the Hang Seng Index relative to US bonds, compared to the negative risk premiums of European and American stock markets, especially the S&P 500 which has entered negative territory, still shows the high cost-effectiveness of Hong Kong stocks. Furthermore, compared to the risk-free rates on the mainland, Hong Kong stock risk premiums remain high at 8%, making them attractively positioned for mainland investors. Investment strategy: The turbulence at the beginning of the main uptrend is an opportunity in the medium term, it is a good time to buy the "core technology assets" at a low price during dips. One should be patient and prepared when selecting stocks and increasing holdings during short-term market fluctuations. Recently, indicators such as the turnover rate and short selling transaction volume of the Hang Seng Composite Index, based on historical experience, indicate that market sentiment is at a short-term high; coupled with the high level of internationalization of the Hong Kong stock market, which is susceptible to the influence of European and American stock markets and geopolitical factors, short-term fluctuations are normal. The Chinese bull market has just found the main backbone of the market in "AI technology breakthrough and progress in the field of Siasun Robot & Automation", just entering the main uptrend of the market. This phase, due to overseas risks, has caused a profit-taking adjustment, which is favorable for the sustainability of the bull market in the medium term. In 2025, one must adapt to the market rhythm of "zigzag fights". In the first quarter, the Hong Kong stock market is still in a relatively favorable environment. It is recommended that investors take advantage of the "Golden Pit" formed by short-term fluctuations. Investors with a contrarian mindset can seize the opportunity to buy the current new core assets represented by AI. 1) Policy analysis shows that the recent market turbulence catalysts stem from Trump's actions causing an increase in global trade risks; however, China will "comprehensively expand domestic demand", "lead new productive forces with technological innovation", and "promote regional coordinated development" in the future. It is expected to strengthen economic cooperation with surrounding countries and regions to jointly address the US trade war. This combination of policies will reorient the "technology bull market".Rising with fluctuations.2) Analysis of the overseas interest rate environment: The yield of the 10-year US Treasury bonds is expected to fluctuate downwards in the first half of the year, as the US economy continues to cool down and the supply-demand relationship of US Treasury bonds favors a decrease in yields. 3) On the trading level, Hong Kong stocks benefit from the low interest rate environment in mainland China, with domestic capital continuing to increase holdings of Hong Kong stocks and gaining more dominance in the pricing system of Hong Kong stocks. The period of intensive disclosure of Hong Kong stock performance in March-April may create opportunities for repairing expectations differences. Investment opportunity one: Focus on technology leaders, seize the core assets of this AI technology market trend. Broadly speaking, the AI technology sector includes internet, Siasun Robot & Automation, chip computing power, and other AI+ stocks, and will be the main theme of the market for the whole year. It is advisable to actively buy during the short-term adjustment period, based on mid-term cost-effectiveness. Particularly, private tech giants represented by internet platforms are starting to reverse their valuation systems, and the post-adjustment period presents a good opportunity for positioning. 1) "ATM" (Alibaba, Tencent, Xiaomi) represent the ecologically advantaged internet platforms. These companies can upgrade their existing businesses through AI empowerment, achieving a deep integration of "AI+ecosystem." In addition, the open-source Deepseek has promoted China's progress in AI technology, and NetDragon is poised to achieve a good cycle of "AI technology innovation" and "AI application landing, commercial model implementation" with its ecological advantage. Consequently, NetDragon's market performance may replicate the brilliance of the US stock M7. 2) Leaders in the Siasun Robot & Automation related industry chain. 3) Selection of leading companies in other industries benefiting from the increased penetration of AI technology, including semiconductor, computers, communications, consumer electronics, AI+ applications, among others. Investment opportunity two: Focus on domestic demand in addition, recommend short-term operations benefiting from policy-driven rebound opportunities, focusing on new energy, securities companies, real estate, consumer goods, and other strategic assets. Additionally, in 2025, pay attention to the "convertible bond type" dividend assets that combine defensive attributes with offensive resilience, focusing on operators, real estate, consumer goods, among others, with a current dividend yield not lower than 3% (providing a safety margin) and benefiting from AI technology empowerment, industry structure improvement, and profit expectations improvement. Risk Warning: Risks include geopolitical tensions, unexpected changes in US monetary policy, and economic growth slowdown beyond expectations.