Galaxy Securities' 2026 A-share market investment outlook: The opening year of the "14th Five-Year Plan" focuses on "two main lines + two auxiliary lines"

China Galaxy Securities releases the 2026 A-share market investment outlook. In the year of the start of the "15th Five-Year Plan", policy dividends and industrial opportunities are expected to deeply integrate, structural main lines will become clearer, and the focus will be on the following "two main lines + two auxiliary lines". The first main line is the accelerated evolution of the global major changes unseen in a century, with the domestic economic logic shifting towards new quality productivity, and key areas such as artificial intelligence, embodied intelligence, new energy, controllable nuclear fusion, quantum technology, aerospace, among others in the "15th Five-Year Plan" are worth paying attention to. The second main line is the mild promotion of anti-inner circulation policies. Under the optimization of supply and demand structure combined with the expectation of price rebound, the profit repair path of the manufacturing industry and resource sectors is clear. In addition, under the guidance of expanding domestic demand policies, the consumption sector has an opportunity for layout, and the trend of going global will further open up corporate profit space. Main points of Galaxy Securities: 2025 market review: As of November 14th, the entire A-share index rose by 26.58%, with the ChiNext Index and the Sci-Tech Innovation 50 Index leading the gains, rising by 45.29% and 37.65% respectively. Among the 31 primary industries, 30 industries had a closing price higher than the end of the previous year. The non-ferrous metals, communications, power equipment, and integrated industries led the gains with increases of over 50%, while the food and beverage industry declined by 3.40%. 2026 investment environment: (1) Overseas perspective: Under midterm election pressure, the Trump administration may refocus on economic growth in 2026. The U.S. labor market is significantly cooling down, but there is still recurring pressure on U.S. inflation. It is expected that the Fed will still be in a rate-cutting cycle in 2026, with higher expectations of rate cuts in the second half of the year. Before the U.S. midterm elections, the overall situation between China and the U.S. remains relatively stable. International uncertainties have increased, and geopolitical risks remain prominent. (2) Domestic perspective: Looking ahead to 2026, China's macro policies will maintain continuity and stability, economic growth will remain resilient, and with the synergy of expanding domestic demand and the "anti-inner circulation" policy, inflation is expected to rise from low levels. Overall judgment: In the first year of the "15th Five-Year Plan", the strengthening of reform policy expectations, price factors such as the upward trend of the RMB exchange rate supporting liquidity, and the reshaping of global capital flows, combined with policy tools, will boost market confidence. With ongoing trends such as continued relocation of household deposits by residents, increased participation of institutional investors, and the reshaping of global capital flows with policy support, the A-share market will continue to benefit from the logic of improving liquidity. Currently, the valuation of A-shares is in a relatively reasonable range and still at a medium to low level compared to major global equity markets. In 2026, profitability is expected to take over valuation, becoming a key focus of the market. It is expected that the basic fundamentals of listed companies will continue to improve, with the deepening of China's economic transformation and the continuous development of emerging industries becoming key drivers of profit growth. The narrowing decline in the Producer Price Index (PPI) is expected to further drive the level of corporate profit margins. Meanwhile, attention should be paid to factors such as the U.S. midterm elections, geopolitical risks, and the pace of economic recovery in China as temporary disruptions. In 2026, the A-share market is expected to show upward momentum. Style judgment: (1) Large and small caps: The performance of small caps is still promising, especially in the first three quarters, as the loose trading environment opened by the rate cuts of the Fed and the upward trend in emerging industries driven by trends, personal investors may accelerate entry into the market, leading to a relatively advantageous situation for small caps. At the same time, the trend of institutional funds entering the market is clear, and the performance of small caps and large caps is expected to become more balanced, with the opportunity to shift towards large caps in the fourth quarter. (2) Growth vs. value: It is expected that the growth stocks' earnings growth will continue to outperform value stocks, and Fed rate cuts are favorable for equity asset valuation. With technology innovation, expanding domestic demand, "anti-inner circulation" policies running parallel, growth style may be relatively advantageous in the first three quarters of 2026; as the U.S. midterm elections approach in the fourth quarter, and changes in the China-U.S. tariff policy, market risk preferences may face disruptions, and value style may be relatively advantageous. Risk warning Increased external uncertainties; risks of fragile internal policies and economic resilience; risks of short-term adjustments in market sentiment and fund flows.