Zhang Yidong: China's stock market opportunities are comparable to real estate after 1998. I suggest investors lay out two main lines and be patient in going long.

On December 3rd, the 10th GMTEight Capital Market Annual Meeting was held in Nanshan, Shenzhen. At the meeting, Industrial's global chief strategy analyst and co-director of the Institute of Economics and Finance shared their view of "unstoppable bull market, patient long positions." Overall, Zhang Yidong believes that the era of "big power rivalry" constitutes the core logic of asset allocation. On one hand, the United States relies on debt expansion to drive market prosperity, with the federal government's debt soaring and the leverage ratio exceeding 120%, facing huge pressure for interest payments every year. Therefore, from a monetary perspective, there is a strong demand for interest rate cuts in the United States, and it is expected that the dollar will continue to weaken next year, and the Federal Reserve will further ease. On the other hand, technology has become the "Noah's Ark" for the United States to maintain long-term economic competitiveness. AI-related investments have contributed to over 40% of its actual GDP growth rate. Therefore, behind the prosperity model driven by debt expansion in the United States, there are hidden crisis risks. This wave of AI technology boom in the United States is likely to form a "rigid bubble" to cover up the potential crisis. In contrast, the stage of China's real estate dragging down the economy may be coming to an end, and China is facing significant historical development opportunities. Key points of the speech: The hegemony of the United States under the shackles of debt increasingly depends on AI technology, and in the era of asset allocation, the core logic is the big power game. Looking at the United States, it is no longer the "sole hegemon" as it was in the past 30 years. The performance of hegemony has shifted from the lighthouse model of "establishing rules and using rules" to the "art of transactions and no rules" mode of America First, which is essentially unilateralism and realism. What is the economic background underlying this shift? It is that the federal government's debt ratio is high, with significant pressure from annual interest payments. The debt-to-GDP ratio has exceeded 120%, and the annual interest payments amount to trillions of dollars. From a currency perspective, the strong demand for interest rate cuts in the United States is clearly evident. Trump is always thinking of changing the chairman of the Federal Reserve, and the reason behind this is the high government debt and leverage ratio in the United States. The United States has been driven by debt expansion for years, leading to a prosperous road that comes with a shadow of crisis. The inflation center of the United States and the West has been on the rise in recent years compared to the globalization era from the 1990s to 2020. Furthermore, the hollowing out of the US manufacturing industry poses a challenge as it lacks the labor dividend from the manufacturing sector or the engineering dividend. In the 1940s, the proportion of manufacturing jobs to non-farm employment was over 30%, but now it is only 8%. The lack of enough talent pool in the United States to fulfill the lower-end manufacturing jobs is evident. The United States now depends on two ends: service consumption, which is the dominant force, and advanced technology manufacturing, which is the emerging force and future. Technology has become the "Noah's Ark" for the United States to maintain economic long-term competitiveness. Industrial's macro team conducted a study and found that using a narrow measure, the four major technology giants - Google, Meta, Nvidia, and Microsoft - have contributed to over 20% of the actual GDP growth rate for the United States. Moreover, if we broaden the scope to include AI-related investments in the United States, such as AMD and Oracle, these investments in information processing technology software, hardware, and data center construction collectively account for over 40% of the actual GDP growth rate in the United States. The development of AI in the United States is heavily intertwined with the long bull run in the stock market. The government's fiscal and monetary expansion policies have been driving the capital market, providing property income to citizens, which supports their disposable income. This, in turn, sustains US consumption, which constitutes over 70% of the US GDP. In conclusion, the AI technology boom in the United States is likely to be a "rigid bubble." It is crucial to analyze this trend and not underestimate the impact of AI technology, which could surprise many in terms of its progress and impact. China is transitioning from the painful stage of old and new economic drivers to becoming a modern socialist powerhouse, presenting historical opportunities for development. The United States relies on debt expansion to stimulate its economy, emphasizing capital markets to drive technological advancements. In contrast, China is focused on steady progress, prioritizing quality over quantity in its development strategies. This presents a significant historical opportunity for the development of China's stock market. The mention of the 15th Five-Year Plan highlights the country's goal to achieve a GDP per capita of $20,000 by 2035 through high-quality development. This ten-year plan emphasizes the importance of maintaining steady and stable economic growth. Additionally, the shift from old to new economic drivers is a challenging process, but it provides an opportunity for China to become a modern socialist powerhouse. Furthermore, it is essential to pay attention to the different investment opportunities in both the growth and value sectors of the market. While technological advancements continue to drive the US market, China's focus on revamping traditional industries and promoting higher quality growth presents unique investment prospects. Overall, the analysis presents a comprehensive overview of the economic landscape, emphasizing the importance of strategic investments and a nuanced understanding of global market trends to navigate the complexities of the financial market.