Guotai Haitong: The New Year's attacking campaign has already begun. Bullish on technology, securities firms, and consumer goods.

Guotai Haitong released a research report, stating that considering the recent economic slowdown and accelerated decline in real estate sales area, policy expectations are expected to be upgraded. Under the premise of a stable renminbi, the expectation for a rate cut by the Chinese central bank in early 2026 is expected to increase. At the trading level, the position reduction for fixed income assets has entered its final stages, and the reconfiguration and institutional fund inflows at the end of the year are expected to improve market liquidity and active trading, and the year-end offensive has already begun. Stepping out of the opening game and entering the year-end offensive, Guotai Haitong is optimistic about technology, securities firms, and consumption. Guotai Haitong's main points are as follows: After a long period of sideways trading, China's "transformation bull" will revive and move forward. On November 24th, when the Shanghai Composite Index fell to 3800 points, Guotai Haitong's strategy team judged that "key position: entering the hitting area, playing the opening game," and in the past two weeks, the ChiNext Index has regained lost ground. Looking ahead, Guotai Haitong is more optimistic than the market consensus: some investors' interpretation of policy as not being proactive in the "cross-cycle" contains errors, and the anomaly in 2025 is relative to the risk exposure at the end of 2024. Looking towards 2026, the Central Economic Work Conference clearly states "consolidating and expanding the momentum of stable and positive economic development," and calls for fiscal policy to be "more proactive" and "dominated by domestic demand," for the first time mentioning "pushing for investment to stabilize growth" (negative growth in 2025), and after a decade, mentioning again the need to reduce inventory in the real estate market; Han Wenxiu, vice director of the Central Financial and Economic Affairs Commission, stated that incremental policies will be introduced based on changes in the situation, continue to implement "nationwide subsidies" and prioritize the implementation of key projects in the "Fifteenth Five-Year Plan," implying the importance of achieving a good start in the "Fifteenth Five-Year Plan." Considering the recent economic slowdown and accelerated decline in real estate sales area, policy expectations are expected to be upgraded. Under the premise of a stable renminbi, the expectation for a rate cut by the Chinese central bank in early 2026 is expected to increase. At the trading level, the position reduction for fixed income assets has entered its final stages, and the reconfiguration and institutional fund inflows at the end of the year are expected to improve market liquidity and active trading, and the year-end offensive has already begun. Spring market law: The main index sets the stage while small caps perform, with quality sectors taking the lead. Reviewing the spring market law from 2010 to the present: 1) The spring market usually focuses on the period from December of the previous year to April of the next year, with the empirical starting point being the 10-15 trading days before the Spring Festival. If the market has been sufficiently adjusted in advance and there are positive expectations for policies and liquidity, the starting time will be significantly earlier, as seen in 2012-2013, 2018-2019, and 2022-2023; 2) The characteristics of the spring market style are that the main index sets the stage while small caps perform, with a shift occurring around the Spring Festival. Before this, due to factors such as pressure from annual report forecasts and insurance funds' investment preferences, the main index style represented by the CSI 800 is dominant; after the Spring Festival, the market enters a period of economic and performance uncertainty, combined with seasonal improvements in liquidity, leading to significant outperformance by small and medium-sized growth companies represented by the CSI 2000; 3) If the strong sector from the previous year still has economic support at the beginning of the new year, its high certainty will mean it takes the lead in triggering valuation shifts and leading the market up. Examples include the game sector in early 2014, Internet+ in early 2015, semiconductor in early 2020, and Maotai index in early 2021. Considering the significant adjustment in the stock index in the previous period, the increase in general policies, and the increase in market incremental funds, the current period is an important window for laying out the spring market. Main board growth trends with industrial trends before the Spring Festival are expected to have an advantage, while main board value stocks benefiting from insurance funds' "good start" allocations are also expected to rebound. Industry comparison: Stepping out of the opening game and entering the year-end offensive: Optimistic about technology, securities firms, and consumption. The Central Economic Work Conference continues its positive stance on macroeconomic policies, focusing on short-term expansion of domestic demand and long-term "internal strength" cultivation, adding more aggressive elements to the combination. Areas of optimism include: 1) Technological growth: Acceleration of progress in AI models and applications, with a shortage of domestic computing power infrastructure. Recommendations: Hong Kong stocks in internet/media/computer/computing power, as well as manufacturing industries with global competitive advantages going overseas: electric power equipment/mechanical equipment. 2) Big finance: Capital market reforms are expected to pick up momentum, with recommendations for securities firms/insurance companies. 3) Pro-cyclical sectors: After adjusting for three years, valuations and holdings are at low levels, with more signs of recovery in the consumption sector, recommending consumption stocks with low prices, low inventory, and improved economic conditions: food and beverage/agriculture and livestock/aquaculture/hotels/tourism services; optimistic about the pro-cyclical sectors such as non-ferrous metals/chemicals. Theme recommendations: 1) Commercial aerospace: The launch of the Changzheng-12A rocket is imminent, with accelerated constellation networking, optimistic about liquid rockets/satellite payloads/launch sites. 2) Energy powerhouse: Expanding the application of green energy has become a strategic focus in energy, optimistic about smart grids/new energy storage/nuclear fusion energy. 3) AI applications: The central government proposes deepening the development of artificial intelligence +, optimistic about Hong Kong stocks in internet/data center power. 4) Domestic consumption: Building a strong domestic market, optimistic about emerging consumption/sports economy/ice and snow tourism. Risk warning: Overseas economic downturn exceeds expectations, global geopolitical uncertainties.