Guotai Haitong: Funds in the New Year market transition from rebalancing to reallocation, optimistic about applications in AI/business space, Hainan free trade zone, and domestic consumption.

Guotai Haitong released a research report stating that the average daily turnover of hot topics last week was 6.75 billion yuan, with an average turnover rate of 3.07%, both significantly lower. Domestic consumption and technology themes exhibited rotational characteristics, with domestic themes such as dairy industry/retail/food processing/aviation surging, some varieties of non-ferrous metals receiving net fund inflows, commercial aerospace themes experiencing increased volatility, and AI-related themes such as computing power/optical communication/copper-clad laminate turning downward, while the Hainan sector showed signs of weakening. Recently, external disturbance factors such as the US Federal Reserve interest rate cuts and the Bank of Japan interest rate hikes have gradually stabilized and market risk appetite is expected to rebound. The continuous strengthening of domestic demand policy expectations has made domestic demand an important direction for the rotation of technology themes. The year-end market funds are shifting from rebalancing to reallocation, with optimism in AI applications/commercial aerospace/Hainan Free Trade Zone/domestic consumption. Guotai Haitong's main points are as follows: Theme 1: AI applications. Domestic computing power architecture capabilities have surged, application product iterations accelerated, and the spiral development of computing power and applications continues to strengthen the AI investment narrative. Moore Thread released a new generation of fully functional GPU architecture "Huagang", with a 50% increase in computing power density compared to the previous generation, and a 10x increase in energy efficiency; Volcano Engine's motive force conference released Bean Bag Large Model 1.8 and Bean Bag Video Generation Model Seedance 1.5 pro; Ant Group's AI health application "Ant Aifu" has reached 15 million monthly active users, ranking first in health management AI applications. Policy guidance, technological breakthroughs, and product promotions are driving China's AI industry into a large-scale demonstration application stage. Recommended: 1. Hong Kong stock Internet and vertical applications in medical/financial/office/game/government sectors; 2. Data center power equipment/domestic computing/AIDC under increased global computing power investment. Theme 2: Commercial aerospace. The medium-sized reusable carrier rocket Long March 12A is about to launch, the large reusable liquid rocket Tianlong 3 has successfully completed ground verification tests with "36 stars in one launch", Chinese Star Network has completed the networking of 16 sets of 127 low-orbit satellites, and the network progress is significantly accelerated by 2025. The China National Space Administration issued the "Action Plan for Promoting the High-quality and Safe Development of Commercial Aerospace (2025-2027)" to support commercial aerospace entities in developing new technologies, new products, and exploring new application scenarios. It is expected that China's annual satellite launch demand will increase by more than 10 times from 2024 to 2030. Recommended: 1. New infrastructure such as rocket manufacturing/launch sites; 2. New scenarios such as satellite communication/remote sensing; 3. New technologies such as reusable rockets/liquid rockets. Theme 3: Hainan Free Trade Zone. The island-wide closure officially launched, Siemens Energy's first landmark foreign investment project landed after closure. On the first day of the island-wide closure of Hainan Free Trade Port, Customs supervision on the "front line" imported "zero tariff" goods amounting to 360 million yuan, mainly crude oil, aviation equipment, etc.; Customs supervision on the "second line" processed goods for internal sales valued at 14.689 million yuan, exempting 80.8 million yuan in duties, mainly medical equipment, pharmaceuticals, food, etc. On the first day of closure, Siemens Energy held the groundbreaking ceremony for the gas turbine total assembly base and service center in Yangpu Economic Development Zone, and simultaneously established Siemens Energy (Hainan) Co., Ltd. Recommended: 1. Aerospace/energy equipment/offshore duty-free/high-end medical benefiting from the development of Hainan's characteristic industries; 2. Modern service industries such as tourism/exhibitions/transportation/finance benefiting from the new phase of development of Hainan Free Trade Port. Theme 4: Domestic consumption. The Central Government has proposed to implement a special action plan to boost consumption and formulate and implement plans to increase urban and rural residents' income. New demand leads to new supply, new supply creates new demand, and new consumer scenes such as sports events/ice and snow tourism/performances and cultural tourism continue to emerge. The "Suo Super League" overflow effect has significantly boosted consumption in multiple scenarios across Jiangsu to over 38 billion yuan; the Liaoning Provincial Party Committee proposed to host the "Northeast Super League" to create a football event brand with national influence; from 2024 to 2025 winter season, China's ice and snow sports consumption scale exceeded 187.5 billion yuan, a year-on-year increase of 25%. Recommended: 1. Event economy/ice and snow tourism where new scenes and demands emerge; 2. Tourism/duty-free/hotels benefiting from intensified consumption promotion measures; 3. Emotional value consumption such as games/trendy toys. Risk warning: Macroeconomic demand and the commercialization process of key technologies may be lower than expected.