Golden Everest's outlook for 2026: a weak US dollar cycle driving global economic recovery, coupled with long-term support from domestic and foreign funds, will boost A/H shares.

Zhongjin released its outlook for 2026, stating that a weak US dollar is driving global economic recovery, leading to an increase in domestic exports and profit improvement. Global monetary policies and liquidity are becoming more accommodative, pushing up the valuation of A-shares and Hong Kong stocks. Meanwhile, more global funds are flowing into emerging markets with higher growth potential in search of higher returns. With the catalyst of a weak US dollar and domestic policies, we believe that more overseas and long-term funds entering the market are expected to boost A-shares from the funding side. Structurally, the "new economy" represented by technology and going global is expected to continue to perform well in terms of fundamentals and returns. In addition, driven by expanding domestic demand, anti-inner spiraling, and overseas demand, domestic enterprises' profits may improve, driving the rise of consumer and other domestic demand sectors. Zhongjin's main points are as follows: Since 2025, the Trump administration's policies such as DOGE, reciprocal tariffs, and cracking down on illegal immigration have continued to impact the US economy's nominal recovery cycle. Entering 2026, pressure from the midterm elections may force Trump to soften his foreign policy, shifting his focus to domestic issues and substantially promoting fiscal and monetary easing and financial deregulation. Zhongjin predicts that the environment of fiscal and monetary easing will effectively alleviate the three major constraints on the US economy in 2025, namely, negative impacts causing a lack of confidence, stalling expansion of small businesses affecting end-demand, and weak housing demand dampening real estate investment. Meanwhile, the loose credit environment will continue to support this year's shining AI and reindustrialization-related investments. Therefore, Zhongjin believes that sectors like technology, industry, and resources that performed well in the US stock market in 2025 are likely to continue leading the way in 2026, while consumer and financial sectors affected by domestic demand in the US may catch up as the nominal cycle rises. As the Fed starts normalizing its balance sheet following the FOMC meeting in December, there is a high probability that US dollar liquidity will gradually loosen next year, jointly supporting global risk assets along with the potentially recovering fundamentals, particularly favoring emerging markets, as well as gold, silver, and copper instruments that benefit from inflation and US dollar liquidity. If the US dollar weakens, there may be room for the renminbi to appreciate. Recently, with the expectation of a Fed rate cut and the peak of annual year-end foreign exchange settlements domestically, the renminbi has accelerated its appreciation against the US dollar. Under Trump's "Big Reset," with US currency coordinating with fiscal policy, Zhongjin believes that US dollar liquidity will trend towards abundance, leading to a high probability of the US dollar being in a depreciation trend. In this scenario, the motivation for accumulated pending foreign exchange funds to be settled may support the renminbi.