Wanlian Securities: A-share market sentiment steadily improving, the prosperity of technological innovation is expected to remain high.

(Wanlian Securities) released a research report stating that looking ahead to 2026, the A-share market is expected to continue its volatile upward trend. With the entry of medium to long-term funds into the market, trading activity is expected to remain high. In terms of investment style, it is predicted that market liquidity and risk appetite will continue to increase, leading to more structural opportunities with a focus on growth in the A-share market. The accelerated development of new quality productivity in China is expected to maintain a high level of innovation in the technology sector, with sectors such as artificial intelligence and high-end manufacturing benefiting. The overall trend of expanding domestic demand is expected to continue, with opportunities emerging in the direction of expanding domestic consumption and services. Key points from Wanlian Securities' analysis: Review of theA-share market in 2025 According to the overall trend of Hithink RoyalFlush Information Network's A-share market in 2025, it showed an overall upward trend with a 41.93% increase by December 31st. From the end of March to mid-April, there was a market correction due to escalating US-China trade tensions. From mid-April to the end of September, with the release of a series of incremental policies and improvements in economic fundamentals, the A-share market showed a sustainable upward trend after stabilizing. Since November, it has shown a volatile upward trend. Areas that performed well in 2025 included 1) Due to escalating geopolitical risks, supply chain disruptions, and increased demand in emerging industries, the non-ferrous metal sector performed exceptionally well; 2) With the rapid development of new quality productivity and the continued enthusiasm for technological innovation, sub-industries in sectors such as telecommunications and electronics in the TMT (technology, media, and telecommunications) sector ranked high in terms of increases. Improved liquidity environment in the A-share market After the May 2025 Political Bureau meeting, a series of favorable policies were successively introduced to promote the entry of medium to long-term funds into the market, leading to capital inflows into the A-share market. The China Securities Regulatory Commission emphasized the continued use of structural monetary policy tools, promoting the entry of medium to long-term funds into the market, and building a sound institutional environment for the national social security funds, insurance, pensions, and asset management to further enhance liquidity. If economic growth expectations improve, corporate profits bottom out, and there is strong policy support, the willingness of long-term funds to enter the A-share market is expected to continue to increase. With uncertainties in overseas interest rate cuts, the domestic liquidity environment being loose, and the advantages of valuation and growth expectations improving, the A-share market is expected to attract overseas capital. Increased policy support and steadily improving market sentiment Regulators have taken many measures to support the development of the capital market, and the market is watching for the effectiveness of these policies. On the investment side, it is expected that the reform of public funds will continue, optimizing the assessment mechanism for venture capital fundraising and management, and promoting the entry of various medium to long-term funds into the market. On the financing side, it is expected that sectoral reforms will continue to be promoted, improving the inclusiveness, attractiveness, and coverage of the capital market system to support the development of new industries such as ShenZhen New Industries Biomedical Engineering and new business formats. The number of mergers and reorganization cases is expected to increase, promoting the integration of industrial resources and accelerating the development of new quality productivity. Technology companies and leaders in various industries are expected to be key directions. Overall, policies are expected to continue to drive comprehensive reforms in capital market investment and financing, consolidating the stabilizing and positive momentum of the capital market. Continuation of the technology trend and more structural opportunities Overall, the Chinese economy is expected to continue to stabilize and improve, with policies to expand domestic demand and boost confidence expected to be continuously introduced to promote the continued recovery of economic growth momentum and further deepening of economic structural adjustment. 2026 marks the beginning of the "14th Five-Year Plan", and it is expected that more active fiscal policies and moderately accommodative monetary policies will be implemented to maintain a strong macroeconomic adjustment, with subsidies focusing on guiding industrial structure optimization. The support for industrial policies will increase, further promoting the development of new quality productivity and the construction of a modern industrial system, and facilitating economic transformation and upgrading. Among them, the technology growth sector is highly anticipated. With the recovery of economic growth momentum, corporate profit expectations are expected to further improve. With a series of favorable policies catalyzing the market, the A-share market is expected to continue its volatile upward trend in 2026. With the entry of medium to long-term funds into the market, trading activity is expected to remain high. In terms of investment style, it is predicted that market liquidity and risk appetite will continue to increase, leading to more structural opportunities with a focus on growth in the A-share market. With the acceleration of China's new quality productivity development, the innovation atmosphere in the technology sector is expected to remain high, with sectors such as artificial intelligence and high-end manufacturing benefiting. The overall trend of expanding domestic demand is expected to continue, with opportunities emerging in the direction of expanding domestic consumption and services. Recommendations for allocation 1) Focus on technology innovation, industry upgrades led by basic research and artificial intelligence. Policies emphasize strengthening key common technologies, cutting-edge leading technologies, and disruptive technological innovations. Breakthroughs in these areas are expected to lead industrial transformation and are worth paying attention to. Specific areas include: high-end chips and semiconductor equipment, basic software and industrial software, biological breeding and agricultural technology, new materials and frontier fields. China is fully implementing the "AI+" action, leading a paradigm shift in scientific research with artificial intelligence. In the field of artificial intelligence, key areas to focus on include data infrastructure, computational infrastructure, and industry AI solutions. 2) Focus on advanced manufacturing, driven by intelligent manufacturing and green transformation. The extensive use of data elements drives the transformation and upgrading of traditional manufacturing industries, increasing the resilience and security of China's industrial chain and supply chain. In the field of intelligent manufacturing, opportunities lie in intelligent manufacturing and digital industrialization, industrial internet, intelligent equipment, intelligent vehicles and components, high-end instruments, and precision manufacturing, among other directions. In the field of green, low-carbon and energy revolution, focus on new energy and energy storage systems, green manufacturing and circular economy. 3) Focus on the expansion of domestic demand and consumption upgrade, where service consumption and digital lifestyles will lead growth. In terms of innovative service consumption scenarios, potential demand in areas such as cultural tourism integration and experiential economy, health care and elderly care services, sports and leisure, social consumption, education and lifelong learning may be released. Additionally, in the direction of digital lifestyles and modern distribution, retail digital platforms, innovative channels, modern logistics, and supply chain systems may bring new investment opportunities. Risk factors Geopolitical risks; domestic economic performance falls short of expectations; technological progress falls short of expectations; significant changes in market structure.