Industrial: What other catalysts are worth looking forward to in the future?

Industrial released a research report stating that it had previously emphasized that the impact of this cooling trend is more on the pace and structure of the market rather than the overall trend. The core logic supporting the upward trend of the spring market has not changed, and this round of spring market is still in progress. Looking at this week, although the market pace is slowing down, the upward trend continues, and the money-making effect is spreading to a wider range structurally. The main points of Industrial are as follows: 1. In an environment of abundant liquidity, what catalytic factors can we expect next? Abundant liquidity is the core drive supporting the upward trend of this round of spring market, stemming from insurance funds' support of new premium inflows, residents' deposits maturing in large amounts and the inflow of overseas funds attracted by the appreciation of the renminbi. On the one hand, according to channel data, this year's "good start" by insurance funds has been impressive, supporting a large amount of new premium inflows into the market. According to channel data disclosed by insurance company observation public accounts, as of mid-January, the growth rate of individual insurance premiums of major companies generally exceeded 30%, with several companies' individual insurance premiums exceeding the one hundred billion mark and a doubling of premiums through the bank-insurance channel. The rigid allocation demand for the 30% increase in new premiums entering the market brings a large amount of incremental funds to the market. On the other hand, based on the calculation of the expiration dates of residents' fixed-term deposits, the first half of this year will be the peak period for residents' deposits to mature. With the rising preference for risk in the spring season, the first quarter is expected to be an important window for residents to increase their allocation of equity assets. Since 2022, residents' fixed-term deposits have been on the rise, reaching a cyclical peak by the middle of 2023. Based on a mainstream view of a 3-year fixed-term deposit period, the first half of this year will be a peak period for residents' fixed-term deposits to mature. In the background of declining interest rates, this part of the funds is seeking new reservoirs, and with the rise in risk preference in the spring season, the first quarter is expected to be an important window for residents to increase their allocation of equity assets. Furthermore, the continuous appreciation of the renminbi is attracting the inflow of overseas funds, becoming a source of liquidity for the spring market. The current appreciation of the renminbi is accelerating the inflow of overseas funds, with a surplus in the bank's foreign exchange transactions reaching as high as $99.9 billion in December 2025, including a surplus of $11.5 billion in securities investment sub-items, both setting new monthly historical highs. The inflow of funds yet to be settled in renminbi and overseas funds driven by the appreciation of the renminbi is providing incremental funds for domestic enterprises, residents, and foreign capital to enter the market, becoming a source of liquidity for this round of spring market. In an environment of abundant liquidity, the warm fundamental conditions and policies are underpinning the market's risk preference, prompting positive responses from funds to narratives at various macro and industry levels. This is continuously expanding the money-making effects, or it could become an important feature structurally of this round of spring market. The highlights of the fundamentals are boosting the market, with improvements in domestic macroeconomic data in December stabilizing expectations of economic downside, and structural highlights in the annual performance forecasts providing clues to economic conditions; clear signals of policy pre-positioning, with recent coordination of policies in real estate, consumption, and currency fields creating a warm macro environment for market interpretation; and the catalytic progress in industries such as AI and commercial aerospace continues. With a bottoming out of risk preference, abundant incremental funds are responding positively to narratives at various macro and industry levels, likely driving the continuous expansion of money-making effects and promoting the deepening development of the spring market. So, what other catalytic factors can be expected structurally in the future? First, next week will still be a dense catalytic window at the industry level, especially welcoming the super earnings week of North American tech giants, which is expected to have an impact on the domestic market. The sustainability of capital expenditure by tech giants and the monetization ability of AI investments will be the focus of the market's attention, mapping to A-share North American AI chains and AI applications. In addition, domestic AI/Chips, space computation, controllable nuclear fusion, and other aspects will also see catalytic developments. Second, next week will also enter the last week of intensive disclosure of annual performance forecasts, and the impact of performance on market structure may become more significant. According to current disclosure rules for performance forecasts, listed companies need to disclose annual performance forecasts for the previous year by January 31, with mandatory disclosures for situations such as negative net profit, profit turnaround, or 50% year-on-year growth or decline. As of January 23, the disclosure rate for this round is 16.61%, and based on historical experience, the disclosure peak will be reached in late January, with a final disclosure rate of around 55%. With the intensified disclosure of performance forecasts, the impact of future performance on market structure may become more significant. Based on the disclosed performance forecasts, the directions with high profit growth are mainly concentrated in AI hardware, chemicals, new energy, pharmaceuticals, non-ferrous metals, computers, etc. As of January 23, 889 A-share listed companies have released their 2025 annual performance forecasts/reports, with 304 companies forecasting a net profit growth rate exceeding 50%, mainly concentrated in AI hardware (semiconductors, communication equipment, components), chemicals, new energy (batteries, grid equipment, photovoltaic equipment), pharmaceuticals, non-ferrous metals (industrial metals, new materials), computers, among others. The stocks that have exceeded expectations in their annual report forecasts are mainly concentrated in storage, battery energy storage, grid equipment, chemicals, and innovative drugs. We define stocks with a median net profit forecast/excess profit exceeding the previous consensus by more than 10% as "outperforming performance," mainly focused on storage, new energy (battery energy storage, grid equipment), chemicals (agrochemical products, plastics), pharmaceuticals (innovative drugs), etc. 2. During the performance disclosure period, continue to focus on the fundamentals and explore highlights With the disclosure peak of A-share listed companies' annual performance forecasts, coupled with the concentrated disclosure of North American tech giants' earnings reports, the impact of performance on the structure may become more significant. Therefore, continue to focus on the fundamentals to explore highlights. Combining clues from annual performance forecasts and recent marginal improvements in profit expectations, the industries with highlights and low levels of increase in this round mainly focus on AI hardware (North American computing power, consumer electronics), batteries, pharmaceuticals, steel, and non-bank institutions. First, the industries with high growth or exceeding expectations in the annual performance forecasts are mainly concentrated in securities brokerage, pharmaceuticals, batteries, and AI hardware, where this round has seen relatively low levels of growth. In the industries with many stocks showing high growth or exceeding expectations in the annual performance forecasts, the industries with a relatively low rate of increase this round mainly include securities brokerage, pharmaceuticals (innovative drugs, medical devices, traditional Chinese medicine), batteries, AI hardware (communication equipment, components, consumer electronics, computer equipment, optoelectronics), as well as public environmental protection (electricity, gas, environmental management) and some consumer sectors (pet economy, light industry, clothing and textiles). Secondly, select the industries with marginal changes in profit forecasts that are expected to improve in the annual performance forecasts. Since November of last year, industries where profit forecasts have been significantly revised upwards include: Technology: In addition to the upstream computing power hardware (communication equipment, components, semiconductors) with high prosperity, recently revised profit forecasts are mainly concentrated in the middle and downstream application areas, including consumer electronics, software, media (film and television distribution, games, TVB), etc. Advanced manufacturing: New energy (photovoltaic equipment, batteries, wind power equipment), military industry (navigation equipment), automotive (commercial vehicles), Siasun Robot & Automation chain (automation equipment, household appliances parts), medical services, etc. Cyclical industries: Building materials (glass fiber), non-ferrous metals (industrial metals, energy metals, minor metals), coal, steel, chemicals (agrochemicals, non-metallic materials), shipping ports, environmental management; Consumption: Food processing, retail, home appliances, internet e-commerce; Finance: Insurance, securities brokerage, rural commercial banks. The industries with relatively low levels of increase since this market round started mainly include: AI hardware (consumer electronics, communication equipment, components), new energy (batteries), cyclical (steel), dividends (home appliances, coal, shipping ports, logistics, rural commercial banks), consumption (retail, food processing, film and television distribution), non-bank institutions (insurance, securities brokerage), etc. 3. February is expected to once again usher in a core buying window, increasing attention to themes Referring to historical experience and looking at the pace of the market at the beginning of the year, as the disclosure of January performance forecasts is completed, February returns to a fundamental vacuum period, combined with sufficient liquidity approaching the Spring Festival, until the two sessions are the core windows of market volatility. In terms of style, small and medium-cap, growth, and other high-elasticity sectors are expected to perform well, with the market's upward resilience expected to open once again. With the rise in market risk preference during the fundamental vacuum period, the market will experience a period typical of market volatility driven by liquidity and risk preference. In terms of calendar effects, February is one of the months with the highest annual win rates for major indices, with small and medium-cap stocks, growth, and other high-elasticity sectors clearly having an advantage structurally. It is expected to be a core buying window for this round of spring market to reach new highs. Structurally, in February, increased attention can be paid to themes. Looking at the turnover ratio, most themes have experienced a certain degree of cooling recently. After entering the fundamental vacuum period in February, with funds returning to a future growth-driven aesthetic mode and the arrival of dense industrial catalysis (especially for AI applications), attention can be increased to themes that have cooled down, including AI applications (media, computers), the "Musk theme" (commercial aerospace, humanoid Siasun Robot & Automation, assisted driving), power shortage narrative (grid equipment, controllable nuclear fusion), etc. Risk warning: Economic data fluctuations, policy easing lower than expected, and Federal Reserve rate cuts below expectations, etc.