Zhongjin: The market may open a "lagging curve" trading, continue to be optimistic about China's "safe assets" outperforming.

CICC released a research report stating that it reiterates the themes of "national security," "resource self-sufficiency," and "productivity enhancement," and recommends countries, asset categories, and industry sectors that are in the upstream of the raw materials and AI industry chains. During the "lagging curve" period, the accommodative monetary policy of the Federal Reserve is actually beneficial for global energy resources and efficient production assets. Considering that China has become a provider of global supply capacity, CICC continues to be bullish on Chinese "safe assets" outperforming. Key points from CICC: Since the beginning of this year, the improvement in total US dollar liquidity brought by the Federal Reserve's RMP, combined with investment-driven economic growth supporting corporate profits, has led to a strong growth in global equity markets, which largely aligns with CICC's expectations earlier this year. Meanwhile, sectors such as hard technology, industry, and energy that relate to supply chain security and productivity enhancement have performed well, with the broader concept of safe assets gaining market attention. Looking ahead, under the backdrop of US government and national security dominance, it is expected that the K-shaped differentiation will continue. On one hand, investment optimism, the upper half of the K shape, will support the continued upward trend of the nominal economic cycle, with investment demand and supply chain pressures potentially maintaining high inflation, making it difficult for the Federal Reserve to cut rates again this year. On the other hand, employment and consumption, the lower half of the K shape, will continue to be under pressure in the face of high interest rates and inflation, compounded by the increasing financing demand for the US AI economy, making it difficult for the Federal Reserve to substantially turn hawkish, i.e. "names hawkish, reality dovish, behind the curve." Therefore, the market may enter a period of "lagging curve" trading, essentially trading the Federal Reserve's increased tolerance for inflation. Historically, during the "lagging curve" period, physical assets, upstream industrial energy sectors and technology still have expansion potential.