China Securities Strategy Conference: China is HALO, A-share Investment Logic Will Shift from Risk Aversion to Seeking New Cycles

Caixin March 12 News (Reporter Wang Yuling): From March 12 to 13, Guojin Securities held its 2026 Spring Strategy Conference in Chengdu with the theme “Spring Begins a New Journey, Steady Progress in a Slow Bull Market.”

Chairman Ran Yun of Guojin Securities emphasized in his speech that in an era where “professionalism is king,” the company is continuously enhancing core capabilities such as investment research and risk control, while also fully building an “AI-friendly organization” to empower services and improve customer experience through technology.

Guojin Securities’ Chief Economist Song Xuetao, Chief Strategy Officer Mou Yiling, and Chief Asset Allocation Officer and Fixed Income Chief Yin Ruizhe each shared their perspectives.

Song Xuetao pointed out that China’s 14th Five-Year Plan clearly shifts toward “people-centered, moving from虚虚 to实实,” with A-shares investment logic transitioning from risk aversion to seeking new cycles. Companies with global competitiveness will become core assets. Mou Yiling believes that the HALO assets sought by overseas investors have better substitutes in the Chinese market, and recommends embracing physical assets in allocations. Yin Ruizhe stated that short-term unfavorable factors in the bond market are increasing; without rate cuts, the rebound window is gradually closing, and a defensive approach is advised.

Song Xuetao: A-shares Investment Logic Will Shift from Risk Aversion to Seeking New Cycles

Song Xuetao noted that the U.S. economy currently exhibits “K-shaped divergence,” with AI computing power investments significantly contributing to GDP. In the first half of 2025, investment in computing centers has already contributed more than private consumption. However, there is a need to beware of an AI bubble evolving into a debt bubble, as tech giants’ capital expenditures have surged, and reliance on external financing has reached new heights. Meanwhile, traditional economies remain weak, creating a “prosperity without employment.” Income share for wage earners is declining, and consumption chains are weakening. Uncertainty around Trump policies is rising, with increased fluctuations in tariffs, U.S. Treasuries, and the dollar. Geopolitical tensions in places like Venezuela and Iran could push up oil prices and safety premiums, impacting global inflation and liquidity.

Contrasting the U.S.‘s “K-shaped” overheating and policy battles, China’s policy focus in the first year of the 14th Five-Year Plan has shifted clearly toward “people-centered” and “moving from虚虚 to实实.” The plan prioritizes “modern industrial systems” over “technological innovation,” emphasizing consolidating the real economy and unprecedentedly highlighting民生 and consumption to raise residents’ consumption rates. Fiscal policy aims to expand leverage through moderate deficit expansion, issuance of special national bonds, and专项债, focusing on supporting equipment upgrades, urban renewal, and other areas to expand domestic demand, stabilize investment, and mitigate local risks. When setting growth targets for 2026, most provinces have been pragmatic, maintaining or lowering their targets, reflecting a “correct performance view.”

An important positive change is that the real estate market, after long-term adjustments, is approaching a bubble clearance threshold. Rental yields in 100 cities are close to long-term loan interest rates, and the price-to-income ratio is approaching international comparable levels. The secondary market shows signs of price and volume stabilization. 2025 may be the “last dip” dragging the economy down, with a bottom expected in 2026, creating conditions for China’s economy to stabilize in an “L-shaped” bottoming process.

Overall, the potential for China’s economy to outperform in 2026 lies in domestic demand, while external demand remains uncertain. With the easing of real estate shocks and active fiscal policies, consumption and investment are expected to gradually stabilize, with CPI and PPI year-on-year rising compared to 2025. On the external side, although China’s export share is supported, there is high alert for demand shocks from the evolving U.S. AI bubble.

As domestic demand recovers and policies support, China’s economy is crossing a critical transformation period. Despite challenges like aging population acceleration, a new growth model driven by domestic demand is forming. The A-shares investment logic will shift from risk aversion to seeking new cycles, with globally competitive companies becoming core assets.

Mou Yiling: China is HALO; Embrace Physical Assets in Allocation

Mou Yiling believes that AI is reshaping the global landscape, with ongoing impacts on overseas labor markets. U.S. service sector PMI is declining, and core service CPI shows deflationary effects. Meanwhile, demand for AI-driven power and infrastructure investments continues to grow, shifting market focus from “tech narratives” to tangible “hard assets.”

In Mou Yiling’s view, even in industries less susceptible to AI replacement, there are beneficiaries. Manufacturing, construction, transportation, and physical service industries have lower exposure to AI and are less easily replaced. Driven by AI infrastructure projects like data centers, industries such as non-ferrous metals (represented by copper) and power are typical beneficiaries.

Compared to U.S. stocks, A-shares’ revenue distribution is already concentrated in mining, manufacturing, and other industries less prone to AI disruption. From an industry-neutral perspective, most A-share listed companies have a higher proportion of tangible assets relative to their U.S. counterparts. Looking at value added across sectors, China’s manufacturing value added and material-related industries are also higher than those in other major developed economies.

Mou Yiling states that China’s manufacturing capacity valuation needs reassessment. The PE valuation gap between China’s top manufacturing firms and overseas giants is at its highest since 2018, with total market value and capacity pricing significantly undervalued. The “better substitutes” for HALO assets sought by overseas investors exist within China, and “productivity equals wealth” is becoming a reality.

He believes that the world currently faces technological challenges to industrial order, regional conflicts challenge globalization, and tangible assets, often overlooked during prosperous periods, will become systemically important. Chinese assets possess the strongest tangible attributes globally. In terms of allocation strategy, the top priorities are strategic resources such as crude oil, oil transportation, copper, aluminum, rare earths, coal, and rubber; secondly, Chinese manufacturing firms with global leading advantages or accelerating overseas expansion; third, structural opportunities in consumption as negative factors reverse.

Yin Ruizhe: Bond Market Fundamentals Are Facing Increasing Headwinds; Prioritize Defense

Yin Ruizhe points out that high-frequency signals of the current fundamentals continue to rise. Driven by rising oil prices, the PPI turning positive is significantly advanced. Corporate expectations remain weak, and February credit growth is expected to be limited. Policy-wise, the two sessions confirmed pragmatic growth targets: actual growth rate targets are modestly lowered, but nominal growth likely to rebound, with interest rates more closely following nominal rates. Fiscal policy is easing, with the broad deficit ratio declining; monetary policy remains unchanged, with little divergence expected.

Regarding the bond market, Yin Ruizhe believes that the fundamental headwinds are increasing. First, the short-term surge in oil prices has significantly advanced the PPI turning point. Second, early-year high-frequency data generally show no strong signs of recovery, aside from some fluctuations in credit. From a policy perspective, the “expectation gap” from the two sessions is small; actual growth has been lowered, but interest rates are more influenced by nominal rates, and the broad deficit ratio is negatively correlated with interest rates. On a micro-structural level, fund durations have moved away from the “low duration + high divergence” zone, weakening supportive factors. Overall, short-term headwinds in the bond market are increasing; without rate cuts, the rebound window is gradually closing.

Yin Ruizhe states that the cycle law of the bond market remains stable, but its elasticity is weakening. In recent years, fundamental factors seem to be marginalized in bond pricing, but over the long term, cyclical patterns remain valid. The demand for real estate aligns well with interest rate levels, and interest rate pricing has sufficiently reflected housing expectations.