The Rise of Tech Consumption

As we approach 2025, a wave of optimism is sweeping through the Chinese investment landscape, particularly among public mutual fund companiesA series of investment strategy meetings have been held, with firms outlining their expectations for the upcoming yearThere is a positive sentiment about the A-share market, buoyed by anticipated policy implementations and a recovery in corporate earningsKey sectors attracting attention include technology and consumer goods, focusing on niche areas such as the low-altitude economy, artificial intelligence (AI), autonomous driving, and robotics.

One standout performer in the competitive arena of fund management has been the Morgan Stanley Digital Economy A fund, which has achieved an impressive return of 72.57% as of December 25, leading the pack in 2024's performance rankingsFollowing closely behind are the ICBC Emerging Manufacturing A fund and others, indicating a robust interest in digital and technology sectors amidst a backdrop of recovery and growth.

Several major players are revealing their investment strategies for 2025, indicating a proactive approach to market dynamics

Wang Yong, Chief Asset Allocation Officer at Invesco Great Wall, points out the recently introduced debt relief plans aimed at alleviating local government debt burdens while improving cash flow in the private sectorCoupled with measures like reduced downpayment ratios and mortgage interest rates, this could potentially resolve significant economic tensions surrounding local debt risks and the real estate marketHe emphasizes that both demand-side stimulants and supply-side policies to mitigate excessive competition in industries can enhance price stability.

Looking at the liquidity landscape, analysts from China Europe Fund predict a significant influx into exchange-traded funds (ETFs) in 2025, with expectations of more than 600 billion yuan in net inflows, alongside 400 billion yuan from insurance funds into the A-share marketWhile foreign investment in the A-share market remains low, improvements in economic outlook could see a gradual reallocation of capital into Chinese equities in the near future.

However, challenges persist

• AI Fuels Growth at DouShen Education
• Precise Credit Services for Micro and Small Enterprises
• The Rise of Tech Consumption
• Byte's Beanbag Fever: The AI Industry on the Rise
• Breakfast FM Radio: December 27, 2024

The China Europe Fund has identified major risks, such as potential policy announcements falling short of market expectations and a possible retreat following market ralliesMorningstar shares this cautious optimism, maintaining a long-term positive outlook on the Chinese market while acknowledging the necessity for a gradual economic recoveryInvestors are advised to be patient and to manage their positions according to their own risk tolerance and capabilities.

Looking ahead, many experts believe that the equity market will present significant opportunities in 2025. Morningstar asserts that China will be the market to watch for global investors, highlighting a broad upside potential for Chinese assets and strong confidence in the market's medium to long-term performance.

Analysts like Zhu Hongyu from China Merchants Fund (China Merchants Fund) suggest that there is a considerable likelihood of a stabilization in corporate earnings and moderate valuation expansions in the equity market, anticipating a characteristic stabilization in overall indices

Following a resurgence in the domestic market, Wang Yong expresses optimism about valuation expansions in the A-share market, particularly in sectors with solid growth prospects such as technology, consumer goods, and high-dividend stocks.

According to Zheng Zheng, General Manager and Investment Director of the Multi-Asset Management Division at Bosera Fund, the macroeconomic environment is expected to improve under active policy measuresThe domestic stock market has not been overvalued following a significant rebound and remains optimistic for future gainsFrom a valuation perspective, current A-share stocks exhibit considerable upside potential when compared globallyThe anticipated implementation of macro policies is expected to further elevate market risk tolerances.

Meanwhile, Zhang Xiaotian, Research Director atPing An Fund, anticipates that the economic fundamentals will remain stable before the second quarter of next year, suggesting that the market will continue to enjoy a phase of positive policy developments and declines in adjustment risks, presenting an ideal landscape for proactive investment.

China Europe Fund reiterates its belief that, while short-term uncertainties persist, the A-share market holds substantial structural opportunities, notably in innovation and consumer demand sectors

The focus on technology and consumer segments is expected to unveil numerous investment avenues.

Looking towards 2025, Zhu Hongyu has proposed an asset allocation framework, prioritizing equities over bonds and primarily emphasizing commodities such as goldHe suggests that stock-bond ratios in portfolios should be aligned with expected returns, emphasizing the construction of stable income through bond allocation while actively managing equity assetsAdditionally, gold is highlighted for its enhanced value proposition.

In terms of stock selection within the A-share market, Zhu emphasizes the need to identify stable, high-barrier business models with reasonable valuations in sectors like consumption, resources, and public utilities, alongside looking for investment opportunities driven by cyclical shifts and product upgrades in growth sectors such as midstream manufacturing and healthcare.

Zhang Xiaotian believes that the market is increasingly bullish on sectors that are set to benefit from fiscal stimulus, such as military, commercial aerospace, medical equipment, low-altitude economy, and various modernization initiatives

Your email address will not be published.Required fields are marked *