Minsheng Bank Chief Economist Wen Bin: Four Major Factors Help Capital Markets Rise Amid Volatility

Relying on the improvement of supply and demand balance driven by economic growth and rapid technological innovation, combined with a warming market risk appetite and relatively ample liquidity, the capital market is expected to experience volatile upward trends by 2026, presenting structural investment opportunities.

First, macro policies on demand and the “anti-involution” actions on the supply side work together to promote supply-demand balance and price recovery, which will help improve corporate profitability.

Second, the “14th Five-Year Plan” emphasizes the development of modern industries and technological innovation. Artificial intelligence (AI) technology is creating new application scenarios and upgrading the tech industry chain, supporting the continued rapid development of China’s technological innovation.

Third, the “quasi-stabilization fund” represented by China Central Huijin Investment Ltd. has explicitly expressed support for the capital market. Coupled with the ongoing easing of US-China trade relations, a risk appetite recovery environment has basically formed.

Finally, long-term funds represented by insurance capital continue to enter the market, foreign investment may increase under the Federal Reserve’s rate cut cycle, and large amounts of 3- and 5-year deposits maturing from residents collectively create a relatively ample liquidity environment.

Specifically, in terms of technological innovation, AI technology continues to develop and mature. Companies related to “AI+” or those focusing on AI applications are expected to see growth opportunities; valuation of growth-oriented tech innovation companies is rising, gradually entering performance realization windows, with profitability and sustainability becoming key focuses. In manufacturing, benefiting from overseas AI infrastructure deployment and industrial restructuring needs, globally competitive export companies have good business opportunities; under the “anti-involution” push, profitability in related industries is expected to improve. In consumption, sectors more relevant to young people, such as social media and national trends, have growth potential; high-cost-performance brands willing and able to expand into lower-tier markets may be favored. Regarding dividends, in a low-interest-rate environment, high-dividend, high-return companies can still serve as stabilizers in investment portfolios.

(Source: Securities Times)