China Merchants Fund: Dual Drivers of Macroeconomic Cycles and Technological Innovation, More Diversified Investment Opportunities in the Year of the Horse

In the Year of the Horse, new prospects emerge. Looking ahead to China’s economy and industry in the Year of the Horse, Zhang Lin, fund manager of the China Technology Innovation Hybrid Fund, believes that several core variables may be approaching critical turning points. Once these turning points are confirmed, they will have a very positive impact on the capital markets.

Zhang Lin states that the resilience of the domestic economy and industrial competitiveness will continue to strengthen. The RMB entering an appreciation cycle has a solid foundation, and a slow and orderly appreciation trend will create favorable conditions for the capital markets. The drag of the real estate market on the economy will gradually weaken, with core city real estate markets expected to bottom out earliest in the second half of 2026, effectively easing financial system pressures. From both the perspective of endogenous industry demand and policy focus, “countering involution” will naturally become a trend for relevant industries in the near future. The trend toward technological independence and self-reliance will further intensify, with continuous innovation and breakthroughs in new technologies. The path of industrial transformation and upgrading will become broader and broader.

Based on the judgment of these key directions, Zhang Lin is optimistic about the market trends and investment opportunities in the Year of the Horse.

Specifically, Zhang Lin points out that investment opportunities in 2026 will be more diverse compared to 2025, driven by both macroeconomic cycles and technological innovation. The global manufacturing cycle is expected to resonate, effectively supporting domestic exports, with upstream commodity prices tending to rise rather than fall. Due to industry development laws or policy promotion, related industries will gradually emerge from involution dilemmas, with market competition patterns changing, product prices gradually bottoming out, and corporate profit recovery expectations strengthening. Corresponding investment opportunities in the secondary market will also increase. The theme of going overseas will continue, but unlike previous product exports, the current focus is more on brand and technology going global—such as in new energy industries and electric vehicles, which have already established long-term brand and channel presence overseas.

From the perspective of deeper or more lasting transformative opportunities, Zhang Lin believes that the domestic investment opportunities in the Year of the Horse will still come from technological innovation and breakthroughs, with the core remaining AI and semiconductors.

Zhang Lin analyzes that although there is debate about a bubble in the AI field, domestically, the concern is more about relatively slow development speed or even insufficient bubble concerns. Compared to the U.S., domestic shortcomings include restrictions on advanced chips and computing power due to sanctions, which limit industry development foundations. However, foundational model technology is catching up with the U.S., with only a lag in progress and a clear cost-performance advantage. In AI applications, progress is steady across various segments, with some areas on par, but the potential for B2B and B2C scenarios is richer and more promising. Additionally, infrastructure such as power and energy is far ahead of the U.S.

From a broader perspective on the development of the domestic AI industry, Zhang Lin believes that the potential may be underestimated by the market. Therefore, if the domestic AI sector makes breakthroughs in several key areas in the Year of the Horse—such as improvements in chip manufacturing capabilities, leaps in domestic large models, the emergence of blockbuster applications, or other surprises—market expectations for AI could be restored.