The investment themes for the 2026 market, in my view, lie on two ends: one is the technological innovation sector, and the other includes HALO assets, resource stocks, and dividend-paying stocks. The former represents the direction of technological innovation, a key focus supported by the "15th Five-Year Plan." Although this sector saw significant gains last year, leading to high valuations for many companies and substantial profit-taking pressure, it has experienced a continuous correction during the recent market adjustment. This aligns with the risk I highlighted at the beginning of the year during the "17 consecutive positive days"—after a strong start, the market underwent a correction, with previously high-flying tech stocks bearing the brunt and declining sharply, necessitating timely position reductions to lock in profits.

On the other hand, this year's market has been characterized by considerable volatility, leading to lower risk appetite among investors. Attention can thus turn to undervalued dividend stocks with stable payout capabilities, i.e., high-dividend-yield stocks, which are attractive to investors seeking steady returns. A significant amount of capital has flowed out from maturing bank wealth management products and fixed deposits this year; these funds are in pursuit of stable returns and may therefore favor high-dividend stocks or related ETFs.

Furthermore, the HALO assets I have mentioned repeatedly—referring to heavy-asset, low-obsolescence-rate assets—remain crucial infrastructure in the AI era and will not be rendered obsolete by AI. Additionally, resource assets, such as those in the energy sector, have gained attention; conflicts in the Middle East have underscored the importance of crude oil to industry. For instance, Iran's blockade of the Strait of Hormuz once drove international oil prices to surge to $119 per barrel, significantly impacting global industrial production. Oil is often called the lifeblood of industry; rising oil prices affect various sectors broadly and can even push up global inflation, potentially forcing the Federal Reserve to delay interest rate cuts until the second half or even the end of the year. Thus, securing access to resources is critical. Crude oil, coal, chemicals, non-ferrous metals, and precious metals are also key areas for capital allocation this year. Rare earths, indispensable for high-tech development and termed "industrial MSG," are strategic resources for China and have played an irreplaceable role in Sino-US trade negotiations. These directions are all worth focusing on this year.

Of course, the market is currently in a correction phase. During such times, investors should observe more and act less, patiently waiting for the market to complete its adjustment. Once the market begins to stabilize and rebound, emphasis can be placed on deploying capital into the aforementioned sectors. Individuals should allocate according to their own risk preferences, striving for a balanced portfolio that includes both offensive tech growth stocks and defensive dividend or resource stocks. This balanced approach allows for both offense and defense, helping maintain a steady mindset amid market fluctuations.

The recent "Two Sessions" emphasized vigorously boosting domestic demand as a key policy goal for the year, with stimulating consumption being the most critical aspect. The growth rate of total retail sales of consumer goods increased from 0.9% at the end of last year to 2.8% in January, showing some improvement but remaining at a relatively low level overall. The decision to issue 250 billion yuan in special government bonds for trade-in programs to boost consumer goods sales, which played a key role in the past two years, was reaffirmed. However, truly boosting consumption requires increasing household income. Enhancing household income levels depends on raising both wage income and property income. Currently, many industries face operational difficulties, and businesses are under significant pressure, making salary increases to boost wage income unrealistic. Therefore, the focus must be on increasing property income. Household property income mainly derives from the property market and the stock market. At present, China's property market is in an adjustment phase overall, with no short-term expectation for rising housing prices and no significant improvement in transaction volumes.

In my "Ten Predictions for 2026" released at the end of last year, besides forecasting that the stock market would continue its slow-bull, long-bull trend, I noted that the property market would remain in adjustment nationwide. Only core residential areas in first-tier cities might see a stabilization or slight rebound in prices due to rigid demand, with transaction volumes possibly recovering somewhat, but a broad surge in housing prices across the country is not anticipated. Thus, the property market's contribution to boosting household property income is currently limited. Enhancing household property income must rely on this slow-bull, long-bull market cycle, allowing the stock market to rise so that investors can gain property income through buying stocks or funds, thereby stimulating consumption. The positive impact of a bull market on consumption is evident, but its sustainability depends on the duration of the bull market. The longer the bull market persists, the more investors will have profit expectations and, consequently, confidence to spend. If the bull market is too short or merely a speculative surge followed by a quick decline, it cannot create stable wealth expectations, and the stock market's effect on boosting consumption will be very limited. Therefore, it is essential to foster a sustained, long-term bull market that lasts for years to genuinely drive consumption growth and allow the capital markets to contribute more directly to economic development.

Currently, investors face an "asset shortage"—not a lack of assets to buy, but a scarcity of good quality assets. Consequently, large amounts of capital lie dormant in bank deposits. The balance in bank deposit accounts has reached 165 trillion yuan and continues to grow monthly. As the capital market strengthens, household savings are likely to shift, with一部分 moving into the bond market via bond funds and另一部分 flowing into the stock market through equity or hybrid funds. This migration of household deposits will significantly contribute to the development of China's capital markets. Consumer spending growth is expected to see some recovery this year, consistent with the stock market's warming trend.

The government work report set this year's GDP growth target at 4.5% to 5% and a CPI target of 2%, aiming for moderate price increases, with the key lying in stimulating consumption. By increasing the consumption growth rate, excess capacity can be absorbed, allowing companies to focus on improving product quality rather than engaging in price wars, thus creating a virtuous cycle. The anticipated growth in consumer spending this year is closely linked to the stock market's performance. Over the past few years, low consumption growth led to pessimism about consumption prospects, causing sustained declines in many consumer sectors, including baijiu, food and beverages, and even pharmaceuticals. These sectors may see some valuation recovery this year, with the extent depending on the subsequent rebound in consumption growth. If the growth rate of total retail sales of consumer goods continues to warm up, fostering hope for consumption recovery, these consumer sectors still have opportunities for improvement this year.

The development of a slow-bull, long-bull market relies on the support of long-term capital. CSRC Chairman Wu Qing mentioned in a speech the need to attract "long-term money for long-term investment," encouraging patient capital to invest early and in small ventures, with institutional frameworks gradually being streamlined. I have always believed that a prosperous capital market and a bull market are key to revitalizing the primary market. If the secondary market weakens, IPOs might slow or even halt, inevitably creating significant difficulties for the primary market. Therefore, attracting long-term funds—such as social security funds, insurance capital, pension funds, and public offering funds—to invest in the equity market requires the secondary market to generate more profitable opportunities. This allows capital to not only enter but also remain, encouraging investors to buy shares in high-quality listed companies or good funds for relatively stable returns.

This necessitates building an institutional environment characterized by openness, fairness, and justice—the "three public principles." On one hand, strict laws and severe penalties are needed to combat financial fraud, insider trading, and other activities that undermine these principles. On the other hand, delisting rules must be strictly enforced to promptly remove fraudulent companies from the market, while supporting more innovative tech companies with significant growth potential to list through the registration-based system. This continuously improves the quality of listed companies, enabling long-term capital to achieve stable, sustained returns. Only then can this capital truly become patient capital. Currently, much capital still engages in short-term speculation, attempting to gain from quick trades rather than long-term holding and accompanying company growth.

I have long been an advocate of value investing. Over the past decade, I have attended the Berkshire Hathaway annual meeting in Omaha, USA, seven times, hoping to leverage this global investors' gathering to allow value investing principles to take root, blossom, and bear fruit in the A-share market, helping more investors avoid losses. This May Day, I will again lead a group of investors to the US to attend the Berkshire Hathaway annual meeting and visit Wall Street investment banks in New York to understand international capital's views on the Chinese market. By vigorously promoting value investing, investors can focus more on the fundamentals and future growth potential of listed companies, rather than chasing trends,频繁 trading, or speculating on themes and concepts. This will guide more investors onto the path of value investing. Encouragingly, over the past year, through extensive promotion, value investing has begun to take root in the A-share market. Many investors have shared that practicing value investing and allocating to good industries and companies has increased their wealth, which is very gratifying.

Of course, adapting to China's market realities, we must practice Chinese-style value investing, or value investing with Chinese characteristics—a concept I have developed. Warren Buffett's value investing is based on the US stock market, a mature market, and some of his principles may not fully translate to the A-share market. Value investing with Chinese characteristics encompasses at least two aspects: First, it involves managing medium to long-term positions based on market fluctuations, rather than mechanically holding for the long term without adjustment. Because the A-share market is predominantly retail-driven and experiences significant volatility—overshooting on both upswings and downturns—appropriate position management, such as reducing exposure during highs to lock in profits and courageously adding positions in quality stocks during lows, can lead to better returns. Second, close attention must be paid to policy changes, including interpreting macroeconomic policy directions and深入研究 industry policies. Sectors strongly supported by policies should be prioritized, while those facing restrictions warrant caution. Only by integrating value investing principles with the actual conditions of the Chinese market can investors achieve sound investment outcomes.