Core Insights - The report highlights a shift in China's consumption structure from a focus on goods to a balanced emphasis on both goods and services, with experience-driven service consumption expected to be a major growth engine. The current valuation of the sector is at historical lows, indicating potential for recovery. The central economic work conference continues to prioritize domestic demand and building a strong domestic market, with consumption policies remaining stable. However, due to adjustments in household balance sheets, a fundamental recovery will take time, and the social service sector is expected to see structural opportunities in the first half of 2026. Long-term growth prospects for service consumption are promising, driven by the demands of Generation Z and the elderly population [2][3]. Group 1: Market Overview - As of 2025, domestic service consumption has risen to 47%, entering a rapid growth phase and becoming a major component of household consumption. The long-term stability and focus of policies on service consumption have been emphasized, with the current sector's price-to-earnings ratio still below the five-year average, indicating room for recovery [3][12][16]. - The travel sector is experiencing pressure on revenue, with notable disparities in performance among tourist attractions. The introduction of extended holiday periods and the implementation of the spring and autumn holiday system are expected to enhance travel demand and improve industry conditions [3][42][43]. - The duty-free market is undergoing significant changes, with the introduction of international duty-free retailers and airport equity investments expected to revitalize the market. Policy benefits and the closure effect are catalyzing a surge in duty-free consumption on the islands [3][42]. Group 2: Consumer Trends - The report identifies a structural change in consumption driven by the needs of Generation Z and the elderly population. These demographics are expected to significantly influence service consumption trends, with Generation Z favoring emotional value and personalized experiences, while the elderly market is expanding due to increasing demand for healthcare and leisure services [3][39][41]. - The rise of new consumption platforms is enhancing user engagement and efficiency in service consumption, with concert events and sports competitions becoming key drivers of market expansion [4][39]. Group 3: Policy and Economic Environment - The government's focus on boosting consumption and optimizing supply-demand structures is evident in the 2025 government work report, which prioritizes expanding domestic demand. The policy direction is expected to remain stable into 2026, with an emphasis on both demand-side stimulation and supply-side optimization [17][20]. - Various measures have been introduced to support service consumption, including financial incentives for service industry operators and initiatives to enhance service quality and accessibility [21][24]. Group 4: Investment Opportunities - The report suggests focusing on sectors that are likely to benefit from policy catalysts, such as travel-related companies, duty-free leaders in the Hainan Free Trade Port, and chain restaurants poised for expansion. Additionally, early investments in emerging experiential sectors like sports events and concerts are recommended [2][41].

Core Viewpoints - The A-share market showed mixed performance with the Shanghai Composite Index closing flat, while the Shenzhen Component Index rose by 0.49% and the ChiNext Index increased by 0.63%. The total trading volume in the Shanghai and Shenzhen markets reached 21,424.47 billion yuan. The leading sectors included oil and petrochemicals, automobiles, and non-ferrous metals, while retail, real estate, and public utilities lagged behind [2][8] - The Hong Kong market saw the Hang Seng Index rise by 0.86% and the Hang Seng Tech Index increase by 1.74%. In contrast, major U.S. indices experienced declines, with the Dow Jones down by 0.2%, S&P 500 down by 0.14%, and Nasdaq down by 0.24% [2][8] Important News - The "Two New" policy for 2026 was released by the National Development and Reform Commission and the Ministry of Finance, outlining support for large-scale equipment updates and consumer goods replacement. A total of 625 billion yuan in special bonds will be allocated for this initiative, with a subsidy rate of 15% for certain household appliances and a maximum subsidy of 1,500 yuan per item [3][9] - Changes to the value-added tax policy for personal housing sales were announced, effective January 1, 2026. Homes sold within two years will incur a 3% VAT, while those sold after two years will be exempt from VAT [3][9] Market Analysis - The A-share market saw active trading in the sci-tech sector, with significant interest in commercial aerospace, terahertz technology, and controllable nuclear fusion. The market liquidity decreased in December, influenced by year-end fund recovery and reduced risk appetite among investors. However, a recovery in investor confidence was noted in the latter half of December due to positive signals from national economic meetings [10][11] - The overall economic environment remains stable, with improvements in fixed asset investment growth and a rebound in import and export growth rates. The CPI has shown an expanding year-on-year increase, while the decline in PPI has narrowed. The macroeconomic policies are expected to continue supporting economic stabilization and growth [12]

Market Overview - In December, the A-share market showed a recovery trend, with the Shanghai Composite Index closing at 3,959.62 points, up 1.83% from the end of November. The ChiNext Index and CSI 500 Index recorded significant gains [16][17] - The market liquidity decreased in December, influenced by year-end capital recovery and reduced risk appetite among investors. The total amount of A-share lock-up releases increased significantly, leading to net selling by major shareholders [24][27] Sector Performance - The technology sector, particularly in commercial aerospace, terahertz technology, and controllable nuclear fusion, saw active trading in December. The central economic work conference emphasized the importance of technological innovation, which is expected to sustain investor interest in these areas [4][5] - Among the major sectors, telecommunications, defense, non-ferrous metals, and non-bank financials led the gains, with telecommunications achieving the highest increase of 14.35% [17][21] Policy Analysis - The central government is expected to implement more proactive fiscal policies in 2026, focusing on expanding domestic demand and optimizing supply. This is anticipated to stimulate consumption and investment in related sectors [49][50] - The central economic work conference highlighted the need for innovation-driven growth and the development of new productive forces, particularly in artificial intelligence and renewable energy sectors [50][51] Valuation Levels - As of December 25, the dynamic price-to-earnings (P/E) ratio of the ChiNext Index is at a historical high, positioned at the 90.74th percentile. Most major indices saw an increase in their historical valuation percentiles compared to the previous month [43][44] - In terms of industry valuation, 21 sectors experienced an increase in valuation levels, with retail, telecommunications, electronics, and computing exceeding the 50th percentile of their historical P/E ratios [44][48]

Core Insights - The A-share market showed mixed performance on Monday, with the Shanghai Composite Index rising by 0.04% while the Shenzhen Component Index and the ChiNext Index fell by 0.49% and 0.66% respectively. The total trading volume in the Shanghai and Shenzhen markets reached 21,392.07 billion yuan [2][7] - In terms of industry performance, sectors such as oil and petrochemicals, national defense and military industry, and banking led the gains, while non-ferrous metals, public utilities, and electric equipment lagged behind [2][7] - Concept sectors that performed well included PEEK materials, carbon fiber, and military equipment restructuring, whereas dairy, lithium from salt lake, and DRG/DIP concepts faced declines [2][7] Domestic Market Performance - The closing figures for major indices are as follows: Shanghai Composite Index at 3,965.28 (up 0.04%), Shenzhen Component Index at 13,537.10 (down 0.49%), CSI 300 at 4,639.37 (down 0.38%), and ChiNext Index at 3,222.61 (down 0.66%) [4] - The Shanghai 50 Index closed at 3,034.63 (down 0.35%), while the Shanghai 180 Index ended at 10,018.94 (down 0.38%) [4] International Market Performance - The international market saw declines across major indices, with the Dow Jones Industrial Average falling by 0.51% to close at 48,461.93, the S&P 500 down by 0.35% to 6,905.74, and the Nasdaq Composite down by 0.5% to 23,474.35 [4][7] - The Nikkei 225 index closed at 50,526.92 (down 0.44%), and the Hang Seng Index ended at 25,635.23 (down 0.71%) [4]

Core Viewpoints - The A-share market saw collective gains last Friday, with the Shanghai Composite Index rising by 0.1%, the Shenzhen Component Index increasing by 0.54%, and the ChiNext Index up by 0.14%. The total trading volume in the Shanghai and Shenzhen markets reached 21,600.31 billion yuan [1][7]. - In terms of industry performance, non-ferrous metals, electric equipment, and steel led the gains, while electronics, light industry manufacturing, and telecommunications lagged behind. Concept sectors such as Hainan Free Trade Zone, zinc, and lead also saw gains, while sectors like new technology stocks and photolithography experienced declines [1][7]. Important News - The National Financial Work Conference was held in Beijing from December 27 to 28, emphasizing the continuation of a more proactive fiscal policy in 2026. Key tasks include supporting domestic demand, enhancing financial collaboration, and promoting green transformation [2][8]. - The National Venture Capital Guidance Fund officially commenced operations on December 26. This fund aims to focus on early-stage investments in hard technology sectors such as artificial intelligence and quantum technology, with a lifespan of 15 to 20 years to match the long-term R&D needs [3][9].

Core Insights - The A-share market saw collective gains on Thursday, with the Shanghai Composite Index rising by 0.47%, the Shenzhen Component Index by 0.33%, and the ChiNext Index by 0.3%. The total trading volume in the Shanghai and Shenzhen markets reached 1,924.381 billion yuan [2][8]. Market Review - The leading sectors included defense and military, light industry manufacturing, and machinery equipment, while the comprehensive, non-ferrous metals, and commercial retail sectors lagged behind. Concept stocks such as Chengfei Concept, aviation engines, and commercial aerospace saw significant gains, whereas Hainan Free Trade Zone, lead metal, and zinc metal concepts experienced declines [2][8]. Important News - The National Development and Reform Commission and the Ministry of Commerce released the "Encouragement Directory for Foreign Investment Industries (2025 Edition)," effective from February 1, 2026. Key changes include encouraging foreign investment in advanced manufacturing and modern service industries, as well as in the central and western regions, Northeast China, and Hainan Province [3][9]. - The People's Bank of China emphasized the need for robust monetary policy adjustments to maintain ample liquidity, suggesting a comprehensive use of various tools to manage policy implementation effectively [3][9]. Industry Analysis - The retail industry is shifting towards emotional consumption, with a focus on consumer sentiment driving demand for related sectors. The current consumption landscape in China has transitioned from "consumption upgrade" to "consumption stratification," where consumers are increasingly seeking value for money while also willing to pay a premium for certain new products or services [10]. Specific Sector Insights - **Trendy Toys**: The trendy toy market in China is rapidly expanding, with market size projected to grow from 22.9 billion yuan in 2020 to 76.3 billion yuan by 2024, reflecting a CAGR of 35.11%. The market is currently fragmented, and companies with comprehensive supply chains and strong IP resources are expected to thrive [11]. - **Gold and Jewelry**: The sector is transitioning from channel-driven to product-driven strategies. Despite rising gold prices suppressing consumer demand, some companies are achieving rapid growth through superior craftsmanship and marketing. The demand for gold jewelry is expected to increase as consumer preferences evolve [13]. - **Cosmetics**: The rise of domestic brands is evident, with local companies focusing on R&D and successfully capturing market share from foreign brands. The demand for domestic beauty products is increasing among younger consumers, suggesting a positive outlook for strong domestic brands [13].

Group 1 - The report highlights the transition from "consumption upgrade" to "consumption stratification" in China, where consumers are increasingly seeking cost-effectiveness in traditional products while being willing to pay a premium for innovative and emotionally valuable goods [2][15][30] - The emotional consumption trend is driven by fast-paced lifestyles and mental health concerns, leading to increased demand for products that provide emotional comfort, such as trendy toys, skincare, and gourmet snacks [2][30][32] Group 2 - The Chinese trendy toy market is rapidly expanding, projected to grow from 22.9 billion yuan in 2020 to 76.3 billion yuan by 2024, with a CAGR of 35.11%, driven by rising disposable income and the popularity of emotional consumption [3][37] - The market is characterized by a fragmented structure, with the top five companies holding only 20.8% market share, indicating potential for consolidation and growth among companies with strong IP resources and extensive distribution channels [3][46][47] Group 3 - The gold and jewelry sector is shifting from channel-driven to product-driven dynamics, with high dividend yields providing defensive attributes amid rising gold prices, which have reached historical highs [4][51] - Despite a temporary decline in gold jewelry consumption due to high prices, companies with strong design and marketing capabilities are still achieving rapid growth [4][51] Group 4 - The cosmetics industry is witnessing a resurgence, particularly for domestic brands, which are gaining market share due to improved product quality and marketing strategies, especially during promotional events like "Double 11" [4][28] - Young consumers are increasingly accepting domestic beauty brands, leading to a potential rise in market share against foreign competitors [4][28]

Market Overview - The A-share market saw all three major indices rise on Wednesday, with the Shanghai Composite Index up by 0.53%, the Shenzhen Component Index up by 0.88%, and the ChiNext Index up by 0.77%. The total trading volume in the Shanghai and Shenzhen markets reached 1,880.129 billion yuan [2][7] - In terms of industry performance, sectors such as defense and military, electronics, and building materials led the gains, while agriculture, coal, and food and beverage sectors experienced declines [2][7] - Concept sectors that performed well included terahertz technology, commercial aerospace, and Tonghuashun fruit index, while dairy, animal vaccines, and pork concepts saw the largest declines [2][7] - The Hong Kong market also showed positive performance, with the Hang Seng Index rising by 0.17% and the Hang Seng Technology Index up by 0.19% [2][7] - Internationally, all three major US indices closed higher, with the Dow Jones up by 0.6%, the S&P 500 up by 0.32%, and the Nasdaq up by 0.22% [2][7] Important News - The State-owned Assets Supervision and Administration Commission (SASAC) emphasized the need for central enterprises to enhance the quality and market value management of listed companies during a meeting held on December 22-23. SASAC's Secretary and Director Zhang Yuzhuo highlighted the importance of internal potential exploration, comprehensive budget management, and strict cost control across all aspects of the business [3][8] - Beijing has further optimized its real estate policies to better meet the diverse housing needs of residents. The new policy, effective December 24, allows non-Beijing residents to purchase properties with reduced social security or tax payment requirements, and supports multi-child families in acquiring additional housing [3][9]

Core Insights - The A-share market saw a collective rise in the three major indices on Tuesday, with the Shanghai Composite Index increasing by 0.07%, the Shenzhen Component Index by 0.27%, and the ChiNext Index by 0.41%. The total trading volume in the Shanghai and Shenzhen markets reached 1,899.687 billion yuan [2][7]. - In terms of industry performance, sectors such as power equipment, building materials, and electronics led the gains, while social services, beauty care, and retail sectors lagged behind. Concept sectors like lithography machines, fluorochemical concepts, and photoresist concepts showed significant increases, whereas terahertz, military information technology, and DRG/DIP concepts experienced declines [2][7]. - The Hong Kong market saw a slight decline, with the Hang Seng Index dropping by 0.11% and the Hang Seng Technology Index falling by 0.69%. In international markets, all three major U.S. indices rose, with the Dow Jones up by 0.16%, the S&P 500 by 0.46%, and the Nasdaq by 0.57% [2][4][7]. Important News - The National Housing and Urban-Rural Development Work Conference emphasized stabilizing the real estate market through city-specific policies to control increments, reduce inventory, and optimize supply. The focus includes revitalizing existing land through urban renewal and village reconstruction, promoting the acquisition of existing commercial housing for use as affordable housing, and enhancing housing quality [3][8]. - The National Development and Reform Commission, along with the Ministry of Education and the Ministry of Finance, issued a notice to improve kindergarten fee policies. The notice aims to standardize fee items, enhance management methods, clarify principles for setting fee standards, and strengthen regulatory oversight to promote reasonable fee formation and support quality and inclusive supply [3][8].

Core Insights - The A-share market saw collective gains on Monday, with the Shanghai Composite Index rising by 0.69%, the Shenzhen Component Index increasing by 1.47%, and the ChiNext Index up by 2.23%. The total trading volume in the Shanghai and Shenzhen markets reached 1.8617 trillion yuan [2][7] - The banking sector announced a one-time credit repair policy for small personal overdue information under 10,000 yuan, applicable to credit cards, home loans, and consumer loans, emphasizing that full repayment of overdue debts is required for eligibility [3][7] - Precious metals experienced a significant surge, with spot gold surpassing 4,440 USD/oz and spot silver breaking 69 USD/oz, both reaching historical highs. Analysts expect gold prices to rise further to 4,900 USD/oz next year [3][8] Industry Overview - The domestic gaming market is projected to reach new highs in revenue and user scale in 2025, with actual sales revenue expected to be 350.789 billion yuan, a year-on-year increase of 7.68%, and a user base of 683 million, growing by 1.35% [9][10] - The mobile gaming sector remains dominant, with actual sales revenue of 257.076 billion yuan in 2025, reflecting a 7.92% year-on-year growth, accounting for 72.39% of the total market [10] - The client-side gaming market is expected to see a significant revenue increase of 14.97%, reaching 78.16 billion yuan, driven by popular titles and cross-platform products [11] - The mini-program gaming market is anticipated to grow by 34.39%, with revenue reaching 53.535 billion yuan, highlighting the trend of "APP games miniaturization" [12] - Self-developed games in the overseas market have consistently generated over 100 billion yuan for six consecutive years, with actual sales revenue of 20.455 billion USD in 2025, marking a 10.23% increase [12]