EB SECURITIES released a research report stating that the current market position is likely the starting point of a long-term bull market. Gradual improvements in fundamentals and industry highlights remain the foundation for a sustained bull market, while the inflow of household funds and policy support in the first year of the "15th Five-Year Plan" will determine the market's trajectory and pace.

Compared to previous full-scale bull markets, the current index still has significant upside potential. However, under the government's guidance for a "slow bull" market, the duration of the bull run may be more critical than the magnitude of gains.

**Core Views:** 1. **Foundation of a Long-Term Bull Market** This bull market remains promising in both duration and upside potential. Sustained bull markets require not just improved liquidity but also strong fundamentals. Historically, the longer the cycle, the higher the correlation between the market and fundamentals. Therefore, while assessing the potential for a long-term bull market, steady fundamental improvements remain key, with policies often signaling turning points in expectations and capital flows dictating the pace.

2. **Stable Earnings Growth with Structural Highlights** By 2026, price changes may become a major driver of earnings. After a phase of significant policy-driven growth, China's economy is expected to stabilize in 2026, with pricing factors playing a more pronounced role in profitability. A-share earnings are projected to recover gradually, with non-financial sectors growing around 10%, while structural improvements may present further opportunities.

3. **Household Funds and the "15th Five-Year Plan"** Risk-appetite-driven capital could be the next major incremental factor. Households remain the most significant source of funding for A-shares, with current inflows resembling those seen in 2015. While high-risk capital has entered swiftly, medium-risk funds—such as mutual funds and ETFs—may drive the next phase of growth.

4. **Policy Momentum in the "15th Five-Year Plan"** The "15th Five-Year Plan" will lay the policy groundwork for economic and industrial development over the next five years. Historically, markets perform well in the first year of a five-year plan, aligning with policy-driven growth areas. Additionally, financial policies are expected to remain accommodative.

5. **The Third Year of the Bull Market: Time Over Space** The current market position could mark the beginning of a prolonged bull run. While upside potential remains substantial, the government's emphasis on a "slow bull" suggests that the duration of the rally may outweigh short-term gains.

**Sector Outlook and Potential Shifts** - **TMT and Advanced Manufacturing** may continue leading the bull market in 2026, likely entering a second phase with further room for growth. - **Cyclicals and Financials** could see periodic rotations. While each bull market has a dominant trend, quarterly shifts are common, often pressuring previous leaders. Rotations may stem from valuation adjustments ("high to low") or shifts in growth expectations.

**Risks:** - Slower-than-expected economic growth dampening A-share performance. - U.S.-China tensions weighing on risk appetite. - Sustained market pessimism leading to capital outflows.