The A-share market rose initially before retreating today. The Shanghai Composite Index edged up 0.09% to close at 4,131.98 points, while the Shenzhen Component Index fell 0.35%, the ChiNext Index dropped 1.08%, and the STAR Market Composite Index declined 0.79%. Total market turnover shrank by over 100 billion yuan from the previous session to below 2 trillion yuan. Sector-wise, gold, non-ferrous metals, steel, and coal led the gains, whereas media, artificial intelligence, and communications—typically high-volatility sectors—experienced pullbacks. Risk appetite remained subdued, with more than 3,200 stocks declining across the market. In terms of market style, small caps underperformed large caps, growth stocks lagged behind value stocks, and the STAR and ChiNext boards weakened relative to the main board. Overall, risk appetite was notably weak.

On February 10, Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, gave an in-depth interview in Dubai, UAE. Drawing on decades of macroeconomic investment experience and historical cycle analysis, Dalio warned that the U.S. is currently in the "fifth stage" of his imperial rise-and-decline cycle—a phase preceding systemic collapse and conflict. He emphasized that the U.S. is experiencing extreme polarization and debt imbalances, teetering on the brink but not yet in full collapse. Dalio also reiterated his view on gold, describing it as the only asset that is "not someone else’s liability" amid current debt and political turbulence. Regarding asset allocation, he suggested that individuals consider holding 5% to 15% of their portfolio in gold, depending on their existing holdings.

We believe a major reversal in the bullish narrative for precious metals is unlikely in the near term. From a medium- to long-term perspective, factors such as the Federal Reserve’s interest rate cutting cycle, deglobalization, overseas uncertainties, de-dollarization trends, and central bank gold purchases continue to support gold’s upward trajectory. Historical data shows that after sharp pullbacks from interim highs, gold often resumes its upward trend with considerable gains. Last week, gold prices experienced a pattern of sharp decline, rebound, retreat, and consolidation, with volatility gradually easing—a typical deleveraging process. Following a three-day selloff, gold staged a strong rebound, while COMEX put option volumes declined, suggesting a possible intermediate-term bottom. Investors are advised to align their allocations with their investment horizon and risk tolerance to capture gold’s medium- to long-term value. Interested investors may consider Gold ETF GT (518800).

Cyclical sectors performed strongly today, with non-ferrous metals, chemicals, and oil and gas leading the advance. Mining ETF (561330) rose 2.93%, Gold Equity ETF (517400) gained 2.62%, and Chemicals ETF GT (516220) climbed 2.20%. While concerns lingered that cryptocurrency volatility might impact liquidity in cyclical sectors like non-ferrous metals, the crypto market continued to adjust today while silver and other precious metals remained relatively stable. Further spillover effects on non-ferrous metals are expected to be limited. The long-term outlook for the non-ferrous metals sector remains favorable, supported by resource nationalism and supply-demand imbalances, with potential upside once volatility subsides.

The coal sector strengthened today. Reports indicate that former U.S. President Trump may direct the Pentagon to purchase coal and enter agreements with coal-fired power plants to support military operations—a potential boost for the industry. The coal sector benefits from near-term supply-demand catalysts and long-term valuation support for resources amid declining U.S. dollar credibility, highlighting its investment appeal. Investors may consider the market’s only Coal ETF (515220).

The film and television sector corrected, with Film and Television ETF (516620) falling 5.80%. Although box office expectations for the extended 2026 Spring Festival holiday remain positive, the ETF’s rapid gains this week suggest overheated sentiment. We previously cautioned about short-term correction risks due to crowded trading and expectation adjustments.

At present, considering valuation attractiveness and catalyst timing, investors may focus on Gaming ETF (516010) to capture seasonal tailwinds during the Spring Festival peak. The gaming sector offers attractive valuations, a strong product pipeline, and seasonal catalysts—a triple boost. Core gaming companies’ PE valuations remain below 2025 and 2026 peaks, offering relative value among growth sectors. Earlier underperformance was partly due to the later timing of this year’s Spring Festival, delaying the typical seasonal uptick in user spending, which may now provide a margin of safety.

Fundamentally, China’s gaming market revenue exceeded 3.5 trillion yuan in 2025 (+7.68% YoY), with 1,771 game licenses issued—the highest in seven years. Ample license approvals lay the groundwork for a strong 2026 product cycle, with over 25 new titles scheduled for release, mostly in Q1. The 2026 Spring Festival holiday is the longest on record, and major publishers are well-prepared, suggesting the start of a seasonal upswing. Catalysts include better-than-expected retention and monetization data for "Yihuan" in its third test, and Game Science’s release of a six-minute gameplay trailer for "Black Myth: Zhong Kui," raising expectations for domestic AAA titles.

Additionally, AI video model advancements benefit film, animation, and drama production, with gaming standing to gain medium- to long-term. ByteDance’s Seedance 2.0, launched on the Jimeng platform, can automatically plan shots and sound effects based on prompts, delivering near-cinematic output.

Gaming ETF (516010) tracks the CSI Animation & Gaming Index (930901), covering the full industry chain. With valuations still low, seasonal catalysts approaching, and a clear "product-rich year" narrative for 2026, the sector may offer allocation value.

The bond market has continued to recover recently, with the 10-year Government Bond ETF (511260) rising 0.87% over the past 20 days. We attribute this mainly to stronger-than-expected bank deposits and institutional demand. While it is unclear how long this momentum will last, interbank funding conditions have eased, as evidenced by the 1-year interbank certificate of deposit rate breaking above 1.6%. In the short term, investors may consider a "short-term entry, long-term hold" approach via Government Bond ETF (511010) and 10-year Government Bond ETF (511260).

Medium-term, the central bank’s Q4 monetary policy report emphasized coordination between monetary and fiscal policy, using ample liquidity to support government bond issuance, combined efforts via relending and fiscal subsidies, and risk-sharing through guarantees. The report also highlighted enhanced policy transmission, including price-based tools, maintaining reasonable interest rate spreads and bank net interest margins, and curbing excessively low rates. Policy direction suggests more targeted support tools to protect bank margins and term spreads, but no clear signals of policy rate cuts. Thus, medium-term downside for long-term bond yields may be limited, and a long-term allocation mindset may be preferable to tactical trading. Moderate-duration products like Government Bond ETF (511010) and 10-year Government Bond ETF (511260) may be more suitable.

With the Spring Festival approaching, investors may enhance returns by combining reverse repo operations with bond or money market ETFs, capturing both repo interest and coupon income.

Risk Disclaimer: Investors should fully understand the differences between systematic investment plans (e.g., dollar-cost averaging) and savings methods like lump-sum deposits. Systematic investing promotes long-term, cost-averaging strategies but does not eliminate investment risks, guarantee returns, or serve as a direct substitute for savings. Equity ETFs/LOFs/sector funds generally carry higher risk and return expectations than hybrid, bond, or money market funds. Funds investing in STAR Market or ChiNext stocks involve specific risks related to underlying assets, market rules, and trading mechanisms. Short-term performance data of sectors/funds/stocks is for reference only and does not guarantee future returns or constitute recommendations. Views expressed are for reference and not investment advice. Investors should assess their risk tolerance and invest in suitable products accordingly. Investing involves risks.