Looking ahead to 2026, centered around the keywords of seeking progress while maintaining stability, improving quality, and increasing efficiency, and supported by more proactive and effective macro policies along with stronger counter-cyclical and cross-cyclical adjustments, the Chinese economy is expected to achieve a favorable start to the "16th Five-Year Plan" period. Concurrently, a new round of technological revolution is reshaping the global economic and industrial landscape with unprecedented depth and breadth, which is certain to inject imaginative new momentum into China's economy. In the foreseeable future, significant investment opportunities will continue to be embedded in areas such as technology, overseas expansion, anti-involution, and domestic demand. Recently, at the "Alpha Insights 2026 Annual Investment Strategy Conference" co-hosted by Invesco Great Wall and its foreign shareholder, Invesco Ltd., Kang Le, the General Manager of Invesco Great Wall, expressed these views.
Simultaneously, Kang Le pointed out that in the current environment where beta returns are quite pronounced, generating alpha increasingly relies on forward-thinking insights, in-depth research, and strict investment discipline. Invesco Great Wall firmly believes that active management grounded in fundamentals remains the unshakable core competitiveness of the public fund industry. In the practice of A-share market investing, it is still possible to create long-term, stable excess returns for clients through top-down asset allocation, bottom-up company selection, and rigorous risk management.
The execution of this philosophy is inseparable from a profound understanding of the macroeconomy and industries, as well as a keen grasp of market dynamics. Looking back at the market, this year, the Shanghai Composite Index surpassed the 4100-point mark for the first time in a decade, igniting market enthusiasm, with the average daily turnover for all A-shares exceeding 3 trillion yuan. At the current juncture, with the official commencement of the "16th Five-Year Plan" and the new technological revolution reshaping the global economic and industrial structure, how should one grasp the rhythm of the macro environment? Where do the opportunities from technological transformation lie? How can one position accurately and unearth alpha in a complex and ever-changing market environment? Addressing these questions, key research and investment personnel from Invesco Great Wall's asset allocation, equity, fixed income, and mixed-asset management teams provided in-depth analysis at the strategy conference, sharing their latest research and insights. The conference also invited investment experts from the foreign shareholder, Invesco Ltd., to share asset allocation strategies from a global perspective, offering a wealth of substantive content.
Macro Environment: Favorable Domestic Policy Environment, Weaker USD Beneficial for Emerging Markets Regarding the macro environment for 2026, Wang Yong, Chief Asset Allocation Officer at Invesco Great Wall, holds a relatively optimistic attitude. He stated that 2026 marks the beginning of the "16th Five-Year Plan" period, with an overall policy environment favorable for capital markets. On one hand, fiscal policy continues to be proactive, with expenditure priorities tilting towards livelihood areas; on the other hand, the "appropriately accommodative" tone of monetary policy remains unchanged, with room for further reserve requirement ratio (RRR) cuts and interest rate reductions, although the central bank is estimated to maintain a prudent stance.
Wang Yong also pointed out that with the turning of the three major gears—technology, internal circulation, and external circulation—the probability of a successful transformation of China's economic structure is increasing. Among these, technology manufacturing is the driving force and the core for building new external and internal cycles; for the external cycle, although the trend of globalization is slowing, future efforts still need to be outward-looking, including strategic reserves of key mineral resources and the export of manufacturing capacity. The internal cycle involves moving away from reliance on property and debt-driven investment and building a new, unified domestic market. Furthermore, alongside the increased likelihood of successful economic restructuring and the decline in risk-free interest rates, the shift of household asset allocation towards equity assets is a long-term trend.
In terms of asset allocation, Wang Yong believes the period of rapid decline in fixed income yields has passed, and they may oscillate at low levels, favoring a coupon strategy. While equity market valuations do not show signs of a bubble, volatility is likely to increase compared to 2025, necessitating greater focus on timing and sector rotation. Structural opportunities should primarily focus on AI, energy, and innovative pharmaceuticals, followed by resources driven by the US dollar cycle and insufficient capital expenditure, such as industrial metals, precious metals, and chemicals. Assets with favorable risk-reward characteristics, like the real estate chain, non-bank financials, and consumption, are also worth attention.
Zhou Weida, Chief Investment Officer for Asia Pacific at Invesco Ltd., shared thoughts on global allocation. He believes resilience and rebalancing will dominate market sentiment, and a generally stabilizing economic environment will support returns on risk assets, making 2026 a year of both opportunities and risks. The rise in US tech stocks is primarily driven by earnings revisions, suggesting further upside potential, but future focus will shift more towards stock selection. The Fed's interest rate cutting cycle and a weaker US dollar will benefit emerging market assets. Specifically, areas to watch include China's consumption recovery, sectors benefiting from stabilizing PPI, and AI applications; semiconductor foundries, memory, and precision manufacturing in Taiwan, China and South Korea; sectors in India benefiting from domestic demand, population, and wealth growth dividends; and consumption and companies in ASEAN countries benefiting from supply chain and global manufacturing trends.
AI Industry: Sustained Strength in Computing Power, No Current AI Bubble Beyond macro and allocation outlooks, investment opportunities within the AI industry chain were a key focus of the strategy session. Regarding AI computing power, Zhang Zhongwei, Director of Equity Investment Department and Fund Manager, believes there is still significant room for growth in demand. From a model perspective, the test-time phase will become a future growth area. On the revenue side, OpenAI's computing power investment and revenue have grown tenfold in sync over the past three years, forming a positive cycle of "computing power construction - revenue growth." In terms of supply chain certainty, TSMC has raised its 2026 capital expenditure to $56 billion and expressed optimism about computing power growth rates for 2027-2028.
Chen Jiawen, an analyst for Invesco Asia Pacific, also believes computing power is not over-invested. She stated that from the perspective of various cloud providers, the risk of not continuing investment now far outweighs the risk of over-investment. Combined with TSMC's very strong capital expenditure guidance, capital expenditure in computing power is highly certain for the next two to three years. In the future, Agentic AI and Physical AI, such as robotics and digital twins, may take over, further increasing computing power demand.
How to capture investment opportunities in computing power? Jiang Shan, Fund Manager in the Mixed Asset Department, believes that simply distinguishing between domestic/overseas computing power or training/inference computing power is overly simplistic. The core lies in researching the broader beta trend that is still upward and identifying segments within the industry chain experiencing value inflation and periodic supply-demand imbalances. From the perspective of model training paradigms and inference, focus on the demand for high-speed data transmission and storage driven by large model training, and the demand for integrated circuits and higher-performance CPUs driven by large model inference.
Regarding the market's key concern about an AI bubble, Nong Bingli, Fund Manager in the Equity Investment Department, analyzed that the core of this round of AI competition is control over key production resources like chips. Major players can lock in scarce resources through upfront investment and cross-shareholdings; otherwise, it means exiting the competition. Furthermore, the demand is genuine, fundamentally different from the 2000 internet bubble. Zhang Zhongwei added that the R&D and iteration of large AI models and chips require hundreds of billions of US dollars. From an investment perspective, capital can only flow to leaders like OpenAI and NVIDIA, making cross-shareholdings an inevitable outcome.
Regarding future investment themes, Zhang Zhongwei summarized them as "US lacks electricity, China lacks chips, the world lacks memory and optics," suggesting a focus on whatever AI is short of. Nong Bingli and Jiang Shan believe that as the AI industry develops, the investment focus should no longer be limited to technology and TMT; opportunities can also be unearthed in energy and non-ferrous metals. Building on this, Nong Bingli is also optimistic about internet and consumer electronics, while Jiang Shan believes that from a five-year perspective and beyond, the certainty surrounding robotics is very high.
Strategy Selection: Focus on Growth Sectors and Manufacturing Going Global Faced with increasingly rapid sector rotation and significant structural divergence, will future market styles become more balanced? Which sectors are more likely to present alpha opportunities? The strategy conference also invited several fund managers with different styles to share their diverse strategic views.
Zhang Jing, Director of the Equity Investment Department and Fund Manager, first noted that as the share of investment-driven industrial structures in the macroeconomy diminishes, the cyclicality of the macroeconomy has significantly weakened. Investment needs to focus on long-term growth potential, paying more attention to changes in industrial structure. Demand points lie in energy storage and power equipment; supply points in photovoltaics and coal; technological advancement points in innovative drugs; and substitution effects in home appliances. He also emphasized that in an environment of ample liquidity and decreasing drag from the property sector, one can "dream big," but must still weigh returns against risks.
Dong Han, Director of the Equity Investment Department and Fund Manager, believes that with ample market liquidity, active capital will seek opportunities around industrial policies and global correlations. From an industry trend perspective, the trend of AI models separating knowledge storage from logical reasoning will strongly drive demand for memory like HBM. He is also optimistic about new technology directions such as advanced packaging and optical computing.
Meng Qi, Fund Manager in the Equity Investment Department, stated that the global expansion of Chinese manufacturing is a gradual, natural process. Once it bears fruit, the earnings trend is relatively certain, making the "going global" sector worthy of attention and deep exploration. He is particularly optimistic about capital goods in European and American industrial chains and demand for machinery and vehicles in the South American market. Wang Kaizhan, Fund Manager in the Research Department, simultaneously emphasized that companies going global achieve business diversification and valuation paradigm shifts through global layouts, representing an important structural opportunity, such as a leading heavy truck company entering the robotics field to achieve a valuation leap.
Regarding Hong Kong stocks, Zhang Jing believes high-dividend assets and large tech companies have attractive valuations. Wang Kaizhan, however, believes the importance of Hong Kong stocks lies in the scarcity of assets, not as a mandatory allocation option, advising caution and allocating to distinctive assets like high-dividend stocks and internet tech giants at appropriate times.
Fixed Income Plus: A Promising Strategy with Methodical 'Plus' Approach Amid the general trend of declining interest rates, "fixed income plus" strategies have become an important component of investor asset allocation. This strategy conference invited core members from all of Invesco Great Wall's fixed income plus business lines to discuss how different asset classes might perform and where the incremental returns ("plus") will come from.
Regarding the equity market, Li Yiwen, General Manager of the Mixed Asset Investment Department and Fund Manager, judges that, from the perspective of the overall domestic environment, the current risks in the stock market are relatively limited, and she maintains some expectation for future market performance. However, she holds a cautious attitude towards overseas markets, emphasizing the need to monitor potential impacts from overseas market volatility, especially given the US election year and the fact that US asset prices have been at relatively high levels for an extended period, which would require significantly more policy space to sustain further price increases. Zou Lihu, Fund Manager in the Mixed Asset Investment Department, believes that with both domestic monetary and fiscal policy in a "dual-easing" stance, the overall performance of the equity market this year is likely promising, but a greater focus on the support from corporate earnings per share (EPS) is needed.
Regarding the bond market, Li Yiwen believes that, overall, it is expected to fluctuate at low levels, with limited room for significant upward or downward movement. Compared to previous relatively cautious judgments, she now holds a more neutral attitude. Peng Chengjun, General Manager of the Fixed Income Department, is relatively more optimistic, stating that the upside risks for bond yields are limited, while there is still room for decline. He views bonds as an asset class with low risk of loss and a high Sharpe ratio in an environment of stable monetary conditions and steady economic growth.
Li Xunlian, Fund Manager in the Mixed Asset Investment Department, addressed the controversy over "expensive convertible bond valuations." He stated that convertible bonds are inherently more equity-like assets, and their characteristics of "free option + trading discipline" contribute to a high Sharpe ratio. Current valuations reasonably reflect the decline in society-wide risk-free rates and the scarcity of quality assets, and do not represent an extreme bubble. During periods of strong liquidity, compression of premiums and correlation with underlying stocks can create alpha, making convertible bonds a strategic asset.
Regarding the source of return elasticity in fixed income plus strategies, Zou Lihu emphasized his views on non-ferrous metals. He pointed out that three new drivers—energy transition, surging defense spending, and AI computing power demand—are decoupling non-ferrous metals from the property and infrastructure cycle and reshaping them into "cyclical growth" industries. In 2026, against the backdrop of global monetary and fiscal easing and supply optimization through anti-involution efforts, the cyclical upswing is expected to be very strong. Chen Ying, Fund Manager in the Mixed Asset Investment Department, stated that besides remaining optimistic about major varieties like gold, copper, and aluminum, new AI computing technologies, AI applications, memory price increases, power shortages in North America, and non-bank financials at low levels are also worth watching.
As potential market volatility increases, how to control the volatility of fixed income plus strategies? Peng Chengjun stated that the core remains asset allocation. Employing a systematic asset allocation method is conducive to achieving stable returns and can serve as the "base position" of a portfolio for long-term allocation. This requires adherence to two principles: first, adherence to the methodology, and second, always paying attention to valuation and trying to position when various asset prices are relatively cheap. Chen Ying from the Mixed Asset Department added that fixed income plus strategies require strict position management, left-side trading to avoid valuation bubbles, and preemptive duration reduction on the bond side; coordination across these three dimensions is necessary to achieve the goal.
Against the backdrop of increasing market volatility, Invesco Great Wall's hosting of a comprehensive and clearly interpreted investment strategy conference fully demonstrates its deep accumulation across multiple investment fields, including equities, bonds, overseas markets, and commodities, as a multi-asset management expert. As Kang Le, General Manager of Invesco Great Wall, stated, "For a long time, Invesco Great Wall has regarded 'active investment' capability as its foundation, adhering to an investment philosophy that prefers steady, long-term gains over short-term surges, insisting on fundamental-driven, long-term investment, building a diversified, tiered investment research team, and comprehensively enhancing multi-asset allocation capabilities. The public fund industry is currently in a critical period of transformation from scale orientation to investor return orientation, presenting both opportunities and responsibilities. Invesco Great Wall will implement the industry's high-quality development requirements, uphold professionalism, continuously improve investment and service capabilities, and strive to deliver even better performance returns and investment experiences for investors."