The beginning of 2026 has seen wide fluctuations in global asset prices. Precious metals such as gold and silver experienced notable pullbacks after reaching highs, while global markets concurrently entered a period of volatility. As the new year unfolds, the question of how to allocate investments in global markets following this turbulence remains a hot topic of discussion.

Fixed-income assets, traditionally used as long-term core holdings in portfolios, have undergone a phase of adjustment in 2025. Their subsequent trajectory has become a key focus for market participants.

At the ChinaAMC Year of the Horse New Year Strategy Conference, experts specializing in international affairs, index investing, and fixed-income allocation gathered to address core market issues, offering in-depth analysis and insights.

**Key Takeaways from the ChinaAMC New Year Strategy Conference**

Global politics are shifting rightward, heralding an era of significant fiscal expansion. Concurrent monetary and fiscal easing has led to abundant liquidity. Policies aimed at securing votes through stock market support, coupled with significant wealth inequality, have fostered a speculative environment ripe for asset bubbles.

**United States:** With Wall Street and Silicon Valley jointly influencing governance, a combination of liquidity, industrial narratives, and political will is likely to fuel a bubble in U.S. equities. **China:** National policy directives are driving the market, with technology sectors leading the charge. While external demand remains acceptable, pressures have intensified compared to 2025, and bolstering domestic demand is urgently needed. **Other Regions:** Amid U.S.-China strategic competition and a depreciating trend for the U.S. dollar, intermediate economies like Europe, Japan, and South Korea are benefiting from capital inflows.

**Several forecasts for the 2026 market include:** a moderate depreciation of the U.S. dollar, U.S. Treasury yields declining before rising, and U.S. stocks and gold entering the final stages of a bubble phase. The two major trading themes for 2026 are expected to be: Federal Reserve independence (leading to interest rates falling then rising, and the dollar stabilizing before weakening) and the U.S. midterm elections (potentially pressuring oil prices, interest rates, and inflation).

U.S. equities are entering a bubble phase reminiscent of 1999, gold may continue to reach new highs, and as the U.S. Dollar Index declines, non-U.S. markets are anticipated to outperform U.S. stocks. Key risks for the 2026 market include: a loss of Federal Reserve independence triggering a sell-off in dollar-denominated assets, aggressive easing leading to a second wave of inflation, and potential U.S. political division or internal strife.

Should any of these scenarios materialize, the U.S. could face simultaneous declines in stocks, bonds, and its currency, while gold and non-U.S. markets would likely benefit. Conversely, if the risk originates outside the U.S., dollar assets might serve as a safe haven, similar to 1998, potentially accelerating the U.S. equity bubble.

Investors are advised to adopt a diversified strategy across major asset classes in 2026, including A-shares, Hong Kong stocks, U.S. equities, commodities, and bonds. For A-shares, a "core + satellite" structure is recommended. **Core:** CSI A500 ETF (better aligned with the new economy, outperforming the CSI 300 by 3-4 percentage points in 2025, with advantages expected to continue in 2026. The index weight is dispersed across sectors like power equipment, defense, and pharmaceuticals, with lower exposure to traditional sectors like banking, non-bank financials, and food & beverage). **Satellite:** A barbell strategy—one end focused on technology growth (AI-related) and the other on cash flow/dividend-paying assets (to balance portfolio risk).

The core theme for 2026 remains artificial intelligence. Upstream computing power offers relatively high certainty throughout the year. Investors may focus on Communication ETFs and Semiconductor Equipment ETFs. Downstream applications require a right-side approach, awaiting catalysts. Potential areas include Gaming ETFs and Software/Hong Kong-listed Internet ETFs. Robotics ETFs and Smart Vehicle ETFs need further catalysts but remain important long-term vehicles for AI applications. Other secondary themes to watch include new energy, innovative pharmaceuticals, and resource sectors. Sectors related to anti-internal competition, such as coal, chemicals, and building materials, may see intermittent activity driven by policy changes.

**Other sectors of interest:** **Securities ETF:** Saw capital inflows in Q3 2025, providing earnings support. While delayed, potential returns are gradually improving. **Power ETF:** Benefits from a combination of export and domestic demand, plus growing electricity needs driven by AI. **Cash Flow ETF:** Demonstrates strong resilience (falling 3-6% less during the 2025 tariff adjustments). While dividend-focused strategies are currently crowded, they offer significant allocation value.

**Important considerations for investors:** Returns can vary significantly among ETFs within the same sector. It is crucial to research index composition and weighting, prioritizing products with large scale, good liquidity, and alignment with industry trends. Portfolio allocation should be diversified to avoid concentration risk in a single sector, potentially balanced with Hong Kong-listed stocks, U.S. equities, and bond ETFs.

**Regarding equity investments:** 2026 is expected to see a shift from valuation recovery to earnings improvement in equity markets. The focus is on leading companies in sectors like non-ferrous metals, new energy, chemicals, and other midstream manufacturing industries with potential for margin improvement. "Fixed-income plus" strategies should maintain a proactive equity allocation while strengthening rebalancing tactics—selling during overvaluation and buying during undervaluation.

**For fixed-income investments:** The macroeconomic recovery remains weak, limiting interest rate adjustment risks. However, if PPI turns positive in the second half of the year and the property cycle bottoms out, interest rates may face some upward pressure. A credit-focused coupon strategy is advised, watching for trading opportunities after market overreactions.

**On convertible bonds:** In an environment with manageable equity market risks, convertibles retain their optionality value. However, with overall premium rates at historical highs and increased asset volatility, their allocation appeal is currently low. Trading opportunities may arise if premium rates decline.

The credit bond market in 2026 is expected to remain volatile. Conditions for extreme bullish or bearish positions are not currently present. Structurally, amid the interplay of moderately easy monetary policy and rebalancing supply/demand dynamics, a scenario of "room for movement at the short end, constraints at the long end" is anticipated. Strategically, the focus should be on medium- to short-term coupon strategies with certain returns, adjusting duration based on market sentiment, and waiting for favorable risk-reward opportunities to return.

**Fundamentally,** the economy continues to face significant pressures. Property market activity is declining, and household consumption capacity and willingness need boosting, making a rapid demand-side improvement unlikely in the short term. Since December, imported inflation and supply-side constraints have led to marginal price increases, but overall demand remains weak. Inflation is expected to see a mild rebound but stay at low levels.

**Regarding liquidity,** with the macroeconomy yet to stabilize fully, monetary policy is expected to remain accommodative. Deputy Governor Zou Lan indicated at a State Council Information Office briefing that there is room for further cuts in reserve requirement ratios and policy rates this year. The drivers for a broad decline in interest rates are strengthening.

**On the policy front,** as a foundational year, 2026 carries high expectations for economic support and market stabilization measures. Structural policy tools are likely to be central, with closer coordination between fiscal and monetary policies.

**Institutional behavior** is influenced by strong equity market performance, boosting overall risk appetite. This may divert some funds from insurance and bank wealth management products. However, insurers and banks face challenges in expanding their balance sheets in the current rate environment. Public funds, grappling with unstable liability structures, are hesitant to be overly aggressive, leading to a reduction in stable, long-term配置 forces for the bond market.

Overall, with weak internal economic momentum and monetary policy in an easing cycle, the fundamental logic for bonds remains unchanged, presenting more opportunities than risks. In the short term, equity market performance and concentrated government bond supply may significantly influence bond market trends, increasing volatility. The short end of the curve, benefiting from loose liquidity, offers higher certainty.

Expectations for 2026 include one 10-basis-point policy rate cut and one 50-basis-point RRR cut. The 10-year government bond yield is forecast to fluctuate between 1.7% and 1.9%, with the yield curve gradually steepening. Downside opportunities in the bond market may stem from bets on monetary easing or external shocks. Upside risks include shifts in "risk appetite," "inflation trades," and "supply-demand pressures." Given the current macro narrative and liability conditions, the risk-reward balance is not optimal. The guiding principle for interest rate bond timing strategies in 2026 should be defensive counter-attack.

**Trading Opportunity 1: Monitor Narrative Consensus and Expectation Gaps.** Recent years have shown that strong consensus on macro narratives in the bond market can lead to herd behavior, accelerating capital flows and creating "asset bubbles." When expectations diverge from reality, sell-offs can occur. For 2026, it's crucial to identify risks embedded in consensus views early to avoid significant portfolio drawdowns, as seen with the optimistic consensus in early 2025 and the pessimistic one in early 2026.

**Trading Opportunity 2: Economic Momentum and Policy Discretion.** The interplay between the strength of internal economic momentum and policy counter-cyclical measures creates numerous tactical trading opportunities. The frequent switching between "cross-cycle" and "counter-cyclical" policies in recent years, aimed at addressing economic pressures and external uncertainties, leads to changes in infrastructure growth, bond issuance pace, and monetary policy focus, offering chances for interest rate波段 trading.

**Trading Opportunity 3: Tracking Liabilities.** Liabilities are a critical variable in pricing all major asset classes. In 2026, close attention should be paid to the impact of "redemption shocks" in public funds and the allocation needs driven by commercial banks' "liability costs." These will be significant liability variables, as seen in the January 2026配置 rally supported by stable bank-side liability costs and scales.

Note: Views are for reference only and do not constitute investment advice or promises. Markets involve risks; investment requires caution.