China-Canada Fund Rights Weekly Report | The Market Needs to Refind the Main Theme

1. Market Review and Analysis

(1) Major Index Overview:
Last week, the main A-share indices all declined, with trading volume decreasing marginally.

(Source: Wind, Data range: 2026/03/02 - 2026/03/06)

(2) Shenwan First-Level Industry Overview

(Source: Wind, Data range: 2026/03/02 - 2026/03/06)

2. Macro Events and Data

Two Sessions “Government Work Report” Commentary

1. Core Task and Target Comparison

2. Specific New Measures and Comments on 2026 Industries

1. Technology: Artificial Intelligence + Action Enhancement
The 2025 government work report first proposed the “AI+” initiative, emphasizing R&D, application, and computing power infrastructure. In the 2026 report, it states deepening and expanding AI+, promoting the rapid adoption of new-generation intelligent terminals and agents, and driving commercial-scale applications to cultivate new intelligent business models. New infrastructure projects include large-scale intelligent computing clusters and compute-electricity collaboration, supporting open-source AI communities. Focus will be on developing emerging pillar industries such as integrated circuits, aerospace, biomedicine, and low-altitude economy, and nurturing future industries like energy, quantum technology, embodied intelligence, brain-computer interfaces, and 6G. These industries will continue to receive policy and financial support.

3. Counter-Inner Competition: Continued Rectification
   Additional in 2026: Use of capacity regulation, standards, price enforcement, and quality supervision to deeply rectify “inner competition”, creating a healthy market environment. Compared to 2025, efforts will increase, with continued reduction of carbon emission indicators. Traditional industries with severe internal competition, such as building materials, steel, and manufacturing, are expected to further eliminate excess capacity.

4. Domestic Demand: New Urban-Rural Income Increase Plan
   First proposed to develop and implement a plan to increase income for urban and rural residents, with practical measures to promote income growth for low-income groups, increase property income, and improve salary and social security systems. This is a major initiative to realize the concept of “Investing in People” and address fundamental issues of insufficient domestic demand. Follow-up will focus on tracking progress.

In boosting consumption:
Support will be provided through 250 billion yuan in ultra-long-term special bonds to promote old-for-new consumption, and a 100 billion yuan fiscal and financial coordination fund to stimulate domestic demand.

In consumer scenarios:
2026 will see the implementation of paid staggered leave for employees, support for pilot programs of spring and autumn holidays in primary and secondary schools, and promotion of offline economy to enrich consumption scenes.

5. Risk Management: More Specific
   Compared to 2025, 2026 emphasizes “actively and prudently resolving risks”, including increasing risk disposal resources and methods for local small and medium financial institutions, and prudently handling non-performing assets. A plan to issue 300 billion yuan in special bonds to supplement the capital of state-owned banks is proposed.

3. Summary
Overall, the tone aligns with market expectations, with increased pragmatism reflecting high-level awareness of complex situations. Future policy focus should be more targeted, mainly on technology and domestic consumption. In the short term, the impact on market structure and style is limited. In the medium to long term, the implementation of “Investing in People” policies and technological industry policies will be key.

3. Market Outlook

(1) Last Week Summary:
Market sentiment remained cautious, with risk aversion high, and financing levels continued to decline.

(2) Short-term View:
The main influences are the Iran conflict and the “HALO trading” sentiment (heavy assets, low obsolescence, where companies with these traits outperform in technological progress). Chinese stocks are less affected but not immune. As events unfold, market sentiment remains highly volatile, with increased risk aversion. In the short term, sectors such as precious metals, industrial metals, chemicals, oil, shipping, and domestically cyclical stocks with supply-side logic may continue to be favored. Expect mainly volatility, with the market waiting for related events to settle before identifying main investment themes.

(3) Medium to Long-term View:
Post Iran conflict and HALO trading stabilization, the market will seek new narratives that can be linearly extrapolated. Earnings season approaches, and corporate performance will increasingly influence individual stocks. Technology growth remains advantageous, with improving macro fundamentals gradually building. The economic outlook and tech narratives have not changed fundamentally; the US is still in a rate-cutting cycle. Long-term logic for tech sectors remains, making them a priority for increased allocation. Conversely, many dividend and cyclical sectors face fundamental issues or lack long-term narratives, requiring strong catalysts (e.g., export pressure offset by investment and consumption policies, or easing measures amid US rate cuts). The government’s firm stance on boosting domestic demand, improving PPI data, and increasing internal competition may catalyze further expansion of domestic demand and anti-inner competition policies. Under accommodative monetary policy and low interest rates, liquidity remains ample, supporting ongoing thematic opportunities.

Long-term perspective:
The ongoing US-China strategic competition continues, with US policies becoming clearer and increasing deficits, leading international capital markets to question US governance and credibility. However, the US dollar’s credit remains intact for now, and US Treasuries pose no immediate risk. Monitoring US market changes and China’s strategic opportunities is essential. With US economic uncertainty and the Fed’s rate cut cycle, RMB appreciation against USD has occurred, and sustained foreign capital inflows could support China’s equity markets. Additionally, regulatory policies may further promote passive management, long-term institutional investment, and increased allocation by insurance funds and brokerages. The rising profitability of equities could lead to more household savings flowing into stocks, with current household financial assets in stocks and funds at over 22%, and total household savings around 55 trillion yuan. In the medium to long term, market inflows are expected to continue.

(4) Industry Outlook:
For defensive dividend sectors, moderate increases in allocation are advisable in the short term, especially if aggressive sectors remain under pressure and market sentiment worsens.
In aggressive sectors, focus on technology (with ongoing catalysts, such as Nvidia GTC conference, computing chain developments, CPO, domestic computing power, aerospace, power infrastructure, internal combustion engines).
Domestic demand and high-growth sectors benefiting from international situations and HALO trading (industrial metals, chemicals, oil, shipping, supply-side driven domestic cyclicals) are also key. Currently, domestic cyclicals remain weak, and market length and sustainability depend on macro and industry data. Before more earnings reports and economic data in March and April, valuation increases may continue, especially in high-growth segments like new energy, some machinery, and internal combustion engines under HALO conditions.

Weak US dollar trades:
Precious metals and industrial metals, with increased volatility due to Iran conflict, but long-term logic remains.

4. Risk Warning:
All information in this material is sourced from publicly available data. No guarantee is made regarding its accuracy, completeness, or reliability. The opinions and analyses herein represent the views of the company’s research team and do not constitute investment advice or guarantees. Unauthorized reproduction by media, websites, or individuals is prohibited.