Guojin Strategy: The main trend of the market will become clearer after the holiday

The core of market rebalancing has never been about whether the AI bubble exists, but rather about AI’s macroeconomic impact layered with monetary policy and major country policy choices. The main contradictions are shifting, and the bottleneck links have moved: investment activity is spreading from previously AI-driven to a broader range of real sectors; meanwhile, the relatively smooth path of future US rate cuts also creates a favorable environment for the recovery of the global manufacturing cycle. In this process, the capacity value of Chinese assets is expected to be re-priced, and capital inflows will also promote internal consumption and inflation cycles.

1 Global Assets: Rebalancing Continues

Our weekly report before the Spring Festival, “High Cut, Low and Simple Topics,” pointed out that the current market high and low are based on synchronized domestic and international recovery. As AI trading gradually enters its second phase, sector differentiation may become the norm in the future. From the global market performance during the Spring Festival period (2026/2/16–2026/2/20), risk assets tended to rise, but with internal divergence: (1) The global equity style continued its rebalancing: sectors like industrials, financials, and energy continued to be favored, while resource-rich countries like Brazil saw their markets surge amid high levels of industrial metals digestion and trading congestion; (2) Sector differentiation within tech assets: with the launch of AI code scanning tools, software stocks represented by cybersecurity continued to be sold off, while segments facing genuine supply-demand tightness, such as storage, rebounded strongly. The market’s focus is no longer on whether AI is a bubble, but on how AI shifts from a theme to a macro factor, actively seeking industry impacts and the main contradictions and bottleneck links. In commodities, crude oil performed the best, with short-term geopolitical tensions between the US and Iran boosting geopolitical premiums, and in the medium term, the increasing importance of the “petrodollar” cycle may support oil prices rising.

2 Further Rise of the Manufacturing Cycle

This week, the US released Q4 2025 GDP data. Although overall growth was below expectations, the main drag was government spending disruptions, while investment driven by AI performed well. More notably, the growth rate of non-AI and residential investment has begun to bottom out, indicating that investment activity is spreading from a single AI focus to a broader real sector. The February S&P Manufacturing PMI data also supports this: Europe exceeded expectations across the board, with Germany returning to the expansion/contraction threshold after more than three years and hitting new highs; the US maintained expansion, with business outlook expectations reaching over a year high. Signals of global manufacturing recovery are accumulating. On the other hand, on Friday, the US Supreme Court ruled that Trump’s tariffs under the IEEPA were illegal. Without considering potential offsetting tariffs through alternative tools, the decline in effective tax rates may ease domestic inflation pressures and support global export recovery. Looking ahead, the main inflation suppression pressure in the US is shifting from the Federal Reserve to more sectors, and the path of US rate cuts is likely to remain relatively smooth, providing a clearer macro backdrop for the recovery of the global manufacturing cycle. For investors, rather than focusing on the complex question of “who will ultimately win” in the tech chain, it is more certain to focus on the global manufacturing cycle recovery. Of course, the Trump administration still has other tools at its disposal, and recently announced tariffs under Section 122 and trade investigations, so tariff disruptions will persist, but the upper limit of their impact on asset pricing has been seen.

3 Commodities: From Excessive Financial Trading to Industry Pricing

Recently, under multiple macro and industry shocks, prices of industrial and precious metals, representing bulk commodities, have experienced high volatility. For industrial metals, the previously mentioned asset allocation-driven speculative congestion has largely subsided, and prices are expected to revert to real industry supply and demand signals. Looking ahead: on one hand, under the rise of resource nationalism, geopolitical premiums for industrial metals persist, and short-term supply disruption tail risks are hard to dissipate; higher acceptable inventories remain a long-term trend. On the other hand, demand-side factors show that tech giants’ real investments in AI have not slowed, with the BIG7’s capital expenditure guidance for 2026 remaining significantly above market expectations. Meanwhile, signals of upward demand from traditional global cycles and emerging markets reinvestment are becoming more evident, potentially forming new demand support. Historical experience shows that current copper-to-gold and aluminum-to-gold ratios, which are relatively low historically, imply higher upward elasticity for metals during an industrial upcycle. For gold, in 2026, Trump’s policy focus is more on “cost of living” issues, and the US’s path to curb inflation is shifting from the Federal Reserve to the government. The need for monetary tightening to suppress inflation is weakening, which is positive for commodities including gold. Additionally, the Supreme Court ruling that IEEPA tariffs are illegal re-focuses attention on US fiscal and debt issues, with potential tariff refunds and Trump’s possible tax cuts making short-term improvements in debt sustainability unlikely. After gold volatility further declines, it will be an opportune time for allocation funds to re-center and move higher.

4 Key Theme: Physical Assets Globally vs. Chinese Assets

The core of market rebalancing is never about whether the AI bubble exists, but about how AI’s macro impact layered with monetary policy and major country policies is changing main contradictions. Bottleneck links have shifted: investment activity is spreading from previously AI-driven to a broader real sector; the relatively smooth path of US rate cuts also creates a favorable environment for the recovery of the global manufacturing cycle. In this process, the capacity value of Chinese assets is expected to be re-priced, and capital inflows will promote internal consumption and inflation cycles. For commodities, after the previous high volatility, industry pricing will be more driven by real supply and demand rather than monetary factors; gold, as a risk hedge, is expected to provide more solid protection as US debt sustainability issues come back into focus. Recommendations: 1. The revaluation logic of physical assets shifts from liquidity and dollar credit to low industry inventories and demand stabilization: copper, aluminum, tin, crude oil and shipping, rare earths, gold; 2. Chinese export chains with global comparative advantages and at cycle bottoms—power grid equipment, energy storage, engineering machinery, wafer manufacturing—and domestically bottoming sectors—petrochemicals, dyeing, coal chemicals, pesticides, polyurethane, titanium dioxide; 3. Capture the capital inflow + easing of balance sheet reduction + personnel inflow trend to boost consumption—airlines, duty-free, hotels, food and beverages; 4. Benefiting from market expansion and bottoming long-term asset returns—non-bank financials.

Risk Warning: Domestic economic recovery falls short of expectations; overseas economic downturn significantly worsens.

(Source: Guojin Securities)