Yang Delong: The turmoil in the international situation will not end this bull market; the AI technology revolution brings numerous investment opportunities

We are currently in the midst of the fourth technological revolution, and the most prominent feature of this revolution is the widespread application of AI, which means that the "Artificial Intelligence +" initiative will change our work and lifestyle. Our country has already launched the "Artificial Intelligence +" initiative, and local governments have introduced corresponding support policies, including the recently popular practice of farming lobsters. Many local governments have quickly taken action; for example, the Longgang government in Shenzhen has already issued a detailed plan to subsidize lobster farming, with subsidies reaching as high as 4 million. It can be said that the "Artificial Intelligence +" initiative will become a key focus of policy support in the coming years and also a source of investment opportunities. Therefore, AI applications are undoubtedly one of the future directions, and we are gradually entering the stage of implementing AI applications. To truly achieve the widespread application of artificial intelligence, high-end chips are essential. Therefore, chip semiconductors are a key direction supported in the 14th Five-Year Plan. The vigorous development of high-end chips is the first item in the 14th Five-Year Plan, and the 15th Five-Year Plan further emphasizes the need to vigorously develop chip semiconductors. Chip semiconductors can be seen as the "brain" of all high-tech; without high-end chips, it is difficult to produce a "brain" with high intelligence, and robots cannot enter households. Thus, we are gradually increasing R&D investment in chip semiconductors, and we have already achieved certain breakthroughs in high-end chips. For instance, many chip stocks surged significantly last year, especially leading chip stocks, which reflected a very positive and optimistic view of chip semiconductors. By 2026, technology stocks are expected to lead the market, and seizing this technological bull market hinges on capturing opportunities from technology innovation enterprises that represent the direction of economic transformation. Of course, one can also seize these opportunities through allocating related thematic investment funds. Chip semiconductors can be said to be a "bottleneck" technology for our country. The United States has imposed a ban on high-end chips against Huawei, but this has not hindered the development of our technology. On the contrary, it has further propelled our country to engage in independent research and domestic substitution. When the U.S. introduced the high-end chip embargo policy a few years ago, former world billionaire Bill Gates asserted that the U.S. restricting China in high-end chips was an extremely foolish act, as it would force China to increase its R&D investment in high-end chips, ultimately leading to breakthroughs. In fact, many researchers in Silicon Valley are Chinese international students who work there after graduation, and in the field of chip manufacturing, China has gradually achieved self-reliance. Bill Gates stated that the U.S. has effectively nurtured a strong competitor. Once China achieves breakthroughs in chips, we may supply chips to the entire world in the future, not just domestically. Therefore, chip semiconductors are a very important development direction for our country in the future and a core technology industry. Thus, the performance of stock prices this year is still worth looking forward to, and everyone can pay attention to opportunities from leading enterprises that truly possess technological strength and potential for breakthroughs. I believe that in the future, we will definitely be able to fill the gaps in chip technology and gradually reach a world-leading level Currently, the A-share market is gradually shaking off the impact of the Middle East situation and is beginning to return to a normal trajectory, with the possibility of continuing the spring offensive trend. The CSI 300 Index is a relatively mainstream index in the A-share market, composed of the largest 300 stocks in the entire market, so the performance of the CSI 300 basically represents the performance of large and mid-cap stocks. Last year, the market experienced significant differentiation, showing a "dumbbell" characteristic: one end of the dumbbell is the high-dividend sector, such as bank stocks, which once reached historical highs and surged significantly, driving the rebound of the CSI 300 Index; the other end of the dumbbell is technology stocks, many of which also saw substantial increases, while many sectors in the middle did not rise, especially some traditional industries like consumption, liquor, and real estate, which were jokingly referred to as "old Deng." This year's situation is similar, with the dumbbell slightly changing. Recently, some international investment banks have proposed a concept called HALO assets, which may replace the high-dividend sector as a direction for capital allocation. The so-called HALO refers to certain blue-chip stocks with heavy assets and low elimination rates; these industries belong to heavy asset sectors, making it difficult for new competitors to enter, thus they possess relatively stable operational and profitability capabilities. For example, industries like non-ferrous metals, chemicals, coal, electricity, and power grid equipment have characteristics of a very stable industry structure that will not be significantly impacted by external shocks. In the era of widespread AI application, we need to look for these industries that are not easily replaceable by AI, and these HALO assets happen to reflect this characteristic. On the other end is the technology sector, which remains the leading force in the market. Most of the constituent stocks of the CSI 300 are composed of these blue-chip stocks, so the CSI 300 can be roughly viewed as one of the representative indices of HALO assets. The performance of the CSI 300 Index this year is worth looking forward to; currently, the price-to-earnings ratio of the CSI 300 is about 15 times, slightly below the historical average level. Historically, the lowest valuation of the CSI 300 was about 9 times, often occurring at market bottoms. The current valuation has seen about a 50% recovery from the bottom, but there is still considerable room to reach historical highs (usually around 25 times). Therefore, the CSI 300 still has certain valuation recovery space. As the "backbone" of the A-share market, the stabilization of the CSI 300 is crucial for the overall stability of the market. Currently, the market has successfully stood above the 4100-point mark, and this round of slow bull market has entered its second phase. Investors may have some disagreements, and there were even concerns recently about whether the recent Middle East conflict would lead to the end of this bull market. My view is very clear: it will not. Because the turbulence in the international situation only affects the short-term performance of the market but does not impact the long-term direction of the market. The long-term trend of the market is influenced by various factors, including domestic policies, capital flows, and market sentiment valuations. Therefore, investors should have confidence in this slow bull market. I believe this round of market may last for more than 2 to 3 years, rather than being a short-term trend Compared to the CSI 300 Index, the STAR 50 Index represents the trend of the technology innovation sector. The STAR 50 is composed of the 50 largest constituent stocks by market capitalization on the STAR Market, and its elasticity is significantly greater than that of the CSI 300. Since these companies belong to the technology innovation sector, their market capitalizations are generally smaller than those of the CSI 300 constituent stocks, thus they are categorized as small and mid-cap stocks. This round of market has characteristics of a technology bull market, and the STAR 50 constituent stocks have strong technological attributes, therefore they have performed much better than the CSI 300 in this round of market. The STAR 50 constituent stocks have a high "technology content," with R&D investment accounting for a significant proportion of their revenue, ranking among the top in the market. For investors optimistic about the technology stock market, appropriate allocation to the STAR 50 Index is advisable. However, it should be noted that the STAR 50 Index has a smaller market size, larger volatility, and more drastic price fluctuations, making its risk-return characteristics more suitable for investors pursuing high risk and high returns. On the other hand, for conservative investors, more attention should be paid to the CSI 300 Index and the CSI A500 Index, which are large and mid-cap indices with relatively smaller fluctuations. The CSI A500 Index is composed of the 500 largest stocks by market capitalization in the entire market, known as the "Top 500" of A-shares. Its market size is slightly smaller than that of the CSI 300, as it includes CSI 300 constituent stocks and adds 200 mid-cap stocks. Different indices have distinct characteristics, and there is no absolute good or bad; investors should choose suitable broad-based indices for allocation based on their own risk preferences. (This is for reference only; investment should be cautious. Image source: Internet)