China Economic Reporter Sun Ruxiang and Xia Xin report from Beijing
&#34;The expectation of downward adjustments is basically over, and the Chinese stock market will regain its upward momentum.&#34;
&#34;Normal trading may still experience some fluctuations, but the relative advantages of Chinese assets will continue to stand out.&#34;
&#34;China is the most stable driving force for global economic growth, which is an important support point for the 'Chinese-style long bull.'&#34;
&#34;The resilience of the supply chain and manufacturing capabilities of China's midstream manufacturing industry may provide scarce 'safe value' for the capital market amid profound adjustments in the global landscape, possessing medium to long-term strategic development potential.&#34;
Against the backdrop of ongoing global geopolitical conflicts and increasing macro volatility, several institutions have recently released research reports indicating that the 'safe value' of Chinese assets is becoming increasingly scarce. For global long-term capital, increasing allocation to Chinese assets is no longer just about pursuing growth returns, but also a strategic choice for building a defensive, risk-diversified investment portfolio.
Breaking the 'Stagflation' Narrative: China's Economic Growth Stability Highlights
&#34;The impact of energy prices on global demand may persist, but China's growth logic is key to breaking the stagflation narrative,&#34; the strategy team at Guotai Junan Securities stated in a recent research report. Since the beginning of the year, China's investment, consumption, and PMI economic data have exceeded expectations, with the recovery of PPI driving nominal growth restoration.
&#34;From a broader perspective, China's stable economic society, complete supply chain system, and positive industrial progress are also scarce in global comparisons,&#34; the Guotai Junan strategy team emphasized.
The strategy team at East Money Securities believes that the differences in energy consumption structures between China and the United States determine that China's industrial production is significantly less dependent on crude oil prices than the U.S. Even if international oil prices rise due to geopolitical factors, China can effectively buffer cost pressures through a diversified energy system including coal and new energy, significantly narrowing the intensity and scope of the impact compared to the U.S.
&#34;In this context, China's economy demonstrates stronger recovery resilience and upward momentum, and the cost-performance ratio of the A-share market will further stand out,&#34; the Chen Guo team stated.
Zhang Yidong, Chief Economist at Haitong International, emphasized from a broader historical perspective that the global pricing logic has fundamentally changed: for the first 30 years, globalization and peaceful development were the main themes, with pricing centered around efficiency and profit. The primary goal now is survival; safety is no longer a given condition but has become a scarce resource. From a medium to long-term perspective, during the turbulent period of international order reconstruction, the pricing logic of major asset classes is safety premium, and the core of allocation is safe assets.
In Zhang Yidong's view, China's assets' 'safety' attribute has become &#34;extremely scarce&#34; in global comparisons due to its stable economic society, complete supply chain system, and positive industrial progress.
Zhang Yu, Chief Economist at Huachuang Securities, also stated in a research report that historical experience shows that during severe fluctuations in global order and macro environment, the midstream manufacturing sector of manufacturing powerhouses can rely on their supply capabilities and industrial resilience to become key highlights of market growth.
&#34;Looking at the present, the resilience of supply and manufacturing capabilities of China's midstream manufacturing industry may provide scarce 'safe value' for the capital market amid profound adjustments in the global landscape, possessing medium to long-term strategic development potential,&#34; Zhang Yu stated
Undervalued and High Certainty Give Rise to &#34;Davis Double-Click&#34; Expectations
&#34;This year, the Chinese stock market is still in a long bull market process,&#34; said Zhang Yidong. &#34;China is the most stable source of economic growth globally, which is an important support point for the 'Chinese-style long bull.'&#34;
Zhang Yidong believes that the macro logic in China for the second half of the year will likely be dominated by expectations of recovery and exiting deflation. After September, there will be a clear drive for recovery, and the representative broad-based indices of A-shares and Hong Kong stocks are likely to reach their annual highs after September.
In addition, this year marks the first year of the 14th Five-Year Plan, where high-level technological self-reliance and a new quality productivity framework will be further solidified, and the structural highlights of China are becoming increasingly strong.
&#34;Regarding the Chinese stock market, we are optimistic about valuation improvement and fundamental enhancement in the second half of the year, with profits and valuations expected to experience a 'Davis Double-Click,'&#34; Zhang Yidong stated, adding that the core driving force for upward valuation may come from the revaluation of China's &#34;hardcore assets.&#34;
China's &#34;hardcore assets,&#34; in addition to safe assets (energy, resources, gold, and national defense military industry), also include assets related to manufacturing going overseas, research-driven &#34;hard technology,&#34; and high-tech assets.
&#34;The expectation downgrade is basically over, and the Chinese stock market will regain its upward momentum,&#34; the strategy team at Guotai Junan Securities also expressed optimism about the Chinese stock market. The team believes that China's growth advantages will become more apparent, making it a scarce asset in global comparisons. At the same time, policies such as the deepening of the ChiNext reform will be implemented, accelerating the construction of an innovation ecosystem centered on the capital market, and the ability of A-shares to gather social capital is expected to further strengthen.
The team also pointed out that the earnings disclosure period in April will show a significant &#34;earnings report effect,&#34; with high profit growth mainly concentrated in resource products benefiting from price increase expectations, as well as technology and overseas manufacturing catalyzed by industrial trends.
Chen Guo's team added a bullish logic from the perspective of inflation differentiation: In March, China's PPI turned positive year-on-year, reinforcing market confidence in China's economy exiting deflation. &#34;If the domestic environment enters a mild inflation scenario, it will help maintain stability in the A-share valuation system; while the high inflation pattern in the U.S. may continue to suppress the valuation center of growth stocks and raise corporate financing costs, which will further enhance the allocation attractiveness of A-shares.&#34;
Therefore, Chen Guo's team believes that although normal trading may still experience fluctuations, the relative advantages of Chinese assets will continue to stand out.
(Editor: Xia Xin Review: Li Huimin Proofreader: Zhai Jun)

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Against the backdrop of escalating global geopolitical conflicts and macroeconomic fluctuations, multiple institutions have pointed out that the "safe value" of Chinese assets is becoming increasingly significant, making them a global rarity. The Chinese economy demonstrates the potential for stable growth, and investors' allocation of Chinese assets is not only a pursuit of returns but also a strategic choice for risk diversification. The resilience of China's manufacturing sector and its diversified energy system provide it with unique advantages in the global economy, and the cost-effectiveness of the A-share market will become even more prominent

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In the era of safety premium, how can Chinese assets become global scarce goods?