Recently, the financial markets have been particularly dynamic, with the stock and bond markets witnessing a significant upswing. Around 10 a.m., the A-share market experienced a surge led by technology stocks.

Come 2025, the investment community will likely acknowledge that China has surpassed other parts of the worldIt's becoming increasingly indisputable that Chinese enterprises offer more value for money across various manufacturing sectors and an expanding service industry, often providing superior quality as well.

Investors are paying for their dominant positions, and we expect China's pricing advantages to fade away

Advertisements

Additionally, we believe that policy shifts favoring consumer spending over production, alongside possible financial liberalization, could unexpectedly boost profitability during the economic cycleWe assert that a bull market for Hong Kong/China stocks will commence in 2024, with mid-2025 likely exceeding previous peaks.

China is emerging as a global powerhouse beyond traditional industries like apparel, textiles, and toysSubsequently, it has taken the lead in foundational industries such as electronics, steel, shipbuilding, and more recently, in less glamorous fields like white goods and solar energy.

Suddenly, it dominates complex sectors like telecommunications equipment, nuclear energy, defense, and high-speed rail

Advertisements

Investors have underestimated its technological achievementsBy the end of 2024, China will gain attention for its rapid rise to become a leader in global automotive exports, flooding the market with powerful, attractive electric vehicles priced far below competitorsThis has drawn global focusIn 2025, China will launch the world’s first sixth-generation fighter jet along with its cost-effective AI system, DeepSeek.

Mark Anderson has described the unveiling of DeepSeek as the “Sputnik moment for artificial intelligence,” yet it is essentially China's Sputnik moment, recognizing its intellectual propertyThe country's advantage in high-value sectors and its dominance within supply chains are expanding at an unprecedented rate.

We observe that global investors typically underinvest in China, resembling how they once avoided fossil fuels—until the market penalized those making non-market-driven decisions

Advertisements

We see parallels with the current minimal exposure of funds to ChinaInvestors attracted to leading companies with competitive advantages must acknowledge that the companies with extensive and substantial moats today are located in China, not the West.

The market operates in predictable cycles; when a bullish trend emerges, many suddenly proclaim their foresightConversely, during bearish phases, a pervasive pessimism takes holdRegardless of the prevailing sentiment, the world remains unchanged; China continues on its path.

Throughout my commentary, I have consistently held that the world, including capital markets, underestimates China. With its immense manufacturing capabilities, vast unified market, and abundant high-quality talent, the combined effect creates a substantial scale effect that permeates various industries, leading to unexpected breakthroughs

• China-U.S. Economic Cycle Repositioning
• Profitability Starts with Loss Prevention
• Storage Market Recovers: HBM Gains Popularity
• AI Integration Reshapes Financial IT Services
• Power Battery Recycling Industry Set for Billion-Dollar Market

The sixth-generation fighter jet and DeepSeek are glaring examples of how quantitative growth can shift into qualitative change.

This scenario resembles that of a good student who must demonstrate their abilities in examinations for others to realize their potentialSuddenly, they become a point of attentionBoth the sixth-generation fighter jet and DeepSeek exhibit universally common traits: they represent high-end technology.

The advent of the sixth-generation fighter jet indicates that China no longer fears any nation regarding strategic security, even the United States

They have missed their opportunity to threaten militarilyThe launch of DeepSeek signifies that blockades on high-end chips to China are not infallible routes to victory, especially as SMIC's 7nm manufacturing process matures, shifting the balance toward China.

Globally, capital has often trudged along with the U.S., anticipating fortunes from the next technological revolution, only to realize upon reflection that stability seems elusive; the question of who ultimately wins is still uncertain, prompting a dual bet scenarioRecent events over the past month have upended traditional perceptions held by many investors, resulting in significant cognitive dissonance.

Conversely, on the U.S

side, not only are stock markets overvalued, but the real situation is also grimRecently, Elon Musk initiated some actions, which spawned anti-Musk protests demanding to keep Musk out!

Reforming structures is a bloodless revolution—it involves cutting into vested interests, often proving to be cruel, bloody, and tumultuous, and has more frequently failed.

A glance at Chinese history suggests that significant reforms often emerge under dire circumstances; without such pressures, change proves difficultUnless conditions worsen, the inclination to rebel is often not sufficiently compelling

When people can secure basic needs, who is willing to risk everything for change?

Hence, reforms typically face immense challenges while revolutions have a higher chance of success because revolutionaries often have no fallbackIn contrast, Americans today seem to have many escape routes; they have not yet reached a state of decayVested interests will use bureaucratic and legal systems to staunchly oppose reforms, making these attempts destined to fail.

The issues Americans face are nearly universal across dynasties

As economies flourish, resources concentrate in the hands of a few, leading to increasing wealth inequality, and solidifying class structuresRecent years of ongoing deficits and frequent political shifts in the U.Sexemplify this, as they strive for change yet find themselves caught choosing between two rotten apples; whoever assumes office cannot challenge the real power brokers.

However, this progression is certainly not instantaneousChina's rise is not a phenomenon of just one or two years; it has taken decadesAlong this journey, there will be bumps along the way, but maintaining confidence will ultimately yield positive outcomes.

The main issue we face remains unchanged—one cannot expect to profit merely by passively waiting for a market upturn