Sinolink: Grasp the important theme of global physical assets vs. Chinese assets.

Sinolink released a research report stating that investment activities are shifting from a single AI-driven focus to a broader spectrum of physical sectors. The relatively smooth path of the future interest rate cuts in the United States is also providing a favorable environment for the global manufacturing industry cycle to recover. In this process, the production value of Chinese assets is expected to be revalued, and the inflow of funds will also promote internal consumption and inflation cycles. In terms of specific asset allocations, first, the reassessment logic of physical assets is shifting from liquidity and USD credit to industrial low inventory and stable demand: copper, aluminum, tin, crude oil and oil transportation, rare earths, gold; second, China's equipment export chains - grid equipment, energy storage, engineering machinery, wafer manufacturing, and domestic manufacturing sectors that have confirmed bottoming out - petrochemicals, printing and dyeing, coal chemicals, pesticides, polyurethane, titanium dioxide, etc.; third, focus on the channel of consumption recovery driven by fund inflows, easing balance sheet pressure, and trends in inward personnel entry - aviation, duty-free, hotels, food and beverage; fourth, non-bank financial institutions benefiting from the expansion of the capital market and the bottoming out of long-term asset return rates. Key points of Sinolink are as follows: Global assets: Rebalancing continues The bank pointed out that the current market's strategy of selling high and buying low is based on the recovery of both internal and external conditions, and as AI trading gradually enters its second stage, the differentiation of the technology chain may become the norm in the future. Looking at the performance of global risk assets during the Spring Festival (2026/2/16-2026/2/20), global equities tended to rise, but with internal differences in performance: (1) Global equity styles continued to rebalance: sectors represented by industry, finance, and energy continued to gain favor in the market, with stock markets of resource countries, represented by Brazil, beginning to surge as industrial metals fluctuated at high levels and absorbed crowded trades; (2) Differentiation within technology assets: with the introduction of AI code scanning tools, software stocks represented by network security continued to be sold off, while sectors facing a real supply-demand shortage, such as storage, rebounded strongly. The focus of the market is no longer whether AI is a bubble, but rather, when AI moves from a thematic focus to macro factors, actively seeking out industrial impacts and identifying real main contradictions and shortages. Looking at the commodity market, crude oil performance is the most eye-catching, short-term tensions in the US-Iran situation pushing up geopolitical premiums, while the increased importance of the "oil-dollar" cycle in the medium term may provide support for oil prices to rise. Further emergence of the manufacturing industry cycle This week, the United States released the Q4 2025 GDP data. Although the overall growth rate was lower than expected, the drag mainly came from government spending disturbances, while investments, represented by AI, showed promising performance. Of particular note is that non-AI and residential investment growth has begun to bottom out, and investment activity is shifting from a single AI-driven focus to a broader spectrum of physical sectors. February's S&P manufacturing PMI data also echoed this trend: Europe exceeded expectations across the board, Germany rebounded from a three-year low and hit a new high, the United States remained in an expansion range, and businesses' outlook on future business prospects have reached over a year high, accumulating signals of a global manufacturing recovery. On the other hand, on Friday, the US Supreme Court ruled that Trump's imposition of tariffs under the IEEPA was illegal. Without considering Trump's use of other alternative tariff tools for hedging, the downtrend in effective tariff rates is expected to ease domestic inflation pressure and support global export recovery. Looking ahead, the primary pressure in suppressing inflation in the United States is shifting from the Federal Reserve to be shared by more sectors, the path of US interest rate cuts is expected to remain relatively smooth, providing a clearer macro backdrop for the recovery of the global manufacturing industry. For investors, rather than focusing on the complex topic of "who will eventually win" in the technology chain, it is better to focus on the more certain trend of the global manufacturing industry cycle recovery. Of course, the Trump administration still has other alternative tools at its disposal, and has recently announced the use of Section 122 for additional tariffs and initiated a trade investigation, so tariff disturbances will still exist, but the upper limit of their disruption to asset pricing has already been observed. Commodities: Shifting from financial speculation to industrial pricing Recently, with multiple disturbances in macro and industrial events, prices of commodities such as industrial and precious metals have shown high fluctuations at high levels. For industrial metals, the previously mentioned demand-driven asset allocation that triggered speculative crowding trades has reached a turning point in the short term, and price signals are expected to revert to reflecting real industrial supply and demand. Looking ahead, on the one hand, under the backdrop of rising resource nationalism, geopolitical premiums for industrial metals will continue to exist, short-term tail risks from supply disturbances may not dissipate easily, and higher appropriate inventory levels remain a long-term trend; on the other hand, from the demand side, tech giants real investments in AI have not shown signs of slowing down, the capital expenditure guidance for 2026 from the BIG 7 is significantly higher than market expectations; at the same time, the upward signals of the global traditional cycle and reinvestment in emerging markets are becoming more apparent, providing new support for demand. Historical experience shows that the relatively low levels of the copper-gold ratio and aluminum-gold ratio compared to historical levels imply that metal prices will have higher upward elasticity during a manufacturing upturn cycle. As for gold, in 2026, the focus of Trump's policies is more on the "cost of living" issue, and the path of reducing inflation in the United States is beginning to shift from the responsibility of the Federal Reserve to the government, reducing the necessity of using monetary tightening to suppress inflation, which is favorable to commodities, including gold. At the same time, the US Supreme Court ruling that tariffs imposed under the IEEPA are illegal will once again bring the issues of US fiscal and debt sustainability into the spotlight, along with the pressure of tariff refunds and potential tax reduction demands of the Trump administration, making short-term improvements in US debt sustainability issues difficult. As gold volatility further recedes, it will be an opportunity for portfolio funds to confirm a shift to higher centrality. Grasping the critical trend of global physical assets vs. Chinese assets The core of market style rebalancing lies not in the existence of an AI bubble, but in the macro impact of AI combined with monetary policy and policy choices of major countries. The main contradictions are shifting, and shortages have been transferred: investment activities are shifting from a single AI-driven focus to a broader spectrum of physical sectors; and the relatively smooth path of the US interest rate cuts in the future is also creating a favorable environment for the recovery of the global manufacturing industry cycle. In this process, the production value of Chinese assets is expected to be revalued, and the inflow of funds will also promote internal consumption and inflation cycles. For commodities, after the return of high price fluctuations in the previous period, industrial pricing will be stronger than monetary properties; and as gold serves as a hedge against risk, with the issue of US debt sustainability being brought back to the foreground, it is expected to provide a more solid protection for portfolios. Focus areas include: first, the reassessment logic of physical assets shifting from liquidity and USD credit to industrial low inventory and stable demand: copper, aluminum, tin, crude oil and oil transportation, rare earths, gold; second, China's equipment export chains with global comparative advantages and confirmed cyclical bottoms - grid equipment, energy storage, engineering machinery, wafer manufacturing, as well as domestic manufacturing sectors with confirmed bottoms - petrochemicals, printing and dyeing, coal chemicals, pesticides, polyurethane, titanium dioxide, etc.; third, take advantage of the consumption recovery channels driven by fund inflows, easing balance sheet pressures, and trends in inward personnel entry - aviation, duty-free, hotels, food and beverage; fourth, non-bank financial institutions benefiting from the expansion of capital markets and the bottoming out of long-term asset return rates. Risks: Domestic economic recovery falls short of expectations, and overseas economy sharply declines.