Cathay Pacific Haitong Securities: New Year's Eve Market Funding Shifted from Rebalancing to Reallocation Optimistic for AI Applications/Commercial Space/Hainan Free Trade/Domestic Consumption

The Zhitong Finance App learned that Cathay Pacific Haitong Securities released a research report saying that the average daily turnover of hot topics last week was 675 million yuan, with an average daily turnover rate of 3.07%. Overall, there was a significant decline. Domestic demand consumption and technology themes are rotating. Domestic demand topics such as dairy/retail/food processing/aviation have surged, some types of non-ferrous metals have received net inflows of capital, commercial aerospace themes have increased, and AI-related themes such as computing power/optical communication/copper-clad plates have declined, and the Hainan sector has weakened. Recently, external disturbances such as the Federal Reserve's interest rate cut and the Bank of Japan's interest rate hike are gradually being implemented, and market risk appetite is expected to rise steadily. Domestic policies to expand domestic demand are expected to continue to strengthen, and domestic demand has become an important direction for relaying the rotation of science and technology themes. The New Year's Eve market capital is shifting from rebalancing to reallocation, and is optimistic about AI applications/commercial aerospace/Hainan free trade/domestic demand consumption.

Cathay Pacific Haitong Securities's main views are as follows:

Topic 1: AI Applications. Domestic computing power architectures have jumped up, iteration of application-side products has accelerated, and the spiral development of computing power and applications has continuously strengthened the AI investment narrative. Moore Thread released the next-generation full-function GPU architecture “Huagang”, with a 50% increase in computing power density and a 10-fold increase in energy efficiency; the Volcano Engine Engine Power Conference released Doubao Big Model 1.8 and Douban Video Generation Model Seedance 1.5 Pro; Ant Group's AI health application “Ant Afu” has 15 million monthly active users, ranking first among health management AI applications. Policy leadership and technological and product breakthroughs have pushed China's AI industry into the large-scale demonstration application stage. Recommended: 1. Hong Kong stock Internet and vertical applications in medical/finance/office/gaming/government; 2. Data center power equipment/domestic computing power/AIDC under increased global computing power investment.

Topic 2: Commercial Aerospace. The medium reusable launch vehicle Long March 12A is about to be launched. The large-scale reusable liquid rocket Tianlong 3 “One Arrow 36 Stars” ground verification tests have been completed, and China Star Network has completed the networking of 16 groups of 127 low-orbit satellites. The networking process has accelerated markedly in 2025. The National Space Administration issued the “National Space Administration Action Plan to Promote the High-Quality and Safe Development of Commercial Space (2025-2027)”, which focuses on supporting commercial space players to develop new technologies and products and explore new application scenarios. It is estimated that in 2030, China's annual satellite launch demand will increase more than 10 times compared to 2024. Recommendations: 1. New infrastructure such as rocket manufacturing/launch sites; 2. New scenarios such as satellite communications/remote sensing; 3. New technologies such as recyclable rockets/liquid rockets.

Topic 3: Hainan Free Trade. The island-wide customs closure was officially launched, and Siemens Energy landed the first iconic foreign investment project in the manufacturing industry after the customs closure. On the first day of the Hainan Free Trade Port's customs closure, customs supervised “first-line” imports of “zero tariffs” of goods enjoying 360 million yuan, mainly crude oil, aviation equipment, etc.; customs supervised “second-tier” domestic sales of processed value-added duty-free goods worth 146.89 million yuan, and 808,000 yuan from tariffs, mainly medical devices, pharmaceuticals, food, etc. On the first day of customs closure, Siemens Energy held a commencement ceremony for the combustion engine assembly base and service center in Yangpu Economic Development Zone, and simultaneously established Siemens Energy (Hainan) Co., Ltd. Recommendations: 1. Benefit from the development of Hainan's characteristic industries for aerospace/energy equipment/outlying islands duty-free and high-end medical care; 2. Benefit from the new stage of development of the Hainan Free Trade Port.

Topic 4: Domestic Consumption. The central government proposed the in-depth implementation of special actions to boost consumption and the formulation and implementation of plans to increase the income of urban and rural residents. New demand leads new supply, new supply creates new demand, and new consumption scenarios such as sports events/snow tourism/performance cultural tourism continue to rise in China. “Su Chao” has had significant spillover effects, driving Jiangsu to spend more than 38 billion yuan in multiple scenarios; the Liaoning Provincial Committee proposed to set up the “Northeast Super League” and strive to build a nationally influential soccer tournament brand; during the 2024-2025 snow and ice season, China's snow and ice sports consumption exceeded 187.5 billion yuan, an increase of 25% over the previous year. Recommendations: 1. Economics/snow and ice tourism in new scenarios where new demand is emerging; 2. Travel/duty-free travel/hotels that benefit from increased consumption promotion measures; 3. Emotional value consumption such as games/trendy play.

Risk warning: Macroeconomic demand and the commercialization process of key technologies fell short of expectations.