The investment landscape in China is gearing up for 2025 with optimism as several fund companies release their strategies for the upcoming yearThe prevailing sentiment among these financial entities is notably positive regarding the A-share marketAnalysts and strategists believe that after a backdrop of stable policy expectations and a bottoming out of corporate earnings, the equity market presents an attractive opportunity for investmentSectors like technology and consumer goods are highlighted as prime areas for exploration, particularly focusing on emerging fields such as low-altitude economy, artificial intelligence, autonomous driving, and robotics.

As the year draws to a close, the performance rankings of mutual funds for 2024 are starting to settle, with only three trading days remainingBy December 25, an impressive six funds had yielded returns exceeding 50% this year, with 46 funds achieving returns in the 40% to 50% range, and a further 873 funds marking over 20% returns

Notably, the top performer in this landscape is the Morgan Stanley A fund, leading the pack with a return of 72.57%, indicating a strong performance specifically among actively managed equity funds.

The end-of-year strategy sessions reveal that fund managers are actively laying down their investment roadmaps for 2025. From a macroeconomic perspective, experts such as Wang Yong, chief asset allocation officer at Great Wall, describe a robust governmental effort with an almost 10 trillion yuan debt reduction plan aimed at alleviating local government debt burdens and improving cash flow for the private sectorSupporting measures such as lower down payment ratios and mortgage rates, alongside tax incentives aimed at stabilizing the real estate market, could provide a significant cushion against risks associated with local debts and real estate investmentsFurthermore, both demand and supply-side policies are slated to move towards preventing excessive competition within various sectors, which includes incentivizing the retirement of outdated capacities and implementing energy-saving measures—all of which boost overall price stability.

Looking ahead to 2025, the mutual funds foresee notable inflows, with China Europe Fund estimating that net inflows into ETFs might surpass 600 billion yuan, alongside an additional 400 billion yuan flowing into various markets

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Although foreign investment in A-shares has historically been limited, the improved outlook of the Chinese economy may entice further foreign capital inflow going forward.

While market volatility is expected in the short term, maintaining a long-term optimistic outlook appears to be the consensus among industry expertsInvestors are urged to stay patient, aligning their strategies with their risk appetites and financial capabilities to navigate through the anticipated fluctuations.

The equity market is considered compelling, with Morningstar declaring China to be one of the most noteworthy markets for global investors in 2025. They project substantial room for growth in Chinese assets and maintain a strong confidence in their mid-to-long-term performanceAnalyst Zhu Hongyu from CICC echoes this sentiment, highlighting a high probability of stabilizing earnings and moderate valuation expansions in the equity market, suggesting an overall attractive environment as the equity index is projected to stabilize eventually.

Wang Yong’s analysis of the A-share market offers an optimistic perspective; he suggests that with policy expectations materializing and corporate profits touching bottom, A-share valuations are anticipated to expand favorably

He points out segments likely to thrive include technology—often seen as offering clear win rates—consumption—which holds potential for turnaround opportunities—and high-yield sectors, showcasing a diverse strategy aimed at capturing various growth drivers.

From the diversified asset management perspective shared by Zheng Zheng of Bosera Fund, the trajectory of macroeconomic policy looks promising for 2025, with increased confidence in domestic stock market evaluationsFollowing a substantial rebound since September, the domestic market does not appear overvalued and overall sentiment remains positiveShe emphasizes the potential for valuation improvements, evidenced by current A-share standings compared globally and relative to GDP—pointing towards a favorable adjustment as macro policies roll out.

Among the various sectors, technology growth remains a focus area for many analysts moving into 2025. Chief Allocation Officer Yu Liyong at CICC highlights signs of a stabilizing profit cycle, anticipating an upward trajectory as favorable policies bolster market optimism

For Hong Kong stocks, factors like the global easing cycle contribute to greater valuation attractiveness, while domestic economic recoveries enhance profitability forecasts for 2025, presenting an overall opportunity-tailored environment.

Zheng recommends prioritizing asset allocation for the next year, placing stocks atop the hierarchy, followed by bonds and then commodities, with gold taking a leadThis allocation strategy is molded by expected returns, where the fundamental strategy is to build a stable asset base via bonds while actively managing equity assetsAdditionally, the potential attractiveness of gold remains strong amid current market conditions.

When discussing stock selection for A-shares, Zhu advocates for identifying stable business models within sectors like consumer goods and resources that promise high returns on equityHe also encourages looking towards midstream manufacturing and healthcare sectors for investment opportunities arising from technological advancements and product upgrades anticipated to yield dual benefits of valuation and earnings growth in 2025. A keen eye on domestic demand-related sectors is recommended, particularly those showcasing both certainty and potential for valuation recovery

Furthermore, exploring industries poised for upward shifts in capacity cycles, especially within the context of heightened trade barriers, could yield lucrative opportunities.

Zhang Xiaoqian, research director at Ping An Fund, points out the market's favor towards sectors benefiting from fiscal enhancements, alluding to industries such as medical devices and low-altitude aviation, which are expected to thrive alongside stimulus measuresAs liquidity drives sentiment and risk appetite, sectors demonstrating growth potential—such as artificial intelligence and robotics, which ride the wave of technological advancement—should not be overlooked.

In discussing the tech sector, Yang Ruiwen, a fund manager at Invesco, notes the critical role technology plays within modern economies, expressing a bullish stance towards the growth sector, particularly those industries redefining competitive landscapes