CITIC Construction Investment: Hong Kong and A-shares performed well in February, while US stocks performed poorly; optimistic about gold and AI applications

According to the Zhitong Finance APP, CITIC Construction Investment published a research report stating that the performance of A-shares and Hong Kong stocks in February was good, while the performance of U.S. stocks was poor, bonds were flat, and gold, non-ferrous metals, and soybean meal performed well, while oil performed poorly. It predicts that the ROE for the Wind All A and Wind All A non-financial for Q4 2024 will be 7.16% and 6.23% respectively (predicted to be 7.06% and 6.18% for Q1 2025), with analysts expecting a downward adjustment compared to last month; the ROETTM for Q3 2024 is expected to be 7.77% and 6.94%. It predicts that the peak year-on-year GDP for the U.S. will be in Q1 2025, the peak year-on-year GDP for Japan will be in Q2 2025, and the peak year-on-year GDP for the Eurozone will be in Q2 2025. It predicts that the weakness of the yen against the dollar will improve and that the euro may be strong against the dollar in the future; it predicts that gold priced in dollars will continue to strengthen. Deep seek open-source week reveals that artificial intelligence is evolving from computing power to optimizing algorithms, and is optimistic about AI applications.

CITIC Construction Investment's views are as follows:

Global major asset performance and cycle positioning from the perspective of Kondratiev waves: The performance of A-shares and Hong Kong stocks in February was good, while the performance of U.S. stocks was poor, bonds were flat, and gold, non-ferrous metals, and soybean meal performed well, while oil performed poorly. Currently, we are in a Kondratiev depression period, and the next round of Kondratiev cycle recovery is likely to be led by artificial intelligence; the negative impact of demographic factors on the stock market has become significant since 2015, and its effect is gradually strengthening; China's capacity utilization rate has declined since 2021; the inventory cycle bottomed out and rebounded from Q2 2023, but is constrained by the downward pressure of the Kondratiev, demographic, and capacity cycles, resulting in a weak recovery of PPI, which is currently close to the end of the upward cycle.

Outlook on fundamentals and asset prices: Based on the bottom-up analysis of aggregated analyst expectations, it predicts that the ROE for the Wind All A and Wind All A non-financial for Q4 2024 will be 7.16% and 6.23% respectively (predicted to be 7.06% and 6.18% for Q1 2025), with analysts expecting a downward adjustment compared to last month; the ROETTM for Q3 2024 is expected to be 7.77% and 6.94%. Based on the three cycles (inventory cycle + capacity cycle + demographic cycle), the intrinsic value estimate for the Wind All A index for Q1 2025 is in the range of 5,289 points (5,343 points for Q2 2025); it predicts that the value of A-shares will enter a downward phase in Q3 2025. The yield on China's ten-year government bonds has deviated from historical cyclical patterns. It predicts that the peak year-on-year GDP for the U.S. will be in Q1 2025, the peak year-on-year GDP for Japan will be in Q2 2025, and the peak year-on-year GDP for the Eurozone will be in Q2 2025. It predicts that the weakness of the yen against the dollar will improve and that the euro may be strong against the dollar in the future; it predicts that gold priced in dollars will continue to strengthen.

Global multi-asset allocation strategy portfolio tracking: The global multi-asset allocation absolute return @ low-risk portfolio returned 0.16% this week, 0.16% this month, and has an excess return of 0.39% relative to the China Bond (Total Wealth) Index this year; the global multi-asset allocation absolute return @ medium-high risk portfolio returned 0.29% this week, 0.29% this month, and has an excess return of 0.87% relative to the Wind FOF Index this year A-share industry and style rotation relative returns: Based on financial statements, analyst expectations, and industry macro data to construct industry prosperity indicators, agriculture, forestry, animal husbandry and fishery, non-ferrous metals, telecommunications, and banking have relatively high prosperity levels. The attention on consumer services and comprehensive sectors has decreased from high levels; in the past week, institutional attention in the "non-ferrous metals," "building materials," "retail," "real estate," and "telecommunications" industries has been increasing. Telecommunications, media, computers, home appliances, automobiles, retail, and machinery industries are in a state of triggering crowded indicator thresholds (liquidity, consistency of constituent stocks) and are in a sustained crowded state; recently, overall crowded signals and the number of crowded industries have risen from low levels