Market performed relatively weak in December. Primary reasons include low confidence in economic recovery, capital outflows from foreign investments, and redemption pressure from domestic funds.

We expect China economic growth rate fall back to around 4% reflecting the peaking of the real estate and increasing aging population.

Therefore, it is essential to seize structural opportunities,

1) Cost-conscious and value-focus Consumer goods or services.

2) Traditional Chinese medicine and medical device companies. We believe the anti-corruption campaign and policy uncertainties has eased. China healthcare will benefit from an aging population.

3) The technology sector, including independent and controllable technologies, semiconductor, and AI application industry chains.

We observed that state-owned funds have already been buying index ETFs. Although the volume is not large, the continuous buying will gradually enhance market confidence.