U.S. equities oscillated forward this month amid the resonance between interest rate cut stimulus and rising concerns over an AI bubble. The Federal Reserve cut rates as scheduled in December, remaining short-term liquidity accommodative, though inflation worries led to significant divergence over the number of rate cuts expected in 2026. In AI, after a continuous rally, the market has turned more selective, focusing more on the practical progress of AI applications and ROI. We believe AI is not fully bubbly, but bubble risks may exist in OpenAI‑related names, and elevated valuations require time to digest. The AI holdings in our portfolio continue to demonstrate strong fundamentals and reasonable valuations. 

Chinese assets outperformed U.S. equities in December. While traditional economy remain under pressure, policy continues to emphasize stability alongside efforts to develop new quality productive forces.The tech sector stands out: the yield rate of high-end chips keeps improving, with leading domestic GPU enterprises expected to launch products rivaling the H200 in performance by 2026. Additionally, Chinese companies demonstrate strong capabilities in the engineered implementation of AI applications. We anticipate accelerated growth in domestic computing power, AI applications, and large models this year. Compared with U.S. AI equities, Chinese 

names still maintain valuation advantages— maintaining high-caliber large model capabilities with only one-tenth of the investment of U.S. counterparts. 

Currently, weak China’s property sales continue to weigh heavily on overall consumption. Further policies such as mortgage rate subsidies may emerge after Q1 2026, but the sector will remain adjusting near‑term. Overall, the Chinese economy is still on the path to emerging from deflation, with stricter reducing internal competition policies across industries. 

We believe 2026 will be a pivotal year for AI applications in both the U.S. and China, and we will keep close tracking.