Zhang Yidong from Industrial Securities: The A-share market is still the most promising in the next two to three years, and the technology bull market will continue throughout

According to the Zhitong Finance APP, recently, Zhang Yidong, the global chief strategy analyst at Industrial Securities, pointed out that the A-share market is still the most promising in the next two or even three years; A-shares will outperform Hong Kong stocks in one to two years and will definitely outperform U.S. stocks in about two years. The logic has reversed, mainly due to one change, two fundamentals, and three main lines. In terms of main lines, the high-quality equity held by local governments currently aligns with new productive forces, including new materials, new energy, biomedicine, artificial intelligence, chips, robots, etc. Therefore, the bull market will drive value discovery, and the "technology bull" will run through this round of bull market.

Regarding where the "bull" in this bull market lies, Zhang Yidong believes there are two levels that are different from history. This time, in addition to mergers and acquisitions, an important fundamental is enhancing shareholder returns. This Chinese-style "slow bull" has its foundation resolved. Now, by revitalizing the capital market, it has greatly optimized the effectiveness of fiscal policy, monetary policy, and industrial policies such as real estate, thus hoping to achieve a transformation from land finance to equity finance. If many years later, people look back at this bull market, the biggest highlight may be its feasibility in implementing China's equity finance.

Zhang Yidong stated that they have conducted a breakdown of the equity participation of local state-owned assets since 2020 and found that it aligns with new productive forces, including new materials, new energy, biomedicine, artificial intelligence, chips, robots, etc. A round of bull market has driven value discovery, so the "technology bull" will run through this round of bull market.

If the technology bull can revitalize the assets held by local governments, it will naturally benefit the improvement of balance sheets and regional economic improvement, thus solving the issue of domestic demand. He believes that A-shares will outperform Hong Kong stocks in one to two years and will definitely outperform U.S. stocks in about two years.

Regarding Hong Kong stocks, Zhang Yidong stated that the Hong Kong market is relatively rational and is dominated by overseas funds. Every time during the transition period between bear and bull markets, its performance is very impressive. Additionally, its performance is also exceptionally remarkable in the later stages of a bull market. However, during the bull market process, especially in a relatively sluggish economic period, the fundamentals are not that strong, and for Hong Kong stocks, their performance during the bull market is actually not as good as A-shares.

Zhang Yidong believes that as China's economy may gradually stabilize and slowly recover, it is clearer that efficiency is improving. In the later stages of this bull market, U.S. capital, European capital, and other overseas capital will still flow back to Hong Kong stocks. Because capital seeks profit. Therefore, he is bullish on Hong Kong stocks strategically. However, in terms of timing, there may be more opportunities in A-shares next year or even in some stage of the year after next.

As for U.S. stocks, if Trump's economic policies are truly implemented, U.S. stocks will not be bad next year. The style of U.S. stocks next year may lean towards domestic demand, finance, real estate, and cyclical sectors. However, by 2026, the inflationary pressure in the U.S. will be enormous. Therefore, with Trump 2.0, Zhang Yidong's expectation for the U.S. economy in the next four years is a rise followed by a decline. In the next two years, the U.S. stock market will need the economy to exceed expectations to stabilize the so-called bull market pattern; once the economy does not meet expectations, such as in 2026 and 2027, U.S. stocks may face significant risks Regarding U.S. Treasuries, with Trump's election, U.S. Treasuries are likely to experience weak fluctuations in the coming years. The possibility of the 10-year Treasury yield returning to below 3.5% next year is low; it may hover around 4%, and it cannot be ruled out that U.S. Treasuries may enter a bear market in 2026 or 2027. He believes that A-shares will definitely outperform the bond market in the next two years, whether it is U.S. Treasuries or Chinese government bonds. As for gold, Zhang Yidong is optimistic about gold in the long term, or digital currencies, such as Bitcoin, with the core reason being the pressure on the U.S. national balance sheet.

In addition, Zhang Yidong also believes that in the early stages of this bull market, ETFs will definitely dominate; as it progresses to the middle stage, it may shift to enhanced indices; and in the final stage, those actively managed funds that can consistently outperform the index over two to three years will still be able to achieve significant growth. In terms of rhythm, this year and next year may be a period of significant development for passive ETFs, similar to the state of the U.S. stock market after the 2008 subprime mortgage crisis. On another front, with long-term funds entering the market, the high-level meeting on September 26 encouraged social security, pensions, and corporate annuities—these medium to long-term funds to enter the market, addressing the bottlenecks for medium to long-term funds