00525 Overview

China A-share Market Performance: The China A-share market showed solid performance last year, particularly in AI, technology, and materials sectors, while domestic consumption sectors lagged, resulting in significant divergence in returns.

Growth Stocks Outlook: Growth stocks in China's A-share market performed well, with expectations that earnings growth will drive returns in 2025, following a period of PE ratio expansion.

Investment Strategy Update: Jefferies has adopted a barbell strategy focusing on reasonable price growth stocks and sustainable yield stocks, adding new targets like SYTECH and HIMILE SCIENCE & TECHNOLOGY to its investment portfolio.

Short Selling Activity: The report highlights significant short selling activity in various stocks, including POP MART and SUNNY OPTICAL, with varying short selling ratios indicating market sentiment.

China's Economic Transition: Under the "15th Five-Year Plan," China is shifting towards an AI and high-tech manufacturing era, focusing on private enterprise and presenting significant growth opportunities, as highlighted by a Jefferies research report.

Investment Themes for 2026: Jefferies identified five key investment themes for 2026, including high-growth technology stocks, companies with upwardly revised earnings forecasts, and those with sustainable yields and buyback programs.

Recommended Stocks: The report suggests various Hong Kong-listed companies for investment, such as TENCENT, ICBC, and WUXI APPTEC, based on their growth potential and financial metrics.

Focus on A-Shares and ROIC: Attention is also directed towards A-shares that may list in Hong Kong and stocks with high Return on Invested Capital (ROIC), while advising against those whose ROIC has peaked.