The recent evaluations from several prominent private equity firms, boasting asset management exceeding a hundred billion, regarding the A-share market in 2025 are starting to come to lightThere is a significant consensus among these institutions about a positive outlook on the market trendIn terms of strategic responses, top-tier private equity firms are primarily focused on uncovering structural opportunities within the marketThree main investment themes have emerged amongst these firms: artificial intelligence (AI) and technology, domestic demand and consumption, and the international expansion of Chinese enterprises.

In light of recent fluctuations and adjustments in the A-share market, there has been a noticeable dip in market sentimentHowever, leading private equity firms retain a rather optimistic expectation concerning the macroeconomic landscape and the A-share market for 2025. For instance, Dachenquan Investment holds a belief that current macroeconomic policies are set in a positive direction, forecasting that the restoration of the economy in 2025 will arise from three key areas: first, the government’s efforts to expand investment and consumer subsidies while alleviating the debt burden on local governments, implementing multiple policies concurrently to invigorate the economy; second, enhancing asset prices to manifest a wealth effect among residents, thereby regaining confidence across various sectors; and third, strengthening the social security system to enhance consumption capacity through increased household income

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Overall, Dachenquan foresees a strong performance in the economy during the first quarter of 2025, supported further by favorable policy effects that will help sustain economic momentum throughout the yearThey emphasize that while a positive policy environment effectively anchors the market, the degree of market rebound and its potential heights depend largely on the successful implementation of new policies.

Heyuan Fund, in a recent interview, remarked that both the scale of the fiscal deficit and the quota for local governments' special debt are projected to rise in 2025, indicating a strong support for economic operationsThe fund highlights a clear policy direction focused on boosting domestic demand, with numerous specific measures currently in a preparatory but unactivated stateTherefore, the overall economic conditions for 2025 are expected to improve significantly.

Meanwhile, Chongyang Investment's analysis points to a stable economic foundation upon which China's industrial competitiveness is continuously rising

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They assert that the Chinese market will present numerous growth investment opportunities in the futureIn the short term, the persistence of macroeconomic policies aimed at boosting market risk tolerance, coupled with liquidity easing, will significantly support the market's favorable trajectory in 2025. For the medium term, the conditions for attracting more long-term capital into the A-share market are gradually being established.

Xingston Investments expresses that domestically, policies will intensify to broaden internal demand, with economic vitality poised for revival, thus establishing a positive cycle of economic and consumption growthFrom the perspective of the A-share market, stocks are still relatively undervalued; the market is anticipated to transition from being liquidity-driven to being driven by fundamental factors in its next phase.

As for structural opportunities, institutions such as Zhongou Ruibo contend that the potential downside risks within the A-share market are limited, and there are conditions for an overall upward shift in valuation levels

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Consequently, capitalizing on structural opportunities is likely to be a vital agenda for the A-share market in 2025. Moreover, as AI technology matures, numerous new industries and sectors are beginning to take shape, gradually progressing towards their initial stages of large-scale commercializationThis technological progression presents a wave of investment opportunities within new economic segments.

Dachenquan Investment re-affirms that the investment opportunities in the A-share market in 2025 will predominantly be structural in natureObserving from the corporate perspective, it is not difficult to identify top enterprises in various domestic sectors that have created superior performance levels exceeding the industry average during the years of high-quality economic developmentMany of these firms can be classified as leaders in their respective fields, and they still possess further growth potential.

Jinglin Asset emphasizes that various policy shifts initiated since late September 2024 hold significant implications for the capital markets, effectively resolving liquidity issues

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Consequently, investors must primarily focus on identifying enterprises that will genuinely benefit from high-quality economic development in ChinaA robust criterion for selecting stocks will be the companies' free cash flow, especially looking at their long-term free cash flow prospects.

As for the three primary investment themes that have garnered considerable attention, it is evident that AI and technology, domestic demand and consumption, as well as the global expansion of Chinese businesses, are highly favored by these private equity firms.

Jinglin Asset points out that specific service sectors and companies providing experiential value in consumption are emerging as shining points in the ongoing growth of the Chinese economyCompanies that offer engaging, healthier, and experience-rich consumption options are likely to enjoy ‘long slopes and thick snow’ paths for growth

Additionally, the smart electric vehicle supply chain and the smart appliance industry are noteworthy areas of interest.

Xingston Investments also indicates that since late September 2024, easing liquidity has made its mark on asset prices across various sectorsNotably, stocks categorized under themes such as technology and brokerage firms have achieved significant price increasesConversely, the internal demand sector depicts a favorable supply-demand landscape, maintaining relatively low trading density, where current valuations remain lowAs the market gradually transitions from liquidity-driven forces to being fundamentally-driven, quality sectors within internal demand will witness what is termed a 'Davis double play'. Within the consumer space, they highlight four key areas: first, consumer services such as aviation, logistics, and tourism which exhibit robust supply-side performance; second, consumer goods industries that embody demand elasticity, including branded apparel, healthcare services, liquor, and cosmetics; third, the pharmaceutical sector that looks poised for breakthroughs in supply-side technologies, particularly in innovative medications; and fourth, the continually growing internet sector.

Looking ahead to 2025, Heyuan Fund intends to seek investment opportunities in three directions: first, high-quality domestic enterprises that exhibit some synchronicity with macroeconomic cycles but also possess clear alpha characteristics in their operations; second, the spaces of technological innovation where AI has advanced to practical applications, particularly within smart terminals, autonomous driving, and robotics, wherein China demonstrates considerable competitive advantages; and third, enterprises that excel in overseas market strategies, which are expected to become high-quality assets with global competitive edge in the future.

Dachenquan Investment notes three primary investment opportunities to focus on in 2025: first, chances arising from the global operations of outstanding enterprises; second, revaluation opportunities stemming from enterprises centered on domestic demand; and third, companies in emerging growth segments characterized by high growth potential