On July 11th, at the launch event for Dr. Yang Delong's 2026 new book "Value Investing" in Beijing, Zhao Jian, President of the Xijing Research Institute, delivered a speech titled "Paradigm Shift and Value Reassessment." He noted that the market's darkest hour has passed, with a deflationary bottom taking shape. However, the economy is not expected to immediately enter an inflationary or broad upswing phase, and the market is likely to maintain an extremely divergent structure.

Reflecting on the most difficult period before September 24, 2024, Zhao Jian stated frankly: "Back then, incomes were shrinking, housing values were falling by a million a year, and fund net asset values dropped to 0.6—it was truly despairing." Today, a bottom for deflation is gradually forming. He believes the key lies in which world an investor inhabits: "If you are in the silicon-based world, the export chain, or the tech chain, you feel prosperity; if you are in the property chain or infrastructure chain, you still have to endure."

Regarding assets represented by traditional consumption and the property sector, termed "old economy" assets, Zhao Jian judged that they can only serve as defensive allocations in the short term and are not the market's main theme, though they will still offer returns. He analyzed that with the main index around 3,000 points, a slight push from the large financial sector could drive the index to 4,500 or even 5,000 points. However, financial reports show that profits for "new economy" (tech and growth) companies are indeed impressive, while "old economy" companies are under clear pressure, with firms like Shedd Wines experiencing significant profit declines.

Zhao Jian also observed that forces for market rebalancing are emerging: prices have risen for the first time, property prices in first-tier cities have stabilized, infrastructure investment is poised for a rebound, capital expenditure related to computing power remains strong, the unemployment rate has not deteriorated significantly, and new consumption formats are thriving—tourist attractions and museums are packed. Exports are performing well, with imports growing even more, indicating China's deep integration into global industrial chains. Although credit growth is sluggish, the broad money supply (M2) growth rate remains around 8%, suggesting liquidity is not scarce, but funds are more concentrated in the hands of large funds.

Regarding asset price movements, Zhao Jian estimated that the property market has erased approximately 200 trillion yuan in market value over the past few years, while the A-share market has recovered about 50 trillion yuan. Combined with the Hong Kong market, the overall wealth effect is still acceptable. Although macro domestic demand is weak, the profit margin for large-scale industrial enterprises remains at a decent level.

Addressing the recent stock market pullback, Zhao Jian views it as the market digesting volatility accumulated in the first half of the year and new external shocks—particularly volatility in US stocks, significant swings in memory stocks like SK Hynix triggered by South Korea's全民炒股phenomenon, the "capital drain" effect of large IPOs, and portfolio adjustments by fund managers. "Volatility is inevitable during portfolio adjustments, but for value investors, this is precisely an opportunity to add positions," he emphasized. "Amid such turbulent waves, maintaining strategic resolve and holding onto good assets is what leads to good returns."