The previous Chief Perspective argued that the recent cyclical market trend has sustainability from the viewpoint of inventory cycles in the United States and China. From a short-term tactical perspective, rather than worrying about a cyclical restoration, concerns should focus on growth divergence. However, from a strategic standpoint, it is essential to distinguish between a cyclical restoration and a cyclical revival; otherwise, one risks falling into the trap of an old cycle's resurgence or missing the opportunities presented by a new cycle.

The recently discussed "HALO" strategy, which stands for Heavy Assets and Low Obsolescence, represents a low-risk approach within the tactical and strategic interplay, often referred to as a "hard asset haven" in the era of AI investing. While this strategy appears low-risk, significant risks are inherent if it is misunderstood.

I. Market Review: Precious Metals Lead Strongly, Market Style Favors Cyclicals Over the past week, global assets displayed a pattern of "strong commodities, weak stocks and bonds, and a cyclical bias." Commodities led the gains, with COMEX silver rising 13.8% weekly. London gold, ICE Brent crude, and LME copper also advanced, highlighting both safe-haven and inflation expectations. Broad-based A-shares saw slight increases, with the STAR 50 and CSI 300 indices rising over 1%. Sector-wise, cyclical sectors like nonferrous metals and basic chemicals led the gains, while media and non-bank financials were among the laggards.

Since the beginning of the year, asset performance has shown clear divergence: Precious metals, leveraging their core attributes as safe-havens and inflation hedges, have remained strong. London gold and COMEX silver have posted significant cumulative gains, becoming central to safe-haven allocations. In contrast, the Hang Seng Tech Index has continued to weaken, with technology and growth sectors clearly impacted by valuation pressures and sentiment drags. Technology stocks in both US and Hong Kong markets have been relatively weak, while government bonds experienced minor pullbacks. Market capital appears more inclined towards hard assets, with sentiment towards growth sectors remaining subdued. Cyclical and resource-related products have become the main theme of the current market.

II. The Fundamental Logic of HALO Investing: Cyclical Revival Reshapes Asset Value Within our consistent framework, the underlying logic of asset allocation is always anchored to the progression rhythm of the industrial cycle. The decline of old industries and the rise of new ones together form the core narrative of asset price fluctuations. The effectiveness of various strategies is strictly constrained by specific stages of the industrial cycle, and HALO investing is no exception. The global and Chinese economies are approaching a critical inflection point in their cycles around 2026: The US manufacturing restocking cycle is commencing, coinciding with the bottoming-out and recovery of inventory cycles among Chinese industrial enterprises. The logic of cycle operation is shifting from a "cyclical restoration" based on existing stock repair to a "cyclical revival" driven by incremental creation. This constitutes the most crucial macro backdrop for HALO investing.

The essence of the cyclical revival is not a simple repetition of traditional cycles but an upgraded integration of "old foundations, new demand, and new barriers," which also forms the cornerstone of HALO investing's underlying logic. Here, "old foundations" refer to the traditional industrial base composed of heavy assets; "new demand" refers to the rigid incremental demand generated by new productive forces like AI; and "new barriers" are the moats formed by the integration of traditional heavy assets with new technologies. HALO assets, characterized by high quality, high liquidity, and high barriers, act as a key bridge connecting the traditional heavy asset base with new AI-driven productive forces. Their value is transitioning from being "valuation repair targets" in the cyclical restoration phase to becoming "core subjects for value re-rating" in the cyclical revival phase. Consequently, their investment logic is undergoing a fundamental reconstruction.

Although AI technology will have achieved breakthroughs by 2026, it may not yet be fully industrialized. Traditional heavy assets are encountering a "new bloom on an old tree" development opportunity due to this new demand. This unique industrial cycle characteristic enables HALO assets to transform from purely "value stocks" into dual-character assets possessing both "value and growth attributes," creating the irreplaceable allocation value of the HALO strategy at this specific stage.

III. Correcting Misconceptions: Dispelling Three Common Market Inertia Fallacies in HALO Investing Current market understanding of HALO assets is still constrained by traditional inertial thinking, leading to three core misconceptions. These cognitive biases are the main obstacles to capturing the returns from HALO assets during the cyclical revival phase. Only by dispelling these fallacies can one grasp their core value.

Fallacy 1: New and Old Industries are Mutually Exclusive. Reality: "Integration and Symbiosis" form the basis of the cyclical revival. The market habitually views the new economy (AI, digital economy) and the old economy (heavy assets, traditional cyclicals) as a zero-sum game. However, new industries cannot exist independently of the physical world. AI's computing operations, hardware manufacturing, and industrial implementation require a continuous stable power supply, vast amounts of basic raw materials, and完善的 transportation infrastructure networks. These demands do not replace traditional ones but represent new, rigid increments layered on top. Consequently, traditional heavy assets transform from economic "stabilizers" into "growth engines" for the new technological revolution. The integration and symbiosis of old and new industries is the most critical industrial characteristic of the cyclical revival phase.

Fallacy 2: Dividends and Low Volatility are Inherently Linked. Reality: "Decoupling" is a core feature of HALO in the cyclical revival. Past frameworks often treated "dividends" and "low volatility" as two sides of the same coin for HALO assets. In reality, they belong to different domains: Dividends stem from genuine corporate profits and cash flows, forming the foundational bedrock of asset valuation. Low volatility arises from the temporary characteristics of industry structure and is not inseparable. In an environment of normalized high interest rates, the dividend attribute of HALO assets is significantly strengthened, making them a haven for capital. However, the earnings elasticity brought by new AI demand shifts their profit growth from static to dynamic, leading to a potential re-rating of their valuation systems and possibly increased stock price volatility. This is not necessarily a risk but rather the "growing pains" associated with the asset's transition from "static defense" to "dynamic growth."

Fallacy 3: Cycles Simply Repeat. Reality: "Upgraded Integration" is the core paradigm of the cyclical revival. Traditional perception views cycles as a closed loop of "recovery-prosperity-recession-depression," believing cyclical asset investing merely revolves around fluctuations in existing demand. However, the cyclical revival anticipated around 2026 is based on a triple fusion involving the creation of new demand and the construction of new barriers. The investment logic for HALO assets is no longer confined to the存量 fluctuations of traditional cycles but is supported by a foundation for medium-to-long-term growth. Their value re-rating is not driven by short-term sentiment but is an inevitable result of substantial improvements in fundamental profitability.

IV. Effectiveness Variance of the HALO Strategy Across the Industrial Cycle Loop The HALO strategy is not a universal solution across all cycles but is specifically tailored to the transitional industrial phase characterized by "technological breakthrough but new industry not yet dominant." Its allocation value shows significant differences across the six stages of the industrial cycle.

STAGE 1: No Clear Theme (Old Declining, New Not Yet Born): Old industries are declining, new ones have not emerged, and the market lacks a clear growth direction. HALO's corresponding heavy asset targets exist merely as traditional high-dividend assets, with their growth attributes dormant. They provide basic returns solely through stable dividends, similar to utilities, lacking unique allocation value.

STAGE 2: Barbell Strategy Phase (New Tech Breakthrough, New Industry Small Scale): AI technology has broken through but does not yet dominate the economy. The HALO strategy replaces traditional pure dividend holdings as the defensive core of the barbell strategy. This stage achieves a triple resonance: strengthened dividend attributes, initiated valuation re-rating, and released earnings elasticity. A portfolio combining "HALO core holdings + tech growth" perfectly fits the characteristics of old-new integration, representing the phase of maximum strategy effectiveness.

STAGE 3: Growth Theme Phase (New Industry Industrialized and Dominant): The new industry enters industrial-scale expansion, and growth stocks become the main theme. HALO assets shift from core holdings to supporting assets, merely acting as "water sellers" releasing earnings elasticity. Their dividend attribute is overlooked, valuation re-rating is complete, and they no longer possess significant alpha potential.

STAGE 4: Bubble Phase (New Industry Differentiation, Leader Concentration): Risk appetite peaks, capital flocks to growth leaders, and speculation replaces logic. HALO assets, with their linear earnings growth, cannot match the exponential growth potential of leading growth stocks. Their defensive value is also ignored, rendering the strategy nearly ineffective.

STAGE 5: Consolidation Phase (Bubble Burst, Deleveraging, Multiple Compression): The market's demand shifts to "capital preservation." Bond-like assets become the core defensive tool. While HALO assets may be relatively resilient, they face earnings downgrade pressure, making them less effective than fixed income.

STAGE 6: Weak Recovery, No Clear Theme (Bubble Cleared, New Industry Not Yet Born): The market returns to "earning certain returns." The growth attributes of HALO assets become dormant again, reverting to purely defensive high-dividend targets with no differentiated allocation value.

V. Dual Positioning and Triple Return Drivers of HALO Assets Under the Cyclical Revival Paradigm Under the new paradigm of cyclical revival, the core positioning of HALO assets is redefined, simultaneously forming a triple resonance of high dividend yield, valuation re-rating, and earnings elasticity, which becomes the core driving force behind their value re-rating in 2026.

1. Dual Positioning: "Water Seller" for the New Cycle and "Ballast" for the Portfolio On one hand, HALO assets are the "water sellers" for the new technological revolution, providing foundational support like power, resources, and infrastructure for new productive forces like AI, with returns deeply linked to their development. On the other hand, they act as the "ballast" for investment portfolios. Their high dividend and high cash flow characteristics can effectively reduce volatility and provide a solid safety margin for the portfolio, fitting the allocation philosophy of "capturing structural differentiation while balancing offense and defense."

2. Triple Returns: Resonant Drivers for Value Re-rating High Dividend Yield is the Foundation: Stable dividend payments build the base return layer for the portfolio, ensuring long-term compound interest effects, representing a scarce value in a high-interest-rate environment. Valuation Re-rating is the Core: The trading logic shifts from traditional "dividend low-vol" to "dividend growth," opening up room for valuation expansion. This is the unique溢价 granted by the cyclical revival. Earnings Elasticity is the Key: New AI demand,叠加 with global manufacturing restocking, translates into substantial growth in corporate profits. Capacity rationalization on the supply side further amplifies the earnings elasticity of scarce varieties, making them leaders during the upturn.

VI. Key Considerations First, the Timeliness of the Strategy: The effectiveness of the HALO strategy is highly dependent on the transitional industrial phase of "technological breakthrough but new industry not yet dominant." This strategy is poised to become a specific, phase-specific tactic within the context of the anticipated 2026 cyclical revival. Its core value lies in breaking the traditional notions of "old vs. new industry opposition" and "dividends equal low volatility," achieving a dynamic balance between defense and offense during the barbell strategy phase.

Second, The Art of Dynamic Balance: Mastering HALO investing does not mean adhering rigidly to a single allocation. It requires敏锐感知 the rhythm of the industrial cycle's transition from a "dividend anchor" phase towards a "growth theme" phase. Investors need to dynamically adjust their allocation to HALO assets based on the progress of new industry implementation and changes in demand for old industries, seeking the optimal balance point between dividend and growth attributes.

Third, The Reconfiguration of Certainty and Scarcity: The essence of investing always involves capturing certainty and scarcity. The 2026 cyclical revival endows HALO assets with new内涵: The cash flow certainty provided by their dividend attribute is a scarce value in a high-rate environment; their strategic industrial position connecting the "old foundation" with "new demand" is a core source of alpha during the cyclical revival phase.

Fourth, Embracing Old-New Integration: The integration of old and new is an irreversible industrial trend. The "new bloom on an old tree" effect generated by the combination of traditional hard assets and new technologies contains significant value potentially underestimated by the market. Under the tide of cyclical revival, HALO assets have upgraded from traditional defensive tools to core allocation targets possessing both defensive and offensive attributes. By dispelling cognitive biases and deeply understanding their phase-specific allocation value, investors can grasp this structural investment opportunity within the cyclical revival.