China Merchants Securities: What Investment Opportunities Might the 15th Five-Year Plan Outline Bring?

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Source: China Merchants Securities

Domestically, focus on the incremental information released in the 14th Five-Year Plan outline, and pay attention to four major areas.

Policy Topic 1: What new information does the 14th Five-Year Plan outline contain?

Key Point 1: Slight reduction in length, with a significant increase in technology-related terms. Overall, the length and chapters of the 14th Five-Year Plan outline are slightly shorter than those of the 13th Five-Year Plan. In terms of word frequency, words like technology, investment, and consumption have increased. Among these, “technology” saw the largest increase, approximately 31 additional mentions.

Key Point 2: Focus on two major changes in key objectives. Overall, the goals of the 14th Five-Year Plan are largely consistent with those of the 13th Five-Year Plan, with only minor differences in green ecology and people’s livelihood and well-being. In green ecology, the indicator “reducing energy consumption per unit GDP” has been adjusted to “the proportion of non-fossil energy in total energy consumption.” Additionally, during the 14th Five-Year Plan period, the goal is to reduce CO2 emissions per unit GDP by a cumulative 17%, slightly lower than the 18% target in the 13th Five-Year Plan. In terms of people’s livelihood and well-being, the order of the urban survey unemployment rate and per capita disposable income growth has been swapped, with the urban survey unemployment rate now ranked first among these indicators. Also, a new target has been added: the number of registered nurses per thousand people.

Key Point 3: What changes are there in major projects? Specifically, the number and proportion of major projects related to new productive forces have increased significantly. In subfields, new industries and new tracks are being cultivated, including mentions of integrated circuits, embodied intelligence, and biomanufacturing across 10 sub-sectors. In frontier technology breakthroughs, new areas such as controlled nuclear fusion and deep space exploration have been added; clinical medicine and health are now categorized under major disease prevention and innovative drug development. Infrastructure-wise, new types of infrastructure have been added, including nationwide integrated computing power networks and satellite internet. In green and low-carbon initiatives, separate items include clean replacement of coal consumption, zero-carbon parks and zero-carbon transportation corridors, and energy-saving and carbon-reduction in key industries.

Key Point 4: What other major content has changed? In industry, traditional industries now include promoting key industrial restructuring to resolve structural conflicts, with specific focus on steel, petrochemicals, and shipbuilding. The future industry terminology remains consistent with the draft suggestions, but a new “Innovation and Development Management Plan for New Industries” has been added, emphasizing the optimization of low-altitude economy management and promoting legislation for biomedicine, intelligent driving, and low-altitude economy. In terms of length, “Digital China” is now a standalone chapter, highlighting arrangements related to computing power. In consumption, key mentions include “promoting healthy development of the real estate and stock markets” and “steadily raising the minimum wage.”

From the 11th Five-Year Plan to the 14th, what are the market patterns after the outline’s release?

The probability of market gains is higher after the outline is released, with small-cap stocks performing relatively better. Reviewing the performance after the first four releases, the market tends to rise within the week to the end of the month following the outline’s release. In terms of style, the average returns of indices like CSI 1000 are higher compared to CSI 300 and others.

Which industries perform relatively better after the outline’s release? Industry performance shows that within a week of the outline’s release, building materials and social services have higher chances of rising; their average returns are also higher. From the outline’s release to the end of the month, coal, building materials, real estate, defense, and military industries, and social services tend to perform better.

How did sectors highlighted in the 11th to 14th Five-Year Plans perform? Overall, sectors emphasized in the plans tend to generate good excess returns. For example, the 14th Five-Year Plan highlights technology and industrial transformation; the 13th Five-Year Plan emphasized supply-side reforms.

Which sectors are recommended for close attention moving forward? First, focus on the new concept of deep space exploration; second, pay attention to computing power; third, monitor areas resolving structural industry conflicts (steel, petrochemicals, ships); fourth, focus on new infrastructure sectors (computing power, low-altitude, satellite, etc.).

Risk warning: Incomplete policy understanding, economic data and policies falling short of expectations, tightening of overseas policies.