On [specific date], Deutsche Bank released a research report on Chinese assets, which caused a stir among investors.

Let's also take a look at this report.

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The will to contain China is collapsing

The reason why Deutsche Bank's report has garnered widespread attention is primarily due to its striking titles when roughly translated, such as "China Devours the World," "China Gobbles Up the World," "China Eats Through the World," "China Will Dominate the World," and so on.

The author of the report is Peter Milliken, a Deutsche Bank financial analyst residing in Hong Kong, whose primary research focus is on the Chinese economy and stock market.

The titles of the Deutsche Bank report include: "China is Eating the World!" and "This is China's 'Sputnik Moment', Not Artificial Intelligence's!".

Such a striking headline is actually Peter Milliken's adaptation of Marc Andreessen's famous quote from the year, "Software is eating the world," replacing "software" with "China."

The "Sputnik Moment" originated from the successful launch of the world's first artificial satellite, "Sputnik," by the Soviet Union, which made the United States realize it had been surpassed by the Soviet Union in the space race.

The reason why the Deutsche Bank report emphasizes "rather than artificial intelligence" is that the emergence of China's artificial intelligence (AI) has led many in the West to believe that China has already surpassed in the field. Deutsche Bank analysts point out that what China has surpassed is not just AI, but that the entire country has entered a "Sputnik moment."

The Deutsche Bank report is addressed to investors worldwide, with its core argument emphasizing that the value of Chinese assets is severely undervalued, currently presenting a discounted price, and this discount is certain to disappear.

When will it disappear?

The Deutsche Bank report suggests: year.

The Chinese stock market may usher in a big bull market this year.

The starting point of the Deutsche Bank report is to demonstrate the value of Chinese assets.

Deutsche Bank analysts have been optimistic about Chinese assets for some time, but they are "troubled by the difficulty in finding factors that would awaken the world and prompt purchases."

In other words, analysts always struggle to figure out how to convince global investors to wake up and realize that Chinese assets are the most undervalued and the most worthy of investment...

Now, Deutsche Bank analysts have found the reason and the timing.

The emergence of artificial intelligence in China has caused a significant stir in the West. Many in the West believe that China's artificial intelligence has reached a "Sputnik moment." Analysts at Deutsche Bank have also seized the opportunity to declare that China is not just surpassing in artificial intelligence, urging everyone to take a closer look at China!

From the tone of the Deutsche Bank report, it is not difficult to see that the emergence of [subject] has caused a collapse in the will of some in the West who attempt to curb China's rise, while also providing a reason for those who support China to cheer for it. It is truly no exaggeration to call it a "national fortune-level" event.

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Several reasons for China's bull market

So, what are the specific reasons cited in the Deutsche Bank report for predicting a bull market in Chinese stocks this year? Let's list some of them.

The underestimated fact

To illustrate the value of Chinese assets, the Deutsche Bank report first emphasizes the facts—facts that have always been there, but Western observers have consistently failed to grasp, underestimating their significance.

What is an underestimated fact?

Analysts point out that China's development process first achieved global dominance in the fields of clothing, textiles, and toys, followed by basic electronics, shipbuilding, white goods, and solar energy. Subsequently, it "suddenly dominated" in telecommunications equipment, nuclear energy, defense, and high-speed rail. In a certain year, China, as a leader, exported "powerful and visually appealing" electric vehicles to the world at "prices significantly lower than existing similar models." In another year, China launched the world's first sixth-generation fighter jet and a low-cost artificial intelligence system within a week.

Currently, China holds developmental advantages in areas such as intellectual property, high-value-added sectors, and supply chains. Correspondingly, there is a global underinvestment in China by international investors. Theoretically, investment preferences lean towards leading companies, essentially favoring firms with strong moats. Currently, the broader and deeper moats are found in China, not in the West.

Compare China and Japan.

After presenting several facts, Deutsche Bank analysts proceeded to compare China with Japan.

Analysts believe that China is quite similar to Japan, but it is often a mistake to compare today's China to Japan of a certain year—today's China more closely resembles an earlier Japan.

In the year, the Japanese real estate bubble burst, followed by an economic collapse. China also experienced a real estate bubble, but to a much lesser extent than Japan. It is noteworthy that in the 1990s, Japan's actual growth rate was %, hailed as an "economic miracle," while today China is anxious about whether its economic growth rate is % or %, considering it "slow." History may look back and refer to today's Chinese economic growth as a "miracle."

The biggest difference between China today and Japan in the past lies in the stock market. After the bursting of Japan's real estate bubble, the stock market bubble also burst, because Japan had previously relaxed financial regulations and promoted financial internationalization, which drove up the Japanese stock market—"at that time, the market value of the Japanese stock market had multiplied over the past years." In contrast, the current valuation of China's stock market is at a low level.

Therefore, Deutsche Bank analysts believe that China is likely to follow a path similar to Japan's next, which is to push up the price of Chinese assets through financial internationalization, thereby triggering a bull market. This aligns with the direction promoted by the United States—the U.S. would consider financial internationalization beneficial to its interests.

The impact of the "Belt and Road" initiative.

Deutsche Bank analysts believe that a major challenge facing the Chinese economy is population decline. However, two current advantages of China will offset this impact.

One aspect is that China's level of automation is at the forefront globally, and the widespread installation of industrial robots will enhance productivity advantages and increase per capita wealth.

Another aspect is China's "Belt and Road" initiative, which has opened the door to exports—Central Asia with tens of thousands, West Asia with hundreds of millions, South Asia with hundreds of millions, Africa with hundreds of millions, and Latin America with hundreds of millions... In 20XX, China's exports grew by XX%, with exports to Brazil increasing by XX%, to the UAE by XX%, to Saudi Arabia by XX%, and to ASEAN countries along the "Belt and Road" by XX%...

Deutsche Bank analysts believe that one issue with China's dominant export position is that it will encounter trade protectionist measures from many countries. However, regardless of the methods used to respond, the pace of Chinese enterprises continues to move forward.

The U.S.-China trade war may trigger favorable outcomes.

The Deutsche Bank report predicts that the outcome of the US-China trade war could "potentially bring unexpected upward shocks."

The so-called "unexpected upside" refers to the current situation where the United States is imposing new tariff pressures on China, but the scenario is likely to reverse.

Analysts believe that Trump views China as a primary source of revenue. He is more of a "trader" than an "investor." A "trader" has a stop-loss mechanism in place. As it has shaken the Western belief in containing China, U.S. trade policy is likely to revert.

The Deutsche Bank report suggests that a trade agreement between China and the United States may be reached in the first half of the year, with the U.S. shifting its focus to Western Hemisphere issues. The agreement would involve limited tariffs, a retreat from current trade restrictions, and some large contracts between U.S. and Chinese companies... If this happens, Chinese stocks are expected to rebound.

The leading position of technology and the disappearance of valuation discounts.

Deutsche Bank analysts believe that the key to investing in technology is to invest in leaders, as profits are concentrated in the hands of market leaders.

Comparing the Shanghai-Shenzhen index with the Nasdaq reveals that both indices include global leaders in their respective fields. However, the book price paid by American investors is several times that of China; many large Chinese companies are listed simultaneously in the United States and Hong Kong, China, but the stock prices in Hong Kong are only a fraction of those in the United States...

分析师说：“随着中国企业在全球崛起，这种估值折扣在某个时刻应该会转为溢价。我们相信，投资者将在中期内不得不转向中国，并且将难以在不抬高价格的情况下获取其股票。” 值班编委：马琳
编辑：韩涧明审读：戴士潮