The core trading logic of 2023 is "expectation difference." Although the United States remains in a tightening cycle and the Russo-Ukrainian conflict intensifies, considering that the domestic economy is already at a relatively low level and the macroeconomy is in a recovery cycle, which is staggered from the international economic cycle, the probability of returns is much higher than the risk. With a safety margin generated by the impact of the Shanghai epidemic, a slight recovery can bring considerable returns.

This study has fully allocated positions in the consumer, banking, and technology industries since October 2022. Specifically:

1. Layout of the consumer industry: Wuliangye (SZ000858) (50% shareholding). The domestic liquor industry is related to consumer capacity and is usually the first to start during a recovery. The fundamentals show that the liquor industry has performed well in the fourth quarter of 2022, with strong support from the fundamentals, stable gross profit margins, and performance growth. Wuliangye has been allocated since October 2022.

2. Layout of the banking industry: China Merchants Bank (SH600036). Bank performance is mainly affected by real estate. Although the real estate market collapsed in 2022, driving bank stock prices to a low, the banking sector is the first to start in the recovery cycle. China Merchants Bank, as the leading company in the banking sector, has already allocated 30% of its position and has recently cleared its position.

3. Layout of the technology industry: Hikvision (SZ002415), iFLYTEK, and Venustech. The technology industry has become the main driving force for the economy in the context of the middle-income trap. Given the severe undervaluation of the technology sector, stock prices have entered a low level, offering investment opportunities.

• Hikvision is a leading global camera manufacturer. Under the trend of intelligentization, cameras will be widely used in new energy vehicles, IoT devices, and other fields with strong demand. This study has allocated positions in Hikvision since October 2022 and cleared positions at the beginning of the year.

• iFLYTEK is a ChatGPT concept stock. With the emergence of ChatGPT language model robots, investors have begun to explore the commercial value of AI. For imaginative companies, their expected valuations are usually high and worth investing in. This study has allocated positions since February 2023, and although the stock price has risen, it is still worth investing in. However, it is necessary to pay attention to the risk of unverifiable performance of technology companies. When news lower than expectations appears, there may be a valuation adjustment, so a certain risk tolerance is required.

• Venustech is a leading domestic security industry company, with core advantages in abundant government channels and strong financial IT demand. Although epidemic prevention and control have caused tight government budgets, demand will be released again as the epidemic eases. In this study's view, Venustech's fourth-quarter operating capability has returned strongly and is worth holding for the long term.

In addition, this study is paying attention to the tourism industry sector. Although the capacity for the tourism industry in 2023 was already planned in 2022, and even with a domestic increase of 10% to 20% in capacity, it is expected that the tourism industry will not fully recover to the level of 2019 until the end of 2024. However, it is certain that the upward trend is guaranteed; it just requires additional news to improve the timing accuracy.

In summary, the Chinese economy in 2023 is expected to experience the strongest year in recent history. Investors can focus on the consumer, banking, and technology industries, as well as the tourism sector.