Northeast Securities Liao Bo: Chinese Assets Poised for "Davis Double Play" as RMB Enters Appreciation Cycle

On May 29, the "2026 Greater Bay Area Wealth Conference" was held in Shenzhen, co-organized by 21st Century Business Herald and the Guangdong Greater Bay Area Research Institute, centered on the theme of "Finding Certainty Amid Uncertainty."

Liao Bo, Chief Macro Analyst at Northeast Securities, delivered a keynote speech titled Wealth Management Under the RMB Appreciation Cycle. He argued that the RMB exchange rate has entered a structural appreciation channel — not merely a short-term fluctuation, but a profound reshaping of global capital flows and Chinese asset pricing logic over the medium-to-long term. Driven by the triple resonance of fundamentals, policy support, and liquidity, Chinese equity assets are expected to enjoy a new round of "Davis Double Play."

RMB Entering Appreciation Channel; H1 Target at 6.8

Liao Bo opened his speech with a core view: "Over a fairly long period ahead, RMB appreciation will be a direction with relatively high certainty." This conclusion is not based on short-term China-US interest rate or inflation differentials, but rather on a deep analysis of longer-cycle USD dynamics and shifts in global factor endowments.

He noted that since the collapse of the Bretton Woods system in the 1970s, the USD index has exhibited a cyclical pattern of "seven years of appreciation, ten years of depreciation." During USD strength periods, global production factors tilt toward the US with its technological and capital concentration; during USD depreciation cycles, the advantage of manufacturing and the real economy shifts more toward emerging markets. Under the new Kondratiev wave, Liao Bo believes the core competitive focus in artificial intelligence has shifted from pure software technology toward manufacturing and data — precisely the areas where China holds structural advantages.

"From this framework, RMB appreciation is the more certain trend," Liao Bo said. The current RMB exchange rate is systematically undervalued. As corporate demand to convert foreign exchange settlements is released and China's fundamentals show resilience amid geopolitical realignment, the exchange rate is expected to appreciate toward 6.8 by H1 2026, with further appreciation potential in H2 and beyond. If the Fed subsequently begins cutting rates and US structural economic contradictions become more pronounced, RMB's relative advantage will be further strengthened.

Moreover, China is steadily expanding institutional openness and optimizing its trade partner structure. The Belt and Road Initiative, Southeast Asia, and Africa are becoming key anchors for RMB internationalization. Combined with China's manufacturing value-added and commodity export share rising in global terms, the macroeconomic fundamentals provide solid support for RMB appreciation.

Triple Logic Resonance Points to "Davis Double Play" for Chinese Assets

Based on the core premise of a structural RMB appreciation trend, Liao Bo expressed clear optimism about Chinese assets. He believes that with fundamentals, policy support, and liquidity all working together, both A-shares and Hong Kong stocks are poised for a systematic double uplift in valuation and earnings.

On the fundamental side, China's manufacturing sector has maintained the world's top position for 16 consecutive years, transitioning from "factory of the world" to "global high-tech product provider." Export structure continues to improve, with electromechanical and high-tech products sustaining strong growth.

On the policy front, a series of proactive macro policies have been introduced, providing a strong buffer against external risks. The Central Economic Work Conference's deployment of consumption promotion and innovation-driven strategies is continuously converting into industrial momentum.

On the liquidity front, with RMB assets' attraction enhancing, overseas long-only funds are beginning to reassess their China allocations. As passive inflows from index rebalancing and active foreign capital inflows stack up, the overall expectation is for continued improvement.