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Looking back at the U.S. economy after World War II, each Juglar cycle has historically aligned with a leading industry that drove systemic investment opportunities. In the 1960s, it was the Big Three automakers—General Motors, Ford, and Chrysler. The 1970s saw the rise of chemical and oil giants like DuPont, Exxon, and BP, while the 1980s were dominated by consumer goods powerhouses such as Pepsi, Pfizer, and Procter & Gamble, often referred to as the "beautiful 50." The 1990s brought computer and communications companies like Microsoft and Intel, followed by real estate and finance in the 2000s. By the 2010s, mobile internet and new energy sectors, including FAAMG and Tesla, took center stage.
In China, over the past 38 years of reform and opening up, infrastructure has consistently delivered strong alpha returns. The 1998 housing reform marked the beginning of a golden era for real estate. However, since 2013, the traditional model of infrastructure and real estate investment has started to wane. On one hand, old economic indicators are losing their potency, while on the other, the new economy is gaining momentum.
The wheels of industrial cycles continue to turn, and artificial intelligence, mobile payments, and smart logistics are now driving the rise of China's new economy. Asset allocation is fundamentally about identifying the right industry at the right time, with systematic investment opportunities emerging from the growth of the new economy rather than the supply-side dynamics of the old.
From the perspectives of capital expenditure, profitability, and industrial policy support, we can uncover the investment potential of the "real enthusiasm industries."
Standing on the edge of the future, the core of asset allocation lies in understanding the evolution of industries. Each Juglar cycle is defined by a leading sector, driven by technological innovation or global demand. For example:
- **1960s:** The automotive industry (GM, Ford, Chrysler)
- **1970s:** Chemical and oil industries (Dow, DuPont, Exxon)
- **1980s:** Consumer goods (Pepsi, Pfizer, P&G)
- **1990s:** Technology and telecom (Microsoft, Intel, AOL)
- **2000s:** Real estate and finance
- **2010s:** Mobile internet and new energy (FAAMG, Tesla)
China’s Juglar cycles have also seen distinct leading industries over time, including large state-owned enterprises, infrastructure, and later, the internet and finance. Infrastructure has long been a key driver of growth, with achievements in high-speed rail, power transmission, and renewable energy. However, its influence is gradually fading as the focus shifts toward the new economy.
The real estate sector experienced its golden age starting with the 1998 housing reforms. But after 2013, the old model of infrastructure + real estate began to lose steam. Local governments and SOEs became increasingly leveraged, and the space for household leverage was limited. This led to a decline in fixed asset investment, signaling the passivation of the old economy.
Meanwhile, the new economy is evolving. Data shows that while the old economy’s capital expenditures have been negative, many new industries—such as high-end manufacturing, tech services, and clean energy—have seen significant growth. These sectors represent the "vent" where investment opportunities lie.
The shift from old to new is not just about replacing one industry with another; it's about redefining value creation. As seen in the case of Kodak, the decline of one sector can create opportunities in others. Similarly, the rise of electric vehicles has shifted investment fromæ•´è½¦åˆ¶é€ to components like batteries and electronics.
Industrial policy plays a crucial role in shaping these trends. Sectors like semiconductors, biotechnology, and environmental protection have received strong support, making them prime candidates for investment. While some industries may appear promising due to high capital spending, true success depends on sustainable profitability and market demand.
Ultimately, the key to finding systematic investment opportunities lies in aligning with the next wave of growth—whether it's through technology, sustainability, or innovation. The future belongs to those who can identify and invest in the industries that will define the next cycle.
September 27, 2025