Morning Insight: December 26, 2025

Morning Insight:December 26, 2025 LinlinGaoCertification：Z0002332gaolinlin@gtht.com Yu Chen Wu (Contact)Certification：F03133175 wuyuchen@gtht.com Main Body Commodity MarketInsight： Cotton:With relatively fast sales progress at ginning plants and supportfrom market sentiment, cotton futures remain strong. Although China hasseen a bumper cotton harvest this season, market feedback indicates thatginning plants in both southern and northernXinjiang have been sellinglint cotton at a relatively rapid pace, and domestic commercial cottoninventories are not significantly higher than the same period last year.Apparent cotton consumption has been solid, downstream mills areconducting phased restocking, and there are pre-holiday inventory buildexpectations. In the forward market, contracts are also pricing inexpectations surrounding the cotton target price subsidy policy over thenext three years. Coupled with the recently optimistic sentiment acrossthe broader commodities market, these factors have driven a steady risein both cotton futures and spot prices. However, the continued rise in cotton prices has squeezed profit marginsfor downstream yarn mills, while cotton yarn imports have increased,leaving overall supply relatively ample, which for now does not support asustained sharp increase in cotton prices. We maintain a view of cottonfutures fluctuating upward, while noting that short-term shifts in marketsentiment warrant close attention. Equity Index Futures:The spring rally has begun; watch for upsideresistance. Recently, A-share markets have performed strongly, with theShanghai Composite posting seven consecutive gains. In terms of drivers,first, expectations of looser liquidity have resurfaced. U.S. inflationdata came in below expectations, reopening expectations for FederalReserve easing, while domestically there are also expectations of areserve requirement ratio (RRR) cut early in the new year. As the newyear begins, position replenishment by institutional investors may alsobring incremental capital inflows. Second, in January and February, economic data releases and corporateearnings are typically in a lull. Traditional policy expectationssurrounding the“Two Sessions,”along with early-year policy initiativesand infrastructure projects, often help create a“strong start”atmosphere, providing positive support. Overall, compared with historicalpatterns, the recent market action is indeed consistent with the typicalspring rally logic. Looking ahead, attention should be paid to the Shanghai Compositeapproaching the 4,000-point psychological level and the previous higharound 4,034. If incremental marginal drivers are insufficient, theselevels may pose breakout resistance. It may be necessary to watch whethermore proactive policy measures are implemented, such as the realizationof rumored easing policies or clearer signals of an accommodative stancefrom a new Federal Reserve chair. Alternatively, on the industrial side,the emergenceof a theme-driven catalyst similar to last year’s“DeepSeek moment”could further improve the wealth effect and drive apositive feedback loop of capital inflows into the market. Open Interest Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch News Highlights: 1. China's integration of the digital and real economies has maintained afast growth trend so far this year, with stronger digital industrialization, increased investment in industrial digitization and agrowing role of data, official data showed Thursday. Value-added tax (VAT) invoice data from the State Taxation Administrationshowed that the sales revenue of core industries in the digital economyrose 10 percent year on year in the first 11 months, notably faster thanthe overall growth rate of enterprises nationwide. Within the sector, sales revenue of smart equipment manufacturing andelectronic components and equipment manufacturing increased 28.2 percentand 10.9 percent, respectively. Enterprises stepped up investment in industrial digitization. FromJanuary to November, manufacturing enterprises' spending on purchases ofdigital technologies rose 11.2 percent year on year, the data showed.The growth was particularly notable in equipment manufacturing. Spendingon digital technology purchases by automobile manufacturing, generalequipment manufacturing, as well as computer, communication and otherelectronic equipment manufacturing rose 25.5percent, 19.7 percent and13.3 percent, respectively. Sales revenue of data-driven industries rose 6.3 percent year on year inthe first 11 months, the data showed. During the same period, sales revenue for internet platforms that covernew business forms such as online freight, food delivery and ride-hailingservices increased by 16.2 percent year on year. Sales revenue of internet retail services, including live-streaming e-commerce, saw an 11.9 percent rise, while