However, current investment opportunities are not only affected by the macro environment. We believe a wave of transformation is coming, driven by five major structural trends. We see three trends spurring major capital spending: the race to develop artificial intelligence, the low-carbon transition, and supply chain restructuring. The speed, scale and impact of related investments are full of variables, but we believe they may change economies and markets on a scale rarely seen in history. We believe the most likely scenario is that growth is concentrated in AI, with a handful of AI winners continuing to drive stocks higher, as detailed below. The real economy has become more important in the new situation. Our first theme is to focus on the real economy. We believe that the real economy contains the greatest investment opportunities, as investment flows into infrastructure, energy systems and technology, as well as the talent that drives the development of these fields. NVIDIA's recent surge reflects investor expectations that the rise of artificial intelligence will bring huge investments. NVIDIA and the Artificial Intelligence Boom Number of years required to increase market value from US$10 billion to US$100 million This information is not intended as a recommendation to invest in any specific asset class or strategy, or as a promise or even an estimate of future performance. Past performance is not a reliable indicator of future performance. Source: BlackRock think tank, data from Bloomberg, July 2024. The time it takes for the stocks of the "Seven Big Technology Giants" to rise from a market value of US$10 billion to a market value of US$100 million. Potential investment boom Structural trends are driving this round of transformation and beginning to release huge investments in the infrastructure, energy systems, advanced technology and talents of the real economy. Our second theme is a modest increase in risk appetite. We believe investors should now be more cautious in taking risks and consider all aspects. First, investors should consider the investment period. Secondly, investors should carefully choose the type of risk positions. The value of some U.S. company stocks has exceeded that of entire benchmark indexes in some countries, reflecting their outright dominance of broad index holdings, so investors must think carefully about taking risks. See below. Third, investors need to carefully select different sources of compensation between public and private markets. Companies whose market capitalization exceeds the national stock market Market capitalization of selected U.S. companies and stock indexes (2005 to 2024) Market capitalization of selected U.S. companies and stock indexes (2005 to 2024) This information is not intended as a recommendation to invest in any specific asset class or strategy, or as a promise or even an estimate of future performance. It is not possible to invest directly in indices. Index performance does not include fees. Source: BlackRock Think Tank, data from LSEG Datastream, July 2024. Note: Shows the market capitalization of Apple, Microsoft, and the British and German stock markets. Indices used to represent the UK and German stock markets: MSCI UK Index and MSCI Germany Index. Measure the impact of five short-term scenarios We worked with BlackRock fund managers to develop five different scenarios with short-term outlooks over the next six to 12 months. These situations help cope with different worlds.It sets parameters for the environment but cannot cover multiple potential outcomes beyond this period. These scenarios cover a variety of potential outcomes. 01. Growth is concentrated in the field of artificial intelligence 02. High interest rates, hard landing 03. Weak growth and high inflation 04. Broad productivity improvements (surge in artificial intelligence and capital expenditures) 05. Rescue the market to avoid a hard landing Purple Growth is concentrated in the field of artificial intelligence AI-driven growth is not enough to offset other structural drags. Inflationary pressures persist and policy rates remain elevated for a long time. Be prepared to respond to market changes We believe companies may need to radically change their business models and make investments to remain competitive. For investors, this means a company's fundamentals become more important. We believe there may be an unprecedented gap between winners and losers. We identify investments that would perform well under different scenarios and focus on the most likely scenarios today. We believe the most likely scenario is that growth is concentrated in AI and a handful of AI winners will continue to drive stocks higher. As the transformation unfolds, we are ready for when another scenario might suddenly arise. So our third theme is to uncover the next wave of opportunities. The focus is on remaining flexible and ready to make significant adjustments to asset allocations in response to vastly different outcomes. Main market views US equities: We continue to be overweight US equities and artificial intelligence themes over the next 6 to 12 months. Japan Stocks: Overweight Japan stocks is one of our highest conviction views due to improving prospects for rising inflation, wage growth and corporate pricing power. Private markets: We believe private markets are a way to capture early winners and tap into the infrastructure needed for future investment booms. The real economy will become the focus of the market, with investment in infrastructure, energy systems and technology playing a key role in leading the future. However, the private equity market is complex and not suitable for all investors.