Macro and Strategy Research - In the first four months of 2025, the profit of industrial enterprises above designated size increased by 1.4% year-on-year, indicating a continued recovery [2] - The industrial added value increased by 6.4% year-on-year, while the PPI decreased by 2.4% year-on-year, reflecting a decline in both volume and price [2] - The profit margin for the period was 4.87%, down 2.6% year-on-year, but the decline was narrower compared to the previous quarter, providing some support for enterprise profits [2][3] - Different types of enterprises showed varied profit growth, with private and joint-stock enterprises improving, while state-owned and foreign enterprises continued to decline [2][3] - Most of the 41 industrial categories saw positive profit growth, particularly in sectors like mining, food processing, and high-tech manufacturing, indicating strong support from "two new" policies [3] Fixed Income Research - The issuance rates for credit bonds decreased, with a range of -3 BP to -1 BP, and the net financing amount turned positive [4][6] - The credit bond issuance scale increased, while corporate bonds had zero issuance, indicating a shift in market dynamics [4] - The overall credit bond market remains stable, with expectations of a downward trend in yields in the long term, suggesting a strategy of increasing allocation during adjustments [6] Industry Research - Significant transactions in the pharmaceutical sector were noted, with Sanofi and Pfizer reaching an agreement on a PD-1/VEGF dual antibody, indicating strong market activity [8][9] - The pharmaceutical sector saw a 1.78% increase in the week of May 19-23, 2025, outperforming the broader market indices [8] - The overall valuation of the pharmaceutical industry remains high, with a TTM P/E ratio of 27.44, reflecting a 146% premium over the CSI 300 [8] Metals Industry Research - Gold prices have rebounded due to expectations of interest rate cuts and geopolitical factors, while lithium prices continue to decline due to oversupply [10][11] - The steel market is expected to lack upward momentum in the short term, influenced by demand and raw material cost trends [10] - The aluminum market may see price increases if demand grows due to export activities, while copper prices are anticipated to fluctuate without strong support [10]

Group 1: Industrial Profit Trends - In the first four months of 2025, the profit of large-scale industrial enterprises increased by 1.4% year-on-year[3] - The operating revenue for the same period grew by 3.2%, a decrease of 0.2 percentage points compared to the first quarter[3] - The profit margin for large-scale industrial enterprises was 4.87%, down by 2.6% year-on-year, but the decline was narrower than in the first quarter[3] Group 2: Sector Performance - Among 41 industrial sectors, most achieved positive profit growth in the first four months, maintaining the same growth breadth as in the first quarter[4] - High-tech manufacturing sectors, such as electrical machinery and equipment manufacturing, showed significant profit improvement, indicating strong support from "two new" policies[4] - Private and joint-stock enterprises continued to see profit growth, while state-owned and foreign enterprises experienced a decline[3] Group 3: Economic Outlook and Risks - The improvement in industrial profit growth is primarily driven by a narrowing decline in profit margins[4] - The easing of external tariff pressures and the implementation of domestic "four stability" policies are expected to support continued profit recovery[4] - Risks include the potential underperformance of the "export rush effect" and uncertainties in the external environment that could impact domestic economic stability[5]

Group 1: Fund Research - The pharmaceutical industry performed well while major market indices mostly declined, with the top five performing sectors being pharmaceuticals, comprehensive, non-ferrous metals, automobiles, and household appliances [2] - The public fund market saw the first batch of new floating rate funds set to be issued, and private fund scale reached 20.22 trillion yuan [2] - FOF funds showed good performance, with the average weekly net value of pension target FOF rising by 0.64%, while bond funds had the largest increase of 0.08% [2] Group 2: Industry Research - Shanghai and Chengdu released policies to boost consumption, suggesting a focus on new tobacco investment opportunities [4] - The light manufacturing industry outperformed the CSI 300 index by 0.90 percentage points, while the textile and apparel industry outperformed by 0.06 percentage points [6] - The global sales of heated tobacco products are expected to grow by 12.7% year-on-year in 2024, while electronic cigarette sales are projected to increase by 9.5% [6]

Group 1: Macro Environment - The global trade tensions have eased temporarily, with the May Markit manufacturing, services, and composite PMI preliminary values exceeding expectations, indicating an overall expansion trend. However, inflationary pressures are still rising, as evidenced by the University of Michigan's inflation expectations reaching a historical high [3] - In Europe, the May composite PMI unexpectedly contracted due to service sector weakness, highlighting the need for early interest rate cuts to stabilize the economy amidst political turmoil and weak domestic demand [4] Group 2: Domestic Environment - In April, despite external challenges, the domestic economy remained stable under supportive macro policies, with new growth drivers becoming increasingly significant. The "export grab" trend is expected to continue under eased US-China tariffs, but consumer and investment sectors require substantial policy support to solidify the current situation [4] - Fiscal data for January to April shows a narrowing decline in national public budget revenue, with tax revenue recovering while non-tax revenue continues to decline. Public budget expenditure has progressed faster than the same period last year, focusing on livelihood areas [4] Group 3: High-Frequency Data - In the real estate sector, transaction volumes have rebounded, while wholesale prices for agricultural products have shown a downward trend. Midstream sectors like steel and cement have seen price declines, and upstream prices for coking coal and coke have weakened slightly, with non-ferrous metal prices remaining stable [4] Group 4: Fixed Income Research - The period from May 16 to May 22 saw a mixed performance in interest rates, with the 10-year government bond yield rising by 4 basis points to 1.72%. The market is characterized by a lack of new information, leading to a cautious outlook on bond yields [6][7] - The issuance of special bonds has increased marginally, with a total of 109 interest rate bonds issued during the period, amounting to a net financing of 633.9 billion yuan [6]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report After the temporary easing of trade relations, the "rush to export" effect and the increase in risk appetite put some pressure on the bond market. However, the continuous improvement of domestic demand still takes time, which limits the upward range of bond market yields. With limited incremental information recently, it is expected that bond market yields will fluctuate following the movement of capital prices [28]. 3. Summary by Relevant Catalogs 3.1 Important Event Reviews - **Economic Data**: In April, economic indicators in production, investment, and consumption showed marginal declines. Export - related industries were affected by tariffs, while high - tech and equipment manufacturing maintained high growth. In the future, "rush to export" may mainly involve inventory reduction, and tariff uncertainties still affect production and investment willingness. The expansion of domestic demand policies can boost consumption, but more employment and income - stabilizing policies are needed. These factors limit the upper limit of bond market yield fluctuations [9]. - **Fiscal Data**: In April, the marginal improvement of broad - based fiscal revenue was observed, and fiscal expenditure continued to increase. Public fiscal revenue improved, with the cumulative year - on - year decline of corporate income tax narrowing for the second consecutive month. Public fiscal expenditure focused on people's livelihood, while government - funded expenditure may be more inclined to "two important" and "two new" areas [10][11]. 3.2 Capital Price: DR007 First Rose and Then Fell During the statistical period, the central bank net - injected nearly 700 billion yuan. DR007 first rose due to the disturbance of treasury bond supply and then fell back. However, the inter - bank certificate of deposit yield increased again, mainly because the reduction of deposit interest rates led to deposit transfer, and banks faced greater pressure on liability outflows [12]. 3.3 Primary Market: The Issuance Scale of New Special Bonds Increased Marginally From May 16th to May 22nd, 109 interest - rate bonds were issued in the primary market, with an actual issuance total of 897 billion yuan and a net financing amount of 633.9 billion yuan. The supply of treasury bonds was large, and the issuance of new special bonds increased marginally. The overall supply scale in May was controllable, but the disturbance of interest - rate bond supply still needed attention [19]. 3.4 Secondary Market: Interest Rates Showed Differentiated Performance During May 16th - May 22nd, the yields of treasury bonds with different maturities varied. The 10 - year treasury bond yield rose 4bp to 1.72%. After the reduction of LPR quotes and deposit interest rates, there was a profit - taking sentiment in the bond market. Subsequently, with limited incremental information, the bond market showed a wait - and - see attitude, and the trading volumes of treasury bonds and policy - financial bonds decreased [20]. 3.5 Market Outlook - **Fundamentals**: From May to July, the "rush to export" effect may become more obvious, mainly through inventory reduction, which has limited impact on domestic inflation. Domestic demand improvement takes time, and trade frictions may recur. Therefore, the upper limit of the long - term interest rate fluctuation range will not be too high [26][28]. - **Policy**: After the positive progress in Sino - US talks, the expectation of large - scale incremental policies has cooled. In terms of monetary policy, some banks have reduced deposit interest rates, which eases the pressure on bank spreads and suggests the possibility of further interest rate cuts (policy rates and LPR quotes) around August - September. The resumption of the central bank's open - market treasury bond trading operations is worthy of attention [28]. - **Capital**: When there is a lack of incremental information in the market, the impact of capital price fluctuations is crucial, especially at the end of the month when the supply pressure of interest - rate bonds is large [28].

Group 1: Corporate Pension System in China - The development of China's corporate pension system has gone through three stages over more than 20 years, with a scale reaching 3.6 trillion yuan by 2024, nearly half of the basic pension insurance in 2023. However, the participation rate is only 3.4%, which is low compared to OECD countries [3][4] - The U.S. corporate pension system has a long history, with a participation rate of 23.4% by 1970 and a scale of 22.4 trillion USD by 2023, accounting for 53.2% of the pension system. The asset allocation of private DB plans is approximately 6:3:1 for equities, fixed income, and other assets, while DC plans favor equities at a ratio of 8:1:1 [4] - Japan's corporate pension system, established in the 1960s, has a total scale of 92.8 trillion yen by March 2024, accounting for 26.2% of the pension system. The asset allocation is balanced for DB plans and more concentrated in high-yield assets for DC plans [5] - Learning from the U.S. and Japan, China's corporate pension system may optimize participation mechanisms, contribution confirmation, tax models, investment choices, and account management, which could lead to increased long-term capital inflow into the equity market [5] Group 2: A-Share Market Investment Strategy - In the past five trading days (May 16-22), major indices showed mixed results, with the Shanghai Composite Index down 0.02% and the ChiNext Index up 0.11%. The average daily trading volume decreased to 1.12 trillion yuan, down 127.85 billion yuan from the previous five days [6][7] - Economic growth remained stable in April, with fixed asset investment growing by 4.0% year-on-year, while retail sales increased by 5.1%. This stability is attributed to the effectiveness of previous macro policies [7] - The Shenzhen Stock Exchange announced plans to improve merger and acquisition mechanisms to support the development of new productive forces, indicating a potential increase in M&A activities in the near future [7] - The market's future opportunities will depend on incremental changes, with a focus on high-quality development and structural layout. A "barbell" investment strategy is recommended, focusing on both high-dividend banking stocks and thematic investments in new consumption sectors [8] Group 3: Margin Trading and Securities Lending - In the week of May 14-20, major A-share indices mostly declined, with the Shanghai 50 index rising by 0.32% and the Sci-Tech 50 index falling by 1.19%. The total margin trading balance reached 1.80731 trillion yuan, an increase of 2.461 billion yuan from the previous week [9][10] - The sectors with the highest net buying in margin trading included automotive, non-bank financials, and machinery, while the computer, electronics, and telecommunications sectors saw lower net buying [10] - The top five stocks for net buying in margin trading were CITIC Securities, Dongfang Wealth, China Merchants Bank, Tonghua Golden Horse, and GF Securities [11]

Macro and Strategy Research - In the first four months of 2025, national general public budget revenue was 80,616 billion yuan, a year-on-year decrease of 0.4%, while expenditure was 93,581 billion yuan, an increase of 4.6% year-on-year [2] - Government fund budget revenue was 12,586 billion yuan, down 6.7% year-on-year, while expenditure was 26,136 billion yuan, up 17.7% year-on-year [2] Public Finance Income - Public finance income continued to show negative growth, but the decline narrowed compared to the first three months, with tax revenue's year-on-year decline narrowing by 1.4 percentage points to -2.1% [3] - Corporate income tax revenue's year-on-year decline narrowed by 3.7 percentage points to -3.1%, indicating a potential improvement in corporate profitability [3] - Non-tax revenue growth rate fell compared to the first three months, but the overall structure of public finance income improved [3] Public Finance Expenditure - Public finance expenditure grew by 4.6% year-on-year, with a notable increase in spending on people's livelihood, which rose by 6.6% [3] - Social security and employment spending increased by 8.5%, while education spending rose by 7.4% [3] - Infrastructure spending continued to show negative growth but the decline narrowed, with infrastructure spending now accounting for less than 20% of total public finance expenditure, a new low in recent years [3] Government Fund Revenue and Expenditure - Government fund revenue decreased by 6.7% year-on-year, but the decline narrowed compared to the first three months, with land transfer revenue's decline improving from -15.9% to -11.4% [4] - Government fund expenditure increased by 17.7% year-on-year, with central government expenditure growing by 75% and local government expenditure increasing by 16.6% [4] - The combination of public finance and government fund expenditure resulted in a year-on-year growth of 7.2% in broad fiscal expenditure [4] Industry Research - In April 2025, forklift sales reached 130,100 units, a year-on-year increase of 5.03% [6] - The operating rate of road construction equipment remained high, with significant growth in construction activity across 15 provinces [6] - Excavator sales from January to April totaled 83,500 units, a year-on-year increase of 21.4%, indicating strong domestic market performance [6] Company Announcements - Zoomlion plans to acquire equity in Beijing Leasing through public bidding [6] - Xinjie Electric plans to establish an industrial investment partnership [6] Market Performance - From May 14 to May 20, 2025, the CSI 300 index rose by 0.05%, while the machinery equipment sector fell by 0.86%, underperforming the index by 0.91 percentage points [6] - As of May 20, 2025, the price-to-earnings ratio for the machinery equipment sector was 26.91 times, with a valuation premium of 125.92% over the CSI 300 [6] Future Outlook - The demand for construction machinery is expected to improve due to ongoing construction projects and favorable weather conditions [6] - The production roadmap for Tesla's humanoid robots is becoming clearer, which may drive rapid development in the industry [7] - The industry maintains a "positive" rating, with recommendations to increase holdings in companies such as SANY Heavy Industry, Zoomlion, and others [6][7]

Macro and Strategy Research - In April 2025, the industrial added value increased by 6.1% year-on-year, exceeding the expected 5.2% but lower than the previous value of 7.7% [2] - The retail sales of consumer goods grew by 5.1% year-on-year, slightly below the expected 5.5% and previous 5.9% [2] - Fixed asset investment accumulated a year-on-year growth of 4.0%, which is lower than both the expected 4.2% and the previous value of 4.2% [2] - The production growth rate of nearly 80% of industries slowed down due to tariff impacts, with industrial enterprises' export delivery value growth dropping significantly by 6.8 percentage points to 0.9% [2] - The service industry production index grew by 6.0% year-on-year, with modern service sectors like information technology and finance showing relatively fast growth [2] Consumption Trends - The year-on-year growth rate of retail sales of consumer goods slowed down in April, primarily due to a decline in automobile consumption driven by price reductions [3] - The "old-for-new" policy continued to boost furniture and home appliance consumption, while rising gold prices increased jewelry consumption [3] - Service retail sales from January to April grew by 5.1% year-on-year, outpacing the growth of goods retail sales by 0.4 percentage points [3] - May is expected to see an increase in retail sales growth due to holiday consumption and the continuous refinement of national policies to expand domestic demand [3] Investment Insights - Fixed asset investment growth slightly decreased in April, with manufacturing investment dropping by 1.0 percentage points to 8.2% year-on-year [4] - Infrastructure investment growth fell by 3.0 percentage points to 9.6%, with central government-led investments in electricity, heating, and water declining [4] - Real estate investment growth saw a year-on-year decline of 1.3 percentage points to -11.3%, with sales in major cities stabilizing [4] - The central bank's further reduction of mortgage rates may not yield immediate effects, and real estate investment growth is expected to remain at a low level until urban renewal projects progress [4] Fixed Income Research - The issuance scale of credit bonds decreased, with corporate bonds seeing zero issuance and a reduction in company bonds, medium-term notes, and directed tools [6] - The net financing amount of credit bonds decreased, with corporate bonds and short-term financing bonds showing negative net financing [6] - The secondary market saw an increase in transaction amounts, with credit bond yields showing differentiation [6] - The overall conditions for a bear market in credit bonds are not sufficient, and long-term yields are expected to enter a downward channel [6] Industry Research - The Guinea government has reclaimed 51 mining licenses, impacting the mining sector [10] - The steel industry faces short-term pressure due to increased rainfall in southern regions, affecting demand [10] - The copper market is influenced by macroeconomic sentiment and export behaviors, with prices expected to fluctuate [10] - The aluminum market is supported by improved US-China trade relations, but domestic demand is entering a low season [10] - The gold market may experience fluctuations influenced by US economic data and geopolitical situations [10] - The lithium market is facing oversupply, with export behaviors impacting demand [10]

Group 1: Fund Research - The stock market indices mostly rose last week, with the Shanghai Composite Index and CSI 300 showing significant gains. Among 31 industry sectors, 22 experienced increases, with the top five being beauty care, non-bank financials, automotive, transportation, and chemicals. The bottom five sectors included computer, defense, media, electronics, and leisure services [2][3] - The net outflow of stock ETFs increased significantly, totaling 30.651 billion yuan, with the CSI 300 index experiencing the largest outflow of 5.153 billion yuan. The average daily trading volume for ETFs reached 246.616 billion yuan [3][4] - The average net value of equity funds rose by 0.56%, while bond funds showed mixed performance. The average net value of mixed bond funds increased by 0.03%, with a positive return ratio of 57.14% [3][4] Group 2: Industry Research - In April, retail sales of furniture increased by 26.9% year-on-year, driven by the domestic replacement policy, although the growth rate slowed compared to March. The contract liabilities of the customized home furnishing sector grew by 60.5% year-on-year, indicating potential improvement in company performance [5][6] - The easing of US-China tariff tensions has led to a decrease in costs for fluff pulp, benefiting the sanitary products industry. However, challenges remain for companies like Under Armour, which is undergoing a transformation [5][6] - The light industry manufacturing sector underperformed the CSI 300 index by 0.25 percentage points, while the textile and apparel sector lagged by 0.10 percentage points during the period from May 12 to May 16 [6][7]

Macroeconomic Environment - The US CPI and core CPI growth rates in April were lower than expected, indicating that tariffs have not significantly pushed inflation upward [2] - Retail data in April showed a substantial slowdown, likely due to a decrease in preemptive purchases by households before tariff implementation [2] - The Federal Reserve's monetary policy is expected to remain cautious, with market predictions for interest rate cuts reduced from three to two [2] - In Europe, officials indicated that US tariff policies could lead to greater recessionary pressures in the Eurozone, potentially allowing for further interest rate cuts [2] Domestic Economic Conditions - China's CPI growth rate in April was negative for the third consecutive month, primarily affected by oil prices, while core CPI remained stable [3] - The PPI decline was exacerbated by falling prices in downstream industries due to tariff impacts [3] - Financial data showed an increase in social financing in April, supported by government bond issuance and a decline in credit bond rates, although corporate and household credit demand remained weak [3] - The central bank emphasized a flexible monetary policy approach, focusing on high-quality development to address external uncertainties [3] High-Frequency Data - Real estate transactions remained weak, while agricultural wholesale prices decreased [3] - Steel prices increased, but cement prices fell [3] - Upstream, coking coal and coke prices rose slightly, while non-ferrous metal prices generally increased [3] Fixed Income Market - The trade relationship has shown temporary easing, leading to upward pressure on interest rates [5] - In April, exports to the US saw a significant decline, but transshipment trade supported exports to ASEAN, which increased by 20.8% [6] - The central bank's net withdrawal of over 400 billion yuan did not prevent a decline in funding rates, with DR007 and DR001 falling to approximately 1.50% and 1.40% respectively [6] - The primary market saw 67 new bond issues totaling 946.4 billion yuan, with net financing of 658.7 billion yuan, indicating a higher than usual issuance pace [6] Market Outlook - The upcoming months may see a further manifestation of export rush effects, but domestic inflationary pressures are expected to remain limited [7] - The easing of large-scale policy expectations following positive developments in US-China talks may temper market sentiment [7] - The recent monetary policy adjustments are anticipated to lead to a downward shift in funding rate benchmarks, potentially limiting the rise in bond market yields [8]