Investment Strategy - The explosive demand for computing power is driving a significant increase in capital expenditures (capex), with infrastructure construction expected to enter a golden period. Major companies like Microsoft and Meta are reporting substantial profit and capex growth, indicating a high level of activity in the computing power industry. For instance, Microsoft's net profit for Q2 was $27.23 billion, a 24% year-on-year increase, while its capital expenditure rose by 27% to $24.2 billion. Meta's net profit grew by 36% to $18.34 billion, with projected capital expenditures for 2025 reaching between $66 billion and $72 billion [4][10][14]. - The token economy's business model is being validated, with domestic demand for computing power expected to accelerate. Alphabet reported processing over 980 trillion tokens monthly, with ChatGPT's weekly active users surpassing 700 million. The weekly token consumption for large models has seen a nearly fivefold increase from January to July 2025 [11][12]. - The "AI+" policy is catalyzing growth in industry applications. The Chinese government is actively promoting the commercialization of AI, with local policies supporting the expansion of AI applications. For example, Shanghai has issued measures including the distribution of 600 million yuan in computing power vouchers [12][15]. Industry News - Major overseas companies are experiencing significant growth in performance and capital expenditure. Microsoft's Q2 revenue reached $76.44 billion, an 18% year-on-year increase, while Meta's revenue was $47.52 billion, up 22%. Both companies attribute their growth to the deep application of AI technology [14]. - The State Council of China has approved the "AI+" action plan, emphasizing the need for large-scale commercialization of AI applications. This policy aims to leverage China's complete industrial system and large market scale to promote AI integration across various sectors [15]. - The rapid launch of satellites indicates an acceleration in satellite internet construction in China. Recent successful launches of low-orbit satellites demonstrate the country's commitment to enhancing broadband communication services [16][17]. - Eight major banks have jointly released financial service products for the "AI+ manufacturing" sector, with a commitment to provide at least 400 billion yuan in credit by the end of 2027. This initiative aims to support the intelligent transformation of manufacturing enterprises [18]. Weekly Review and Focus - The communication sector saw a 4.12% increase this week, outperforming major indices like the Shanghai Composite Index, which fell by 0.57%. Notable gains were observed in optical modules and optical communication sectors, with increases of 9.86% and 5.29%, respectively [19][21]. - The focus for the upcoming week includes investment opportunities in the AIDC chain and related sectors, with companies such as ZTE Corporation and Inspur Information being highlighted for potential growth [23].

Macro Analysis - The political bureau meeting on July 30, 2025, appeared "plain," but it reflects a stable economic outlook for the first half of 2025, aligning with expectations[5] - The meeting confirmed a consistent policy direction since September 2024, indicating effective policy tools and measures[5] - Short-term pressures are manageable, allowing for strategic focus on domestic demand, reform, risk mitigation, and improving living standards[5] Investment Strategy - A "barbell strategy" is recommended, favoring both financial and resource sectors while also targeting growth opportunities in AI applications and innovative pharmaceuticals[10] - The 10-year government bond yield is expected to fluctuate between 1.6% and 1.75% due to low inflation and interest rates[10] - Gold is projected to benefit from "de-dollarization" and debt monetization in the long term, despite short-term fluctuations due to currency appreciation[10] Company Performance Highlights - Zijin Mining (601899.SH) anticipates a 6% increase in copper production to 1.07 million tons in 2024, with a target of 1.5-1.6 million tons by 2028[11] - Shandong Gold (600547.SH) expects a 10.51% increase in gold production to 46.17 tons in 2024, driven by improved mining operations and resource acquisitions[15] - China Hongqiao (1378.HK) reported a 14.69% increase in revenue to CNY 156.17 billion in 2024, with net profit rising by 95.21% to CNY 22.37 billion, supported by rising alumina prices[16] Risks and Challenges - Risks include potential underperformance of policies, slower economic recovery, and significant price drops in metals like gold and copper[7] - The performance of companies like GuoBo Electronics (688375.SH) is under pressure due to declining revenues, with a 27.36% drop in total revenue to CNY 2.591 billion[32] - WanHua Chemical (600309.SH) faces short-term profit pressures due to asset impairments and market fluctuations, with a projected net profit margin of 8.1% in 2025[36]

Core Insights - The domestic economy is stabilizing, with a narrowing decline in industrial profits and a transition to a "passive destocking" phase in the industrial inventory cycle, led by a recovery in high-end manufacturing [4][8] - The national childcare subsidy policy has been officially implemented, which is expected to alleviate the pressure of newborn population in the medium to long term and boost domestic consumption in the short term [4][8] - Industrial policies are showing positive effects, with significant price recoveries in the supply chain, easing short-term survival pressures for some companies [4][8] Industrial Economic Insights - In June, the revenue of large-scale industrial enterprises increased by 1.0% year-on-year, while profits decreased by 4.3%, a reduction of 4.8 percentage points compared to May [8][10] - The inventory cycle is transitioning from "active destocking" to "passive destocking," with three consecutive months of inventory decline. High-end equipment manufacturing is leading the recovery, with four out of eight sectors experiencing profit growth [10][11] - The automotive industry saw a profit increase of 96.8% due to promotional activities and investment returns from key enterprises [10][11] Consumer Insights - The national childcare subsidy policy targets families with children born after January 2022, with an estimated subsidy scale exceeding 100 billion yuan by 2025, which is expected to boost consumption in the maternal and infant sector [4][12] - In the first half of 2025, gold jewelry consumption decreased by nearly 30% due to high gold prices [4][12] High-end Manufacturing Insights - The photovoltaic industry is experiencing price increases for polysilicon, silicon wafers, and battery cells, although recent price surges have moderated [4][16] - The motorcycle sector is seeing sustained growth in exports as domestic brands expand their global sales networks [4][15] - The home air conditioning market is benefiting from extreme heat and ongoing government subsidies, leading to increased domestic demand [4][15] Hard Technology Insights - AI remains the core growth driver in the hard technology sector, with AI-related investments accounting for 71% of venture capital funding in Q1 2025 [4][19] - The semiconductor equipment sales in Japan reached 404.59 billion yen in June, a year-on-year increase of 17.6% [4][17] - The PCB sector is experiencing high demand due to AI, with inventory and turnover days increasing among manufacturers in mainland China and Taiwan [4][19]

Group 1: Macroeconomic Policy Insights - The July Politburo meeting maintained the overall policy tone of 2025, focusing on five key areas, including a clear long-term goal and a short-term policy stance of "taking the initiative and adapting to circumstances" [3] - The macroeconomic environment is facing short, medium, and long-term challenges, with short-term risks stemming from international trade disputes and tariff negotiations [3] - The meeting emphasized the need for fiscal and monetary policies to support economic growth while also addressing structural transformation and green development goals [3] Group 2: Policy Implementation and Focus Areas - Key policy areas include stimulating consumption, enhancing new productivity, combating "involution," improving foreign trade and investment, and enhancing people's livelihoods [4] - The meeting highlighted the importance of a dual expansion of fiscal and monetary policies, with actual GDP growth reaching 5.3% in the first half of the year, indicating effective policy implementation [4] - The focus on improving living standards and employment is crucial, especially for vulnerable groups such as college graduates and migrant workers [5] Group 3: Market Reactions and Future Outlook - The capital market was identified as a "highlight," with an emphasis on enhancing its attractiveness and inclusivity, which may lead to increased foreign capital inflow [6] - The real estate sector was noted as an "unexpected" area, with a shift from an "incremental" to a "stock" market phase, indicating a change in policy focus [6] - The report suggests a balanced investment strategy, favoring both financial and resource sectors while also considering growth opportunities in emerging technologies [6]

Group 1: Market Trends and Economic Indicators - The current commodity futures market is driven by a combination of "strong expectations," "weak realities," and "speculative demand," with PPI expectations for April 2026 turning positive[2] - As of June 2025, the CPI increased by only 0.1% year-on-year, significantly below the 2% inflation target, while PPI fell to a new low of -3.6%, marking 33 consecutive months of negative growth[2] - Recent commodity price movements include coking coal surpassing 1200 CNY/ton, lithium carbonate exceeding 80000 CNY/ton, rebar breaking 3300 CNY/ton, and live pig prices exceeding 15000 CNY[2] Group 2: Policy Implications and Market Dynamics - The "anti-involution" policy aims to establish a high-level market system and correct local government behaviors, rather than directly targeting price increases[4] - The current low inflation environment is influenced by supply-side factors, structural adjustments, and global industrial roles, validating China's manufacturing advantages[2] - The speculative demand has reignited due to the combination of strong expectations and weak realities, leading to increased price volatility in the commodity market[2] Group 3: Future Outlook and Risks - The commodity market currently reflects a positive price recovery expectation, with potential for PPI to turn positive by April 2026 if current price levels are maintained[4] - The report highlights risks including unexpected downturns in real estate, insufficient policy implementation, and underwhelming effects of new real estate policies[4] - The "anti-involution" policy is not necessarily synonymous with rising prices, as it focuses on optimizing supply-demand dynamics rather than broad monetary expansion[4]

Investment Rating - The report maintains an "Outperform" rating for the non-ferrous metals industry [2]. Core Views - Precious metals are expected to continue their upward trend, with gold prices rising and a favorable long-term outlook. The gold-silver ratio has reached a peak of over 100 this year, and as gold prices stabilize, silver prices are expected to rise to restore the ratio [5]. - Industrial metal prices are on the rise, driven by significant infrastructure projects, such as the Yarlung Tsangpo River hydropower project, which is expected to boost overall demand and support metal prices [5]. - The report highlights a positive outlook for the non-ferrous metals sector, particularly in precious metals, as the Federal Reserve enters a rate-cutting cycle and domestic monetary policies strengthen [5]. Summary by Sections 1. Industry Data Review 1.1 Precious Metals - Gold prices have increased by 0.26% and silver by 2.24% in the week of July 21-25, 2025. The gold-silver ratio has decreased to 86.13, indicating potential for silver price increases [5]. 1.2 Industrial Metals - Prices for copper, aluminum, lead, zinc, tin, and nickel have increased by 1.8%, 1.7%, 0.7%, 3.4%, 3.7%, and 3.7% respectively. The overall demand is expected to rise due to major infrastructure projects [5][28]. 1.3 Minor Metals - Prices for praseodymium-neodymium oxide have increased by 7.5% weekly, with a year-on-year increase of 41.3%. Tungsten prices have also risen significantly, indicating a recovery in manufacturing demand [5][30][32]. 1.4 Energy Metals - Lithium concentrate prices have risen by 10.5% weekly, while cobalt prices remain stable. Nickel prices have also increased, reflecting growing demand in the energy sector [5][35]. 2. Market Data - The non-ferrous metals sector has seen a 6.70% increase, with specific segments like industrial metals and energy metals rising by 4.72% and 12.40% respectively during the week [36]. 3. Important Events Review - Notable events include President Trump's visit to the Federal Reserve, where discussions on interest rates took place, indicating potential future monetary policy changes that could impact the metals market [43].

Group 1: Federal Reserve Rate Decision Insights - The market anticipates a 97% probability that the Federal Reserve will maintain interest rates during the July meeting[3] - Since the beginning of 2025, the Federal Reserve has kept rates unchanged due to mixed economic data and tariff concerns[3] - President Trump has increased pressure on the Federal Reserve for rate cuts, indicating a strong desire for lower rates[3] Group 2: Future Rate Cut Conditions - The upcoming meeting may clarify conditions for potential rate cuts, with Powell likely to outline specific criteria[3] - Three scenarios are considered for Powell's communication: maintaining ambiguity, indicating a possible September cut, or outlining conditions for future cuts[3] - The likelihood of maintaining a vague stance is deemed low due to increasing pressure from Trump and potential market volatility[3] Group 3: Market Volatility and Risks - The FOMC meeting precedes significant earnings reports from major tech companies and ongoing US-China trade talks, which may heighten market volatility[3] - Risks include unexpected inflation rebounds, weaker global economic conditions, and geopolitical tensions that could lead to increased market fluctuations[6]

Market Performance - Global stock markets showed mixed results last week, with major US indices rising collectively, while the German DAX index experienced a slight pullback[3] - The UK FTSE 100 and French CAC40 indices increased, while the Taiwan Weighted Index and India's SENSEX30 saw declines[3] Economic Negotiations - Key economic negotiations between China, the US, and Europe are set to progress next week, with significant meetings scheduled between leaders[3] - Trump indicated a 50% chance of a US-EU agreement, while the US expressed optimism regarding US-China talks[3] Federal Reserve Outlook - The probability of a rate cut at the upcoming FOMC meeting is low, but pressure is mounting on the Fed from Trump, who highlighted a $3.1 billion budget overrun on Fed renovations[3] - The FOMC's outlook on future rate cuts is expected to change significantly, influenced by recent economic data and ongoing trade negotiations[3] Investment Strategy - Increased market volatility is anticipated, with a focus on sectors showing high growth potential, such as nuclear power and AI[3] - The upcoming FOMC meeting and corporate earnings reports are likely to contribute to market fluctuations, particularly in the tech and consumer sectors[3] Risk Factors - Potential risks include unexpected inflation rebounds in overseas markets, weaker-than-expected global economic conditions, and escalated geopolitical tensions[3]

Investment Rating - The report maintains an "Outperform" rating for the telecommunications industry [2] Core Insights - The report highlights significant advancements in AI infrastructure, particularly with the introduction of the CloudMatrix384 system, which marks a transition from "catching up" to "leading" in AI capabilities [10] - The global AI server market is expected to reach $298 billion by 2025, accounting for over 70% of the total server market, indicating a robust growth trajectory and increasing opportunities for domestic alternatives [11] - The report emphasizes the collaborative effects within the industry, suggesting that core suppliers are likely to experience performance elasticity due to rising demand for supporting equipment [12] Summary by Sections Investment Strategy - Technological breakthroughs are reshaping the AI computing landscape, with the CloudMatrix384 system setting a new industry benchmark [10] - The global AI server market is poised for explosive growth, with significant domestic replacement opportunities emerging [11] - The synergy within the supply chain is becoming more pronounced, leading to enhanced performance for key suppliers [12] Industry News - Major overseas companies continue to demand AI computing power, sustaining a high level of industry prosperity [13] - The U.S. has released a national AI strategy aimed at establishing dominance in the global AI landscape through innovation, infrastructure, and geopolitical positioning [14] - China Mobile's AI model has achieved top rankings in international assessments, showcasing advancements in human-computer interaction technology [16] - The acceleration of satellite internet construction is indicated by a recent tender for rocket launch services worth 1.336 billion yuan [17] Weekly Review and Focus - The telecommunications sector experienced a slight decline of 0.47% this week, underperforming compared to major indices [18] - Key stocks to watch include those in the AIDC and related supply chains, as well as long-term focus on major telecom operators and infrastructure providers [22]

Investment Rating - The report maintains an "Outperform" rating for the basic chemical industry [2]. Core Viewpoints - The report emphasizes that the "anti-involution" expectations are strengthening, suggesting attention to five major investment themes: 1. Polyester filament: The industry is expected to see a recovery in prosperity due to a high-quality development initiative and price increases driven by raw material costs and downstream recovery [5]. 2. MDI: The MDI market is characterized by high technical and capital barriers, with a concentrated competitive landscape. The report anticipates a shift in supply focus towards China due to aging overseas facilities [5]. 3. Industrial silicon and organic silicon: The report notes a potential improvement in supply-demand dynamics for industrial silicon, while organic silicon may see coordinated production cuts as a new norm [5]. 4. Polyester bottle chips: A significant portion of the industry is expected to undergo production cuts, which may lead to a recovery in industry profits [5]. 5. Sucralose: The report highlights a collaborative pricing strategy among leading companies, which is expected to support price increases in the coming periods [5]. Summary by Sections Market Performance - The basic chemical sector outperformed the market, with a weekly increase of 4%, ranking 8th among 31 industry sectors [6][18]. Key News and Company Announcements - The report discusses the launch of the Yarlung Zangbo River hydropower project, which is expected to significantly boost demand for chemical materials [6][31]. Product Price Changes - The report lists the top price increases for chemical products, including lithium carbonate and DMC, while also noting significant declines in products like hydrochloric acid [7]. Investment Recommendations - The report suggests focusing on core assets that have entered a long-term value zone, as well as industries facing supply constraints that may see price elasticity [7][15][16].