Investment Rating - The report maintains a "Positive" outlook for the media industry as of July 28, 2025 [6] Core Insights - The music industry is expected to transition from a paid growth model to a dual growth model of traffic and payment, driven by the expansion of audio content and refined operations of fan economy [4][10] - The resilience of streaming music against macroeconomic headwinds is highlighted, with a projected CAGR of 22% for China's streaming music industry from 2021 to 2024, significantly outpacing retail sales growth [9][20] - The report emphasizes the importance of expanding content pools to shift the music market from a stock game to a growth game, with Tencent Music and NetEase Cloud Music both enhancing their content offerings [9][10] Summary by Sections 1. Emotional Value Driving High Growth in Online Music Platforms - China's online music platforms are projected to reach revenues of 27.1 billion in 2024, reflecting a 25% year-on-year growth [18][19] - The emotional value derived from music consumption is increasingly recognized, with a shift towards subscription models providing significant psychological benefits to users [20] 2. Traffic: Copyright Expansion Expected to Drive Growth - The overall DAU for the music industry is expected to reach 183.73 million in 2024, with a 2% year-on-year increase [22] - Tencent Music's DAU has been declining, but the acquisition of Himalaya is anticipated to reverse this trend by introducing long audio users [24][41] - ByteDance's platforms have seen significant DAU growth, with a 100% increase in the first half of 2025 [26] 3. Payment: Expansion of Rights Driving Payment Increases - The report notes a significant increase in the proportion of songs available to VIP members, with QQ Music's share rising from 38% to 95% and NetEase Cloud Music's from 4% to 48% [48][49] - The introduction of SVIP memberships is expected to enhance ARPPU, with Tencent Music's acquisition of SM Entertainment and Himalaya providing additional content [50][51] 4. Cost: Operational Leverage and AI Expected to Optimize Margins - The report discusses how the management of top-tier copyrights is improving, leading to increased gross margins for music platforms [9] - AI is expected to decentralize music production, further optimizing margins [9] 5. Investment Recommendations and Targets - The report suggests focusing on Tencent Music and NetEase Cloud Music due to their strategic acquisitions and content expansions, which are expected to drive user growth and payment increases [4][13]

Investment Rating - The report maintains a "Positive" investment rating for the computer industry, indicating an expectation of returns exceeding the market benchmark by more than 5% [5]. Core Insights - The continuous development of domestic AI large models, the ongoing enhancement of domestic AI chip performance, and the flourishing of AI applications are expected to drive the sustained growth of China's AI industry, thereby boosting market confidence in AI development [3][8]. Summary by Sections Domestic AI Development - Recent months have seen a slight decline in domestic AI enthusiasm, but recent catalysts in AI models, applications, and computing power are beginning to restore market confidence [8]. - The World Artificial Intelligence Conference (WAIC) showcased significant advancements in domestic AI chip performance, exceeding market expectations, with companies like Huawei and MuXi unveiling new products [8]. AI Applications - Breakthroughs in AI applications such as embodied intelligence, AI glasses, and AI agents are expected to reignite investment interest in the AI sector [8]. - Notable products include Alibaba's Quark AI glasses, which integrate various functionalities, and the Galbot humanoid robot capable of precise item recognition in real-world settings [8]. Investment Recommendations - For AI computing chain investments, the report suggests focusing on companies like Cambricon (未评级), Haiguang Information (Buy), and Inspur Information (未评级) among others [8]. - In the AI application sector, recommended stocks include Kingsoft Office (Buy), Tax Friend (Buy), and Fanwei Network (Buy) [8].

Group 1 - The report highlights the re-pricing risk of the components of the Sci-Tech Bond ETF index, suggesting that investors should avoid chasing high prices [5][10][19] - The average "overheated" yield spread of the Sci-Tech Bond ETF index components is approximately 7 basis points, with the top 25% showing around 12 basis points [15][19] - The report indicates that the "overheated" performance of the Sci-Tech Bond ETF index components is closely linked to liquidity improvements and the rhythm of ETF listings and redemptions [19][20] Group 2 - The report notes that the overall adjustment in the bond market has not significantly negatively impacted the valuation of the index components, maintaining a stable valuation gap compared to non-index components [20][21] - It emphasizes the need to be cautious of potential negative feedback from redemptions, which could lead to significant price adjustments for the index components [20][21] - The report suggests that current trading opportunities for the Sci-Tech Bond ETF index components are limited, advising against further price chasing [20][21] Group 3 - The report observes a significant increase in credit bond issuance, with a total of 350.8 billion yuan issued, reflecting a 25% week-on-week increase, while the total repayment amount also rose to 295.9 billion yuan [27][30] - It highlights that the average valuation of credit bonds has increased significantly, with an average rise of about 11 basis points across various grades [30][31] - The report indicates that credit spreads have generally widened, with an average increase of approximately 4 basis points, particularly in the short-term [30][32]

Investment Rating - The report maintains a positive outlook on the steel sector, emphasizing its mid-term investment value under the "anti-involution" policy context [9][14]. Core Viewpoints - The steel sector is expected to have fundamental support for mid-term investment value, driven by supply-side, cost, and profit release expectations [9][14]. - The "anti-involution" policy is seen as a short-term catalyst for realizing mid-term investment logic, with three favorable mid-term logic points identified [9][14]. Supply and Demand Logic - The ultra-low emission transformation is nearing completion, which is expected to reverse structural supply issues and serve as a mid-term capacity clearance tool [15]. - As of April 20, 2025, approximately 760 million tons of capacity have completed or partially completed ultra-low emission transformations [15]. - Downstream demand from infrastructure and shipbuilding industries is anticipated to grow, supporting steel price stabilization and profit release [15]. Cost Logic - The West Mangu project is set to commence production by the end of 2025, with an annual output of 120 million tons, potentially contributing nearly 5% to global supply [15]. - The project is expected to alleviate profit pressure on midstream steel companies from upstream raw material costs [15]. High Dividend Logic - With the completion of ultra-low emission transformations and capacity replacements, capital expenditures for steel companies are expected to decline [15]. - The report anticipates accelerated profit release for midstream steel companies, making high dividends a reality [15]. Steel Price Outlook - The report indicates that the steel price index is expected to continue rising, with a notable increase of 4.16% in the overall steel price index this week [35]. - The price of cold-rolled steel has seen a significant rise of 4.67% [35]. Inventory and Production Data - The report notes a weekly rebar consumption of 2.17 million tons, reflecting a week-on-week increase of 5.05% [16]. - Social inventory and steel mill inventory are showing signs of divergence, with expectations for continued improvement on the demand side [22]. New Energy Metals - The report highlights a significant year-on-year increase of 20.95% in lithium carbonate production in June 2025, reaching 71,890 tons [39]. - The demand for new energy vehicles remains strong, with June 2025 production of 1.1923 million units, a year-on-year increase of 24.11% [43]. Price Trends in New Energy Metals - The average price of battery-grade lithium carbonate has risen significantly, reaching 77,000 yuan per ton, a week-on-week increase of 17.56% [48]. - Nickel prices have also shown upward trends, with LME nickel settling at 15,330 USD per ton [48].

Election Results - The ruling coalition (LDP + Komeito) failed to secure a majority, holding 122 seats, 3 seats short of the majority line of 125 seats[9] - The opposition parties, particularly the Democratic Party for the People, increased their seats from 9 to 22, and the Sanseito party grew from 2 to 15 seats[10] Political Implications - Japan's political landscape has shifted to a more balanced power structure, making legislative processes more challenging as the ruling coalition must collaborate with opposition parties[15] - Prime Minister Ishihara's control is weakened, with a public support rate dropping to 20.8%, the lowest in history[15] Fiscal Policy Outlook - The ruling coalition shows a conservative inclination towards fiscal expansion, while opposition parties advocate for more aggressive measures like consumption tax cuts and increased social welfare[16] - The likelihood of significant fiscal policy changes is limited, with potential progress expected in 2026[16] Monetary Policy Impact - The impact on monetary policy is expected to be minimal, with the Bank of Japan likely to maintain its current stance until uncertainties regarding inflation and tariffs are resolved[20] - Market expectations suggest that the Bank of Japan may resume interest rate hikes in early 2026[20] Market Reactions - The risk of fiscal expansion has been priced in, leading to a stabilization of Japanese government bonds and the yen[28] - The global trend towards fiscal expansion is reinforced, with developed markets like the US, Europe, and Japan signaling marginal changes in fiscal policy in 2025[28]

Investment Rating - The industry investment rating is "Positive (Maintain)" [5] Core Viewpoints - The report emphasizes the transformation and upgrading of the industry, highlighting the investment opportunities in companies with genuine brand strength [3][8] - The report notes that the gold jewelry sector is facing challenges due to rising gold prices and declining sales, with a significant drop in gold jewelry consumption [8] - Despite industry pressures, certain leading companies have seen stock price increases due to their differentiated transformation strategies and market expectations [8] Summary by Sections Investment Recommendations and Targets - The report recommends focusing on companies that have begun to establish a brand presence, including: - Chao Hong Ji (002345, Increase) - Lao Pu Gold (06181, Increase) - Chow Tai Fook (01929, Not Rated) - Lao Feng Xiang (600612, Buy) - Zhou Da Sheng (002867, Increase) [3] Industry Overview - The report indicates that gold jewelry consumption in China decreased by 3.54% year-on-year in the first half of 2025, with gold jewelry sales down by 26.00% [8] - The average gold price in China for the first half of 2025 was 725.28 yuan per gram, reflecting a year-on-year increase of 41.07% [8] - The report highlights a shift in consumer demand towards self-purchase and emotional consumption, particularly among younger consumers [8] Future Trends - The report anticipates a trend towards brandization and stratified development in the gold jewelry sector, with investment opportunities emerging from both high-end and light luxury fashion brands [8] - High-end brands are expected to focus on original design and craftsmanship, while light luxury brands will cater to younger consumers with affordable, stylish products [8]

Quantitative Models and Construction Methods 1. Model Name: Dividend Forecast Model - **Model Construction Idea**: The model aims to predict the impact of dividends on index futures pricing by estimating the dividend points for each index and calculating the theoretical cost of holding futures contracts until expiration[7][11][19] - **Model Construction Process**: 1. **Estimate Component Stocks' Net Profit**: Use annual reports, earnings forecasts, and other financial data to estimate the net profit of index component stocks[21][23] 2. **Calculate Pre-Tax Total Dividends**: Based on the estimated net profit and assuming a constant dividend payout ratio, calculate the total pre-tax dividends for each stock[21][24] 3. **Assess Dividend Impact on Index**: Using the latest market capitalization and weight of each stock, calculate the dividend impact on the index as follows: $$\text{w}_{it} = \frac{\text{w}_{i0} \times (1 + R)}{\sum_{1}^{n} \text{w}_{i0} \times (1 + R)}$$ where \( \text{w}_{i0} \) is the initial weight of stock \( i \), and \( R \) is the return over the period[24] 4. **Predict Dividend Impact on Futures Contracts**: Aggregate the dividend impact for all component stocks before the contract expiration date to estimate the total dividend points for each futures contract[25][28] - **Model Evaluation**: The model provides a systematic approach to quantify dividend impacts, but its accuracy depends on assumptions about dividend payout ratios and timing[19][28] 2. Model Name: Futures Pricing Model with Discrete Dividends - **Model Construction Idea**: This model calculates the theoretical price of index futures by incorporating discrete dividend distributions during the contract period[30] - **Model Construction Process**: 1. Assume the futures price \( F_t \), spot price \( S_t \), and the present value of dividends \( D \) over the period \( T-t \) 2. For \( m \) discrete dividend payments at times \( t_1, t_2, ..., t_m \), the present value of dividends is: $$D = \sum_{i=1}^{m} \frac{D_i}{(1 + r_i)}$$ where \( r_i \) is the risk-free rate for the period between \( t_i \) and \( t \) 3. The theoretical futures price is then: $$F_t = (S_t - D)(1 + r)$$ where \( r \) is the risk-free rate over the period \( T-t \)[30] - **Model Evaluation**: This model is effective for scenarios with discrete dividend distributions but may require adjustments for continuous dividend flows[30] 3. Model Name: Futures Pricing Model with Continuous Dividends - **Model Construction Idea**: This model simplifies the pricing of index futures by assuming continuous dividend distributions over the contract period[31] - **Model Construction Process**: 1. Assume the futures price \( F_t \), spot price \( S_t \), annualized dividend yield \( d \), and annualized risk-free rate \( r \) 2. The theoretical futures price is calculated as: $$F_t = S_t \cdot e^{(r-d)(T-t)}$$ where \( T-t \) is the time to maturity[31] - **Model Evaluation**: This model is suitable for markets with frequent and evenly distributed dividends, providing a more streamlined calculation compared to the discrete model[31] --- Model Backtesting Results 1. Dividend Forecast Model - **Annualized Hedging Costs (Excluding Dividends)**: - **IH (SSE 50)**: -1.56% for August contracts[7][11] - **IF (CSI 300)**: -0.19% for August contracts[7][11] - **IC (CSI 500)**: 8.55% for August contracts[7][11] - **IM (CSI 1000)**: 8.78% for August contracts[7][11] 2. Futures Pricing Model with Discrete Dividends - **Remaining Impact of Dividends on August Contracts**: - **IH (SSE 50)**: 0.09%[12] - **IF (CSI 300)**: 0.12%[13] - **IC (CSI 500)**: 0.12%[14] - **IM (CSI 1000)**: 0.07%[15] 3. Futures Pricing Model with Continuous Dividends - **Remaining Impact of Dividends on Futures Prices**: - **IH (SSE 50)**: 2.43 points for August contracts[7][11] - **IF (CSI 300)**: 4.81 points for August contracts[7][11] - **IC (CSI 500)**: 7.39 points for August contracts[7][11] - **IM (CSI 1000)**: 4.54 points for August contracts[7][11] --- Quantitative Factors and Construction Methods 1. Factor Name: Dividend Impact Factor - **Factor Construction Idea**: Quantify the impact of dividends on index futures pricing by calculating the dividend points and their contribution to the futures basis[7][11][19] - **Factor Construction Process**: 1. Estimate the dividend points for each index based on component stocks' dividend payouts and weights[21][24] 2. Incorporate the dividend points into the futures pricing model to adjust the theoretical basis[30][31] - **Factor Evaluation**: This factor effectively captures the influence of dividends on futures pricing, aiding in arbitrage and hedging strategies[19][28] --- Factor Backtesting Results 1. Dividend Impact Factor - **Dividend Points for August Contracts**: - **IH (SSE 50)**: 2.43[7][11] - **IF (CSI 300)**: 4.81[7][11] - **IC (CSI 500)**: 7.39[7][11] - **IM (CSI 1000)**: 4.54[7][11]

Quantitative Models and Construction Methods 1. Model Name: Maximized Factor Exposure Portfolio (MFE) - **Model Construction Idea**: The MFE portfolio is designed to maximize the exposure of a single factor while controlling for various constraints such as industry exposure, style exposure, stock weight deviation, and turnover rate[64][65] - **Model Construction Process**: - The optimization model is formulated as follows: $$ \begin{array}{ll} \max & f^{T}w \\ \text{s.t.} & s_{l} \leq X(w-w_{b}) \leq s_{h} \\ & h_{l} \leq H(w-w_{b}) \leq h_{h} \\ & w_{l} \leq w-w_{b} \leq w_{h} \\ & b_{l} \leq B_{b}w \leq b_{h} \\ & 0 \leq w \leq l \\ & 1^{T}w = 1 \\ & \Sigma|w-w_{0}| \leq to_{h} \end{array} $$ - **Explanation of Parameters**: - \( f^{T}w \): Weighted exposure of the portfolio to the factor - \( w \): Portfolio weight vector - \( w_{b} \): Benchmark weight vector - \( X, H, B_{b} \): Matrices representing factor, industry, and benchmark exposures - \( s_{l}, s_{h}, h_{l}, h_{h}, w_{l}, w_{h}, b_{l}, b_{h}, to_{h} \): Constraints on factor exposure, industry exposure, stock weight deviation, and turnover rate - Constraints include: - Limiting style and industry deviations relative to the benchmark - Controlling stock weight deviations and turnover rates - Ensuring full investment (weights sum to 1) and no short selling[64][65][67] - The portfolio is rebalanced monthly, and historical returns are calculated after deducting transaction costs to evaluate factor effectiveness[68] - **Model Evaluation**: The MFE model effectively isolates the impact of individual factors while adhering to practical constraints, making it a robust tool for factor evaluation[64][65] --- Quantitative Factors and Construction Methods 1. Factor Name: Trend - **Factor Construction Idea**: Captures the momentum of stock price trends over different time horizons[16] - **Factor Construction Process**: - Two variations: - **Trend_120**: \( \text{EWMA}(\text{halflife}=20) / \text{EWMA}(\text{halflife}=120) \) - **Trend_240**: \( \text{EWMA}(\text{halflife}=20) / \text{EWMA}(\text{halflife}=240) \) - \( \text{EWMA} \): Exponentially Weighted Moving Average[16] - **Factor Evaluation**: Demonstrates strong performance in capturing price continuation patterns, particularly in volatile markets[11][13] 2. Factor Name: Volatility - **Factor Construction Idea**: Measures the variability of stock returns over a specified period[16] - **Factor Construction Process**: - Variants include: - **Stdvol**: Standard deviation of daily returns over the past 243 days - **Ivff**: Fama-French 3-factor idiosyncratic volatility over the past 243 days - **Range**: \( \text{High Price}/\text{Low Price} - 1 \) over the past 243 days - **MaxRet_6**: Average of the six highest daily returns over the past 243 days - **MinRet_6**: Average of the six lowest daily returns over the past 243 days[16] - **Factor Evaluation**: Effective in identifying high-risk stocks, though performance may vary across market conditions[11][13] 3. Factor Name: BP (Book-to-Price Ratio) - **Factor Construction Idea**: Represents the valuation of a stock relative to its book value[20] - **Factor Construction Process**: - Formula: \( \text{BP} = \text{Net Assets} / \text{Market Capitalization} \)[20] - **Factor Evaluation**: Consistently performs well in value-oriented strategies, particularly in markets favoring undervalued stocks[42][43] 4. Factor Name: Three-Month Institutional Coverage - **Factor Construction Idea**: Measures the level of analyst coverage over the past three months[20] - **Factor Construction Process**: - Formula: Count of research reports published by institutions over the past three months[20] - **Factor Evaluation**: Strongly correlated with market sentiment and stock visibility, often leading to positive price momentum[8][46] --- Factor Backtesting Results 1. Trend Factor - **Recent Weekly Return**: 2.39% - **Recent Monthly Return**: 5.57% - **Year-to-Date Return**: -0.70% - **Annualized Return (1 Year)**: 24.36% - **Annualized Return (10 Years)**: 14.25%[11][13] 2. Volatility Factor - **Recent Weekly Return**: -1.75% - **Recent Monthly Return**: -3.95% - **Year-to-Date Return**: 4.10% - **Annualized Return (1 Year)**: 24.26% - **Annualized Return (10 Years)**: -13.16%[11][13] 3. BP Factor - **Recent Weekly Return**: 0.68% - **Recent Monthly Return**: 0.06% - **Year-to-Date Return**: -4.33% - **Annualized Return (1 Year)**: -1.51% - **Annualized Return (10 Years)**: -0.61%[42][43] 4. Three-Month Institutional Coverage Factor - **Recent Weekly Return**: 1.70% - **Recent Monthly Return**: 1.29% - **Year-to-Date Return**: 4.96% - **Annualized Return (1 Year)**: 1.66% - **Annualized Return (10 Years)**: 4.39%[46][48]

Group 1 - The core view of the report indicates that the Sci-Tech Innovation Board is expected to accelerate its rise, with a shift in leading sectors towards technology. The index is anticipated to continue its upward trend without significant resistance, as evidenced by the recent increases in major indices: Shanghai Composite Index up 1.67%, ChiNext Index up 2.76%, and Sci-Tech 50 Index up 4.63% [2][13]. - There is an imminent change in the leading structure of industries and themes. Last week, the leading sectors included construction materials (up 8.2%), coal (up 8.0%), steel (up 7.7%), and non-ferrous metals (up 6.7%), driven by themes such as "anti-involution" and hydropower station developments. However, the report suggests that the current phase of rapid price increases may be nearing its end, and market expectations for policy announcements may not exceed optimistic forecasts [3][14]. - The technology sector is expected to become the main focus of attention as the rapid rise of cyclical sectors comes to an end. The report emphasizes that technology will be the main line of the upcoming market trends [4][15]. Group 2 - The report maintains a positive outlook on artificial intelligence (AI) as a key theme, predicting significant marginal changes in the AI industry over the next 1-2 months. The release of new models, such as OpenAI's GPT-5, is expected to stimulate competition and drive growth in the sector [5][16]. - Within the AI theme, the report highlights strong potential in domestic computing power, AI applications, PCB-related sectors, and robotics. It argues that domestic computing power is crucial for national development and will likely receive continued policy support. AI applications are expected to gain traction as new models are released, while the PCB sector remains in an upward trend. Robotics, as a significant application of AI, is also projected to follow the growth of the AI sector [6][17][18].

Investment Rating - The report maintains a "Positive" investment rating for the defense and military industry [5]. Core Viewpoints - The integrated combat system of China is expected to rapidly open up the market, with military trade likely to continue increasing [16][17]. - In Q2 2025, active funds have significantly increased their overweight position in the military sector, with expectations for further increases focusing on military trade and new combat directions [21]. - The current market position remains optimistic for the military sector, with upstream components and key materials expected to benefit from demand amplification effects [22]. Summary by Sections 1.1 Military Trade and Equipment Strength - The Weapon Industry Group showcased China's military trade capabilities in unmanned and counter-unmanned systems, indicating a growing demand for military trade [9][16]. - The demonstration included various advanced equipment such as the BZK-005E drone and the Tianlong 100 air defense missile system, highlighting the capabilities of China's integrated combat system [17][18]. 1.2 Fund Allocation Trends - In Q2 2025, the overweight position of active funds in the military sector increased to 0.92 percentage points, up from 0.57 percentage points in Q1 2025, indicating a growing confidence in military trade and new combat technologies [21][22]. - The report suggests that the market's understanding of the marginal elasticity of military trade is still insufficient, with potential for performance releases to strengthen military trade logic [21]. 1.3 Current Market Outlook - The military sector has shown positive performance since July, with many sub-sectors still at low levels, suggesting significant configuration value [22]. - The report emphasizes the importance of upstream components and key materials in weapon development and production, which are expected to benefit from increased demand [22]. Appendix: Market Performance and News - The defense and military industry index rose by 1.28% but underperformed compared to the broader market indices [24]. - Key military companies have reported significant growth in their half-year earnings, with many companies showing rapid increases in net profits [44].