Economic Overview - The GDP growth rate for Q2 is expected to be around 5.3%, close to Q1's 5.4%[3] - Industrial production growth for Q2 is projected at approximately 5.9%[3] - Retail sector growth is anticipated to rebound to about 6.8% in Q2, up from 5.8% in Q1[3] Production Insights - June's industrial growth rate is estimated at 6.0%[11] - The PMI production index for June increased to 51%, indicating expansion[4] - The wholesale growth rate for automobiles in June is expected to be 14.1%[4] Demand and Investment Trends - Social retail sales growth is projected to decline to around 4.6% in June, influenced by holiday timing and promotional activities[20] - Fixed asset investment growth for the first half of the year is expected to be around 3.4%, with manufacturing investment at 8.1% and real estate investment at -11.2%[16] - Real estate sales area growth is anticipated to be -8.0% in June[17] Trade and Price Dynamics - Export growth for June is expected to be approximately 3.5%, while imports are projected to grow by 1%[14] - CPI for June is forecasted to be around 0% year-on-year, with PPI expected to remain at -3.3%[9][10] Financial Sector Outlook - New social financing in June is estimated at 3.8 trillion yuan, an increase of 600 billion yuan year-on-year[5] - M2 money supply growth is expected to be around 7.9% in June[5]

Group 1 - The core viewpoint of the report indicates that the major indices experienced an upward trend in the second quarter of 2025, with the ChiNext Composite Index leading with a 5.80% increase and the National Index 2000 rising by 4.41% [1][12][13] - In terms of industry performance, only a few sectors showed negative returns, with the comprehensive financial sector increasing by 32.16% and the national defense and military industry rising by 16.03% [1][13][14] - The report highlights that the timing models performed excellently in Q2 2025, particularly the price-volume resonance V3 model, low volatility blade model, and characteristic volume model [1][6][18] Group 2 - The report identifies sectors to watch for Q3 2025, including oil and petrochemicals, automobiles, and electronics, indicating a positive outlook for these industries [3][6] - The report emphasizes the use of multi-dimensional models for market timing, industry rotation, and stock selection strategies, which are based on estimated fund positions and over/underweighting [7][18] - The report provides a comprehensive analysis of various timing models, including short-term, medium-term, and long-term strategies, showcasing their historical performance and future predictions [6][18][19]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The report highlights a significant increase in the issuance of wealth management products, with 3,574 new products launched during the period from June 14 to June 27, 2025, compared to 2,530 in the previous period, indicating a strong market recovery [6][9] - Fixed income products dominate the new issuance landscape, accounting for 95.41% of new wealth management products, reflecting a conservative risk appetite among investors [19] - The report notes a shift towards diversified investment products, with some institutions beginning to explore equity and derivative assets to enhance returns while maintaining stability [19] Summary by Sections 1. Wealth Management Products - During the period from June 14 to June 27, 2025, the market saw a total of 3,574 new wealth management products, a significant increase from the previous period [9] - The majority of new products (84.28%) were issued by wealth management companies, with an average performance benchmark of 2.64%, the highest among all types of institutions [9] - The structure of new products remains stable, with fixed income products leading at 3,410 new issues, representing 95.41% of the total [19] - Short to medium-term products (3-6 months and 6 months-1 year) are favored by investors, indicating a preference for liquidity alongside returns [20] 2. Fund Products - A total of 91 new public funds were established during the reporting period, with a total issuance scale of 786 million units, a 96.75% increase from the previous period [25] - Bond funds led the new issuance with 344.50 million units, although their market share slightly decreased to 43.83% [26] - The report notes a resurgence in various fund types, including QDII, REITs, and FOF funds, indicating a recovery in the market [30] 3. Insurance Products - The market saw the issuance of 38 new insurance products during the reporting period, continuing a trend of moderate growth [39] - Life insurance products saw a decline in new issuances, while annuity products surged, becoming the dominant category with a market share of 57.9% [39] - Regulatory changes are influencing the structure of insurance products, particularly in the area of dividend insurance, which is expected to remain a key focus for companies [38]

1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - In H1 2025, convertible bonds showed an "N"-shaped upward fluctuation driven by multiple factors. The convertible bond index outperformed major stock indices, and the valuation increased by 3.58pct compared to the end of 2024. The convertible bond market experienced two rises and two falls, which can be divided into three stages: the valuation increase supported by the capital of convertible bonds from the end of 2024 to before the Spring Festival, the technology sector theme fever from after the Spring Festival to the end of March, and the callback and rebound of convertible bonds following the equity market under the tariff disturbances from early April to June [2][9]. - The convertible bond market presented strong performance. From the beginning of 2025 to June 30, the CSI Convertible Bond Index outperformed major equity market indices. The net value of convertible bond funds rose by 7.48% in H1 2025, better than that of first - and second - tier bond funds and partial - debt funds. The maximum drawdown of convertible bond funds was - 8.38%, which was better than that of stock - type and partial - stock - type funds [12]. 3. Summary According to Relevant Catalogs 3.1 2025H1 Convertible Bond Market: Fluctuating with the Underlying Stocks under the Macroeconomic Narrative, with Better Stability - **Convertible Bond Terms**: In 2025, the number of forced redemptions remained high. A total of 96 convertible bonds triggered the forced redemption clause, and 36 were announced for redemption, with a forced redemption probability of 37.5%, slightly lower than 42.4% in 2024. The number of times the downward revision clause was triggered decreased, and the probability of downward revision also declined. The number and balance of convertible bonds entering the put - back period were still large, but put - back events only occurred sporadically [3][21][22]. - **Supply - Demand Structure**: The supply improved significantly year - on - year but was uneven. A total of 19 convertible bonds were issued in H1 2025, with a scale of 21.775 billion yuan, up 58.33% and 68.66% respectively compared to H1 2024. High - rating and large - cap convertible bonds had relatively weak issuance. On the demand side, most major holders reduced their positions, but securities firms and private funds increased their holdings [4][30][42]. 3.2 Stage Review: Convertible Bonds' Resistance to Decline - Theme Fever - External Disturbances - **January 2 - January 27**: Equity market had a small "V" - shaped reversal, and convertible bonds maintained a high - level valuation. At the beginning of the year, the equity market's callback and the spill - over effect from pure bonds catalyzed a rapid increase in the valuation of convertible bonds. Insurance funds and ETFs' increased holdings supported the valuation. The 100 - yuan premium rate increased by 3.43pct to 24.10% [5][58][63]. - **February 5 - March 31**: The technology theme fever catalyzed the convertible bond market. After the Spring Festival, the technology theme drove the equity market, and the convertible bond market was affected by the redemption pressure of bond funds, with its elasticity being less than that of the equity market, and the valuation decreased by 1.82pct to 22.28% [5][58][66]. - **April 1 - June 30**: External uncertainties were controllable, and the hot spots shifted to the pharmaceutical and consumer sectors. The tariff disturbances led to a callback in the equity market in April, but the impact was controllable. The convertible bond style turned to be more stable, and the valuation was relatively firm. The 100 - yuan premium rate increased by 2.44pct to 24.72% [5][58][71].

Group 1: Fund Flow and Market Trends - The supply side of funds has slightly contracted, with public equity issuance recovering in the past two weeks, while leveraged funds saw a significant net inflow of 265 billion CNY, up from a previous outflow of 29 billion CNY[8][24] - Equity financing surged by 543.5 billion CNY in the last two weeks, indicating strong demand, while southbound funds continued to flow in with a net inflow of 259.5 billion CNY[8][24][82] - The net inflow of retail investor funds in the A-share market was 633 billion CNY, a decrease of 402.1 billion CNY from the previous value, placing it at the 19.2% percentile over the past five years[9] Group 2: Trading Activity and Sector Performance - Trading congestion metrics indicate that the financial and TMT sectors are on the rise, while most cyclical sectors are cooling down; for instance, the brokerage sector's heat index rose by 34 percentage points to 39%[8][9] - The insurance sector increased by 17 percentage points to 34%, while the chemical sector decreased by 11 percentage points to 79%[8][9] - The computer sector's trading heat rose by 16 percentage points to 67%, and the communication sector increased by 7 percentage points to 68%[8][9] Group 3: ETF and Stock Buyback Trends - Stock-type ETFs experienced a net outflow of 197 billion CNY, significantly larger than the previous inflow of 139.8 billion CNY, placing the current sentiment at a low point[50][51] - The amount of stock buybacks increased to 21.1 billion CNY from 15.4 billion CNY, which is at the 61% percentile over the past three years[54][55] Group 4: Investor Sentiment and Market Dynamics - The search interest for Kuaishou's A-shares has surged, driven by the recent peak in the Shanghai Composite Index, which reached a new high for the year[9][135] - The public fund concentration trend has weakened, shifting towards value styles and focusing on consumption and cyclical industries, with 30% of the top public fund stocks leading the gains in electronics, pharmaceuticals, and military sectors[9]

Tariff Impact - The effective tariff rate in the U.S. surged to 7% in April 2025, up from 2.3% in 2024, with the rate for imports from China reaching 37.5%[6] - By May 2025, the overall tariff rate further increased to 8.7%[6] Import Surge - U.S. imports exceeded historical trends by approximately $188.3 billion from December 2024 to May 2025, representing 68.6% of the average monthly import value for 2024[6] - The import growth rate is expected to be negatively impacted by about 9.8% in the remaining months of 2025 due to this surge[6] Import Sources - Major regions contributing to the import surge include the Eurozone, ASEAN, Taiwan, Australia, and India, collectively boosting U.S. imports by 11 percentage points in the first four months of 2025[6] - In April 2025, the import growth from these regions was approximately 5.7 percentage points, while the Eurozone's contribution turned negative, detracting 0.1 percentage points[6] Import Methods - Air freight imports surged to 37.1% in January to March 2025, significantly higher than the annual average of 27.6%, before dropping to 31.5% in April[6] - The increase in air freight usage indicates a strategy to expedite imports before tariffs took effect[6] Product Categories - The primary products imported during this period were electronics, pharmaceuticals, and raw metals, which together accounted for an 18.5 percentage point increase in overall import growth from January to April 2025[12] - In April 2025, electronics alone contributed 4.1 percentage points to the import growth, while pharmaceuticals and raw metals also showed significant increases[12]

Investment Rating - The report gives a "Buy" rating for the precision reducer industry, highlighting its broad application space and high technical barriers, driven by downstream industries for rapid market growth [10][12]. Core Insights - The precision reducer market is experiencing robust growth, with a projected market size of 9.1 billion yuan in 2024, driven by industrial robots, machine tools, and humanoid robots [36][40]. - Domestic manufacturers are expected to accelerate core customer integration and achieve domestic substitution through years of industry and technology accumulation [10][12]. - The report identifies three main categories of domestic reducer manufacturers: traditional precision reducer manufacturers, upstream and downstream industry players, and manufacturing companies transitioning to reducer production [4][11]. Summary by Sections Section 1: Precision Reducers - Precision reducers serve as core transmission components, connecting power sources and actuators, with various types including harmonic, RV, and planetary reducers [16][19]. Section 2: Industry Opportunities - The precision reducer market is set for steady growth, with the industrial robot sector being the largest downstream application, accounting for 36% of the market in 2024 [37][39]. - The machine tool sector follows, representing 23% of the market, while humanoid robots are emerging as a potential growth area [36][40]. Section 3: Domestic Manufacturer Landscape - Traditional precision reducer manufacturers like Grede Harmonic and Ring Dynamics have established a strong presence in the industrial robot sector [4][11]. - Companies from the automotive parts and related industries are extending their reach into the reducer market, leveraging their existing capabilities [4][11]. - Manufacturers with OEM capabilities are transitioning to reducer production, capitalizing on market demand [4][11]. Section 4: Key Company Profit Forecasts and Valuation - Grede Harmonic is projected to have an EPS of 0.47 yuan in 2025, with a PE ratio of 252.81, indicating strong growth potential [5].

Investment Rating - The report maintains a "Recommend" rating for the company, indicating an expectation to outperform the benchmark index by 10%-20% over the next six months [1][8]. Core Insights - The company is expected to achieve a year-on-year increase in net profit of 70%-100% for the first half of 2025, with a midpoint estimate of 5.22 billion yuan, reflecting an 85% increase [7]. - The emerging business segment, particularly the subsidiary focusing on aviation power systems, is projected to benefit from the booming low-altitude economy and evolving international dynamics, leading to significant revenue growth [2]. - The financial forecasts for the company show a robust growth trajectory, with total revenue expected to reach 13.94 billion yuan in 2025, representing a 32.7% year-on-year increase [3]. Financial Summary - Total revenue projections for 2024, 2025, 2026, and 2027 are 10.51 billion yuan, 13.94 billion yuan, 16.09 billion yuan, and 18.52 billion yuan respectively, with corresponding growth rates of 28.9%, 32.7%, 15.4%, and 15.1% [3]. - The net profit attributable to the parent company is forecasted to be 461 million yuan in 2024, increasing to 919 million yuan in 2025, with a remarkable growth rate of 99.2% [3]. - Earnings per share (EPS) are projected to rise from 0.40 yuan in 2024 to 0.80 yuan in 2025, reflecting the company's improving profitability [3]. Business Performance - The company's traditional business segments are experiencing high demand, particularly in motorcycle engines and general machinery, which are expected to drive revenue growth [7]. - The integration of the company with its joint venture, Longxin General, is anticipated to create synergies that could enhance overall performance [7]. - The aviation power segment reported a revenue of 160 million yuan in 2024, marking a 71.74% increase year-on-year, with expectations for further improvement in 2025 [2].

Tariff Impact - The effective tariff rate in the U.S. rose to 7% in April, with projections of 2.3% for 2024, and specific rates of 37.5% on imports from China and 3.9% from other regions[2] - By May, the overall tariff rate further increased to 8.7%[3] Import Surge - U.S. imports exceeded historical trends by approximately $188.3 billion from December 2024 to May 2025, accounting for 68.6% of the average monthly imports in 2024[3] - Air freight imports surged to 37.1% in January-March 2025, compared to an annual average of 27.6%[4] Source Regions - Major sources of increased imports include the Eurozone, ASEAN, Taiwan, Australia, and India, contributing 11 percentage points to the 19.3% year-on-year growth in U.S. imports from January to April 2025[4] - In April, the overall import growth rate fell to 1.9%, with ASEAN, Taiwan, and India still showing strong contributions[4] Product Categories - The primary products imported include electronics, pharmaceuticals, and raw metals, which collectively contributed 18.5 percentage points to the overall import growth of 19.3% from January to April 2025[5] - In April, electronics maintained a high growth rate, contributing 4.1 percentage points to the import increase, while pharmaceuticals and raw metals saw a decline in growth rates[5]

Group 1: Central Economic Committee Meeting Insights - The 6th meeting of the 20th Central Economic Committee was held on July 1, 2025, with a significant gap of nearly one and a half years since the last publicly disclosed meeting[3] - The meeting emphasized the need to deepen the construction of a unified national market, focusing on supply-side optimization and combating "involution" competition[13] - The meeting's outcomes are expected to lead to smoother policy formulation and execution, as clarified by the recent political bureau meeting[6] Group 2: Supply-Side Reform and Involution - The concept of "anti-involution" was first introduced in the July 2024 political bureau meeting, with the current meeting reinforcing this stance and calling for specific policy implementations[17] - Historical context shows that supply-side structural reforms initiated in November 2015 led to significant improvements in local government finances, with land transfer income rising from CNY 3.1 trillion to CNY 5.0 trillion between 2015 and 2017[20] - Current local fiscal pressures remain high, necessitating careful monitoring of how "anti-involution" and supply-side optimization are implemented[20] Group 3: Marine Economy Development - The meeting highlighted the ongoing policy support for the marine economy, which has been a consistent focus since the 18th National Congress in 2012[24] - Key investment areas identified include offshore wind power, marine infrastructure, and marine transportation, with expectations for short-term fundamental improvements[28] - The integration of marine economy with other sectors such as pharmaceuticals, military, and cultural tourism is anticipated to catalyze further policy support[28]