Core Insights - The anti-involution policy reconstructs China's economic growth logic through supply constraints, forming a positive cycle of "improved corporate profits → increased household income and fiscal capacity → dual upgrades in consumption and technology," ultimately driving the revaluation and internationalization of RMB assets [4][5] - The anti-involution policy promotes a shift in China's economic structure: declining savings rate, declining investment, and increasing consumption [4] - The current economic recovery is characterized as a supply recovery, with supply constraints, price improvements, and enhanced corporate profits [4] Interest Rate Structure - The anti-involution corresponds to a new interest rate structure: declining real interest rates, rising inflation, and increasing nominal interest rates [15][18] - The current decline in the savings rate means that consumption has a greater impact on the interest rate structure, where a slight increase in consumption can lead to a decrease in real interest rates [15][18] - The combination of rising inflation and declining real interest rates suggests that nominal interest rates are likely to increase [15][18] Impact on Consumption - The anti-involution policy directly affects the supply side but influences household consumption capacity and willingness through multiple transmission paths, creating a virtuous cycle [25][26] - The improvement in corporate profits directly enhances household income levels, as evidenced by the narrowing decline in industrial enterprise profits in July 2025 [25] - Government fiscal improvements enhance the ability to invest in people, with significant increases in VAT and corporate income tax revenues due to price recovery and improved corporate profits [30] Asset Revaluation - The revaluation of Chinese assets is still in its early stages, with rising nominal interest rates and a weak bond market, while the capital market's capital expenditure intensity is declining [4][35] - The stock market is expected to outperform the bond market, with a focus on core assets and a potential long-term appreciation of the RMB [4][35] Global Pricing Power - China is gradually gaining pricing power in global supply and demand due to its leading supply capabilities, shifting from a buyer's pricing marginal to a seller's pricing position [4][35] - The convergence of trade surpluses and financial account deficits indicates a potential influx of foreign capital into the Chinese market, driven by the anti-involution policy [35] Technological Impact - The anti-involution policy stimulates consumption recovery, which in turn drives demand for technological innovations and applications [36][37] - A large consumer market provides opportunities for rapid iteration and optimization of new technologies, enhancing the overall technological landscape [37]

Investment Rating - The industry rating is "Outperform the Market" [7][79] Core Insights - Changan Automobile launched the "Tianshu Intelligent" brand, focusing on driving assistance, cabin, and chassis technologies to provide consumers with "extremely safe intelligent travel solutions" [2][13] - The new model, Wanjie M7, has a pre-sale price range of 288,000 to 368,000 CNY, with over 15,000 units reserved within 24 hours of opening pre-orders [3][15] - The company plans to explore applications in industrial robots and service robots, aiming to produce humanoid automotive robots by 2028 and passenger drones by 2026 [3][14] Market Performance - From September 1 to September 5, 2025, the automotive sector declined by 1.3%, underperforming the CSI 300 index, which fell by 0.8% [16][23] - Year-to-date, the automotive sector has increased by 20.5%, ranking 11th among 31 sectors [16][23] Key Industry Data - In August 2025, retail sales of passenger vehicles reached 1.952 million units, a year-on-year increase of 3% [36] - Wholesale sales for the same period were 2.409 million units, reflecting a 12% year-on-year growth [36][38] - New energy vehicle retail sales reached 1.079 million units in August, up 5% year-on-year [36][38] New Vehicle Highlights - The Wanjie M7 features dimensions of 5080×1999×1780 mm and a wheelbase of 3030 mm, with a maximum range of 700 km for the pure electric version and 1600 km for the range-extended version [4][15] - The vehicle is equipped with Huawei's advanced driving assistance system, including the industry's first in-cabin laser vision technology [4][15]

Group 1 - The report emphasizes the construction of a high-dimensional macroeconomic factor system to analyze the impact of macroeconomic variables on asset prices and to predict future price movements of broad indices and styles [2][8][9] - The current macroeconomic situation is characterized by a weak recovery, with GDP growth maintaining at a high level of 5.2% and industrial production showing stability, while credit and inventory indicators are weakening [17][20][23] - The report recommends a focus on small-cap and dividend styles due to marginal improvements in liquidity and the current economic environment, suggesting a cautious allocation strategy [17][23][36] Group 2 - The broad index timing strategy constructed from macro variables has achieved an annualized return of 16.34% since January 2012, outperforming the industry by 10.52% [3][29] - The dividend index timing strategy has yielded an annualized return of 11.12% over the same period, exceeding the industry by 8.67%, indicating a favorable environment for dividend strategies [3][36] - The style rotation strategy has produced an annualized return of 13.89% since September 2014, outperforming equal-weighted styles by 7.43%, highlighting the effectiveness of macro variable combinations in predicting style performance [3][47]

Export Trends - In August, China's exports showed initial signs of cooling, with a year-on-year growth rate of 4.4%, down 2.8 percentage points from July, marking the second-lowest since May of the previous year[2] - Direct exports to the US saw a significant decline of 11.2 percentage points, reaching -33.1%, the second-lowest monthly figure during the current tariff friction phase[3] - Exports to the EU, UK, and Japan increased slightly by 1.1%, 2.7%, and 4.3% respectively, indicating a minor recovery in these markets[3] Import Dynamics - China's imports also fell by 2.8% year-on-year to 1.3% in August, primarily due to fluctuating crude oil prices, which saw a year-on-year decline of 15.1%[4] - Soybean imports dropped significantly by 14.6%, contributing to a broader decline in bulk and energy commodities, which saw a combined year-on-year decrease of 4.1%[4] - The contribution of processing trade intermediate goods to imports decreased by 0.7 percentage points, reflecting ongoing challenges in this sector[4] Market Outlook - Despite the extension of the tariff easing period, the export situation is expected to remain cautious, with potential impacts from US tariffs on ASEAN countries and other regions[5] - The current resilience in China's export industries is largely attributed to mature collaborative supply chains, which may face challenges from new tariffs imposed by the US[5] - If significant monthly declines in exports occur, there may be a need for increased fiscal support for durable consumer goods to counteract the cooling external demand[5]

Investment Rating - The industry rating is "Strongly Outperform the Market" indicating that the overall return of the industry is expected to exceed the market benchmark index by more than 5% in the next 6 months [5][65]. Core Insights - The report highlights that pig prices have shown a trend of rising and then falling, with a focus on demand during the upcoming festivals in late September. The average price of live pigs in China was 13.79 yuan/kg as of September 5, reflecting a week-on-week increase of 0.17 yuan/kg [2][10]. - The report notes a significant increase in slaughterhouse activity, with an average daily slaughter volume of 149,100 pigs, up 5.30% week-on-week. However, frozen product inventory levels have also risen slightly, indicating slower sales [12][30]. - The report emphasizes the importance of policy measures aimed at controlling production capacity in the pig farming industry, which may lead to a long-term increase in pig prices and benefit low-cost, high-quality pig farming enterprises [30][46]. Summary by Sections Pig Farming - Pig prices initially rose due to increased demand from schools and restaurants but later fell as larger enterprises increased their slaughtering plans. The average weight of pigs at slaughter has slightly increased to 128.23 kg, with group farms averaging 123.61 kg and smallholders at 143.75 kg [10][16]. - The report suggests that the supply pressure is expected to increase in the short term, with a projected rise in slaughter numbers for September. The focus remains on the demand boost from the upcoming Mid-Autumn Festival and National Day [30][32]. Poultry Sector - The white chicken market is experiencing a slight price decline due to high inventory levels. The average price for white feather broilers was 7.17 yuan/kg as of September 5, down 0.16 yuan/kg week-on-week [32][37]. - The egg market has seen a slight rebound in prices, with an average price of 6.53 yuan/kg during the first week of September, reflecting a week-on-week increase of 0.02 yuan/kg [3][37]. Agricultural Products - The soybean meal market is experiencing fluctuations, with futures prices for soybean meal at 3,067 yuan/ton, up 12 yuan/ton week-on-week. The spot price for soybean meal is 3,084 yuan/ton, down 18 yuan/ton week-on-week [4][46]. - The report indicates that the agricultural sector is facing challenges due to trade policies and weather conditions affecting soybean imports, particularly from South America [4][46]. Seed Industry - A national meeting on strict variety management was held, emphasizing the need for innovation in breeding and the importance of maintaining food security amid trade tensions. The report suggests that policies supporting agricultural technology development may accelerate the industry’s growth [46].

Group 1: Fixed Income Plus Fund Tracking - The performance of fixed income plus funds has shown significant volatility this year, with mixed results across different types of funds. In August, mixed, stock, and convertible bond funds increased by 2.03%, 1.76%, and 0.58% respectively [2][14]. - Fixed income plus funds have increased their exposure to bond duration while reducing their reliance on credit strategies. There has been a notable increase in exposure to valuation and market capitalization styles in equity assets [4][19][21]. - The selected fixed income plus fund combination outperformed the secondary bond index by 0.10% this month, indicating a more stable performance compared to the index [5][27]. Group 2: Pure Bond Fund Tracking - The mid-to-long-term pure bond fund index decreased by 0.17% in August, with a year-to-date return of 0.44%. In contrast, the short-term pure bond fund index rose by 0.04% this month, with a year-to-date increase of 0.90% [36][39]. - Pure bond funds have significantly reduced their allocation to high-rated credit bonds, indicating a shift in credit strategy. The variance in credit exposure suggests differing strategies among pure bond funds [6][42]. - The selected pure bond fund combination has performed better than the mid-to-long-term pure bond fund index this year, with a slight underperformance of 0.10% in August compared to the index [7][46].

Investment Rating - The industry rating is "Strongly Outperforming the Market" [67] Core Viewpoints - The report emphasizes optimism for the military industry, particularly from Q4 2025 to 2026, driven by strong demand recovery expectations and a new economic cycle approaching [39][40] - Despite a recent decline in the military index, passive funds continue to show net inflows, indicating sustained confidence in the military sector [39][23] - The current price-to-earnings ratio (TTM) for the military index is 70.07, with a 94.51% percentile ranking, suggesting high allocation significance at this time [39][29] Summary by Sections Market Review - The military index (801740) fell by 10.25% from September 1 to September 5, while the Shanghai and Shenzhen 300 index decreased by 0.81%, resulting in a relative underperformance of -9.44 percentage points [11][6] - Year-to-date, the military index has increased by 27.98%, outperforming the Shanghai and Shenzhen 300 index, which rose by 14.28% [13] - Various sub-sectors within the military industry experienced declines, with the information technology sector seeing a significant drop of 12.12% [17] Fund and Valuation Insights - Passive fund sizes in military ETFs decreased slightly, but fund shares increased, indicating continued investment interest despite market declines [23] - The military sector's valuation has decreased from 78.3 to 70.07, reflecting a more favorable investment environment given the anticipated recovery in demand [29] Key Investment Opportunities - The report suggests focusing on specific companies within various segments of the military industry, including land equipment, stealth materials, deep-sea technology, engines, unmanned systems, AI, aircraft, and nuclear fusion [40][42]

Market Overview - The market experienced fluctuations with a decline of 1.37% across the board from September 1 to September 5, 2025, with the ChiNext and micro-cap stocks leading the gains while the CSI 1000 and STAR 50 indices fell [2][10] - The healthcare and advanced manufacturing sectors outperformed, while financial real estate and technology sectors lagged behind [10] - Among 31 Shenwan industries, power equipment, comprehensive services, and non-ferrous metals showed gains, whereas non-bank financials, computers, and defense industries faced declines [2][10] Market Sentiment and Structure - Market sentiment has cooled, with a decrease in industry rotation intensity, as indicated by a market sentiment index drop of 14.3% to 70.5 [22] - The stock-bond yield spread increased to 0.8%, which is below the +1 standard deviation threshold, indicating a decline in valuation differentiation [20] - The average daily trading volume in the stock market decreased, with power equipment, comprehensive services, and social services showing a higher proportion of bullish stocks [28] Industry Highlights - Huawei launched its new Mate XTs extraordinary master three-fold phone, marking a significant innovation in foldable screen technology [41] - Tesla introduced its "Master Plan Part IV," shifting its strategic focus towards artificial intelligence and robotics, particularly the Optimus humanoid robot [42] - Apple is reportedly collaborating with Google to enhance Siri using the Gemini AI model, which could boost hardware sales and strengthen the Apple ecosystem [43] Industry Allocation - The lithium battery sector is supported by a favorable storage market, solid-state battery narratives, and "anti-involution" policies, suggesting potential for both profit and valuation recovery [46] - The gold sector is expected to benefit from a weaker dollar environment, with recommendations to focus on gold and gold stocks [46] - Other sectors are seeing liquidity-driven expansions, with a focus on internal growth within TMT and external rotation towards large-cap blue chips [47]

Investment Rating - The report maintains a positive outlook on the basic chemical industry, suggesting that leading companies with significant scale and cost advantages will benefit from economic recovery and demand resurgence [4][8]. Core Insights - The report highlights the recovery of the TDI production facility by Mitsui and the successful commissioning of a new ethylene plant by Jilin Petrochemical, indicating positive developments in the industry [3][4]. - It emphasizes the strong competitive position of domestic tire manufacturers and suggests that rare growth stocks in this sector are worth attention [4]. - The report notes a potential recovery in consumer electronics, recommending upstream material companies as beneficiaries of this trend [4]. - It identifies several resilient cyclical industries, such as phosphate and fluorine chemicals, which are expected to see improved market conditions due to supply constraints and rising demand [5][8]. Summary by Sections Market Performance - The Shanghai Composite Index fell by 1.18%, while the ChiNext Index rose by 2.35%. The CITIC Basic Chemical Index increased by 0.15%, and the Shenwan Chemical Index decreased by 1.36% [14][17]. - The top-performing sub-industries included organic silicon (3.59%), modified plastics (2.46%), and tires (2.22%), while the worst performers were other plastic products (-4.72%) and compound fertilizers (-3.04%) [17][18]. Industry Dynamics - Mitsui's TDI plant is set to resume production after a chlorine leak incident, with expectations of stable product supply [3]. - Jilin Petrochemical's new ethylene plant has successfully started operations, increasing its total ethylene capacity to 1.9 million tons per year [3]. Investment Themes - **Tire Sector**: Domestic tire companies are noted for their strong competitive edge, with recommendations to focus on companies like Sailun Tire and Linglong Tire [4]. - **Consumer Electronics**: A gradual recovery is anticipated, with upstream material companies expected to benefit from increased demand in the panel supply chain [4]. - **Cyclical Industries**: Phosphate and fluorine chemical sectors are highlighted for their resilience, with recommendations for companies like Yuntianhua and Juhua [5][8]. - **Leading Companies**: The report suggests that leading companies in the chemical sector, such as Wanhua Chemical and Hualu Hengsheng, will benefit from economic recovery and demand resurgence [8].

Investment Rating - The report maintains an "Outperform" rating for the industry [6] Core Insights - The battery sector is witnessing significant advancements in solid-state battery technology, with a penetration rate of 55.3% for new energy vehicles in August [2][10] - The photovoltaic sector is set for high-quality development following new government policies aimed at curbing low-price competition [3][17] - The energy storage sector has reached a record high in bidding scale, with 25.8GW/69.4GWh in August, indicating strong market demand [4][35] Summary by Sections New Energy Vehicles and Lithium Battery Sector - Battery companies are making substantial progress in solid-state battery development, with industry-wide commercialization on the horizon [9] - The penetration rate of new energy vehicles reached 55.3% in August, with expectations for market growth in September due to seasonal demand and subsidy implementation [10][11] Photovoltaic Sector - New government initiatives aim to eliminate low-price competition in the photovoltaic industry, promoting high-quality growth [3][17] - The plan includes measures for better industry planning, quality management, and international cooperation [18] Wind Power Sector - The successful delivery of the Fan Stone II project's submarine cable and new orders from Europe highlight ongoing growth in the wind power sector [27][28] - The wind power supply chain is experiencing stable pricing for key materials, with some fluctuations noted [29] Energy Storage Sector - August saw a historic high in energy storage bidding, with a total scale of 25.8GW/69.4GWh, driven by large-scale project completions [35] - The average price for 2-hour energy storage systems has dropped below 0.5 yuan/Wh, indicating a trend towards cost reduction [36][37] Electric Power Equipment Sector - The South Grid's first batch of metering products achieved a total bid of 3.462 billion yuan, with significant contributions from leading companies [49][50] - The Jinshang-Hubei ±800 kV UHVDC project has commenced operation, enhancing power transmission capabilities [51] Industrial Control and Robotics Sector - The PMI index showed improvement in August, indicating a recovery in manufacturing demand, which is expected to boost orders for industrial control components [58] - The establishment of the Wenzhou Artificial Intelligence Bureau aims to promote AI development, with significant contracts awarded in the humanoid robot sector [60] Hydrogen Energy Sector - The Yalong River Basin's hydrogen energy development plan is underway, with significant projects being awarded, indicating growth in the hydrogen sector [66][67]