Quantitative Models and Construction Methods 1. Model Name: Industry Crowding Monitoring Model - **Model Construction Idea**: This model is designed to monitor the crowding levels of Shenwan First-Level Industry Indices on a daily basis, identifying industries with high or low crowding levels[4] - **Model Construction Process**: The model calculates the crowding levels of various industries based on specific metrics (not detailed in the report) and ranks them accordingly. For the previous trading day, industries such as steel, building materials, and non-ferrous metals had high crowding levels, while media, home appliances, and automobiles had lower levels[4] - **Model Evaluation**: The model provides a useful tool for identifying industry crowding trends and potential investment opportunities or risks[4] 2. Model Name: Premium Rate Z-Score Model - **Model Construction Idea**: This model identifies potential arbitrage opportunities in ETF products by calculating the Z-score of premium rates over a rolling window[5] - **Model Construction Process**: The Z-score is calculated as follows: $ Z = \frac{(P - \mu)}{\sigma} $ where: - $ P $ represents the premium rate of the ETF - $ \mu $ is the mean premium rate over the rolling window - $ \sigma $ is the standard deviation of the premium rate over the rolling window The model flags ETFs with significant deviations from their historical premium rates, indicating potential arbitrage opportunities[5] - **Model Evaluation**: The model is effective in identifying ETFs with potential mispricing but requires caution due to the risk of price corrections[5] --- Backtesting Results of Models 1. Industry Crowding Monitoring Model - No specific numerical backtesting results were provided for this model[4] 2. Premium Rate Z-Score Model - No specific numerical backtesting results were provided for this model[5] --- Quantitative Factors and Construction Methods No specific quantitative factors were detailed in the report. --- Backtesting Results of Factors No specific quantitative factor backtesting results were provided in the report.

Investment Rating - The report suggests a positive investment outlook for the aluminum industry, highlighting the potential for high prices due to stable demand and controlled supply [4][8]. Core Insights - Aluminum is the most abundant metal on Earth, with Guinea holding the largest bauxite reserves at approximately 7.4 billion tons, accounting for 25.52% of global reserves [4][21]. - The global electrolytic aluminum production is projected to reach 72 million tons in 2024, with China maintaining a dominant position at 43 million tons, representing 60% of the total [4][67]. - The report emphasizes the growth potential of the green aluminum industry, particularly in regions like Yunnan, which benefits from abundant hydropower resources [5][70]. Summary by Sections Global Bauxite Resource Status - Bauxite is primarily found in Guinea, Australia, and other countries, with China having a relatively low reserve of 2.34% [21]. - In 2024, global bauxite production is expected to be 45 million tons, with Guinea contributing 13 million tons, or 28.89% [27]. Global Bauxite Production - The top three producers of bauxite in 2024 are Guinea (13 million tons), Australia (10 million tons), and China (9.3 million tons) [27][28]. - China imports significant amounts of bauxite from Guinea and Australia, with imports of 110.58 million tons and 39.89 million tons, respectively [27]. Global Alumina Production - The global alumina production is projected to be 142 million tons in 2024, with China producing 84 million tons, accounting for 60% of the total [37]. - China's alumina capacity is expanding rapidly, with a year-on-year growth of 6.86% [37]. Global Electrolytic Aluminum Production - The report indicates that the global electrolytic aluminum production will reach 72 million tons in 2024, with China leading at 43 million tons [67]. - The demand for electrolytic aluminum is expected to grow due to the increasing use in renewable energy sectors [89]. Yunnan's Clean Energy Advantage - Yunnan province has a significant advantage in clean energy, with hydropower accounting for 71.22% of its total electricity generation in 2024 [70]. - The province is positioned to support high-energy-consuming industries like electrolytic aluminum production [70]. Investment Opportunities - The report identifies Yunnan's green aluminum industry as having substantial growth opportunities due to its resource advantages and the EU's carbon tax policy [5][8]. - Companies like Yun Aluminum are highlighted as leaders in the green aluminum sector, with a comprehensive production capacity and a focus on sustainable practices [79].

Investment Rating - The overall investment rating for the food and beverage industry is positive, with expectations of returns exceeding the CSI 300 index by more than 5% in the next six months [23]. Core Insights - The food and beverage sector has shown signs of stabilization and recovery, with soft drinks, liquor, and dairy products leading in growth. The sector index increased by 0.97%, ranking 14th among 31 sub-industries [4][13]. - The liquor segment is experiencing a rebound, with the SW liquor index rising by 0.88%. The sector is in a bottoming phase, with a focus on the upcoming demand during the Mid-Autumn Festival and National Day [5][17]. - The beverage market is seeing mixed short-term performances due to external events, but there is a long-term positive outlook for companies with upward momentum [6][18]. Summary by Sections Liquor Sector - The liquor sector is recommended for investment, with specific companies like Guizhou Moutai, Luzhou Laojiao, Shanxi Fenjiu, and Jianshiyuan receiving "Buy" ratings. The sector is currently at a historical low valuation, suggesting a potential recovery [3][5][21]. - The price of Moutai (bottle) is reported at 1890 RMB, showing a slight increase, while the price of Wuliangye remains stable at 870 RMB [5][17]. Beverage Sector - The beverage sector is experiencing fluctuations due to public sentiment affecting certain brands. Companies like Nongfu Spring and China Resources Beverage have shown resilience, with Nongfu Spring's market share recovering significantly [6][20]. - Recommendations include Youyou Foods, Dongpeng Beverage, and Dashi Co., with a focus on companies that can capitalize on market share recovery [6][18][21]. Food Sector - The food sector has seen some companies facing challenges due to external events, but there are still opportunities for growth in the long term. The focus remains on companies with strong mid-year performance [6][18].

Group 1: Financial Data Overview - In June, China's social financing scale increased by 41,993 billion RMB, exceeding the expected 37,051 billion RMB and the previous value of 22,870 billion RMB[6] - New RMB loans in June amounted to 22,400 billion RMB, surpassing the expected 18,447 billion RMB and the previous value of 6,200 billion RMB[6] - M2 growth in June was 8.3%, higher than the expected 8.1% and the previous value of 7.9%[4] Group 2: Credit and Financing Trends - New credit in June was 22,400 billion RMB, with a year-on-year increase of 1,100 billion RMB, although still below seasonal averages[11] - Short-term loans contributed significantly to the increase, with a year-on-year rise of 1,334 billion RMB[16] - Government bond financing in June reached 13,508 billion RMB, a year-on-year increase of 5,032 billion RMB, supporting overall social financing[35] Group 3: M1 and M2 Analysis - M1 increased by 4.6% year-on-year, a significant rise of 2.3 percentage points from the previous month[37] - Total deposits in June increased by 32,100 billion RMB, with a year-on-year increase of 7,500 billion RMB[37] - Resident deposits rose by 3,300 billion RMB year-on-year, while non-financial corporate deposits increased by 7,773 billion RMB[37]

Investment Rating - The industry is rated positively, with expectations of overall returns exceeding the CSI 300 Index by more than 5% in the next six months [27]. Core Insights - The Central Urban Work Conference was held for the first time in ten years, emphasizing the transition of urbanization from rapid growth to stable development, with a focus on improving existing urban quality [8][11]. - Urban renewal has been highlighted as a key focus, with the government stressing the importance of high-quality urban development and the implementation of supportive policies [13][14]. - The report indicates a shift towards a new model of real estate development, with a steady push for the renovation of urban villages and dilapidated housing [18][19]. - The development of modern urban clusters and metropolitan areas is prioritized, with counties identified as crucial for urbanization efforts [25]. Summary by Sections 1. Central Urban Work Conference - The conference reviewed the achievements of urban development in China and set the overall requirements and key tasks for future urban work [7][8]. - It was noted that the urbanization rate increased from 57.3% in 2015 to 67% in 2024, with a total urban population of 944 million [8]. 2. Importance of Urban Renewal - The conference emphasized urban renewal as a core strategy, with a focus on creating vibrant and innovative cities [14]. - A comprehensive policy document was released, outlining eight main tasks to support urban renewal, including the renovation of old neighborhoods and enhancing urban infrastructure [13][14]. 3. New Model of Real Estate Development - The report discusses the ongoing efforts to establish a new real estate development model, which includes the gradual promotion of urban village and dilapidated housing renovations [18][19]. - Recent meetings have reiterated the need for policies that support both rental and purchase housing systems [18]. 4. Development of Modern Urban Clusters - The report highlights the importance of developing modern urban clusters and metropolitan areas, with a specific focus on counties as key components of urbanization [25]. - The conference outlined seven key tasks, with the first being the optimization of the modern urban system to enhance the capacity for population and economic development [25].

Group 1: Macro Economic Overview - The report indicates that the 10-year government bond futures index is fluctuating around the half-year line, consistent with previous assessments, suggesting that the weak adjustment in the stock market and the sluggish fundamentals will support high-level fluctuations in the bond market until the stock market strengthens again [4][16]. - Positive developments in US-China trade negotiations, such as the lifting of restrictions on Nvidia chips and partial easing of rare earth exports, combined with expectations of inflation stabilizing due to anti-involution policies, suggest a trend where stocks rise and bonds fall [4][16]. Group 2: Stock Market Analysis - The A-share market has seen trading volumes return above 1.5 trillion, with various sectors like banking, AI, innovative pharmaceuticals, and military industry experiencing significant rallies, reflecting a "hundred schools of thought" phenomenon [5][20]. - The report maintains that the upward trend in the index is not over, with expectations that it will surpass the high point from October 8 of the previous year, and identifies 3420 points as a strong short-term support level for the index [5][20]. - Key observation points for potential trend reversals include oil price peaks, sustained trading volume, and the stability of the RMB exchange rate [5][20][21]. Group 3: Sector Performance - The report highlights three main sectors for investment: anti-involution policies leading to recovery in sectors like photovoltaics, live pigs, and glass; significant turning points in industries such as solid-state batteries and innovative pharmaceuticals; and high-dividend sectors, particularly coal, which benefits from anti-involution policies [21][22]. - The report notes that the military industry stocks are performing well, with companies like AVIC Shenfei reaching historical highs, and the innovative pharmaceutical sector seeing a nearly 3% increase [21][22]. Group 4: Foreign Exchange Market - The onshore RMB against the USD was reported at 7.1806, showing an increase of 15 basis points from the previous day, with the offshore RMB breaking its downward trend [6][31]. - The report anticipates that the RMB will perform better than most non-USD currencies due to favorable trade negotiation outcomes compared to Europe and Japan [6][31]. Group 5: Commodity Market Insights - The Wenhua Commodity Index has completed a bottom breakout, with a recommendation to adopt a buy-on-dips strategy, particularly in anti-involution related sectors [7][35]. - The report warns investors to be cautious of strong commodities like polysilicon due to potential short squeeze risks, while suggesting that geopolitical uncertainties may lead to continued volatility in oil and related products [7][35].

Export Performance - In June, China's exports increased by 5.8% year-on-year, exceeding market expectations of 5% and up from 4.8% in May[5] - The export growth rate for Q2 was 6.2%, higher than Q1's 5.7% and the full-year rate of 5.8% from the previous year[6] - Key export categories included mechanical and electrical products, which grew by 8.2%, and high-tech products, which rose by 6.9%[16] Import Trends - Imports in June rose by 1.1% year-on-year, compared to a decline of 3.4% in May, aligning closely with market expectations of 1.3%[5][24] - The increase in imports was supported by a low base effect from the previous year and improved domestic demand due to expansionary policies[24] - High-tech products significantly contributed to import growth, with integrated circuits and aircraft showing strong performance[24] Trade Balance - China's trade surplus in June reached $114.77 billion, surpassing the expected $109 billion and up from $103.22 billion in May[5] - The trade surplus reflects a recovery in both exports and imports, indicating a positive shift in trade dynamics[5] Market Dynamics - The marginal improvement in external demand is attributed to a recovery in global manufacturing, with the global PMI rising to 49.5 in June[10] - Exports to emerging markets showed robust growth, with ASEAN exports increasing by 16.8% and exports to Africa rising by 34.8%[13]

Economic Growth - China's GDP grew by 5.2% year-on-year in Q2 2025, exceeding the expected 5.1% and up from 5.4% in Q1 2025[6] - The contribution of final consumption expenditure to GDP growth was 52.3% in Q2, an increase from Q1[7] - The cumulative GDP growth for the first half of 2025 was 5.3%, a 0.3 percentage point increase compared to the same period last year[7] Industrial Production - The industrial added value in June increased by 6.8% year-on-year, surpassing the expected 5.6%[6] - Manufacturing sector growth was particularly strong, with a 7.4% increase in June[13] - High-tech industries led the growth with a 9.7% year-on-year increase[16] Consumer Spending - Social retail sales in June grew by 4.8%, below the expected 5.6% and down from 6.4% in May[6] - The contribution of key consumer categories, such as home appliances and communication equipment, remained strong with growth rates above 10%[23] - Restaurant revenue growth significantly declined to 0.9%, down 5 percentage points from the previous value[19] Investment Trends - Fixed asset investment (excluding rural households) grew by 2.8% year-on-year in the first half of 2025, below the expected 3.7%[6] - Manufacturing investment growth fell to 5.1% in June, down from 7.8% previously[30] - Real estate development investment decreased by 12.9% year-on-year, indicating ongoing weakness in the sector[35] Employment Situation - The urban survey unemployment rate remained stable at 5.0% in June, unchanged from the previous value[6] - The average unemployment rate for the first half of 2025 was 5.2%, a slight decrease from Q1[38] - There was a divergence in unemployment rates between local and migrant workers, with local unemployment rising slightly to 5.1%[38]

Group 1: Investment Strategy Overview - The report emphasizes a bullish market outlook, indicating that the current market is in a "slow bull" phase, with significant participation opportunities for investors as various sectors show signs of recovery and growth [5][22][23] - The report identifies key support levels for the Shanghai Composite Index at around 3420 points, suggesting that this level can be used as a reference for market strength [5][22] - The report highlights the importance of monitoring oil prices, trading volumes, and the exchange rate of the Chinese yuan as critical indicators for market trends and potential corrections [5][22][23] Group 2: Market Performance and Sector Analysis - The A-share market has seen various indices break out of their previous trading ranges, with the technology and banking sectors leading the charge, while sectors like white wine and coal have underperformed [22][23] - The report notes that the software sector has outperformed, driven by news related to Nvidia's H20 GPU, while other sectors such as power and photovoltaic have shown weakness [23][24] - The report suggests that investors should actively participate in sectors benefiting from policy changes aimed at reducing internal competition, such as photovoltaic, live pig, and glass industries, which are currently at historical low levels [23][24] Group 3: Economic Indicators and Policy Developments - The report outlines that China's GDP grew by 5.3% year-on-year in the first half of the year, with industrial output increasing by 6.8%, indicating a stable economic environment [49][50] - The People's Bank of China has conducted a significant reverse repurchase operation of 1.4 trillion yuan, indicating efforts to maintain liquidity in the banking system [49] - The report mentions that the U.S. economic indicators are showing signs of recovery, with job vacancies stabilizing above pre-pandemic levels, which may influence global market sentiment [26][30]

Investment Rating - The industry rating is optimistic, expecting overall returns to exceed the CSI 300 index by more than 5% in the next six months [11] Core Insights - The report highlights the upgrade of the "old-for-new" housing policy in Qingdao, aiming to stabilize the real estate market and benefit residents. The new policy framework includes government guidance, policy support, and market operations, with over 4,400 applications received from citizens [8] - The Shenzhen land auction resulted in a new record for land price, with a floor price of 84,180 CNY per square meter and a premium rate of 86.1%, indicating strong market demand [5] - In Guangzhou, eight urban village reconstruction projects have commenced, expected to provide 6,000 housing units upon completion in 2027, marking a significant step in urban development [6] Market Performance - On July 14, 2025, the equity market saw most sectors rise, with the Shanghai Composite Index and Shenzhen Composite Index increasing by 0.27% and 0.15%, respectively. However, the Shenwan Real Estate Index fell by 1.29% [3] - The top five performing stocks in the real estate sector included Greenland Holdings and Wolong Real Estate, with increases of 10.10% and 10.06%, respectively. Conversely, stocks like Yuhua Development and Guangda Jiabao experienced declines of -10.03% and -9.89% [4]