Investment Rating - The report maintains a "Positive" outlook on the defense and military industry [5] Core Insights - The military trade market is expected to accelerate and improve efficiency, with a continued positive outlook on the military trade sector [10][12] - Geopolitical instability is likely to lead to sustained global demand for military trade, presenting significant development opportunities for China's military trade [14][15] - The current market position suggests a continued positive outlook on the military industry, with military trade expected to become a second growth driver [16] Summary by Sections Military Trade Sector - A high-level meeting between AVIC and Shaanxi Aircraft Industry Group highlighted the importance of military trade, focusing on high-quality development and addressing international market needs [9][12][13] - The European defense sector is undergoing upgrades, with countries increasing defense budgets, which may create supply gaps and opportunities for China's military exports [14][15] Performance and Market Trends - The defense and military industry index increased by 2.26%, outperforming the Shanghai Composite Index [18][19] - The report notes that most military companies have shown rapid growth in their half-year performance for 2025, with significant increases in net profits for several companies [30][32] Investment Recommendations - Suggested investment targets include: - Military Electronics: Zhenhua Technology (000733, Buy), Aerospace Electronics (002025, Buy) [17] - Key Materials and Parts: Western Superconductor (688122, Buy), Chujian New Materials (002171, Buy) [17] - Engine Supply Chain: Aero Engine Corporation of China (600893, Not Rated), Western Superconductor (688122, Buy) [17] - Military Trade: AVIC Shenyang Aircraft Corporation (600760, Not Rated), Guorui Technology (600562, Not Rated) [17]

Investment Rating - The report maintains a positive outlook on the defense and military industry, suggesting an increase in focus on military investments [4][5]. Core Insights - The military trade supply and demand are strongly resonating, creating a new industry landscape, with expectations for continuous progress [5]. - The military industry is entering an upward cycle, driven by domestic demand from military construction, particularly in the transition to "mechanization + informationization" and the upcoming "intelligent + unmanned" equipment [5]. - The global geopolitical changes are expanding military trade demand, with China's military products gaining recognition, leading to a strong resonance between supply and demand in military trade [5]. - The growth cycle in the military sector is expected to enhance industry valuations, with a recognition of "technological equity" in military advancements [5]. - Recommendations include increasing attention to military investments, focusing on next-generation equipment and precision-guided weapons, which are expected to see initial growth by 2025 [5]. Market Review - Last week, the Shenwan Defense and Military Index rose by 2.26%, while the CSI Military Leaders Index increased by 3.68%, outperforming the Shanghai Composite Index, which rose by 0.69% [6][4]. - The top five performing stocks in the defense and military sector were Beihua Co. (23.37%), Yingliu Co. (20.37%), Feilihua (15.98%), AVIC Shenyang Aircraft (12.78%), and Aerospace Power (11.37%) [6][13]. - The bottom five performing stocks included Changchun Yidong (-9.36%), Rongfa Nuclear Power (-6.6%), Rainbow Co. (-6.14%), Guorui Technology (-5.02%), and Galaxy Electronics (-4.66%) [6][13]. Valuation Changes - The current PE-TTM for the Shenwan Military Sector is 83.84, placing it in the upper range historically, with a valuation percentile of 71.57% since January 2014 [14]. - Valuations are slightly differentiated among sub-sectors, with aerospace and aviation equipment at a relatively high valuation since 2020 [14][19]. Key Valuation Targets - The report lists key valuation targets in the military sector, including companies like AVIC Shenyang Aircraft, AVIC Chengfei, and others, with projected net profits and PE ratios for the coming years [21].

Market Overview - On July 18, the A-share market experienced an upward trend, with the Shanghai Composite Index rising by 0.5% to close at 3534.48 points, and the ChiNext Index increasing by 0.34%. Market sentiment improved, leading to a trading volume of 1.59 trillion yuan [1]. Defense and Military Industry Performance - The defense and military sector continued to show strong performance, with the popular defense and military ETF (512810) rising by 1.06%, marking its highest closing price since November 14, 2024. The ETF recorded a trading volume of 92.06 million yuan for the day [1]. - For the week of July 14-18, the defense and military ETF (512810) accumulated a gain of 2.45%, achieving a four-week consecutive increase, with a total weekly trading volume of 404 million yuan, significantly higher than the previous week [2]. Earnings Forecasts and Stock Performance - As of July, the defense and military sector was primarily in a phase of adjustment, influenced by mid-year earnings expectations. However, from July 17 onwards, the sector began to rebound as several companies released positive earnings forecasts, indicating a recovery in the sector's fundamentals [3]. - Among the 29 component stocks of the defense and military ETF that have released mid-year earnings forecasts, 23 are expected to report profits. Notably, 11 companies are projected to see their net profits double, with Aerospace Science and Technology showing a growth rate exceeding 23 times [3]. Notable Stock Movements - The defense and military ETF's component stocks saw 59 stocks rise and 21 decline, with several stocks reaching historical or recent highs. Notable performers included AVIC Shenyang Aircraft Company, which rose by 2.92%, and Yingliu Co., which surged by 3.44% [4]. Future Outlook - The outlook for the defense and military sector appears promising, with multiple catalysts expected to drive growth. Short-term improvements in Q2 earnings are anticipated due to increased orders and a stabilization in military component orders. The sector is expected to gain further attention as the September 3 military parade approaches, potentially leading to structural investment opportunities [6]. - Long-term prospects are bolstered by geopolitical factors, such as the India-Pakistan conflict, which may enhance China's defense industry's profile and stimulate military trade. The upcoming centenary of the military in 2027 is also expected to sustain high demand for military equipment [6]. Investment Strategy - The defense and military ETF (512810) is highlighted as a strategic investment option, offering exposure to both traditional and emerging military capabilities. It includes a diverse range of sectors such as commercial aerospace, low-altitude economy, large aircraft, deep-sea technology, and military AI. The ETF is considered a low-risk investment vehicle with a lower entry threshold compared to individual stocks [7].

Core Viewpoint - The report highlights significant adjustments in the heavy holdings of Liu Gesong's six funds managed by GF Fund, particularly in the new energy vehicle and semiconductor sectors, with a notable shift towards new consumption, internet, and military industries [1][2]. Fund Holdings Adjustment - Liu Gesong's funds have reduced their positions in several previously favored stocks, including: - North Huachuang: Holdings decreased by approximately 17.69% to 161,240 shares [2]. - Seres: Holdings reduced by 9.14% [6]. - EVE Energy: Holdings decreased by 4.16% [6]. - JinkoSolar: Holdings down by 10.77% [6]. - Conversely, there has been a significant increase in holdings of stocks such as: - DeYe Co.: Increased by 40% [3][8]. - Xichuang Data: Increased by nearly 76% [3]. - Xiaomi Group-W: Increased by 25.66% [7]. Fund Performance - The overall performance of Liu Gesong's funds in Q2 was underwhelming, with all funds experiencing net redemptions: - The best-performing fund, GF Multi-Dimensional Emerging, recorded a net value growth rate of 7.91% [4]. - Other funds, such as GF Small Cap Growth A and C, reported growth rates of 2.38% and 2.28%, respectively [4]. - GF Innovation Upgrade and GF Technology Pioneer recorded negative returns [4]. Market Context - The A-share market saw mixed performance in Q2, with the Shanghai Composite Index rising by 3.26% and the Shenzhen Component Index slightly declining by 0.37% [5]. - Key sectors such as military, banking, and telecommunications showed significant gains, while sectors like food and beverage, home appliances, and steel performed poorly [5]. - Liu Gesong remains optimistic about the domestic economy's resilience, citing factors such as the easing of geopolitical tensions and supportive domestic policies [5].

Market Overview - The net inflow of large orders in the two markets reached 16.628 billion yuan, with 44 stocks seeing net inflows exceeding 200 million yuan, led by Changshan Beiming with a net inflow of 2.333 billion yuan [1] - The Shanghai Composite Index closed up 0.37%, with a total of 2,101 stocks experiencing net inflows and 2,633 stocks seeing net outflows [1] Industry Analysis - Among the 19 industries with net inflows, the computer sector had the highest net inflow of 5.790 billion yuan, with an index increase of 1.33%. The electronics sector followed with a net inflow of 4.318 billion yuan and a rise of 2.18% [1] - The public utilities sector experienced the largest net outflow of 809 million yuan, followed by the banking sector with a net outflow of 741 million yuan [1] Individual Stock Performance - 44 stocks had net inflows exceeding 200 million yuan, with Changshan Beiming leading at 2.333 billion yuan, followed by Jianghuai Automobile at 1.193 billion yuan [2] - Stocks with significant net inflows saw an average increase of 7.58%, outperforming the Shanghai Composite Index, with 43 stocks closing higher, including Man Kun Technology and Jin Modern, which hit the daily limit [2] - The top sectors for net inflows among individual stocks were computer, electronics, and communication, with 10, 9, and 4 stocks respectively [2] Top Net Inflow Stocks - The top stocks by net inflow include: - Changshan Beiming: 2.333 billion yuan, 10.02% increase [2] - Jianghuai Automobile: 1.193 billion yuan, 10.01% increase [2] - Runhe Software: 903 million yuan, 9.68% increase [2] - Construction Industry: 771 million yuan, 10.01% increase [2] - AVIC Shenyang Aircraft: 745 million yuan, 10.00% increase [2] Top Net Outflow Stocks - The stocks with the largest net outflows include: - ST Huatuo: 398 million yuan, -4.77% decrease [4] - Sunshine Power: 329 million yuan, -0.55% decrease [4] - Zhongdian Port: 307 million yuan, -1.21% decrease [4] - Zijin Mining: 267 million yuan, -0.37% decrease [4] - C Huaxin: 240 million yuan, -9.19% decrease [4]

Core Viewpoint - The China Securities Military Industry Leading Index has shown significant growth, reflecting the strong performance of leading companies in the military sector [1][2]. Group 1: Index Performance - The China Securities Military Industry Leading Index opened lower but closed higher, increasing by 3.56% to 3044.24 points, with a trading volume of 26.227 billion yuan [1]. - Over the past month, the index has risen by 4.29%, by 11.43% over the last three months, and by 6.85% year-to-date [2]. Group 2: Index Composition - The index comprises 30 listed companies involved in military products and services, reflecting the overall performance of leading companies in the military sector [2]. - The top ten weighted companies in the index are: AVIC Shenyang Aircraft (11.42%), Aero Engine Corporation of China (8.21%), AVIC Optical-Electrical Technology (8.05%), AVIC Xi'an Aircraft (6.48%), AVIC Aircraft (4.77%), Aerospace Electronics (4.33%), Haige Communications (4.16%), AVIC Chengfei (4.11%), Western Superconducting Technologies (3.8%), and AVIC High-Tech (3.63%) [2]. Group 3: Industry Breakdown - The industry composition of the index shows that 86.78% is in the industrial sector, 6.68% in materials, 4.16% in communication services, and 2.38% in information technology [2]. Group 4: Index Adjustment - The index samples are adjusted semi-annually, with adjustments occurring on the next trading day after the second Friday of June and December [3]. - Weight factors are generally fixed until the next scheduled adjustment, with special circumstances allowing for temporary adjustments [3]. Group 5: Investment Products - Public funds tracking the military industry leading index include the Fortune China Securities Military Industry Leading ETF [4].

Market Overview - The A-share market has shown a positive trend with the Shanghai Composite Index rising by 0.37% to 3516.83 points, the Shenzhen Component Index increasing by 1.43% to 10873.62 points, and the ChiNext Index up by 1.75% to 2269.33 points [1] - There is a noticeable increase in foreign investment interest in the Chinese market, with South Korean investors' cumulative trading volume in mainland and Hong Kong stocks exceeding $5.4 billion this year, making China the second-largest overseas investment destination for South Korean investors after the US [1][10] Sector Performance - The computing power, innovative pharmaceuticals, and military sectors have experienced significant gains, with the computing power sector leading the charge [2] - In the computing power sector, companies like Benq Intelligent, Shijia Photon, and Dekeli saw their stock prices rise over 10%, while Cambridge Technology and Changfei Fiber reached their daily limit [2][4] - The innovative pharmaceutical sector remains strong, with companies such as Weikang Pharmaceutical and Maiwei Bio achieving a 20% increase in stock price, and several others rising over 10% [5] Investment Sentiment - Citigroup has upgraded the ratings for Chinese and South Korean stock markets to "overweight," citing a constructive medium-term outlook despite macroeconomic volatility [9] - The report predicts that the Hang Seng Index will reach a target price of 25,000 points by the end of this year and 26,000 points by mid-next year, while the CSI 300 Index is expected to hit 4,200 points by year-end and 4,350 points by mid-next year [9] - In addition, the Invesco Global Sovereign Asset Management Research indicates a rebound in interest from international investment institutions towards the Chinese market, with a total asset management of approximately $27 trillion [12] Future Outlook - The military sector is also gaining traction, with companies like AVIC Shenfei and AVIC Aviation experiencing stock price surges [11] - The recent announcement by NVIDIA to resume supply of the H20 computing power chip for the Chinese market is expected to enhance domestic AI model training and inference capabilities, creating a positive feedback loop for demand [4] - The National Healthcare Security Administration's new policy for innovative drugs aims to balance accessibility and sustainability, indicating a strategic shift in healthcare policy that could benefit the pharmaceutical sector [6]

Group 1 - The core viewpoint of the article highlights that the stock market has seen a significant number of stocks reaching their daily limit up, with a total of 58 stocks hitting the limit, and a promotion rate of 38.46% for consecutive stocks [1] - Among the 16 consecutive stocks, 5 achieved three consecutive limit ups or more, indicating a mixed performance in the high-level consecutive stocks, with some stocks like Lansheng Co. and Shanghai Material Trade successfully advancing while others like Dayilong and Huahong Technology dropped over 6% [1] - The article notes a market segmentation in consecutive stock tiers, indicating increasing divergence, particularly with gaps between the 3-4 and 5-6 tiers [1] Group 2 - The article provides detailed statistics on the promotion rates of various stocks, such as 100% for Shunwei New Materials (robotics) moving from 6 to 7 consecutive limits, and 50% for Lansheng Co. (securities investment) moving from 4 to 5 [2] - Other notable stocks include Lisheng Pharmaceutical (performance) with a 28% promotion rate from 2 to 3, and Yingli Automotive (automotive) with a 26% promotion rate from 1 to 2 [2] - Additionally, the article mentions stocks like Liugang Co. achieving 7 consecutive limits over 13 days in the steel sector, and Wohua Pharmaceutical with 3 consecutive limits over 6 days, indicating strong performance in specific sectors [2]

Market Overview - The three major stock indices in China collectively rose, with the Shanghai Composite Index closing at 3516.83 points, up 0.37% [1] - The Shenzhen Component Index closed at 10873.62 points, up 1.43% [1] - The ChiNext Index closed at 2269.33 points, up 1.76% [1] - The total trading volume in the Shanghai and Shenzhen markets reached 1.54 trillion yuan, an increase of 97.3 billion yuan compared to the previous trading day [1] Sector Performance - The electronic components sector led the gains, with companies like Mankun Technology hitting the daily limit of 20% increase, and Shengyi Electronics rising over 13% [4] - The CPO concept showed strong performance throughout the day, while the military equipment sector was also active, with companies like Zongheng Co. and Chenxi Aviation seeing significant increases [5][6] - Conversely, the precious metals sector experienced declines, with Shandong Gold dropping over 2% [7] Capital Flow - Main capital flows showed a net inflow into sectors such as electronics, computers, and communications, while there was a net outflow from public utilities, real estate, and coal sectors [8] - Specific stocks like Changshan Beiming and Runhe Software saw net inflows of 2 billion yuan and 925 million yuan, respectively [9] - On the outflow side, companies like China Electric Power and Sunshine Power faced sell-offs of 444 million yuan and 397 million yuan, respectively [10] Institutional Insights - Dongfang Securities noted that overseas liquidity remains volatile, with a short-term rebound in the US dollar, leading to limited domestic opportunities in July [12] - CITIC Securities highlighted that mid-year performance reports could drive market sentiment towards technology sectors [13] - Galaxy Securities mentioned that the large financial sector is entering a phase of rotation and adjustment [14]

Market Overview - The A-share market showed a strong performance on July 17, with the Shanghai Composite Index rising by 0.37% and the Shenzhen Component Index increasing by 1.43% [1][2] - The total trading volume reached 1.56 trillion yuan, an increase of 98.5 billion yuan compared to the previous trading day, with over 3,500 stocks rising [1] Sector Performance - The CPO concept stocks performed strongly, with notable gains from companies like Shengyi Technology and Changfei Optical Fiber, which hit the daily limit [4][5] - The pharmaceutical sector also saw significant gains, with stocks such as Chengdu Xian Dao and Xin Li Tai reaching their daily limit [6][7] - The military industry stocks were active, with AVIC Shenfei reaching a historical high [6] - The steel sector experienced a rally, with Liugang Co. and Linggang Co. hitting the daily limit, while other steel stocks also showed positive performance [8] Notable Stocks - In the CPO sector, Shengyi Technology rose by 13.86%, while Shijia Photon increased by 11.10% [5] - In the military sector, AVIC Shenfei and other companies saw gains exceeding 6% [6] - The innovative drug sector had a surge, with Chengdu Xian Dao and Maiwei Biotech both hitting the daily limit [7] - In the steel sector, Liugang Co. rose by 10.08%, and Linggang Co. increased by 5.32% [8] Financial Sector - The financial sector, including banks and insurance companies, showed weakness, with *ST Tianmao dropping over 5% and several banks declining by more than 1% [12][13] Precious Metals and Real Estate - The precious metals sector experienced low volatility, with Shandong Gold falling over 2% [9][10] - The real estate sector faced adjustments, with companies like Zhongxin Group dropping over 6% [11] Future Outlook - According to research from China International Capital Corporation, the financial data indicates that market conditions are improving, and the current market point is significantly higher than the average cost over the past year and three years, suggesting a better profit outlook [14]