Investment Rating - Industry Rating: Recommended [6] Core Insights - The passing of the US "GENIUS Act" and Hong Kong's "Stablecoin Ordinance" marks a significant milestone in the recognition of stablecoins, potentially transforming virtual assets into key components of financial infrastructure [2][19] - Stablecoins are expected to bridge the gap between digital finance and traditional finance, enhancing their acceptance by regulatory bodies due to their stable value and payment attributes [2][12] - The total market capitalization of stablecoins exceeded $269 billion as of July 12, 2025, with over 90% being USD-pegged stablecoins [17] Regulatory Framework - The US "GENIUS Act" requires stablecoin issuers to hold 1:1 cash or treasury reserves and grants the Federal Reserve emergency stop authority to prevent systemic risks [20] - Hong Kong's "Stablecoin Ordinance" establishes a licensing system for stablecoin issuers, mandating sufficient reserves and compliance with anti-money laundering regulations [22][23] - The European Union's MiCA regulation, effective from December 30, 2024, also aims to regulate stablecoins, focusing on consumer protection and market integrity [19][21] Stablecoin Characteristics - Stablecoins are pegged to fiat currencies, balancing openness and stability, unlike Bitcoin which is highly volatile [3][12] - They are designed to function as a payment tool, with lower transaction costs and faster settlement times compared to traditional payment systems [17][23] - The stablecoin ecosystem includes issuers, exchanges, and application scenarios, supported by reserve banks and compliance service providers [25][26] Market Opportunities - The implementation of the "Stablecoin Ordinance" is expected to boost the development of stablecoin issuance, trading, and cross-border payments in Hong Kong, positioning it as a global virtual asset hub [8][23] - Companies like ZA Bank are poised to benefit from the stablecoin ecosystem by providing reserve banking services [26][28] - The regulatory environment in Hong Kong is conducive for local securities firms to expand their services into the virtual asset space, creating new growth opportunities [31][32]

Investment Rating - The industry rating is "Recommended" [4] Core Insights - The non-bank financial sector index increased by 3.96%, outperforming the CSI 300 index by 3.14 percentage points, ranking third among all primary industries [2][15] - The implementation of the "28 Measures for High-Quality Development of the Securities Industry" aims to enhance self-regulation and promote high-quality development within the securities sector [3][16] - The recent notification from the Ministry of Finance emphasizes the importance of long-term stable investments by state-owned insurance companies, adjusting performance evaluation metrics to include longer time frames [7][17] Market and Sector Performance - The average daily trading volume of A-shares reached 14,961 million yuan, a week-on-week increase of 3.8% and a year-on-year increase of 138.2% [20] - In the second quarter of 2025, the average daily trading volume was 12,886 million yuan, up 55.7% from the same period in 2024 [20] - As of July 10, 2025, the margin trading balance was 18,737.06 billion yuan, a 0.78% increase from the previous period and a 19.57% increase compared to the average level in 2024 [20] Regulatory Developments - The "Implementation Opinions" released by the China Securities Association outlines 28 measures to strengthen self-regulation and enhance the service capabilities of securities firms [3][16] - The new performance evaluation system for state-owned insurance companies will now consider annual, three-year, and five-year indicators for net asset return and capital preservation rates, with respective weights of 30%, 50%, and 20% [7][17][19] Investment Opportunities - The adjustment in performance evaluation metrics for insurance companies is expected to reduce sensitivity to short-term market fluctuations and enhance the willingness of insurance funds to enter the market, potentially stabilizing market operations [8][19] - The securities sector is anticipated to achieve high-quality development as the new measures are gradually implemented, fostering a more robust industry ecosystem [6][16]

Investment Rating - Industry Rating: Recommended [4] Core Insights - The expectation for stablecoin policy is likely to strengthen, with the Shanghai State-owned Assets Supervision and Administration Commission holding a special study meeting on the development trends and response strategies for cryptocurrencies and stablecoins [11][18] - The Hong Kong Stablecoin Regulation has been officially released and is expected to be implemented on August 1, 2025, establishing a licensing system for fiat-backed stablecoin issuers and enhancing the regulatory framework for virtual asset activities [2][19] - The tokenization ecosystem is extending, with application scenarios continuously enriching, as real asset tokenization is accelerating from regional pilots to global collaboration [3][12] Summary by Sections Stablecoin Policy Expectations - The Shanghai State-owned Assets Supervision and Administration Commission's meeting indicates a potential strengthening of domestic stablecoin policies following the implementation of overseas and Hong Kong regulations [11][18] - The Hong Kong Stablecoin Regulation aims to maintain financial stability while promoting financial innovation, with a licensing system for stablecoin issuers [2][19] Tokenization Ecosystem - The tokenization of real assets is gaining momentum, with companies like Ant Group collaborating with Circle Internet Group to adopt stablecoins on their blockchain platform [3][12] - The recent launch of GFToken by Guangfa Securities (Hong Kong) marks a significant step in deploying multi-currency interest rate mechanisms on-chain [3][12] Investment Recommendations - Beneficiary stocks include: - RWA: Xiexin Energy Technology, Langxin Group, Hongbo Co., Hainan Huatie, Youfang Technology, Yingfeng Environment, etc. - Stablecoins: Sifang Jingchuang, Yuxin Technology, Lakala, New Guodu, Jingbeifang, Tianyang Technology, Hengbao Co., Xiongdi Technology, Yuyin Co., Chutianlong, Dazhihui, Yonyou Network, Xinan Century, etc. - Hong Kong stocks: Zhong'an Online, Lianyi Technology, Lianlian Digital, China Everbright Holdings, Yika, etc. - Licensed: China Post Capital, Nanhua Futures, Hongye Futures, Ruida Futures, Guotai Junan International, Yaocai Securities Finance, etc. [6][34] Market Performance - The computer industry saw a weekly increase of 3.22%, outperforming the CSI 300 index, which rose by 0.82% [35][36] - Among 321 stocks in the computer sector, 256 stocks rose, indicating a strong market performance [42] Core Recommended Stocks - The top-performing recommended stock was Yuxin Technology, with a weekly increase of 7.59%, while Langxin Group experienced a decline of 3.42% [48] Valuation Overview - The SW computer industry PE (TTM) has risen from a low of 37.60 times in 2018 to 84.59 times, exceeding the historical average of 58.17 times from 2010 to 2025 [51]

Summary of Key Points Core Viewpoint - The total trading volume of the Shanghai and Shenzhen stock markets reached 17,121.33 billion yuan on July 11, marking an increase of 2,179.63 billion yuan compared to the previous day [1] Trading Volume Details - The Shanghai Stock Exchange recorded a trading volume of 7,535.49 billion yuan, up from 6,131.61 billion yuan on the previous trading day, with a trading volume of 664 million shares compared to 564 million shares [1] - The Shenzhen Stock Exchange had a trading volume of 9,585.84 billion yuan, an increase from 8,810.09 billion yuan, with a trading volume of 743 million shares compared to 702 million shares [1] Leading Companies by Trading Volume - Dongfang Caifu topped the trading volume with 263.14 billion yuan [1] - Other notable companies included: - Northern Rare Earth with 100.49 billion yuan - Zhina Compass with 87.94 billion yuan - Kweichow Moutai with 82.39 billion yuan - PetroChina Capital with 74.23 billion yuan [1]

Group 1 - The non-bank financial sector saw a net inflow of over 8.7 billion yuan, indicating strong investor interest in this area [1][2] - The securities sector also experienced significant net inflow, amounting to 7.0 billion yuan, reflecting positive market sentiment [2] - The computer sector recorded a net inflow of 5.9 billion yuan, suggesting a growing confidence in technology-related investments [2] Group 2 - The new energy industry faced a net outflow of 3.8 billion yuan, indicating potential concerns among investors [2] - The electronics sector experienced a net outflow of 2.6 billion yuan, which may reflect market volatility or shifting investor priorities [2] - The transportation equipment sector saw a net outflow of 2.4 billion yuan, suggesting a cautious approach from investors in this segment [2] Group 3 - Among individual stocks, Dongfang Wealth led with a net inflow of 1.5 billion yuan, highlighting its strong market performance [3] - Baogang Co. and Tonghuashun also saw significant net inflows of 0.7 billion yuan and 0.6 billion yuan respectively, indicating robust investor interest [3] - On the sell side, Sairis experienced the highest net outflow of 1.6 billion yuan, suggesting a lack of confidence from investors [4]

Group 1: Market Trends - The internet finance sector is experiencing a strong rally, with stablecoin concepts seeing significant gains, exemplified by the Software 50 ETF (159590) rising over 3% [1] - A meeting in Shanghai focused on the development trends and strategies for cryptocurrencies and stablecoins, emphasizing the need for innovation and research in digital currencies [1] Group 2: Regulatory Developments - The People's Bank of China released a draft for the "Rules for Cross-Border Payment System Business," aimed at managing the expansion of CIPS and enhancing participant management [3] - The new regulations are expected to facilitate the continuous expansion of CIPS and accelerate the internationalization of the Renminbi, indicating a shift towards more flexible regulatory frameworks [3] Group 3: Software Industry Insights - A training program for talent in enterprise basic software and industrial software was launched, highlighting the importance of software development in implementing a strong manufacturing strategy [4] - The Software 50 ETF tracks the CSI Software Index, which includes a diverse range of software companies, with approximately 67% of its weight in application software and over 15% in AI-related fields [5] Group 4: Cloud Infrastructure Spending - Canalys reported that spending on cloud infrastructure services in mainland China reached $11.6 billion in Q1 2025, marking a 16% year-over-year increase [5] - Alibaba Cloud holds a 33% market share in the cloud services market in mainland China, followed by Huawei Cloud at 18% and Tencent Cloud at 10% [5]

Market Overview - The market showed a strong upward trend in the morning, with both the Shanghai Composite Index and the ChiNext Index rising over 1% [1] - The total trading volume in the morning session reached 1.03 trillion [1] Sector Performance - The rare earth permanent magnet sector experienced a collective surge, with stocks such as Northern Rare Earth, Baogang Co., and Shenghe Resources hitting the daily limit [1] - Financial stocks, including brokerage and banking sectors, continued their strong performance, with stocks like China Merchants Bank and Harbin Investment hitting the daily limit, while Industrial and Commercial Bank of China and Zhihang Innovation reached new highs [1] - The innovative drug concept remained active, with stocks like WuXi AppTec, Kailai Pharmaceutical, and Lianhuan Pharmaceutical also hitting the daily limit [1] - Conversely, the PCB concept stocks faced adjustments, with Jin'an Guoji hitting the daily limit down [1] Stock Movement - A total of 2,667 stocks rose, with 50 stocks hitting the daily limit up; 2,237 stocks declined, with 10 stocks hitting the daily limit down [1] - 21 stocks experienced a "炸板" (a term indicating a stock hitting the limit up and then falling back), with a rate of 33% [1]

Core Viewpoint - The financial technology sector is experiencing significant activity, particularly in stablecoin-related stocks, with notable gains in various companies and ETFs, indicating a positive market sentiment and investment potential in this area [1][3]. Group 1: Market Activity - Stablecoin concept stocks are active, with companies like Guoao Technology hitting a 20% limit up, and others like New Wisdom Software and Geer Software rising over 5% [1]. - The financial technology ETF (159851) is showing strong performance, with a price increase of over 2% and a trading volume surpassing 300 million yuan, indicating increased investor interest [1][2]. - Over the past five days, the financial technology ETF has attracted over 370 million yuan in capital inflow, highlighting its liquidity and market appeal [1][3]. Group 2: Investment Opportunities - According to招商证券, technology innovation remains a key growth theme, with a focus on financial technology as a promising investment direction [3]. - The stablecoin and Real World Assets (RWA) are identified as clear development directions within financial technology, with international advancements in tokenization of securities [3]. - The financial technology ETF (159851) has a current scale exceeding 6.6 billion yuan, with an average daily trading volume of over 500 million yuan in the past six months, showcasing its liquidity advantages [3].

Investment Rating - The report maintains a neutral/cautious outlook on the near-term performance of the China market due to earnings risks and unattractive valuations, while remaining structurally bullish on China's long-term turnaround [1]. Core Insights - The China market outperformed in 1Q25 but traded sideways in 2Q25, with MSCI China showing a flat performance of +0.7% compared to significant gains in global indices [2][16]. - The report emphasizes a focus on bottom-up earnings stories, particularly in mid-small-cap stocks, while avoiding sectors heavily reliant on policy stimulus or exports [1][4]. - Key macroeconomic indicators show signs of weakness, with credit growth modestly increasing but insufficient to drive meaningful GDP recovery [3][12]. Market Performance - In 2Q25, MSCI China lagged behind global peers, with a P/E valuation of 11.4x, near long-term averages [2][9]. - Best-performing sectors included Healthcare (+11.5%), Financials (+11.1%), and IT (+9.5%), while Consumer Discretionary (-11.2%), Real Estate (-3.1%), and Consumer Staples (-1.6%) underperformed [2][16]. Macro Environment - Credit growth rose from 8.0% YoY in 2024 to 8.7% in May 2025, but loan growth declined from 7.0% to 6.7% [3][54]. - The property market showed recovery in late 2024 but declined again in 2Q25, indicating ongoing challenges in the real estate sector [3][15]. - The report anticipates nominal GDP growth to decelerate to 3-4% in 2H25 amid trade tensions and insufficient credit growth [47][48]. Sector Model Portfolio - For 3Q25, the report favors sectors focused on domestic demand, such as financials and internet, while downgrading liquors and real estate due to earnings risks [4][14]. - The model portfolio includes banks and brokers for better downside protection, while tech hardware and gold sectors are upgraded [4][14]. Valuation and Earnings Revision - The average 12-month forward P/E valuation for the CSI 300 rebounded to 13x, while the MSCI China Index remained above 11x, indicating a discount to long-term averages [38][39]. - In 2Q25, consensus earnings for MSCI China were revised down by 0.9% QoQ, with significant downgrades in Real Estate, Utilities, and Energy sectors [42][42].

Group 1 - The core index of the A-share market showed mixed performance, with the CSI 500 Information Technology Index declining by 1.03% to 7591.7 points, with a trading volume of 53.243 billion yuan [1] - Over the past month, the CSI 500 Information Technology Index has increased by 4.95%, by 18.19% over the last three months, and by 10.82% year-to-date [1] - The CSI 500 Index is categorized into 11 primary industries, 35 secondary industries, and over 90 tertiary industries, providing a comprehensive analysis tool for investors [1] Group 2 - The top ten weighted stocks in the CSI 500 Information Technology Index include Shenghong Technology (5.83%), Huagong Technology (3.01%), Runhe Software (2.5%), and others [1] - The market capitalization distribution of the CSI 500 Information Technology Index shows that the Shenzhen Stock Exchange accounts for 57.95%, while the Shanghai Stock Exchange accounts for 42.05% [1] - The CSI 500 Information Technology Index consists entirely of companies from the information technology sector, with a 100% allocation [2] Group 3 - The index sample is adjusted biannually, with adjustments occurring on the next trading day after the second Friday of June and December [2] - Weight factors are generally fixed until the next scheduled adjustment, but can be modified in case of temporary adjustments due to sample changes [2] - Special events affecting sample companies, such as delisting or mergers, will lead to corresponding adjustments in the index sample [2]