Macro and Strategy Research - The manufacturing sector shows signs of recovery with the May PMI data indicating a manufacturing purchasing managers' index (PMI) of 49.5%, a non-manufacturing business activity index of 50.3%, and a composite PMI output index of 50.4% [2] - The production index increased by 0.9 percentage points to 50.7%, attributed to a low base from April and improved US-China trade relations leading to a "export rush effect" [3] - New orders index rose by 0.6 percentage points to 49.8%, while new export orders increased by 2.8 percentage points to 47.5% due to the temporary suspension of certain tariffs [3] - Large enterprises' manufacturing PMI rose by 1.5 percentage points to 50.7%, indicating a positive outlook for production and potential benefits for small and medium enterprises [3] - The non-manufacturing business activity index slightly decreased by 0.1 percentage points to 50.3%, with the construction sector seeing a decline while the service sector experienced a minor increase [4] - The composite PMI output index rose by 0.2 percentage points to 50.4%, reflecting a synchronized recovery in both manufacturing and non-manufacturing sectors [4] - The short-term outlook suggests that the "export rush effect" may continue due to a 90-day tariff exemption, although seasonal factors may exert downward pressure in June [4] Industry Research - The metal industry faces ongoing supply surplus pressures, with significant declines in lithium prices observed in May [6] - Steel demand is expected to remain weak in June due to weather factors, with prices likely to fluctuate [6] - Copper prices may experience short-term fluctuations due to seasonal demand and trade policy uncertainties, although domestic stimulus measures may provide some support [7] - Aluminum prices are anticipated to remain weak, influenced by traditional seasonal demand and ongoing uncertainties in international trade relations [7] - Lithium prices are under pressure due to increased supply from salt lake lithium extraction, with expectations of continued weakness in the short term [7] - The cobalt market shows no significant support for price increases, with a general expectation of price adjustments [7] - Nickel prices are expected to fluctuate, with attention on Indonesia's nickel export policies [7] - The strategy for copper and aluminum suggests resilience in demand supported by domestic economic stimulus and potential improvements in overseas demand due to changes in EU tariff policies [8] - Long-term factors such as high US debt levels, inflation risks, and global geopolitical complexities are expected to support gold prices [8] - The rare earth sector is positioned for long-term growth driven by new demand from robotics and renewable energy sectors [8]

Macro and Strategy Research - The external environment shows volatility, with the US experiencing a decline in durable goods orders, particularly in non-defense capital goods, leading to cautious investment outlooks among businesses [2][3] - Domestic policies are expected to focus on boosting internal demand, with local governments implementing measures to enhance consumption, reflecting a trend towards quality upgrades and environmental improvements [3] Fixed Income Research - Industrial enterprise profit data for January to April shows improvement, with a narrowing decline in profit margins due to the impact of tariff policies and falling international commodity prices [4][6] - The primary market saw the issuance of 66 bonds totaling 769.2 billion, with net financing of 511.1 billion, indicating a high issuance scale for government bonds [6] - The secondary market experienced mixed performance in bond yields, with the 10-year government bond yield decreasing by 3 basis points to 1.69% [6][7] Industry Research - The pharmaceutical and biotechnology sector continues to thrive, with multiple innovative drugs receiving approval, including three from Heng Rui Medicine and others from Fosun Pharma and Zai Lab [8][10] - The industry saw a 2.26% increase in the pharmaceutical sector index, outperforming other sectors, with a current price-to-earnings ratio of 27.74, indicating a 150% premium over the CSI 300 index [10] - The upcoming American Society of Clinical Oncology (ASCO) conference is expected to provide significant updates on innovative drug data, suggesting continued investment opportunities in the sector [11]

Investment Rating - The industry maintains a "Neutral" rating [7][62]. Core Views - The pharmaceutical and biotechnology industry continues to experience a favorable environment with multiple innovative drugs receiving approval for market entry, indicating sustained industry vitality [6][7]. - The recent approval of several innovative drugs, including those from 恒瑞医药 and 复星医药, highlights ongoing advancements in drug development and potential investment opportunities [6][29][30]. - The upcoming American Society of Clinical Oncology (ASCO) conference is expected to provide further updates on significant research findings, which may influence investment strategies in innovative drugs and related sectors [7][61]. Industry News - 恒瑞医药 has received conditional approval for three Class 1 innovative drugs, including 苹果酸法米替尼胶囊 and 注射用瑞康曲妥珠单抗 [4][29]. - 复星医药's subsidiary has also gained approval for drugs such as 枸橼酸伏维西利胶囊 and 芦沃美替尼片 [4][30]. - 石药集团 is in discussions for potential licensing and collaboration on several products, which could lead to significant financial opportunities [4][31]. - 泽璟制药's 盐酸吉卡昔替尼片 has been approved for market entry, expanding its product offerings [4][32]. Market Review - In the week from May 23 to May 29, 2025, the Shanghai Composite Index fell by 0.50%, while the Shenzhen Component Index decreased by 0.90%. In contrast, the pharmaceutical and biotechnology sector rose by 2.26%, with most sub-sectors showing positive performance [5][45]. - The current price-to-earnings ratio (TTM) for the pharmaceutical and biotechnology industry is 27.74 times, with a valuation premium of 150% relative to the CSI 300 index [5][51]. Weekly Strategy - The ongoing trend in innovative drug approvals is expected to continue, with significant attention on the impact of U.S. tariff policy changes on the CXO sector [6][59]. - Investors are advised to focus on innovative drugs and related supply chains, as well as sectors benefiting from domestic demand recovery, such as medical services and pharmaceutical commerce [7][61].

Market Review - The important indices showed mixed performance over the past five trading days, with the Shanghai Composite Index down by 0.50% and the ChiNext Index down by 1.61% [2] - The trading volume continued to shrink, with a total turnover of 5.36 trillion yuan, averaging 1.07 trillion yuan per day, a decrease of 524.08 billion yuan compared to the previous five trading days [2] - Among the industries, the environmental protection, pharmaceutical, and computer sectors saw the highest gains, while the power equipment, comprehensive, and automotive sectors experienced the largest declines [2] Data Insights - From January to April, the profit growth rate of large-scale industrial enterprises continued to recover. However, the industrial added value growth rate showed a decline compared to the first quarter due to the impact of tariff policies on exports [2] - The Producer Price Index (PPI) also saw a year-on-year decline, leading to a slight decrease in revenue growth. However, the profit margin decline narrowed, providing some support for enterprise profits [2] - Looking ahead, the easing of Sino-US trade relations in May and the "export rush effect" from tariff exemptions are expected to support revenue and improve profit growth for industrial enterprises [2] Policy Developments - Consumption-boosting measures are being implemented, with the Fujian provincial government announcing a special action plan to enhance consumption, focusing on service consumption and new consumption areas such as health and low-altitude economy [3] - The plan encourages flexible work arrangements to create more consumption scenarios, which is expected to stimulate consumer demand [3] - Overall, these measures are anticipated to provide incremental support for the consumption sector as part of the strategy to strengthen domestic circulation [3] Strategy Outlook - The market is expected to continue oscillating at reasonable levels, with future opportunities depending on incremental changes in the market [4] - If external risks or fundamental factors lead to unexpected downturns, stable funding support may help form a temporary market bottom [4] - A "barbell" investment strategy is recommended, focusing on high-dividend and relatively underweight sectors like banking, while also looking for thematic investment opportunities in new consumption areas [4]

Market Overview - During the week of May 21 to May 27, the A-share market saw all major indices decline, with the ChiNext Index experiencing the largest drop of 2.77%. The Shanghai Composite Index fell by 1.18%, while the Shenzhen Component Index decreased by 2.15% [2] - As of May 27, the margin trading balance in the Shanghai and Shenzhen markets was 1,804.733 billion yuan, a decrease of 2.577 billion yuan from the previous week. The financing balance was 1,792.922 billion yuan, down by 2.292 billion yuan, and the securities lending balance was 11.812 billion yuan, down by 0.285 billion yuan [2] Industry Insights - In the financing activities, the automotive, pharmaceutical, and non-ferrous metal industries saw significant net buying, while the electronics, computer, and non-bank financial sectors experienced lower net buying [3] - The financing buy-in ratio was notably high in the non-bank financial, banking, and steel industries, while it was lower in textiles, light manufacturing, and retail [3] Company Announcements - Huanghe Xuanfeng plans to establish Henan Qianyuan Chip Drilling Semiconductor Technology Co., Ltd. in partnership with Bozhi Jinduan [5] - Tianyi Shangjia intends to change its stock abbreviation to Tianyi New Materials [5] Machinery Industry Performance - From January to April 2025, excavator sales reached 83,500 units, representing a year-on-year increase of 21.40%, with domestic sales accounting for 49,100 units, up by 31.90% [6] - The construction machinery industry is experiencing an upward trend, driven by improved construction activity, particularly in road equipment, which saw significant increases in operating rates [6] Investment Recommendations - The report maintains a "positive" rating for the machinery industry, with specific "buy" ratings for companies such as Sany Heavy Industry, Zoomlion Heavy Industry, Hengli Hydraulic, and CRRC Corporation [6]

Macro and Strategy Research - In the first four months of 2025, the profit of industrial enterprises above designated size increased by 1.4% year-on-year, indicating a continued recovery [2] - The industrial added value increased by 6.4% year-on-year, while the PPI decreased by 2.4% year-on-year, reflecting a decline in both volume and price [2] - The profit margin for the period was 4.87%, down 2.6% year-on-year, but the decline was narrower compared to the previous quarter, providing some support for enterprise profits [2][3] - Different types of enterprises showed varied profit growth, with private and joint-stock enterprises improving, while state-owned and foreign enterprises continued to decline [2][3] - Most of the 41 industrial categories saw positive profit growth, particularly in sectors like mining, food processing, and high-tech manufacturing, indicating strong support from "two new" policies [3] Fixed Income Research - The issuance rates for credit bonds decreased, with a range of -3 BP to -1 BP, and the net financing amount turned positive [4][6] - The credit bond issuance scale increased, while corporate bonds had zero issuance, indicating a shift in market dynamics [4] - The overall credit bond market remains stable, with expectations of a downward trend in yields in the long term, suggesting a strategy of increasing allocation during adjustments [6] Industry Research - Significant transactions in the pharmaceutical sector were noted, with Sanofi and Pfizer reaching an agreement on a PD-1/VEGF dual antibody, indicating strong market activity [8][9] - The pharmaceutical sector saw a 1.78% increase in the week of May 19-23, 2025, outperforming the broader market indices [8] - The overall valuation of the pharmaceutical industry remains high, with a TTM P/E ratio of 27.44, reflecting a 146% premium over the CSI 300 [8] Metals Industry Research - Gold prices have rebounded due to expectations of interest rate cuts and geopolitical factors, while lithium prices continue to decline due to oversupply [10][11] - The steel market is expected to lack upward momentum in the short term, influenced by demand and raw material cost trends [10] - The aluminum market may see price increases if demand grows due to export activities, while copper prices are anticipated to fluctuate without strong support [10]

Group 1: Industrial Profit Trends - In the first four months of 2025, the profit of large-scale industrial enterprises increased by 1.4% year-on-year[3] - The operating revenue for the same period grew by 3.2%, a decrease of 0.2 percentage points compared to the first quarter[3] - The profit margin for large-scale industrial enterprises was 4.87%, down by 2.6% year-on-year, but the decline was narrower than in the first quarter[3] Group 2: Sector Performance - Among 41 industrial sectors, most achieved positive profit growth in the first four months, maintaining the same growth breadth as in the first quarter[4] - High-tech manufacturing sectors, such as electrical machinery and equipment manufacturing, showed significant profit improvement, indicating strong support from "two new" policies[4] - Private and joint-stock enterprises continued to see profit growth, while state-owned and foreign enterprises experienced a decline[3] Group 3: Economic Outlook and Risks - The improvement in industrial profit growth is primarily driven by a narrowing decline in profit margins[4] - The easing of external tariff pressures and the implementation of domestic "four stability" policies are expected to support continued profit recovery[4] - Risks include the potential underperformance of the "export rush effect" and uncertainties in the external environment that could impact domestic economic stability[5]

Group 1: Fund Research - The pharmaceutical industry performed well while major market indices mostly declined, with the top five performing sectors being pharmaceuticals, comprehensive, non-ferrous metals, automobiles, and household appliances [2] - The public fund market saw the first batch of new floating rate funds set to be issued, and private fund scale reached 20.22 trillion yuan [2] - FOF funds showed good performance, with the average weekly net value of pension target FOF rising by 0.64%, while bond funds had the largest increase of 0.08% [2] Group 2: Industry Research - Shanghai and Chengdu released policies to boost consumption, suggesting a focus on new tobacco investment opportunities [4] - The light manufacturing industry outperformed the CSI 300 index by 0.90 percentage points, while the textile and apparel industry outperformed by 0.06 percentage points [6] - The global sales of heated tobacco products are expected to grow by 12.7% year-on-year in 2024, while electronic cigarette sales are projected to increase by 9.5% [6]

Group 1: Macro Environment - The global trade tensions have eased temporarily, with the May Markit manufacturing, services, and composite PMI preliminary values exceeding expectations, indicating an overall expansion trend. However, inflationary pressures are still rising, as evidenced by the University of Michigan's inflation expectations reaching a historical high [3] - In Europe, the May composite PMI unexpectedly contracted due to service sector weakness, highlighting the need for early interest rate cuts to stabilize the economy amidst political turmoil and weak domestic demand [4] Group 2: Domestic Environment - In April, despite external challenges, the domestic economy remained stable under supportive macro policies, with new growth drivers becoming increasingly significant. The "export grab" trend is expected to continue under eased US-China tariffs, but consumer and investment sectors require substantial policy support to solidify the current situation [4] - Fiscal data for January to April shows a narrowing decline in national public budget revenue, with tax revenue recovering while non-tax revenue continues to decline. Public budget expenditure has progressed faster than the same period last year, focusing on livelihood areas [4] Group 3: High-Frequency Data - In the real estate sector, transaction volumes have rebounded, while wholesale prices for agricultural products have shown a downward trend. Midstream sectors like steel and cement have seen price declines, and upstream prices for coking coal and coke have weakened slightly, with non-ferrous metal prices remaining stable [4] Group 4: Fixed Income Research - The period from May 16 to May 22 saw a mixed performance in interest rates, with the 10-year government bond yield rising by 4 basis points to 1.72%. The market is characterized by a lack of new information, leading to a cautious outlook on bond yields [6][7] - The issuance of special bonds has increased marginally, with a total of 109 interest rate bonds issued during the period, amounting to a net financing of 633.9 billion yuan [6]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report After the temporary easing of trade relations, the "rush to export" effect and the increase in risk appetite put some pressure on the bond market. However, the continuous improvement of domestic demand still takes time, which limits the upward range of bond market yields. With limited incremental information recently, it is expected that bond market yields will fluctuate following the movement of capital prices [28]. 3. Summary by Relevant Catalogs 3.1 Important Event Reviews - **Economic Data**: In April, economic indicators in production, investment, and consumption showed marginal declines. Export - related industries were affected by tariffs, while high - tech and equipment manufacturing maintained high growth. In the future, "rush to export" may mainly involve inventory reduction, and tariff uncertainties still affect production and investment willingness. The expansion of domestic demand policies can boost consumption, but more employment and income - stabilizing policies are needed. These factors limit the upper limit of bond market yield fluctuations [9]. - **Fiscal Data**: In April, the marginal improvement of broad - based fiscal revenue was observed, and fiscal expenditure continued to increase. Public fiscal revenue improved, with the cumulative year - on - year decline of corporate income tax narrowing for the second consecutive month. Public fiscal expenditure focused on people's livelihood, while government - funded expenditure may be more inclined to "two important" and "two new" areas [10][11]. 3.2 Capital Price: DR007 First Rose and Then Fell During the statistical period, the central bank net - injected nearly 700 billion yuan. DR007 first rose due to the disturbance of treasury bond supply and then fell back. However, the inter - bank certificate of deposit yield increased again, mainly because the reduction of deposit interest rates led to deposit transfer, and banks faced greater pressure on liability outflows [12]. 3.3 Primary Market: The Issuance Scale of New Special Bonds Increased Marginally From May 16th to May 22nd, 109 interest - rate bonds were issued in the primary market, with an actual issuance total of 897 billion yuan and a net financing amount of 633.9 billion yuan. The supply of treasury bonds was large, and the issuance of new special bonds increased marginally. The overall supply scale in May was controllable, but the disturbance of interest - rate bond supply still needed attention [19]. 3.4 Secondary Market: Interest Rates Showed Differentiated Performance During May 16th - May 22nd, the yields of treasury bonds with different maturities varied. The 10 - year treasury bond yield rose 4bp to 1.72%. After the reduction of LPR quotes and deposit interest rates, there was a profit - taking sentiment in the bond market. Subsequently, with limited incremental information, the bond market showed a wait - and - see attitude, and the trading volumes of treasury bonds and policy - financial bonds decreased [20]. 3.5 Market Outlook - **Fundamentals**: From May to July, the "rush to export" effect may become more obvious, mainly through inventory reduction, which has limited impact on domestic inflation. Domestic demand improvement takes time, and trade frictions may recur. Therefore, the upper limit of the long - term interest rate fluctuation range will not be too high [26][28]. - **Policy**: After the positive progress in Sino - US talks, the expectation of large - scale incremental policies has cooled. In terms of monetary policy, some banks have reduced deposit interest rates, which eases the pressure on bank spreads and suggests the possibility of further interest rate cuts (policy rates and LPR quotes) around August - September. The resumption of the central bank's open - market treasury bond trading operations is worthy of attention [28]. - **Capital**: When there is a lack of incremental information in the market, the impact of capital price fluctuations is crucial, especially at the end of the month when the supply pressure of interest - rate bonds is large [28].