1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints of the Report - The expansion of Southbound Connect and the improvement of its operating mechanism will provide new channels for domestic institutional investors to allocate overseas bonds. The expansion of participants and the improvement of the mechanism will bring new opportunities for domestic institutional investors to invest in overseas bonds. - The expansion of domestic institutional investors in Southbound Connect is expected to alleviate the unmet demand of non - bank institutions for overseas bond allocation. Non - bank institutions will have more channels to invest in overseas bonds, and the overseas bond market may see more capital inflows into high - coupon bonds such as Chinese - funded US dollar bonds and Dim Sum bonds, which may lead to a further decline in bond yields [91][92]. 3. Summary by Directory 3.1 Recent Development of Bond "Southbound Connect" - **Background and Purpose**: Southbound Connect aims to facilitate domestic institutional investors to allocate offshore bonds by strengthening the cooperation between bond market infrastructure institutions in the Mainland and Hong Kong [11]. - **Regulatory Policy Development**: It has gone through three stages: policy preparation (2017 - 2020), policy launch (2021 - 2022), and deep - opening (2023 - present). In 2025, it is proposed to expand the scope of domestic investors to non - bank institutions and improve relevant mechanisms [13][16][17]. 3.2 Operating Mechanism and Participation Methods of Southbound Connect - **Business Operation and Regulatory Mechanism**: The scope of domestic investors is currently limited to 41 banks and QDII/RQDII - qualified institutions. Investors need to open accounts through designated domestic custodian banks or bond registration and settlement institutions and open accounts in the CMU system of the Hong Kong Monetary Authority for cross - border custody. The total annual quota for all participating institutions is 500 billion yuan, and the daily quota is 20 billion yuan [24][33]. - **Current Domestic Investors Participating in Southbound Connect**: As of July 2025, the expansion policy has not been fully implemented. The investors are still limited to primary dealers (excluding non - bank institutions and rural commercial banks) and QDII/RQDII - qualified institutional investors [32]. - **Participation Process**: It includes qualification approval and account opening, and the bidding process (viewing quotation intentions, sending quotation requests, receiving responses from quotation providers, and confirming transactions). Currently, investors mainly prefer investment - grade Chinese - funded US dollar bonds and high - rated Dim Sum bonds, and the expansion of investors may change the investment preference [38][40]. 3.3 Current Investment Opportunities in Southbound Connect - **Overall Situation of Southbound Connect Sector**: The investable bonds include offshore RMB bonds (Dim Sum bonds), Hong Kong dollar bonds, and G3 currency bonds. As of July 29, 2025, the total scale of tradable bonds in the Hong Kong market was 1.2052 trillion US dollars, with 5,892 bonds. Chinese - funded US dollar bonds and Dim Sum bonds accounted for more than 70% of the investable bonds in Southbound Connect [54]. - **Focus on Dim Sum Bonds**: The scale of Dim Sum bonds has expanded significantly since 2023. As of July 17, 2025, there were 3,099 outstanding Dim Sum bonds with a total scale of 1.5449 trillion yuan. The financial services and sovereign debt sectors have a large scale. Dim Sum bonds have a higher coupon rate than domestic bonds, especially in the urban investment, real estate, and bank sectors. However, attention should be paid to their subsequent performance as the yields have declined significantly in recent months [63][64][67]. - **Focus on Chinese - funded US dollar bonds**: As of early July 2025, there were 2,009 outstanding Chinese - funded US dollar bonds with a total scale of 666.7 billion US dollars. The real estate, internet media, bank, and urban investment sectors have a large scale. The issuance of Chinese - funded US dollar bonds has slowed down since 2023, and the newly issued bonds are mainly unrated. Chinese - funded US dollar bonds have a higher coupon rate than domestic bonds, especially in the urban investment and real estate sectors. Attention should be paid to high - quality individual bonds and short - term risks [71][74][83]. 3.4 Impact of the Expansion of Domestic Institutional Investors in Southbound Connect - **For Non - bank Institutions**: The expansion of participants is expected to alleviate the unmet demand of non - bank institutions for overseas bond allocation. They can invest in overseas bonds through the Southbound Connect channel in addition to using QDII quotas [91]. - **For the Overseas Bond Market**: Non - bank institutions have a relatively more active risk preference. High - risk - return bonds such as the real estate and urban investment sectors of Chinese - funded US dollar bonds and the urban investment sector of Dim Sum bonds may receive more attention and capital inflows, which may lead to a further decline in bond yields [92].

Group 1: Investment Opportunities in 2025 - The domestic economy is expected to maintain a GDP growth rate above 5%, driven by strong export performance and advancements in AI and advanced manufacturing [6][10][12] - The new consumption trends, particularly in tea drinks and trendy products, are showing structural prosperity, although demand growth may face challenges due to base effects [6][10] - The overall investment sentiment remains cautious, with weak financing demand observed in the first half of the year, primarily driven by government bonds [6][10] Group 2: AI Investment Opportunities - The AI sector is anticipated to continue its growth, with significant investments from major tech companies, indicating a robust demand for AI capabilities [20][21] - The domestic AI infrastructure is expected to see substantial development, with a focus on hardware upgrades to support large models [20][21] - The application of AI across various sectors, including healthcare and education, is projected to create irreversible changes in profitability for the industry [22][24] Group 3: Technology Investment Opportunities - The Chinese technology sector is breaking through previous technological barriers, particularly in semiconductors, which are expected to see sustained high growth rates [25][26] - The integration of AI with manufacturing is seen as a key driver for future growth, with significant opportunities in robotics and smart manufacturing [27][28] - The focus on supply-side reforms and technological upgrades is expected to create new investment opportunities in various industries [26][28] Group 4: New Energy Investment Opportunities - Despite current challenges in the new energy sector, the long-term growth potential remains strong, with expectations of recovery as the industry stabilizes [38] - The industry is currently facing collective losses, which are unsustainable, indicating a need for restructuring and improved financial health across the supply chain [38]

Report Industry Investment Rating No relevant content provided. Core Viewpoints - In the week from July 21 - 25, 2025, the bond market adjusted. The net value of benchmark market - making credit bond ETFs and science - innovation bond ETFs declined significantly, and the overall net subscription of science - innovation bonds was 5.56 billion yuan. Institutions may have redeemed ETF shares to cope with liquidity shocks [4]. - After the adjustment, some science - innovation bonds have fallen to a point where they offer value. For allocation portfolios, some exchange - traded science - innovation bonds with a remaining term of 4 - 5 years are worth considering; for trading portfolios, short - term index component science - innovation bonds are more attractive [4]. - The science - innovation bond ETF is expected to expand further. After the adjustment, index component science - innovation bonds with a widening relative spread have certain value, and investors can participate at the current adjusted points and wait for the spread to recover [46]. Summary by Directory I. First Batch of Science - Innovation Bond ETFs Expanded Rapidly in One Week after Listing - On July 17, 2025, 10 science - innovation bond ETFs were listed. By July 25, the total scale exceeded 100 billion yuan, with a growth rate of over 250% [15]. - The 10 products were all raised on July 7, 2025, and the total raised scale was about 29 billion yuan, indicating strong market demand [15]. - There are differences in product elements such as redemption methods, product durations, and component bond capacities among these 10 science - innovation bond ETFs [20]. II. Index Component Bonds of Science - Innovation Bond ETFs Led the Decline in this Adjustment - In terms of net value fluctuations, the net value of benchmark market - making credit bond ETFs and science - innovation bond ETFs declined by about 0.3% in a week [29]. - In terms of subscription and redemption data, the overall net subscription of science - innovation bonds was 5.56 billion yuan, while short - term financing ETFs and benchmark market - making credit bond ETFs with good liquidity were more affected by redemptions, suggesting that institutions may have redeemed shares for liquidity reasons [4]. - In terms of the performance of underlying component bonds, science - innovation bond index component bonds had a faster adjustment speed and a larger adjustment range. Exchange - traded non - science - innovation index component science - innovation bonds and inter - bank science - innovation bonds were relatively more resilient [35]. III. Which Science - Innovation Bonds Have Fallen to an Attractive Level? - After the adjustment, the overall yield of science - innovation bonds increased, and the inversion between the average valuation of short - term component bonds and the 1 - year AAA certificate of deposit yield improved significantly. However, the yields of 1 - year - below and 1 - 2 - year science - innovation bond index component bonds of AAA grade were still 1 - 2 BP lower than the 1 - year AAA certificate of deposit yield [39]. - The relative spread between exchange - traded and inter - bank science - innovation bonds of the same issuer showed differentiation. Index component science - innovation bonds with a widening relative spread have certain value, and investors can participate at the current adjusted points [44]. - For allocation portfolios, some exchange - traded science - innovation bonds with a remaining term of 4 - 5 years are worth considering due to the relatively large increase in valuation compared to their inter - bank counterparts and the attractive static coupon income [46]. - For trading portfolios, it is more advisable to focus on 1 - 2 - year index component science - innovation bonds that have adjusted significantly, have a large outstanding scale, and a valuation higher than 1.67% [49].

Investment Rating - The industry investment rating is maintained as "Recommended" [1] Core Views - The real estate beta factors are more positive, suggesting proactive positioning in retail building materials to seize opportunities [10] - Attention is drawn to the cement industry's bottom improvement, with price increases during the off-season stabilizing profits and indicating bottom signals [11] - It is recommended to focus on the allocation value of high-dividend stocks [12] - The mid-term strategy for 2025 emphasizes domestic demand supporting the economy, with structural opportunities emerging [14] Summary by Sections Market Performance - The report covers market performance from July 14 to July 18, 2025, but specific details are not provided in the extracted content [15] Price Changes in Building Materials - Cement prices showed stability in the Beijing-Tianjin-Hebei region, with some slight increases in the East China market driven by emotional factors [35] - The Central China market experienced a decrease in inventory, while the South China market remained flexible with stable prices [36] - The Northeast market focused on just-in-time purchasing, and the Southwest region saw stable prices with slight increases in specific areas [36] Key Company Tracking and Industry News - The report includes various announcements from companies such as Honghe Technology and Haicui New Materials regarding shareholding changes and acquisitions [75] - Industry news highlights include measures to optimize real estate development in Changsha and the promotion of housing security initiatives [77] - The report notes a rebound in real estate and new urbanization concept stocks, with various companies experiencing significant stock price increases [77]

Investment Rating - The industry investment rating is "Recommended (Maintain)" [1] Core Viewpoints - The report indicates that the coal prices are expected to continue rising due to increased demand driven by high temperatures and a recovering supply from major production areas [2][59] - The report highlights that the focus should be on companies with stable performance and high return on equity (ROE), as well as those with attractive valuations and dividend yields [60] Summary by Sections 1. Weekly Data Tracking - Thermal coal prices have rebounded significantly, with Qinhuangdao thermal coal closing at 644 RMB/ton on July 18, an increase of 10 RMB/ton week-on-week [3][12] - Coking coal prices have also risen, with Shanxi coking coal reaching 1420 RMB/ton, up 110 RMB/ton week-on-week [4][32] 2. Supply and Demand Dynamics - The report notes that the supply of thermal coal is tightening, with June imports down 26% year-on-year [2][59] - Daily consumption of thermal coal has increased, with coastal provinces averaging 222.3 million tons per day, a week-on-week increase of 3.5 million tons [17][21] 3. Price Trends - The long-term contract price for thermal coal (Q5500) is reported at 666 RMB/ton, showing a month-on-month decrease of 0.4% and a year-on-year decrease of 4.9% [3][12] - The coking coal price index is at 1111 RMB/ton, with a week-on-week increase of 42 RMB/ton, while the cost index is at 1286 RMB/ton, indicating a gap of 175 RMB/ton [37][38] 4. Recommended Stocks - The report recommends a combination of companies including Shanxi Coal International, Huabei Mining, Pingmei Shenma, Shanxi Coking Coal, Yanzhou Coal, Shaanxi Coal, China Shenhua, and others for investment [2][60] 5. Market Performance - The coal sector has underperformed compared to the broader market, with specific stocks showing varied performance [54][60]

Inflation Data - The US CPI for June 2025 increased by 2.7% year-on-year, up from 2.4% in May, and slightly below the expected 2.6%[6] - Core CPI rose by 2.9% year-on-year, compared to 2.8% in the previous month, aligning with expectations[6] - Month-on-month CPI increased by 0.3%, up from 0.1% in May, while core CPI rose by 0.2%[6] Energy and Core Goods - Energy CPI saw a month-on-month increase of 1.94%, with fuel CPI rising by 3.5 percentage points to 1.03%[6] - Core goods CPI increased by 0.24 percentage points to 0.2%, marking the highest growth in four months[6] - Significant inflation pressure was noted in products highly dependent on China, such as clothing and furniture, reflecting tariff adjustments and inventory consumption[6] Rental and Super Core Inflation - Rent inflation rebounded with a month-on-month increase of 0.03 percentage points to 0.29%, while year-on-year growth remained stable[6] - Super core inflation, excluding housing, increased by 0.17 percentage points to 0.21%, driven by rising prices in air travel and medical services[6] Market Expectations and Risks - The expectation for a July interest rate cut has diminished, with market focus shifting to September for potential cuts[3] - Risks include persistent inflation exceeding expectations and the Federal Reserve's rate cuts being less aggressive than anticipated[4]

Group 1: Stablecoin Overview - Stablecoins are digital currencies anchored to a reference value, primarily traditional financial assets, with Tether (USDT) and USDC being the largest, valued at $156.7 billion and $61.8 billion respectively, together accounting for over 85% of the total market[30] - The total market capitalization of stablecoins reached approximately $232 billion by March 2025, a nearly 45-fold increase from $5.2 billion at the end of 2019[31] - Stablecoin transaction volume approached $35.5 trillion in the past 12 months, with $7.4 trillion in payments settled, indicating significant growth compared to traditional payment platforms like PayPal and Mastercard[36] Group 2: Regulatory Developments - The U.S. is enhancing its stablecoin regulatory framework through the STABLE Act and GENIUS Act, requiring a 1:1 reserve ratio with assets like U.S. dollars or short-term U.S. Treasury securities[54] - U.S. stablecoins, particularly USDT and USDC, hold over $170 billion in U.S. Treasury securities, ranking them as the 17th largest holder, surpassing countries like Germany and South Korea[48] - Hong Kong's Stablecoin Ordinance, effective August 1, 2025, allows for a more inclusive regulatory environment, permitting reserves in multiple currencies and maintaining a 1:1 reserve requirement[63] Group 3: Market Implications - Stablecoins are expected to play a crucial role in reshaping the international financial system, particularly in cross-border payments, due to their efficiency and low costs[70] - The integration of stablecoins with Real World Assets (RWA) is anticipated to create a sustainable growth environment, leveraging blockchain technology to enhance trust and efficiency in asset transactions[74] - The demand for decentralized and efficient payment solutions is increasing as countries seek to reduce reliance on traditional dollar-based systems amid geopolitical tensions[70]

Group 1: Industrial Profit Trends - In April 2025, the year-on-year growth rate of industrial enterprise profits maintained positive growth, primarily supported by export demand, while revenue growth showed a marginal decline[9] - The middle-stream profit growth weakened, mainly due to the energy and chemical industries, consistent with the decline in related commodity prices[12] - The downstream profit improved, particularly in the automotive sector, indicating a potential impact from export demand[15] Group 2: Inventory and Demand Dynamics - In March and April 2025, industrial enterprises showed signs of inventory destocking, with raw material inventory growth rates declining marginally in March and finished product inventory growth rates also decreasing in April[10][42] - The inventory turnover days and inventory-to-sales ratio for industrial enterprises remain high, indicating ongoing inventory management challenges[52] - As of March 2025, the inventory growth rate compared to the entire year of 2024 increased, primarily due to structural replenishment in consumer goods[47] Group 3: Risks and Market Outlook - Risk factors include unexpected changes in domestic economic policies and global geopolitical conflicts, which could impact industrial performance[11][53] - The report highlights the need for careful monitoring of market conditions and potential shifts in consumer demand as economic indicators evolve[53]

Investment Rating - The industry investment rating is "Recommended (Maintain)" [2] Core Insights - The implementation of public fund reforms is expected to enhance the constraint of performance benchmarks, leading to an increased allocation towards the significantly underweighted banking sector [4][9] - The new assessment mechanism for public funds emphasizes investor returns and aligns the interests of fund companies with investors, which is likely to result in a greater focus on fund performance and benchmark deviations [4][9] Summary by Relevant Sections Public Fund Reform Impact - The China Securities Regulatory Commission released a plan on May 7, 2025, to promote high-quality development of public funds, which includes establishing a performance evaluation system centered on fund investment returns [4][9] - Fund managers are required to have performance indicators account for no less than 80% of their evaluation, with significant penalties for underperformance relative to benchmarks [4][9] Industry Allocation Insights - As of the end of 2024, the banking sector accounted for only 3.81% of active fund holdings, while the weight of the banking sector in the CSI 300 index was 13.67%, indicating a deviation of nearly 10 percentage points [6][12] - The new public fund assessment mechanism is expected to lead to an increase in bank holdings among active funds, thereby reducing the deviation from performance benchmarks [6][12] Individual Stock Insights - Major banks such as China Merchants Bank and Industrial Bank have significant underweight positions in active funds, with deviations of 1.9% and 1.5% respectively, suggesting that these banks may benefit from increased allocations as funds adjust their holdings [6][27]

1. Report Industry Investment Rating - No relevant content provided 2. Core Viewpoints - In March 2025, the net financing scale of Chinese - issued US - dollar bonds in the primary market was positive, with an increase in issuance volume month - on - month. The main issuers were comprehensive banks, integrated oil companies, and sovereign bonds. In the secondary market, the long - and short - term interest rates of US Treasury bonds fluctuated, and the pressure on US Treasury bonds increased. The overall yield of the Xingzheng Chinese - issued US - dollar bond tracking index declined, and the spread widened [4][37][39] 3. Summary by Directory 3.1 Primary Market of Chinese - issued US - dollar Bonds - **Overall Situation**: In March, the issuance volume increased month - on - month, and the net financing scale was positive. The main issuers were comprehensive banks, integrated oil companies, and sovereign bonds. The issuance volume in March was 207, compared with 37.79 in February 2025 and 76.85 in 2024. The net financing amount was 151.79 [4] - **Key Industry Tracking** - **Real Estate Industry**: In March, there were 7 issuances with a total amount of 61.14 [22] - **Banking and Urban Investment Financing Platforms**: In March, 10 issuances totaled 20.67, and 27 issuances totaled 46.01 [31] 3.2 Secondary Market of Chinese - issued US - dollar Bonds - **Market Overview**: In March, the long - and short - term interest rates of US Treasury bonds fluctuated, and the pressure on US Treasury bonds increased. The 2 - year US Treasury bond yield decreased from 4.08% in February to 4.03% in March, a decrease of 5bp; the 10 - year US Treasury bond yield decreased from 4.24% in February to 4.23% in March [37] - **Xingzheng Chinese - issued US - dollar Bond Tracking Index**: The overall yield declined, and the spread widened. The yield changes were 0.05, 0.41, 0.91, and the spread changes were 30.74bp, 19.19bp, 16.47bp [39][41] - **Tracking of Active Bonds and Active Issuers in the Month** - **Active Issuers in March**: There were several active Chinese - issued US - dollar bond issuers in March, but there may be deviations in statistical data [44] - **Valuation Changes of Active Bonds in March**: There were significant valuation changes in some bonds in March. For example, the valuation yield of BN3850672 changed by 815.13bp, and that of BQ3057743 changed by 288.40bp [49]