Group 1 - The A-share market showed signs of recovery in June, with major indices generally rising, particularly the ChiNext Index which increased by 6.1% [1][8] - The performance of various sectors was mixed, with telecommunications, non-bank financials, banks, and non-ferrous metals performing well, while consumer sectors like food and beverage, beauty care, and home appliances lagged [1][8] - The Hong Kong stock market also experienced a rebound, with the Hang Seng Index and other indices showing increases of 5.0%, 4.8%, and 4.4% respectively by June 26, 2025 [1][12] Group 2 - The report anticipates that the A-share index will maintain a volatile trend, with external risks potentially easing but still requiring vigilance regarding U.S. policies [2][16] - The upcoming earnings season is expected to highlight sectors with strong performance, particularly steel, computers, electric equipment, and defense industries, which are projected to have relatively high growth rates [2][18] - Stable assets such as high-dividend stocks and gold are recommended for attention, as they have historically performed well during uncertain market conditions [2][18] Group 3 - The Hong Kong market is expected to continue its volatile trend, influenced by liquidity constraints and uncertainties in U.S.-China relations [3][23] - Long-term investment strategies should focus on a "barbell" approach, emphasizing technology growth and high-dividend stocks, particularly in sectors like telecommunications, utilities, and banking [3][23] - The report identifies several key stocks for July 2025 in both A-shares and Hong Kong markets, including Newguang, Gree Electric, Tencent Holdings, and Xiaomi Group, among others [3][29][32]

Investment Rating - The report maintains an "Overweight" rating for the basic chemical industry [6] Core Viewpoints - The report is optimistic about the domestic breakthroughs in COC materials, packaging materials, and semiconductor materials, emphasizing the importance of "domestic substitution" in achieving supply chain security and reducing production costs for end products [1][22] Summary by Sections Semiconductor Materials - The global semiconductor sales are projected to reach approximately $630.5 billion in 2024, representing a year-on-year growth of about 19.7%, with the Asia-Pacific region expected to see a growth of 17.5% [4][38] - The steady growth in the semiconductor market is anticipated to drive an increase in demand for semiconductor materials, including photoresists and electronic specialty gases [4][43] COC/COP Materials - COC/COP, a high-end optical material, has shown significant potential, with Akolai's thousand-ton production line entering trial production in Q3 2024 [2][29] - COC/COP materials are characterized by high thermal deformation temperature, high transparency, low birefringence, and low dielectric loss, making them ideal for optical components [25][28] - The domestic production of COC/COP is gaining momentum, with several companies, including Akolai, making strides in industrialization [28][29] PSPI Materials - PSPI combines the functions of photoresist and dielectric insulation layer, showing promise in integrated circuits and OLED applications [3][35] - Domestic companies like Aolide and Dinglong have achieved breakthroughs in the localization of PSPI, indicating a potential increase in domestic supply [3][36] Investment Recommendations - The report suggests focusing on high-value new materials, particularly semiconductor materials, OLED supply chains, and wind power materials [5] - It also highlights the importance of monitoring the development of new capacities in the semiconductor materials sector [43]

Investment Rating - The mechanical industry is rated as "Buy" (maintained) [1] Core Views - The report highlights the marginal decline in domestic demand for engineering machinery, while also emphasizing the advancements in humanoid robotics and related technologies [3][4][5] - The report suggests that 2025 will be a breakthrough year for humanoid robots, with mass production expected to drive the downstream supply chain [5] - The agricultural machinery market shows signs of improvement, with tractor exports increasing significantly [8] - The engineering machinery sector is experiencing short-term pressure on domestic sales, but export volumes are maintaining a growth trend [12] Summary by Relevant Sections Humanoid Robots - A joint research team has developed the world's first humanoid robot with high-resolution tactile perception and complete motion capabilities [3] - Tesla's CEO Elon Musk confirmed the integration of AI voice assistant Grok into the Optimus V3 humanoid robot [3] - Significant investments in humanoid robotics are being made, with companies like Galaxy General completing a financing round of 1.1 billion RMB [3][4] Machine Tools & Cutters - Japan's machine tool orders in May 2025 amounted to 128.716 billion JPY, with a year-on-year increase of 3.4% [6] - The report suggests that the machine tools and cutters sector is influenced by economic expectations, with potential improvements expected as policies are implemented [6] Agricultural Machinery - The agricultural machinery market sentiment index was reported at 43.5% in May 2025, indicating a slight year-on-year improvement [7] - Tractor exports from China increased by 12.3% in quantity and 31.1% in value during the first five months of 2025 [8] Engineering Machinery - In May 2025, excavator sales (including exports) reached 18,202 units, a year-on-year increase of 2.1% [12] - Domestic sales of excavators decreased by 1.5%, while export sales increased by 5.4% [12] - The report anticipates a recovery in demand for engineering machinery as infrastructure investment is expected to remain high [12] Forklifts - Forklift sales in May 2025 reached 123,472 units, a year-on-year increase of 11.8% [13] - The average working hours for forklifts increased by 22.5% month-on-month, indicating improved demand [13] Rail Transit Equipment - The report notes significant increases in the procurement of high-speed train maintenance projects by the National Railway Group [14] - The rail transit equipment sector is expected to benefit from increased railway investment and passenger flow recovery [14] Semiconductor Equipment - The report discusses the acceleration of domestic substitution for key semiconductor equipment due to increased tariffs [15][16] - The establishment of the third phase of the big fund, with a registered capital of 344 billion RMB, is expected to significantly boost the domestic semiconductor industry [16] New Energy Equipment - As of May 2025, the cumulative installed capacity of power generation in China reached 3.61 billion kW, a year-on-year increase of 18.8% [17] - The report highlights the rapid growth of photovoltaic power generation capacity, with a 57% year-on-year increase in new installations [17] Low-altitude Economy and EVTOL - Policies supporting the development of the low-altitude economy and EVTOL (Electric Vertical Takeoff and Landing) aircraft have been introduced in various regions [18][19] - The report emphasizes the potential for the low-altitude economy to drive new industries and consumer spending [19]

Macro Analysis - Industrial enterprises' profit growth turned negative in May due to factors such as weakened export support, expanded year-on-year decline in industrial product prices, and lower profit margins [2] - The previously high-profit growth in the midstream equipment manufacturing sector also turned negative [2] - Future recovery of industrial enterprise profits remains uncertain due to overseas demand fluctuations, low industrial product prices, and insufficient effective demand [2] Market Strategy - The most severe external risk disturbances may have passed, but vigilance towards potential policy changes from Trump is still necessary [3] - With a 90-day pause on "reciprocal tariffs" between China and the US, exports are expected to maintain high growth in the short term, with consumption being a key driver of economic recovery [3] - The market is anticipated to remain volatile in the short term, focusing on domestic consumption, domestic substitution, and low allocation of funds [3] Bond Market - The convertible bond market saw significant gains, with the index rising by 2.1% for the week, marking the highest increase of the year [4] - The overall performance of the convertible bond market has outperformed the equity market since the beginning of 2025, with a year-to-date increase of 6.6% [4] - Future market performance will be influenced by fundamentals and macro policies, particularly in sectors aimed at boosting domestic demand [4] Quantitative Analysis - The market displayed a small-cap style, with significant excess returns from block trading combinations [6] - The Beta factor and liquidity factor achieved positive returns of 1.06% and 0.37%, respectively, while the market capitalization factor and residual volatility factor recorded negative returns [6] - The block trading combination outperformed the overall index by 1.16% [6] Industry Research Computer Industry - The report emphasizes the potential of stablecoins in the internationalization of the RMB, suggesting investment opportunities in companies like Newland, Lakala, and Newland [10] - Ant Group's competitive advantages in compliance, technology, and market penetration are highlighted, recommending attention to companies like Hengsheng Electronics and Longxin Group [10] Internet Media - The gaming industry maintains a high level of prosperity, with strong consumer sentiment and a robust pipeline of new products for the summer [11] - Recommendations include Tencent, NetEase, and Perfect World, with a focus on innovative gameplay in various segments [11] Renewable Energy - The wind power sector is expected to see continuous improvement in profitability due to stable prices and cost reductions [12] - The report also highlights the importance of upcoming policies in the photovoltaic sector and suggests monitoring developments in solid-state batteries and energy storage [12] Non-Ferrous Metals - LME copper inventories have dropped to a 22-month low, with domestic air conditioning production expected to decline by 13% year-on-year [13] - The report anticipates strong copper prices in the short term, recommending investments in companies like Zijin Mining and Western Mining [13] Real Estate - The real estate sector shows weak beta but highlights structural alpha opportunities in core cities [17] - Sales in major cities increased by 14.4% from January to May 2025, with a recommendation to focus on companies like China Resources Land and China Jinmao [17] Agriculture - The pig farming sector is expected to recover as inventory levels decrease, with a long-term view of profitability growth [16] - Recommended companies include Juxing Agriculture and Muyuan Foods, as the industry moves towards a long-term upward cycle [16]

Investment Rating - The report maintains an "Accumulate" rating for the coal mining industry [6]. Core Viewpoints - The turning point for coking coal mine inventories has been observed, leading to a seasonal increase in coal prices. As of June 27, the inventory of raw coal at 523 coking coal mines was 6.835 million tons, a decrease of 179,000 tons week-on-week, marking the first decline since May [1]. - The average closing price of coking coal futures was 847.5 yuan/ton, up 6.6% week-on-week, indicating a positive trend in pricing [1]. - The average price of thermal coal at Qinhuangdao Port was 616 yuan/ton, reflecting a week-on-week increase of 7 yuan/ton (+1.15%) [2]. Summary by Sections Supply and Demand Tracking - The operating rate of 110 sample washing plants was 59.1%, down 2.2 percentage points week-on-week and 9.9 percentage points year-on-year, remaining at a five-year low [3]. - The average daily pig iron output was 2.4234 million tons, unchanged week-on-week and up 1.2% year-on-year [3]. - The outflow of water from the Three Gorges Dam was 17,843 cubic meters per second, an increase of 17.28% week-on-week [3]. Inventory Tracking - As of June 27, coal inventory at Qinhuangdao Port was 5.65 million tons, down 2.25% week-on-week and 5.52% year-on-year, returning to normal levels for the season [4]. - The inventory at independent coking plants was 6.7863 million tons, up 1.95% week-on-week, while the inventory at sample steel mills was 7.8121 million tons, up 0.85% week-on-week [4]. Key Company Profit Forecasts and Valuation - China Shenhua (601088.SH) is forecasted to have an EPS of 2.5 yuan in 2025, with a PE ratio of 16, rated as "Accumulate" [5]. - Shanxi Coking Coal (000983.SZ) is expected to have an EPS of 0.37 yuan in 2025, with a PE ratio of 17, also rated as "Accumulate" [5]. - The report highlights stable profitability for companies with a high proportion of long-term contracts, recommending China Shenhua and China Coal Energy [4].

Group 1 - The investment rating for the real estate development sector is "Buy" for specific companies such as Poly Development, China Merchants Shekou, and Shanghai Lingang, while "Hold" is given to others like New Town Holdings and Binjiang Group [5][29][63] - The report highlights that the real estate sector's beta is currently weak, with significant declines in investment and new construction areas, but structural alpha opportunities are emerging due to regional and urban differentiation [3][56][59] - Key companies in the real estate development sector have shown varying performance, with New Town Holdings and Binjiang Group leading in A-shares, while Jianfa International Group and China Jinmao excelled in H-shares [21][24][29] Group 2 - The investment rating for the property service sector is also "Buy" for companies like China Resources Mixc Life and Greentown Service, while "Hold" is assigned to others [53][63] - The property service sector has shown resilience, with a slight increase in market performance, although it still lags behind the broader indices [45][48] - Key companies in the property service sector, such as Poly Property and China Overseas Property, have demonstrated strong performance in recent months, indicating a positive outlook for the sector [48][53][54]

Investment Rating - The report maintains an "Overweight" rating for the petrochemical industry [6] Core Views - Geopolitical risks in the Middle East have eased, leading to a decline in oil prices, with Brent and WTI crude oil prices reported at $66.34 and $65.07 per barrel respectively, down 12.5% and 12.1% from the previous week [1] - The ongoing geopolitical tensions, particularly regarding Iran's nuclear program and conflicts involving Israel and Palestine, continue to pose significant risks to oil prices [2] - OPEC+ is expected to continue its large-scale production increase plans, with a focus on monitoring the execution of these plans [3] - Potential mergers and acquisitions in the energy sector, particularly the discussions between Shell and BP, could accelerate consolidation in the overseas energy market [4] - The long-term outlook for oil supply and demand remains positive, with a focus on major Chinese oil companies and the oil service sector, as well as chemical product demand recovery driven by macroeconomic factors [5] Summary by Sections Geopolitical Risks - The easing of Middle Eastern geopolitical tensions has resulted in a significant drop in oil prices, returning to levels prior to the Israel-Iran conflict [1] - Despite the ceasefire, the underlying issues related to Iran's nuclear program remain unresolved, indicating ongoing geopolitical risks [2] OPEC+ Production Plans - OPEC+ is preparing to consider further production increases in its upcoming meeting, with a notable increase of 411,000 barrels per day agreed upon by eight member countries [3] Mergers and Acquisitions - Shell is reportedly in preliminary talks to acquire BP, which could lead to the largest energy sector merger since the Exxon-Mobil deal in 1999 [4] Investment Recommendations - The report suggests a continued positive outlook for major Chinese oil companies and oil service firms, as well as for the petrochemical sector driven by recovering demand [5]

Report Industry Investment Rating - There is no information provided regarding the report industry investment rating. Core View of the Report - The discussion on bank liability pressure should clarify the concept, which depends on the scale of the liability gap and the difficulty of filling it, and the liability gap can be measured by regulatory indicators and banks' own demands [1][8]. - The regulatory - indicator - based liability gap is rigid but easy to fill due to the central bank's ample liquidity supply, while the gap based on banks' own demands is flexible but difficult to fill, mainly referring to the demand for deposits [1][8][9]. - Banks' attempts to increase deposit rates to attract deposits due to scale - related concerns lead to an involution - style competition, which reduces the industry's profitability and affects the sustainability of financial support for the real economy and the space for monetary policy [2][11]. - Although the monetary authorities have achieved good results in regulating the deposit and loan market competition order, the involution - style competition caused by scale concerns may resurface, and the root solution lies in abandoning the one - sided pursuit of scale, perhaps by having the board of directors reduce scale - based assessments [3][13]. Summary by Relevant Directory 1. By Bank Liability Pressure - Many investors think that after the new round of deposit rate cuts on May 20, a large amount of deposits flowed to wealth management products, increasing banks' liability pressure [1][8]. - The liability pressure depends on the scale of the liability gap and the difficulty of filling it, and there are two measurement scales: regulatory indicators and banks' own demands [1][8]. - The regulatory - indicator - based liability gap is easy to fill as the central bank has provided ample liquidity, such as a 1 - trillion - yuan reserve requirement ratio cut on May 15, about 0.5 billion yuan of medium - term funds through MLF in May and June, and 1.4 trillion yuan of outright reverse repurchase operations on June 6 and 16 [8]. - The yields of 1Y AAA - grade CDs and 5Y AAA - grade commercial bank financial bonds are at relatively low levels since early May, indicating low demand for funds and easy access to liquidity at low cost for commercial banks [8]. - The gap based on banks' own demands is mainly the demand for deposits, which is difficult to fill as the total deposit scale is relatively fixed [9]. - Banks usually raise deposit rates explicitly or implicitly, but this leads to a zero - sum game, and if other banks follow suit, it may cause a phased increase in deposit rates [2][9][11]. - Banks' desire to increase deposit rates is due to scale concerns, such as not meeting the deposit growth target after the May rate cut, worrying about ranking decline, or wanting to improve their ranking [2][11]. - This involution - style competition also affects the asset side, resulting in an unreasonable decline in loan rates, and overall, it reduces the industry's net interest margin and profit growth [2][11]. - The monetary authorities have regulated the market competition order, but the involution - style competition may resurface, and the root solution is to abandon the one - sided pursuit of scale [3][13].

Quantitative Models and Construction Methods 1. Model Name: Volume Timing Indicator - **Model Construction Idea**: The model uses volume indicators to determine market timing signals, identifying bullish or bearish trends based on trading volume dynamics[12][21] - **Model Construction Process**: 1. Calculate the volume timing signal for major indices 2. Assign "bullish" or "bearish" views based on the volume trend 3. As of June 27, 2025, all indices except the North Exchange 50 showed bullish signals[21][22] - **Model Evaluation**: The model effectively captures market sentiment shifts based on volume trends[21] 2. Model Name: Momentum Sentiment Indicator - **Model Construction Idea**: This model evaluates market sentiment by analyzing the proportion of stocks with positive returns in the past N days, aiming to identify market optimism or overheating[23] - **Model Construction Process**: 1. Calculate the proportion of stocks in the CSI 300 index with positive returns over the past N days $ \text{Proportion} = \frac{\text{Number of stocks with positive returns in N days}}{\text{Total number of stocks in CSI 300}} $ 2. Smooth the indicator using two moving averages with windows N1 and N2 (N1 > N2) 3. Generate signals: - Bullish when the short-term average (fast line) exceeds the long-term average (slow line) - Neutral when the fast line is below the slow line 4. Parameters: N = 230, N1 = 50, N2 = 35[26][27] - **Model Evaluation**: The model is effective in capturing upward opportunities but may miss gains during sustained market exuberance and struggles to predict downturns[23][26] 3. Model Name: Moving Average Sentiment Indicator - **Model Construction Idea**: This model uses an eight-moving-average system to assess market trends and sentiment by comparing the closing price of the CSI 300 index with its moving averages[29] - **Model Construction Process**: 1. Calculate eight moving averages for the CSI 300 index: 8, 13, 21, 34, 55, 89, 144, and 233 days 2. Count the number of moving averages below the current closing price 3. Assign sentiment values: - Positive sentiment if more than five moving averages are below the closing price - Neutral or negative sentiment otherwise 4. Generate signals based on sentiment values[29] - **Model Evaluation**: The model provides a clear relationship between sentiment states and index trends, making it a useful tool for market timing[29] --- Model Backtesting Results 1. Volume Timing Indicator - **Signal**: Bullish for all indices except North Exchange 50, which remains bearish as of June 27, 2025[21][22] 2. Momentum Sentiment Indicator - **Signal**: Fast line rising, slow line declining, maintaining a bullish view for the CSI 300 index[27] 3. Moving Average Sentiment Indicator - **Signal**: CSI 300 index is in a positive sentiment zone as of June 27, 2025[29] --- Quantitative Factors and Construction Methods 1. Factor Name: Cross-Sectional Volatility - **Factor Construction Idea**: Measures the dispersion of stock returns within an index to assess the alpha environment[34] - **Factor Construction Process**: 1. Calculate the cross-sectional volatility of index constituents weekly 2. Compare the current week's volatility with historical averages to determine the alpha environment[34][38] - **Factor Evaluation**: - Short-term alpha environment improved for CSI 300 and CSI 500 but weakened for CSI 1000 in the past week - Over the past quarter, CSI 300 showed a strong alpha environment, while CSI 500 and CSI 1000 were weaker[34][38] 2. Factor Name: Time-Series Volatility - **Factor Construction Idea**: Tracks the volatility of index constituents over time to evaluate market stability and alpha potential[38] - **Factor Construction Process**: 1. Calculate the time-series volatility of index constituents weekly 2. Compare the current week's volatility with historical averages to assess the alpha environment[38][41] - **Factor Evaluation**: - Short-term alpha environment improved for all indices in the past week - Over the past quarter, CSI 300 and CSI 500 showed strong alpha environments, while CSI 1000 was moderate[38][41] --- Factor Backtesting Results 1. Cross-Sectional Volatility - **CSI 300**: - Last week: Increased, indicating improved short-term alpha environment - Quarterly average: 1.65%, in the upper range of the past six months[34][38] - **CSI 500**: - Last week: Increased, indicating improved short-term alpha environment - Quarterly average: 1.88%, in the lower range of the past six months[34][38] - **CSI 1000**: - Last week: Decreased, indicating a weaker short-term alpha environment - Quarterly average: 2.23%, in the middle range of the past six months[34][38] 2. Time-Series Volatility - **CSI 300**: - Last week: Increased, indicating improved short-term alpha environment - Quarterly average: 0.52%, in the upper range of the past six months[38][41] - **CSI 500**: - Last week: Increased, indicating improved short-term alpha environment - Quarterly average: 0.44%, in the upper range of the past six months[38][41] - **CSI 1000**: - Last week: Increased, indicating improved short-term alpha environment - Quarterly average: 0.27%, in the middle range of the past six months[38][41]

Group 1 - The A-share market showed a positive trend in the week, with major indices rising, particularly the ChiNext and CSI 500, while the Shanghai Composite Index lagged behind [1][17] - The market exhibited an "N-shaped" trend in the first half of 2025, with the Shanghai Composite Index increasing by 2.2% from the beginning of the year to June 27 [2][21] - The performance of various industries was notably divergent, with non-ferrous metals and banking sectors showing significant gains of 18.0% and 13.5% respectively, while coal and real estate sectors faced declines of 12.6% and 7.4% [3][31] Group 2 - The A-share market experienced active trading, with an average daily turnover exceeding 1.3 trillion yuan, reflecting a year-on-year increase of 61% [4][46] - The net inflow of funds into stock ETFs reached 1.6 billion yuan during key periods, indicating a recovery in market liquidity [4][49] - The issuance of equity funds rebounded significantly, with over 250 billion yuan issued in the first half of the year, marking a substantial increase compared to the same period last year [4][47] Group 3 - The report highlights three main investment themes: domestic consumption, domestic substitution, and sectors underweight by funds, which are expected to attract attention in the medium to long term [5][65] - The focus on domestic consumption is driven by recent policy initiatives aimed at boosting domestic demand, which is anticipated to enhance the performance of related sectors [5][66] - The domestic substitution theme reflects the potential for certain industries, such as technology and defense, to benefit from reduced reliance on foreign products, although challenges remain in achieving substantial progress [5][67]