Investment Rating - The industry is rated as "Outperform" relative to the market [6] Core Views - Precious metals are under pressure due to a strong dollar and hawkish comments from Powell, with gold prices expected to remain volatile in the short term, while long-term trends may support price increases due to potential Fed rate cuts and inflation concerns [11][12] - Industrial metals are in a tight supply-demand balance, making prices more likely to rise than fall, with copper and aluminum expected to see upward price movements in the medium term [13][15] - In the new energy metals sector, lithium prices are expected to rise due to supply disruptions, although a long-term supply-demand reversal has not yet occurred [20] - Other minor metals, particularly rare earths, are showing positive price trends supported by recovering demand and supply constraints [21] Summary by Sections Precious Metals - The gold market is facing significant pressure from a strong dollar and rising U.S. Treasury yields, with prices expected to fluctuate [11] - Recommendations include focusing on leading companies such as Zhaojin Mining and Zijin Mining for potential investment opportunities [12] Industrial Metals - Copper prices are under pressure due to recent tariff implementations, but a long-term upward trend is anticipated due to a tight supply-demand balance [14] - Aluminum prices are expected to stabilize and potentially rise in the medium term due to seasonal demand increases [15] - Suggested stocks for copper include Baima Jincheng and Luoyang Molybdenum, while for aluminum, focus on Yun Aluminum and Huadong [16][19] New Energy Metals - Lithium prices are expected to rise in the short term due to supply disruptions, with a focus on strategic stock investments in companies like Yongxing Materials and Salt Lake Resources [20] - The demand for lithium is currently mixed, with a slowdown in electric vehicle consumption noted [20] Other Minor Metals - Rare earth prices are expected to rise due to recovering demand and supply constraints, particularly for praseodymium and neodymium [21] - The tungsten market is experiencing price stagnation due to conflicting supply and demand dynamics [22]

Employment Data - In July, the U.S. added only 73,000 non-farm jobs, significantly lower than expected, with previous months' job additions revised down to 19,000 and 14,000 for May and June respectively, indicating a downward adjustment of 86,000 jobs[3] - The average unemployment rate increased by 0.1 percentage points to 4.2% in July, reversing a slight decline in June[3] Labor Market Dynamics - The labor force participation rate fell for the third consecutive month, down 0.1 percentage points to 62.2%, the lowest since December 2022, reflecting a decrease in potential labor supply due to strict immigration controls[4] - Average hourly earnings rose by 0.1 percentage points to 3.9% year-on-year, following three months of stagnation, indicating upward pressure on wages[4] Economic Implications - The labor market's current cooling trend is expected to be temporary, with potential recovery as fiscal expansion measures are implemented, which may lead to increased job creation and higher incomes[4] - The "Big and Beautiful Act" is anticipated to provide significant tax incentives for domestic investment, potentially leading to a rebound in the labor market and upward pressure on inflation[4] Market Reactions - Following the employment data release, the U.S. dollar index fell sharply by 1.38% to 98.69, reflecting market concerns over the labor market's performance[3] - The overall structure of job additions in July suggests a prolonged process for the return of advanced industry chains to the U.S., with tariffs having a notable impact on domestic manufacturing[3]

Group 1 - The report recommends a focus on cyclical sectors for August 2025, including oil and petrochemicals, construction, banking, agriculture, building materials, automotive, media, textiles, and pharmaceuticals [2][26][54] - The multi-strategy approach has achieved an annualized relative return of 7.08% since July 2011, with a maximum drawdown of 13.03% [2][26][62] - The dynamic balance strategy has an annualized absolute return of 16.45% from 2015 to July 2025, with a relative maximum drawdown of 10.18% [3][20][50] Group 2 - The macro-driven strategy has an annualized excess return of 4.44% since early 2016, with a maximum drawdown of 9.51% [4][18][42] - The report highlights the performance of various sectors, with the top-performing sectors in July being steel, pharmaceuticals, communications, building materials, and construction [11][12][13] - The report indicates that the current economic diffusion is the most important macro-driven factor, with an importance score of 105.52% [34][39] Group 3 - The report identifies crowded trading conditions in sectors such as coal, non-bank financials, and pharmaceuticals, indicating potential risks in these areas [5][68] - The dynamic balance strategy's absolute return in July was 4.85%, underperforming the benchmark with an excess return of -0.14% [3][50] - The multi-strategy sector allocation for August includes a high weight on oil and petrochemicals, construction, and banking, with no adjustments from the previous period [54][58][62]

Group 1: PMI Trends - In July, the manufacturing PMI index fell by 0.4 percentage points to 49.3%, marking the fourth consecutive month below the threshold and the lowest in nearly six months[1] - The new orders index dropped significantly by 0.8 percentage points to 49.4%, with the consumer goods sector declining by 0.9 percentage points to 49.5% due to ongoing downturns in the real estate market[1] - The production index also decreased by 0.5 percentage points to 50.5%, influenced by extreme weather and weakened internal and external demand[1] Group 2: Export and Inventory Insights - The new export orders index fell by 0.6 percentage points to 47.1%, with high-tech and equipment manufacturing sectors declining by 0.3 and 1.1 percentage points respectively, reflecting short-term impacts from delayed tariff negotiations[1] - The finished goods inventory index dropped by 0.7 percentage points to 47.4%, indicating a cautious outlook among enterprises amid weak demand[2] - Industrial enterprises are expected to maintain a moderate pace of inventory replenishment due to ongoing challenges in the real estate market and limited traditional infrastructure investment[2] Group 3: Service and Construction Sector Performance - The service sector PMI slightly decreased by 0.1 percentage points to 50.0%, remaining near the threshold, indicating stable growth in service consumption[2] - The construction sector PMI fell significantly by 2.2 percentage points to 50.6%, impacted by extreme weather conditions and limited traditional infrastructure investment due to debt concerns[2] - The political bureau meeting emphasized the importance of expanding consumer goods consumption, but did not extend the previous policies aimed at enhancing durable goods subsidies, suggesting a need for ongoing observation[3]

Monetary Policy Insights - The Federal Reserve maintained the federal funds rate at 4.25%-4.5% for the fifth consecutive time in 2025[3] - Powell did not indicate a rate cut in September, emphasizing that inflation remains above target while employment is at target levels[3] - The assessment of economic activity was downgraded from "continuing to expand at a steady pace" to "economic growth has slowed in the first half of the year"[3] Inflation and Tariff Impact - Powell noted that the inflation caused by tariffs is still in its early stages, with evidence showing that exporters are not absorbing the costs, but rather businesses and retailers are[4] - The potential for inflation to rise due to tariffs is being closely monitored, indicating a cautious approach to future rate cuts[4] Labor Market Dynamics - The labor market is described as robust, with recent data showing a decline in weekly initial jobless claims to a 14-week low[5] - The "Big and Beautiful" plan is expected to stimulate both supply and demand in the economy, potentially leading to a tighter labor market and upward pressure on wages and inflation[5] Economic Outlook - The combination of tax cuts and tariff agreements is likely to support economic growth and limit the Fed's ability to implement significant rate cuts in the near term[5] - The recent tax cuts include substantial individual tax reductions for middle and upper-income groups, which are expected to boost consumer spending[5] Risks and Considerations - There is a risk that the pace and magnitude of potential Fed rate cuts may be slower than anticipated[6]

Investment Rating - Industry rating: Outperform the market (maintained) [1] Core Viewpoints - The development of offshore wind power is crucial for promoting high-quality development of the marine economy, with offshore wind power taking the lead in the marine industry [2][5] - The deep-sea offshore wind power development will start with demonstration projects, with significant progress in Zhejiang and Liaoning provinces [2][4] - Investment suggestions focus on the mid-to-long-term beneficiaries of deep-sea offshore wind power development and deep-sea technology [2][49] Summary by Sections Promoting High-Quality Development of Marine Economy - The national strategy emphasizes the importance of offshore wind power in the marine industry, highlighting the need for orderly construction amid increasing competition for marine resources [5][10] Progress of Deep-Sea Offshore Wind Power - Zhejiang has planned six deep-sea offshore wind power zones, with a total capacity of 28GW, and is actively developing demonstration projects [14][37] - Liaoning's first phase of the 1GW deep-sea offshore wind power project is scheduled for full capacity grid connection by December 31, 2027 [34] Investment Recommendations - Focus on the supply chain benefiting from deep-sea offshore wind power development: 1. Submarine cable segment: Recommended companies include Dongfang Cable, Zhongtian Technology, and Hengtong Optic-Electric [49] 2. Offshore wind foundation and marine engineering: Recommended companies include Dajin Heavy Industry, Haili Wind Power, and Tian Shun Wind Power [49] 3. Turbine manufacturers with sufficient orders: Recommended companies include Goldwind Technology, Yunda Co., Sany Heavy Energy, and Mingyang Smart Energy [49]

Group 1 - The report highlights the strategic direction set by the Central Political Bureau meeting on July 30, focusing on the upcoming 14th Five-Year Plan and addressing current economic recovery challenges [2][6][7] - The meeting emphasizes the importance of the next five years as a critical period for achieving modernization goals, with a focus on maintaining strategic determination and enhancing confidence in overcoming challenges [7][8] - Key economic work for the second half of the year includes consolidating economic recovery, with macro policies aimed at precise support and enhancing domestic demand through dual drivers [8][12] Group 2 - The report identifies three strategic directions for investment focus: technological self-reliance, restructuring the domestic demand system, and high-level opening up [16][20] - The first strategic direction emphasizes the cultivation of emerging pillar industries such as semiconductors and AI, and the integration of technology with traditional manufacturing [20] - The second strategic direction focuses on building a unified national market and promoting new growth points in service consumption, alongside measures to ensure common prosperity [21] - The third strategic direction highlights opportunities for enterprises in integrated domestic and foreign trade, particularly in the context of the Belt and Road Initiative [22]

Group 1 - The core viewpoint of the report emphasizes a three-dimensional policy system focusing on short-term stability, medium-term structural adjustment, and long-term breakthroughs, particularly in the context of the transition from the "14th Five-Year Plan" to the "15th Five-Year Plan" [2][18] - The report highlights the collaborative approach of fiscal and monetary policies, aiming to create a synergistic effect that enhances economic stability and supports domestic demand [10][18] - The governance of "involution" and optimization of production capacity is underscored, with a focus on regulating disorderly competition and promoting the exit of excess capacity in key industries [11][18] Group 2 - The report suggests monitoring export-oriented industries that may benefit from the reduction of tariffs by the U.S., particularly those with high export ratios such as home appliances and consumer electronics [21] - It identifies high-growth sectors that could thrive under precise policy support and global technological resonance, including domestic computing power and defense industries [21] - The report points to thematic opportunities arising from the "15th Five-Year Plan," indicating potential investment avenues aligned with national strategic goals [21]

Economic Outlook - The assessment of the economic situation has become more positive, with major economic indicators performing well, leading to a projected economic growth of 5.3% in the first half of the year, exceeding the annual target[3] - Concerns over external shocks have significantly eased, reflecting the effectiveness of measures taken against the recent tariff war with the U.S.[3] - The focus of future economic work is expected to shift towards enhancing domestic circulation and improving quality and efficiency[3] Policy Adjustments - Supply-side quality enhancement has re-emerged as a policy focus, emphasizing technological innovation and the development of internationally competitive emerging industries[4] - The macroeconomic policy stance has shifted to a more neutral tone, with potential for minor interest rate cuts, particularly a 10 basis point reduction expected in August[5] - Fiscal policy remains cautious, with a low probability of increasing special bond issuance, while emphasizing the need to effectively release domestic demand potential[5] Real Estate and Capital Markets - The focus of real estate policy is shifting from stimulating incremental demand to high-quality urban renewal, with a more cautious approach to urban development[6] - The meeting highlighted the importance of enhancing the attractiveness and inclusivity of domestic capital markets, aiming to consolidate the positive momentum in capital market recovery[6]

Group 1: Trade Relations and Tariff Policies - The US-China trade talks in Sweden resulted in a 90-day extension of the tariff relief period, contrasting with the EU and Japan's acceptance of new tariffs under US pressure[3] - The US has imposed a 15% tariff on EU imports, while the EU committed to invest $600 billion in the US and purchase $750 billion in US energy products[3] - Japan agreed to a 15% tariff on US goods and pledged to invest $550 billion in the US, highlighting the differences in trade negotiations compared to China[3] Group 2: Economic Implications - The US's universal tariff policy may lead to increased import prices and reduced demand, impacting domestic production costs[4] - The US economy shows resilience with strong retail and labor market data, indicating sustained domestic demand despite tariff pressures[4] - European and Japanese economies, heavily reliant on exports to the US, face risks of being undermined by US tariff policies due to their lack of effective domestic demand stimulation[4] Group 3: China's Strategic Response - China's dual approach to the US tariff war focuses on maintaining the integrity and competitiveness of its supply chain while stimulating domestic consumption and investment[5] - The extension of the tariff relief period may alleviate some downward pressure on China's exports in the second half of the year[5] - Future economic policies in China will prioritize resolving real estate and local debt risks, expanding fiscal stimulus to boost domestic consumption, and encouraging effective investment[5]