1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The report suggests that local bonds may be approaching an allocation window. It analyzes the primary and secondary market conditions of local bonds, including net financing, issuance terms, issuance spreads, secondary spreads, and trading volume and turnover rates [1]. 3. Summary by Directory 3.1 Primary Market Conditions - **Net Financing**: This week, local bond issuance was 107.8 billion yuan, with a net repayment of 43 billion yuan. Next week, the planned issuance is 261.8 billion yuan, with a net financing of 124.3 billion yuan, a significant increase compared to this week [1][3]. - **Issuance Terms**: The issuance proportion of 10 - year local bonds was the highest this week (47%), and the proportion of 10 - year and above bonds reached 76%, an increase from last week. The 10 - year bond issuance proportion increased by about 24 percentage points [1]. - **Debt - Resolution - Related Local Bonds**: This week, special refinancing bonds worth 26.7 billion yuan were issued. In 2025, 33 regions have disclosed plans to issue special bonds for replacing hidden debts, totaling 1.7362 trillion yuan. Special special bonds worth 1.5 billion yuan were issued this week, and as of the end of this week, the disclosed and issued scales in 2025 were 273 billion yuan and 245.4 billion yuan respectively [2]. - **Issuance Spreads**: The weighted average issuance spread of local bonds this week was 12bp, wider than last week. The 30 - year local bond had the highest weighted average issuance spread at 19.3bp. Except for the 5 - year, 20 - year, and 30 - year bonds, the spreads of other terms widened [1]. - **Fund - Raising Allocations**: As of the end of this week, the main allocation directions of newly - added special bond funds in 2025 were cold - chain logistics, municipal and industrial park infrastructure construction (32%), transportation infrastructure (21%), social undertakings (12%), and affordable housing projects (12%). The proportion of land reserve allocations increased by 7.7% compared to 2024 [2]. - **Issuance Plan**: In the second quarter of 2025, 36 regions have disclosed local bond issuance plans, with an estimated total issuance of 2.48 trillion yuan. In June, the planned issuance is 1007.6 billion yuan [30]. 3.2 Secondary Market Conditions - **Secondary Spreads**: This week, the secondary spreads of 15 - year and 30 - year local bonds were advantageous, and the secondary spread of 10 - year local bonds narrowed significantly. The secondary spreads of 15 - year and 30 - year bonds were 21bp and 20bp respectively. The historical quantile of the 30 - year bond's secondary spread was 87% [4]. - **Trading Volume and Turnover Rates**: This week, both the trading volume and turnover rate of local bonds increased. Tianjin, Shenzhen, and Ningbo had relatively high turnover rates. The trading volume reached 598.3 billion yuan, and the turnover rate was 1.17%. Tianjin, Jiangsu, and Sichuan had large trading volumes [5].

Investment Rating - The report maintains a recommendation for the food and beverage industry, indicating a positive outlook for the sector [4]. Core Viewpoints - The report highlights that the pet food and snack segments continue to show strong performance, while the liquor sector is experiencing a downturn, with concerns over inventory and demand impacting sentiment [14][15]. - The report emphasizes the importance of companies managing supply and maintaining prices in response to market conditions, particularly in the liquor industry [14]. - E-commerce performance in snacks, health products, and pet food is expected to be strong, with a notable 16% year-on-year increase in sales for pet food across major platforms [14]. Summary by Relevant Sections Core Company Tracking - **Yanghe Co.**: Acknowledges issues and plans for deep adjustments, with inventory down 10% year-on-year. The company aims to reduce expenses and promote high-quality products [9]. - **New Dairy Industry**: Focuses on product innovation and differentiation, with a strong supply chain and a third of its milk sourced from its own farms [10]. - **Tianwei Foods**: Reports positive revenue growth in April-May, driven by improved sales and custom business growth, with a healthy inventory [11]. - **Haitian Flavor Industry**: Experiences slower shipping progress due to weak restaurant demand, but maintains a steady pace in overseas expansion [12]. - **Ximai Foods**: Achieves rapid online growth and aims for double-digit growth offline, focusing on product innovation and member engagement [12]. - **Good Idea**: Implements cost control measures and emphasizes profit assessment, with a focus on promoting specific product lines [13]. - **Kangshifu**: Faces revenue growth pressure but sees profit margin improvement due to price adjustments and raw material cost reductions [13]. Investment Recommendations - The report suggests focusing on companies with new product and channel catalysts, such as Youyou Foods, New Dairy Industry, and Ximai Foods, as well as those with profit recovery potential like Good Idea [15]. - It highlights the seasonal sales improvement for brands like Qingdao Beer and Farmer Spring, and suggests monitoring opportunities in the pet food segment [15]. - Defensive stocks such as Yili and Mengniu are recommended, along with low-position opportunities in liquor companies like Guizhou Moutai and Wuliangye [15]. Industry Valuation - The report provides a valuation table for key companies, indicating market capitalization and projected earnings for the upcoming years, with Guizhou Moutai leading in market cap at 1792.5 billion [16].

Quantitative Models and Construction Methods 1. Model Name: Interest Rate Price-Volume Multi-Cycle Timing Strategy - **Model Construction Idea**: The model uses kernel regression to identify support and resistance lines in interest rate trends. It combines signals from long, medium, and short investment cycles to form a composite timing strategy[10][22] - **Model Construction Process**: - **Signal Generation**: - Long-cycle signals switch monthly, medium-cycle signals switch bi-weekly, and short-cycle signals switch weekly[10] - A downward breakthrough in at least two cycles triggers a long-duration allocation, while an upward breakthrough in at least two cycles triggers a short-duration allocation[22] - **Portfolio Construction**: - Full allocation to long duration when at least two cycles show downward breakthroughs and the trend is not upward - 50% medium duration + 50% long duration when at least two cycles show downward breakthroughs but the trend is upward - Full allocation to short duration when at least two cycles show upward breakthroughs and the trend is not downward - 50% medium duration + 50% short duration when at least two cycles show upward breakthroughs but the trend is downward - Equal allocation across short, medium, and long durations during other periods[22] - **Performance Benchmark**: Equal-weighted duration strategy (1/3 short duration + 1/3 medium duration + 1/3 long duration)[22] - **Stop-Loss Mechanism**: Adjust to equal-weighted allocation when daily excess return falls below -0.5%[22] - **Model Evaluation**: The strategy demonstrates robust performance with consistent positive absolute and excess returns over 18 years, indicating strong adaptability and reliability[23] --- Model Backtesting Results 1. Interest Rate Price-Volume Multi-Cycle Timing Strategy - **Short-Term Performance (Since End of 2023)**: - Annualized Return: 7.35% - Maximum Drawdown: 1.58% - Return-to-Drawdown Ratio: 6.31 - Excess Return: 2.26% - Excess Return-to-Drawdown Ratio: 2.39[4][22][23] - **Long-Term Performance (Since 2007)**: - Annualized Return: 6.18% - Maximum Drawdown: 1.52% - Return-to-Drawdown Ratio: 2.26 - Excess Return: 1.66% - Excess Return-to-Drawdown Ratio: 1.18[22][23] - **Annual Performance Statistics (2008-2025)**: - Absolute Return: Positive in all 18 years (100% success rate) - Excess Return: Positive in all 18 years (100% success rate) - Example Annual Returns: - 2008: Absolute Return 17.08%, Excess Return 4.41% - 2024: Absolute Return 9.35%, Excess Return 2.52% - 2025 (YTD): Absolute Return 1.37%, Excess Return 0.76%[23][26] --- Quantitative Factors and Construction Methods 1. Factor Name: Interest Rate Structure Indicators (Level, Slope, Convexity) - **Factor Construction Idea**: Transform yield-to-maturity (YTM) data of 1-10 year government bonds into structural indicators to analyze the interest rate market from a mean-reversion perspective[7] - **Factor Construction Process**: - **Level Structure**: Measures the average YTM across maturities - **Slope Structure**: Captures the difference between long-term and short-term YTMs - **Convexity Structure**: Reflects the curvature of the yield curve[7][9] - **Current Readings**: - Level: 1.53%, in the 6%, 4%, and 2% percentiles for 3, 5, and 10-year historical windows, respectively - Slope: 0.24%, in the 5%, 3%, and 6% percentiles for 3, 5, and 10-year historical windows, respectively - Convexity: 0.05%, in the 21%, 13%, and 14% percentiles for 3, 5, and 10-year historical windows, respectively[9] 2. Factor Name: Public Bond Fund Duration and Yield-to-Maturity (YTM) - **Factor Construction Idea**: Use an improved regression model to estimate the duration and YTM of medium-to-long-term pure bond funds, dynamically tracking weekly changes in institutional views[13] - **Factor Construction Process**: - **Duration**: - Median Duration: 3.3 years - 4-Week Moving Average: 3.32 years - Mean Duration: 3.39 years - Current Percentile: 96.14% over the past 5 years[13][14] - **Duration Dispersion**: - Cross-sectional Standard Deviation: 1.58 years - Current Percentile: 65.64% over the past 5 years[14] - **YTM**: - Median YTM: 1.79% - 4-Week Moving Average: 1.81% - Mean YTM: 1.86% - Current Level: Near historical lows[19] --- Factor Backtesting Results 1. Interest Rate Structure Indicators - **Level Structure**: 1.53% - **Slope Structure**: 0.24% - **Convexity Structure**: 0.05%[9] 2. Public Bond Fund Duration and YTM - **Duration**: - Median: 3.3 years - 4-Week Moving Average: 3.32 years - Mean: 3.39 years[13][14] - **Duration Dispersion**: - Standard Deviation: 1.58 years[14] - **YTM**: - Median: 1.79% - 4-Week Moving Average: 1.81% - Mean: 1.86%[19]

Investment Rating - The report maintains a "Recommended" investment rating for the environmental and public utility sector [2] Core Insights - The environmental sector index increased by 0.26%, while the public utility sector index decreased by 1.19%, indicating a divergence in performance [7] - The report highlights the ongoing pilot projects in hydrogen energy, aiming to support the entire chain of hydrogen "production, storage, transportation, and utilization" [11] - The report emphasizes the need for market-oriented measures in electricity management, particularly in cross-provincial emergency dispatching [11] Summary by Sections Key Event Interpretations - The National Energy Administration has initiated hydrogen energy pilot projects to promote clean energy consumption in various sectors [11] - The National Development and Reform Commission has proposed a management method for cross-provincial electricity emergency dispatching to ensure power supply safety [11] Market Performance Review - The environmental sector has shown a cumulative increase of 6.01% since the beginning of 2025, outperforming the Shanghai and Shenzhen 300 indices [7] - The report notes that the coal price remains low, with Qinhuangdao's 5500 kcal thermal coal price at 620 CNY/ton, a significant drop from previous highs [23][24] Industry Data Tracking - As of June 13, 2025, the water level of the Three Gorges Reservoir is 150.66 meters, showing a year-on-year increase of 1.6% [25] - The report tracks the price of polysilicon, which has decreased to 35 CNY/kg, reflecting ongoing price adjustments in the market [40] Key Industry Events - The report discusses the implementation of various policies aimed at promoting hydrogen energy and carbon emission reduction across different provinces [54][55]

Investment Rating - The investment rating for the industry is "Strong Buy" for key companies such as Shengnong Development, Wens Foodstuff Group, and Lihua Co., Ltd. [3] Core Insights - The report indicates a decline in broiler chicken prices, leading to potential capacity reduction in yellow feathered chicken production. The demand side remains weak, resulting in losses for the broiler farming sector. [1][9] - The white feathered chicken sector shows signs of recovery with increased chick sales driven by seasonal restocking, although overall prices remain low. [9][10] - The yellow feathered chicken sector is experiencing losses, which may accelerate the exit of underperforming capacity. [19][24] Summary by Sections White Feathered Chicken - In May, the average price of broiler chicken was 7.41 yuan/kg, down 4.1% year-on-year and 0.1% month-on-month. The average price of chicken products was 8,874 yuan/ton, down 7% year-on-year and 0.4% month-on-month. The farming sector faced a slight loss of 0.07 yuan per bird. [9][10] - Chick sales increased due to seasonal restocking, with major companies like Yisheng selling 56.61 million chicks, up 11% year-on-year. [10] - The report anticipates a favorable outlook for the white chicken breeding sector, with expected strong demand for quality parent stock in 2025. [11][33] Yellow Feathered Chicken - The average price for fast-growing yellow chickens was 4.33 yuan/jin, down 19% year-on-year, while the price for Xueshan grass chickens was 6.52 yuan/jin, down 14.6% year-on-year. [23] - Major companies reported increased sales volumes, with Wens selling 108 million chickens, up 14.6% year-on-year. However, the overall supply remains relatively abundant, leading to price declines. [19][24] - The report suggests that the current low prices and costs in the yellow chicken sector may set the stage for future price increases as supply contracts. [24][33] Investment Recommendations - The report recommends focusing on integrated leading companies like Shengnong Development for white feathered chickens and Lihua Co., Ltd. for yellow feathered chickens, as they are expected to benefit from cost improvements and market recovery. [31][33]

Investment Rating - The industry maintains a "Recommended" rating, indicating a positive outlook for the industry fundamentals and expectations for the industry index to outperform the benchmark index [7]. Core Insights - The report highlights a narrowing year-on-year decline in both new and second-hand housing transaction areas in sample cities, suggesting a potential stabilization in the real estate market [1][5]. - The report emphasizes the importance of policy adjustments, such as interest rate cuts, which may help stimulate demand in the housing market [5]. - The analysis indicates that the new housing market may experience marginal improvements sooner than the second-hand housing market due to supply and demand dynamics [5]. Summary by Sections New Housing Transactions - The year-on-year decline in new housing transaction areas has narrowed to -10% as of June 12, with a month-on-month comparison showing a relatively high level compared to the past five years [4][9]. - The report notes that the new housing transaction area in first-tier cities has turned negative, while second-tier cities show a significant decline of -10% [4]. Second-Hand Housing Transactions - The year-on-year decline in second-hand housing transaction areas has also narrowed to -4%, with a notable increase in transaction activity in first-tier cities [4][14]. - The report indicates that the second-hand housing market is showing signs of recovery, with transaction areas in some sample cities turning positive [14]. Land Acquisition - The report states that from January to May 2025, the cumulative land transaction area has seen a year-on-year decline of -7%, while the average transaction price has increased by 31% [21][26]. - The land acquisition data indicates a trend of increasing average prices despite a decrease in transaction volumes, suggesting a tightening supply [21][29]. Inventory and Market Dynamics - The report highlights an increase in the unsold inventory and the time required to sell properties, indicating a potential oversupply in the market [31][34]. - The analysis suggests that the market is entering a phase of observation, with high-quality residential supply and narrowing differences between rental yields and mortgage rates being key variables to monitor [5][31]. Forward-Looking Indicators - The report discusses various forward-looking indicators, including a projected increase in liquidity and a potential rise in confidence in housing transactions across multiple cities [5][49]. - The report also notes that the confidence index for new and second-hand housing transactions has shown a marginal decline, indicating cautious sentiment among buyers [51].

Group 1: US-China Relations and Trade Negotiations - The US and China held trade talks in London on June 9-10, focusing on economic issues and reaching a consensus on measures to implement the leaders' June 5 call[8] - The US Treasury Secretary proposed extending the tariff suspension for countries participating in "good faith" trade negotiations until after July 9[5] - The US is conducting a Section 232 investigation into semiconductors, pharmaceuticals, and other critical industries, with potential short-term tariff risks[10] Group 2: Middle East Conflicts - The Israel-Iran conflict escalated with significant airstrikes on June 13, disrupting US-Iran nuclear negotiations originally scheduled for June 15[9] - The conflict reflects internal divisions within the Republican Party regarding US involvement in the Middle East, particularly between MAGA supporters and traditional hawks[13] - The US's strategic focus has shifted towards the Indo-Pacific, making direct involvement in Middle Eastern conflicts more cautious[15] Group 3: Domestic Political Landscape in the US - Protests in Los Angeles over immigration issues led to the deployment of National Guard troops by President Trump, reinforcing his political base[12] - The ongoing political turmoil and policy shifts within the Trump administration may impact market stability and investor confidence[18] - The upcoming G7 summit from June 15-17 will address tariffs and geopolitical conflicts, with limited expectations for concrete outcomes[14]

Investment Rating - The report maintains a recommendation for the gold and rare earth sectors, emphasizing their investment value amidst geopolitical risks and expectations of interest rate cuts in the U.S. [1] Core Insights - The report highlights that U.S. inflation data fell below expectations, leading to increased market anticipation for a rate cut by the Federal Reserve in September. The ongoing tariff negotiations and weak economic data are expected to keep market risk appetite subdued. [1] - The report suggests focusing on sectors related to self-sufficiency and time-sensitive technologies, including robotics and controllable nuclear fusion materials. [1] Industry Overview - The metal industry is experiencing a significant performance, with the non-ferrous metal index showing a weekly increase of 3.79%, ranking first among sectors. Precious metals, industrial metals, energy metals, and minor metals also showed positive growth rates. [6] - The report notes that the largest weekly gain was seen in tungsten prices, which increased by 2.76% due to supply constraints and rising demand from sectors like photovoltaics and military applications. [6] - Conversely, zinc prices fell by 1.91% due to increased supply from mine restarts and weak demand from downstream industries. [6] Specific Metal Insights - Copper inventory decreased by 0.4 thousand tons to 144.8 thousand tons as of June 12, indicating a strong short-term fundamental outlook for copper prices. [6] - Aluminum prices are expected to rise due to significant inventory reductions and market sentiment shifting towards bullishness. [6] - The report anticipates a continued high price level for tin, supported by supply constraints and demand from the semiconductor industry. [7] Rare Earth and Precious Metals - The report indicates a potential increase in rare earth prices, with exports expected to rebound in June after a decrease in May. [7] - Gold prices rose by 3.8% to $3,433 per ounce, driven by geopolitical tensions and weak U.S. economic data, with an 81% probability of a rate cut in September. [7] New Materials and Technologies - The report emphasizes the ongoing development of controllable nuclear fusion and suggests monitoring companies involved in this sector, as well as those in the robotics and permanent magnet industries. [7]

Group 1 - The report introduces a quantitative model solution for addressing the issue of value and growth style rotation based on odds and win rates [1][8] - The recent performance of the growth style portfolio was -0.01%, while the value style portfolio returned -0.14% [8] Group 2 - The estimated odds for the growth style is 1.10, while the value style is estimated at 1.08, indicating a negative correlation between relative valuation levels and expected odds [2][14] - The current win rates indicate that 3 out of 7 indicators favor growth, resulting in a win rate of 68.88% for growth and 31.12% for value [3][16] Group 3 - The latest investment expectation for the growth style is calculated at 0.44, while the value style has an investment expectation of -0.35, leading to a recommendation for the growth style [4][18] - Since 2013, the annualized return of the style rotation model based on investment expectations is 27.10%, with a Sharpe ratio of 0.98 [4][19]

Investment Rating - The report maintains a positive outlook on the banking sector, indicating potential for absolute and relative returns in the short, medium, and long term [2][3]. Core Insights - The M1 growth rate has rebounded, signaling economic vitality, although it remains below seasonal norms. The increase in M1 is primarily attributed to a low base effect from the previous year [1][2]. - Credit growth in May was 0.62 trillion, which is lower than the seasonal average, but the real credit demand appears stable as indicated by the increase in non-bill financing [1][2]. - The fiscal strength indicator has shown a significant decline, suggesting a need to monitor the sustainability of fiscal efforts moving forward [2]. Summary by Sections Financial Data Analysis - M1 growth increased by 0.8 percentage points, with a monthly decrease of 0.23 trillion in May 2025, compared to a net decrease of 1.08 trillion in May 2024 [1]. - Total credit increased by 0.62 trillion in May 2025, lower than the 0.95 trillion in May 2024 and 1.36 trillion in May 2023, indicating that credit growth has not yet returned to seasonal levels [1]. Economic Outlook - The report emphasizes that while M1 and credit indicators show no further weakening in economic vitality, they have not yet returned to normal seasonal levels. Future attention should be given to the sustainability of fiscal efforts and the liquidity effects following large bank capital injections [2]. - The banking sector is expected to benefit from structural optimization and increased fiscal support directed towards social welfare areas, which could enhance both short-term demand and long-term supply [2][3]. Investment Recommendations - The report suggests a balanced investment approach across state-owned, joint-stock, and regional banks, focusing on those with superior free cash flow valuations [3]. - It highlights that high-dividend banks are likely to outperform in relative returns due to their defensive advantages amid external uncertainties [3].