Sou Hu Cai Jing·2025-08-03 23:52Core Viewpoint - The recent adjustment in the A-share market is a result of profit-taking pressure and changes in expectations after a period of continuous gains, with a focus on the impact of domestic and international economic indicators and policies [1][4][44]. Changes in Expectations - Decrease in Expectations for Incremental Policies and Cyclical Recovery: The Politburo meeting in July did not announce significant new policies, emphasizing the need for macro policies to continue while being more detailed. The July PMI data showed a larger decline in domestic demand compared to external demand, indicating a slowdown in internal demand [1][9]. - Increased Uncertainty Regarding the Fed's Rate Cut Schedule: The Fed's July FOMC meeting maintained the current rate, with Powell expressing concerns about inflation and labor market resilience. Following disappointing non-farm payroll data, market expectations for a rate cut in September surged from 38% to 80% [2][20]. - Diminished Expectations for Improvement in US-China Relations: Recent US trade agreements with allies and ongoing tensions, such as the Nvidia H20 incident, have led to a more cautious outlook on US-China economic relations [3][27]. Unchanged Factors - Global Monetary Easing and Abundant A-share Liquidity: The environment remains supportive for equity markets, with the Politburo emphasizing the need for liquidity and lower financing costs. The two-margin financing has seen a net inflow of approximately 169 billion yuan from late June to the end of July [2][30]. - Investor Bull Market Expectations Remain Intact: Historical data shows that 5-10% pullbacks are normal during bull markets, and current investor sentiment remains high, suggesting a potential return to upward trends after adjustments [2][35]. - Structural Prosperity in New Sectors: The Ministry of Industry and Information Technology has outlined key areas for focus, including expanding domestic demand and technological innovation. Positive earnings forecasts are noted in sectors such as non-bank financials, metals, electronics, and agriculture [3][41].