Macro Overview - The U.S. labor market shows signs of fatigue, with non-farm employment growth nearly stagnating over the past two months, which historically indicates economic distress or the need for intervention [4] - Despite the weak labor data, the probability of a recession remains manageable, with the New York Fed predicting a 28.71% chance of recession in the next 12 months [4] - The U.S. economy is experiencing a slowdown in consumption and investment due to high interest rates and uncertainty in tariff policies, although the overall economic resilience was strong in the first half of the year with a GDP growth rate of 5.3% [4] Domestic Policy Insights - The current policy focus is on observing the economic conditions in consumption, exports, and real estate, with a shift towards long-term mechanisms for sustainable economic development [4] - The government is expected to prioritize high-quality economic development and establish long-term sustainable growth mechanisms during the "14th Five-Year Plan" period [4] - If GDP growth falls below 4.7% in the third quarter, there may be considerations for additional policy measures [4] Market Strategy and Asset Allocation - The A-share market is expected to experience a slow upward trend, supported by strong economic fundamentals and high market activity, although valuation recovery may slow down [4] - The focus for investment should be on long-term allocations in sectors such as banking, dividends, and broad-based indices, with a cautious approach to chasing high valuations [4] - The market is witnessing a structural rotation with opportunities in themes like technology (AI, computing power, chips), military, pharmaceuticals, stablecoins, rare earths, and cyclical sectors [4] Asset Class Outlook - A-shares are viewed as relatively optimistic, while Hong Kong stocks and U.S. stocks maintain a neutral stance [6] - Credit bonds and convertible bonds are also seen as relatively optimistic, indicating a favorable outlook for fixed-income investments [6] - The outlook for commodities like oil remains cautious, reflecting ongoing uncertainties in the global market [6]

Core Viewpoint - The article discusses the significant shifts in investment strategies among fund managers in response to changing market conditions, particularly focusing on the divergence in approaches towards traditional sectors like liquor and emerging sectors like new consumption and innovative pharmaceuticals [3][39]. Market Performance - In Q2 2025, the Chinese A-share market experienced a rebound after an initial decline, with the Shanghai Composite Index dropping nearly 10% before recovering due to policy support [4][5]. - The Shanghai and Shenzhen Composite Index rose by 3.8% in Q2, while the Hang Seng Index outperformed with a 4.1% increase [6][7]. Fund Manager Strategies - Fund managers displayed contrasting strategies, with some reducing exposure to traditional sectors like liquor while others increased their stakes in high-end liquor brands [10][11]. - Zhang Kun, a prominent fund manager, significantly increased his holdings in high-end liquor stocks, contrary to the general trend of reduction among peers [12][16]. - In contrast, Jiao Wei completely exited liquor stocks to focus on new consumption sectors, indicating a shift in investment paradigms [17][18]. Sector Analysis - The article highlights a notable reduction in public fund holdings in the liquor sector, with the average allocation dropping to 4%, marking a historical low [10]. - Jiao Wei's new focus includes companies like Pop Mart and high-end gold brands, reflecting a broader trend towards new consumption [18][24]. - Liu Yanchun's fund also reduced its liquor holdings but maintained a consistent investment logic despite market fluctuations [26][30]. Emerging Trends - The article emphasizes the growing interest in innovative pharmaceuticals, with many fund managers reallocating resources towards this sector due to its recent performance and potential [39][41]. - Fund managers are increasingly recognizing the opportunities in new consumption narratives and cultural exports, which are seen as significant growth areas [46].

Investment Rating - The report maintains a "Strong Buy" investment rating for Hong Kong Exchanges and Clearing Limited (HKEX) with a target price of HKD 515.00, indicating a potential upside of 23% from the current price of HKD 417.0 [2][6]. Core Views - The report highlights the dual resonance of assets and funds driving the valuation of HKEX upwards, with expectations of high profit growth and an upward shift in valuation amid a thriving primary and secondary market in Hong Kong [6][7]. - The anticipated net profits for HKEX from 2025 to 2027 are projected to be HKD 153 billion, HKD 166 billion, and HKD 178 billion, representing year-on-year growth rates of 17%, 9%, and 7% respectively [6][7]. Summary by Sections Company Overview - HKEX is recognized as a global leader in the exchange sector, benefiting from government backing and a unique position as the only exchange platform in Hong Kong, which provides it with significant regional monopoly advantages [6][9]. - The strategic vision of HKEX focuses on connecting China with the world, capital with opportunities, and the present with the future, leveraging its unique resources to enhance its international presence [6][21]. Financial Performance - The financial overview indicates robust performance with a high return on equity (ROE) of 25.1% and a stable profit margin, with net profit margins around 58% and EBITDA margins around 75% [2][36]. - Revenue growth from 2012 to 2024 shows a compound annual growth rate (CAGR) of 10%, with total revenue increasing from HKD 72.1 billion to HKD 223.7 billion [36][41]. Business Model and Competitive Advantages - HKEX operates a light capital business model that ensures high profitability and a strong correlation between performance and trading activity, with trading fees and system usage fees contributing significantly to revenue [6][24]. - The exchange's competitive barriers include its unique government endorsement and the absence of direct competitors in the region, which solidifies its market position [24][25]. Valuation Drivers - The report identifies a dual resonance of asset quality and fund availability as key drivers for HKEX's valuation enhancement, with favorable market conditions and policy support for secondary listings boosting trading activity [6][7]. - The anticipated influx of southbound capital and the low interest rate environment are expected to sustain market liquidity and trading volumes, further supporting HKEX's growth [6][21]. Revenue Structure - The revenue structure is diversified, with significant contributions from trading fees, investment income, and settlement fees, reflecting the exchange's comprehensive service offerings [41][45]. - In 2024, the revenue from the cash segment is projected to be HKD 94.22 billion, with trading and settlement fees being the primary revenue sources [48].

Group 1 - The Hang Seng New Economy Index tracks the largest 50 stocks in the "new economy" sector within the Hong Kong Stock Connect, primarily including information technology, consumer discretionary, and healthcare [2] - The index experienced a daily change of 1.2% and has a rolling price-to-earnings (P/E) ratio of 23.3 times [2] - The Hang Seng Technology ETF follows the Hang Seng Technology Index, which consists of the 30 largest stocks related to technology, with over 90% of the index comprising information technology and consumer discretionary sectors [2] Group 2 - The Hong Kong Stock Connect Pharmaceutical ETF tracks the CSI Hong Kong Stock Connect Pharmaceutical and Healthcare Composite Index, which includes 50 liquid and large-cap stocks in the healthcare sector, accounting for over 90% of the index [2] - The index had a daily change of 2% and a rolling P/E ratio of 21.2 times [2] - The Hong Kong Stock Connect Internet ETF follows the CSI Hong Kong Stock Connect Internet Index, consisting of 30 leading internet companies, primarily in information technology and consumer discretionary [3] Group 3 - The Hong Kong Stock Connect Consumer ETF tracks the CSI Hong Kong Stock Connect Consumer Theme Index, which includes 50 liquid and large-cap consumer stocks, with nearly 60% in consumer discretionary [3] - The index experienced a daily change of 1.2% and has a rolling P/E ratio of 20.7 times [3] - The data for the indices is sourced from Mind, with the closing data as of August 4, 2025, and rolling P/E ratios as of August 1, 2025 [2][3]

Core Viewpoint - The public fund industry is experiencing a significant recovery in 2025 after a four-year downturn, with over 90% of active equity funds achieving positive returns this year, leading to increased confidence among fund managers and a revival in fund issuance [1][2]. Fund Performance - Active equity funds have seen an average return of over 13% year-to-date as of August 1, with a notable number of funds doubling their performance, including 17 funds that achieved over 140% returns [2]. - More than 800 active equity funds reached historical net asset value highs in the past month, indicating a strong recovery from previous losses [3]. Market Dynamics - The current market environment presents structural opportunities in sectors like humanoid robots, AI hardware, and innovative pharmaceuticals, which have contributed to the recovery of fund performance [2]. - Fund managers are increasingly focusing on high-growth sectors, with a shift from traditional sectors like real estate and bonds to equities, particularly in new economy sectors [3]. Fund Manager Behavior - Fund managers are showing a clear increase in risk appetite, with many raising their stock positions and concentrating their holdings in core stocks [5]. - Data shows that nearly 2,500 funds increased their stock positions and concentration in the second quarter, reflecting a significant shift in risk preference [5]. Fund Issuance Trends - The pace of new fund issuance has accelerated, with 149 new funds launched in July, matching the issuance rate from November 2022 [11]. - Notable funds like Dachen Insight Advantage raised 2.461 billion yuan in just eight days, marking the largest initial fundraising for active equity funds this year [9]. Investor Sentiment - Despite the positive performance, many investors remain cautious, with a tendency to redeem funds once they break even, indicating a need for trust rebuilding in active equity funds [1][11]. - The market is witnessing a preference for passive investment products over active equity funds, with high-performance products gaining more attention [11].

Core Viewpoint - After a four-year downturn, public funds are experiencing a significant recovery in 2025, with over 90% of active equity funds achieving positive returns this year, marking a turning point for the industry [1][2]. Group 1: Performance Recovery - Active equity funds have seen an average return exceeding 13% as of August 1, 2025, with a notable number of products doubling their performance, including 17 funds achieving over 140% returns [2]. - Many fund managers are recovering from previous losses, with over 800 active equity funds reaching historical net asset value highs in the past month [2][3]. - Despite some funds still in the recovery phase, the short-term performance rebound is expected to support long-term growth [2]. Group 2: Investment Strategy Shifts - Fund managers are increasingly focusing on the stock market as a key asset allocation option, moving away from real estate and low-yield bonds [3]. - There is a noticeable increase in risk appetite among fund managers, with many raising stock positions and concentrating holdings in core stocks [5]. - Data shows that nearly 2,500 funds increased their stock positions and concentration in the second quarter, indicating a shift towards higher risk tolerance [5]. Group 3: Fund Issuance and Market Sentiment - The positive performance of funds has boosted market confidence, leading to a noticeable acceleration in the issuance of new funds, particularly equity funds [8]. - In June, 155 new funds were established, marking a recent high, with July seeing 135 new fund launches, indicating a strong recovery in the fund issuance market [9]. - Fund companies are rapidly increasing the pace of new fund launches to capitalize on the market rebound, with some funds achieving record subscription amounts [9][10]. Group 4: Challenges and Investor Sentiment - Despite the recovery, many investors remain cautious, with a tendency to redeem funds as soon as they break even, reflecting a lack of deep trust in active equity funds [1][11]. - The sales performance of equity funds varies significantly across different sales departments, with some struggling to meet sales targets despite the overall market improvement [10][11]. - Passive investment products are currently more favored by investors compared to active equity funds, indicating a need for active funds to rebuild trust and attract new capital [11].

Core Viewpoint - The public fund industry is experiencing a resurgence in 2025 after a prolonged period of stagnation, with over 90% of actively managed equity funds achieving positive returns this year, indicating a potential recovery in investor confidence [1][2]. Group 1: Fund Performance - Active equity funds have seen an average return exceeding 13% year-to-date, with a significant number of products doubling their performance, including 17 funds achieving returns over 140% as of July 29 [2]. - Over 800 active equity funds reached historical net asset value highs in the past month, reflecting a strong recovery in short-term performance [2][3]. - Despite some funds still recovering from previous losses, the overall performance improvement is expected to support long-term growth [2]. Group 2: Fund Manager Sentiment - Fund managers are increasingly optimistic, raising stock positions and focusing on core holdings, with some increasing their stock allocations by 5 to 8 percentage points [5][6]. - A notable shift in investment strategy is observed, with managers concentrating their portfolios, as seen in the increase of top ten holdings' concentration from around 50% to nearly 60% [6][7]. - Fund managers are favoring sectors with clear growth potential, particularly in technology and high-end manufacturing, as they anticipate improving profit growth in the latter half of the year [5][7]. Group 3: Fund Issuance and Market Dynamics - The positive performance of funds has led to a noticeable increase in the pace of new fund issuance, particularly in equity funds, with a significant rise in marketing efforts [8][9]. - In June, 155 new funds were established, marking a near-record high, with July seeing 135 new fund launches, indicating a robust recovery in the fund issuance market [9][10]. - Despite the overall positive trend, not all funds are equally favored, with passive investment products gaining more traction than actively managed equity funds [10].

Market Performance - A-shares ended the last trading day of July with a decline, but overall performance for the month was strong, with the Shenzhen Component Index, Shanghai Composite Index, CSI 300 Index, and CSI A500 Index rising by 5.2%, 3.74%, 3.54%, and 3.95% respectively [1] - Global stock markets saw strong performance in the tech sector, with the Nasdaq Index and Nasdaq 100 Index increasing by 3.73% and 2.94% respectively, while the Hang Seng Index and Hang Seng Tech Index rose by 2.91% and 2.83% [1] Sector Performance - In the A-share market, the steel, pharmaceutical and biotechnology, building materials, and telecommunications sectors led the gains, while the banking, public utilities, and transportation sectors experienced the largest declines [5] - In the Hong Kong market, the healthcare, energy, and real estate and construction sectors saw significant increases in July, with gains of 22.75%, 9.72%, and 5.19% respectively [6] ETF Performance - The "Global Vision on China" top ten core ETFs all recorded gains in July, with an average increase of 6.68% for the month and an average year-to-date increase of 18.59%, outperforming the CSI 300 Index by 15 percentage points [6] - The best-performing ETF in July was the Hong Kong Innovative Drug ETF, which rose by 26.94%, followed by the ChiNext 50 ETF with an 8.81% increase, and the A500 ETF (512050) which increased by 4.56% [6] - The A500 ETF (512050) has seen a year-to-date increase of 6.11%, benefiting from the performance of new economy sectors such as power equipment, electronics, and pharmaceuticals, supported by policy and technological breakthroughs [8][9] Consumer Sector Insights - The Consumer ETF saw a slight increase of 1.39% in July but remains down 1.47% year-to-date, making it the only ETF among the top ten core ETFs to decline this year [10] - The consumer sector faces challenges due to the deep adjustment in the liquor industry and weaker-than-expected consumer recovery, but long-term prospects remain positive [11] - Recent government policies aimed at boosting consumption are expected to support the consumer sector, with significant funding allocated for trade-in subsidies [12] Valuation Metrics - As of August 1, 2025, the price-to-earnings ratio (TTM) for the major consumption index was 18.82, with a historical low of 0.39% over the past decade, indicating a high safety margin for investors [13] H-share ETF Performance - The H-share ETF rose by 2.4% in July and has accumulated a gain of over 20% this year, benefiting from the current macro environment characterized by ample liquidity and asset scarcity [13][14] - The H-share ETF tracks the Hang Seng China Enterprises Index, which includes 50 Chinese companies listed in Hong Kong, covering various sectors such as finance, technology, and energy [13]

Market Performance - A-shares ended July with a decline, but overall performance for the month was strong, with the Shenzhen Composite Index, Shanghai Composite Index, CSI 300 Index, and CSI A500 Index rising by 5.2%, 3.74%, 3.54%, and 3.95% respectively [1] - Global markets saw strong performance in the tech sector, with the Nasdaq Index and Nasdaq 100 Index increasing by 3.73% and 2.94% respectively, while the Hang Seng Index and Hang Seng Tech Index rose by 2.91% and 2.83% [1] Sector Performance - In the A-share market, the steel, pharmaceutical and biotechnology, building materials, and telecommunications sectors led the gains, while the banking, public utilities, and transportation sectors experienced the largest declines [5] - In the Hong Kong market, the healthcare, energy, and real estate and construction sectors saw significant increases, with respective gains of 22.75%, 9.72%, and 5.19% in July [9] ETF Performance - The top ten core ETFs under "Global Vision Investing in China" all recorded gains in July, with an average increase of 6.68% for the month and an average year-to-date increase of 18.59%, outperforming the CSI 300 Index by 15 percentage points [12] - The best performer in July was the Hong Kong Innovative Drug ETF, which rose by 26.94%, followed by the ChiNext 50 ETF with an 8.81% increase, and the A500 ETF (512050) which gained 4.56% [12][13] - The A500 ETF (512050) has seen a year-to-date increase of 6.11%, with a cumulative rise of over 7% since the market shift on June 23 [13][15] Consumer Sector Insights - The Consumer ETF saw a slight increase of 1.39% in July but remains down 1.47% year-to-date, making it the only ETF in the top ten to decline this year [16] - The consumer sector faces challenges due to the deep adjustment in the liquor industry and weaker-than-expected consumer recovery, although long-term prospects remain positive [18] - Government policies aimed at boosting consumption are expected to support the sector, with a focus on rational spending and experience-driven consumption trends [18][19] H-Shares Performance - The H-share ETF rose by 2.4% in July and has seen a cumulative increase of over 20% this year [20] - The H-share ETF tracks the Hang Seng China Enterprises Index, which includes 50 Chinese companies listed in Hong Kong, benefiting from a favorable macro environment characterized by high liquidity and active southbound capital flows [22]

Group 1 - The core viewpoint of the articles indicates that the current market structure is transitioning from a "barbell strategy" to "mid-assets," with the technology and innovation sectors experiencing cyclical turning points [1] - In the industrial sector, new growth drivers such as AI (computing power), Hong Kong internet, innovative pharmaceuticals, new consumption, semiconductors, and new energy vehicles are entering their respective cyclical turning points, providing conditions for undervalued large-cap growth and the return of "mid-assets" to excess effectiveness [1] - The ChiNext Index's current price-to-earnings ratio is at 23.82%, significantly lower than other broad-based indices, with a first-quarter profit growth rate of 19%, outperforming other indices [1] Group 2 - The Science and Technology Innovation Board 100 ETF (588120) tracks the Science and Technology Innovation 100 Index (000698), which can have a daily fluctuation of up to 20% and selects 100 securities with moderate market capitalization and good liquidity from the Science and Technology Innovation Board [1] - The Science and Technology Innovation Comprehensive Index ETF (589630) aims to comprehensively reflect the overall performance of the Science and Technology Innovation Board market, covering nearly 97% of its market capitalization [2] - Investors without stock accounts can consider various linked funds related to the Science and Technology Innovation Board ETFs, which provide alternative investment options [2]