Report Industry Investment Rating - Not provided in the report Core Viewpoints - In China, the economy turned downward in April due to tariff impacts, but the decline slowed in May. With the agreement reached in the Geneva economic and trade talks between China and the United States, economic confidence has recovered. The government has ample resources and policies are expected to be implemented intensively in June [1][10][15]. - Abroad, tariff and debt issues continue to disrupt the market. Attention should be paid to whether the tariffs based on IEEPA can remain in effect. Short - term debt is not a problem, but the pressure lies in the medium - and long - term [2][27][31]. - For major asset classes, stocks will fluctuate within a range, bonds will fluctuate while waiting for an opportunity for interest rates to decline, the RMB exchange rate will fluctuate between 7.15 - 7.36, and gold will fluctuate within a range in the short term [3][32][39] Summaries by Directory I. Domestic: Waiting for Policy Acceleration (1) April economic downturn, slower decline in May - Most economic data showed a decline in April. In May, the manufacturing PMI rose 0.5 percentage points to 49.5%, but was still below the boom - bust line, indicating that the economy was still in a downward trend, but at a slower pace. From the perspective of leading monetary indicators, the economy is still at the bottom [1][10][11]. (2) The government has more measures in reserve - Fiscal spending is tilted towards people's livelihoods. The expenditure of public finance and government - managed funds is at a high level in history, but the expenditure on infrastructure has decreased. There are still large balances of special bonds and ultra - long - term special treasury bonds to be issued, and government deposits are much higher than in previous years. Most policies to stabilize employment and the economy are expected to be implemented by the end of June [15][16][23]. II. Abroad: Tariffs and Debt (1) Focus on whether the tariffs based on IEEPA can remain in effect - Tariff disruptions continue, but their impact on the market is gradually weakening. The court's decision on the legality of Trump's tariff measures needs attention. If the appeal fails, Trump may try other ways to impose tariffs, which could have a long - term impact on the US economy [27][28][29]. (2) Short - term debt is not a problem - The US has a large short - term debt rolling pressure, but it is unlikely that short - term debt cannot be renewed. The Fed has the SRF tool. The medium - and long - term debt pressure is controllable in the near term, and the pressure lies in the medium - and long - term [31]. III. Outlook for Major Asset Classes (1) Stocks: Range - bound fluctuations - Due to the smooth Geneva economic and trade talks, the overall tariff situation has returned to that on April 5. The export - rush effect in May is expected to continue, but economic uncertainties are still large, and the macro - economy continues to face pressure. The stock market is likely to fluctuate within a range [32]. (2) Bonds: Fluctuating while waiting for an opportunity for interest rates to decline - A full - process interest rate cut has been implemented. Future reserve requirement ratio and interest rate cuts are likely. However, in the short term, the bond market is likely to remain volatile due to high capital interest rates, supply pressure, and potential deposit transfer issues [35]. (3) RMB exchange rate: Range - bound fluctuations - The weakening US dollar index drives the RMB to appreciate, but the appreciation is expected to be limited. The RMB exchange rate is expected to fluctuate between 7.15 - 7.36 [39]. (4) Gold: Short - term range - bound fluctuations - Tariff and debt issues have pushed down the US dollar index and driven up the gold price. However, as these issues are not acute at present, gold is likely to fluctuate within a range in the short term [42].

Export Data and Tariff Impact - In April, China's export growth showed a marginal slowdown, with a significant decline in exports to the US, indicating the actual impact of tariff increases is becoming evident [1][10] - The export growth structure can be categorized into three scenarios: overall export slowdown with simultaneous declines in both US and non-US exports, export decline to the US but an increase in non-US exports, and a decline in US exports with overall export growth improving due to non-US exports [2][12] - Industries facing significant revenue impact due to export declines include home appliances, non-ferrous metals, light industry, machinery, and textiles [2][14] Monthly Market Review - In May, risk assets generally experienced a recovery, with A-shares showing a preference for value styles, while sectors like environmental protection, pharmaceuticals, and military industries led the gains [3][21] - The market saw a mixed performance with fluctuations in risk appetite, influenced by tariff negotiations and concerns over US debt risks [3][21] June Market Outlook and Allocation Recommendations - The market is expected to continue its oscillation with a downward shift in the central tendency, influenced by tariff expectations and policy anticipation [4][5] - The recommendation is to increase allocation in low-volatility dividend stocks, focusing on sectors like electricity, banking, and consumer goods, while also considering trading opportunities in emerging technologies such as AI and robotics [5][6]

Core Viewpoint - The resilience of the economy is maintained by the "export grabbing" strategy, with the sustainability of economic recovery dependent on future export conditions and policy responses [1][4]. Group 1: Economic Indicators - The manufacturing PMI for February is at 50.2, indicating a return above the growth line, with a month-on-month increase of 1.1 percentage points, surpassing the average increase of 0.8 percentage points from 2015 to 2019 [1]. - The production index rose by 2.7 percentage points to 52.5%, while the new orders index increased by 1.9 percentage points to 51.1% [1]. - The export new orders index in February increased by 2.2 percentage points to 48.6%, driven by the "export grabbing" trend [2]. Group 2: Export Dynamics - The "export grabbing" mode has been accelerated since Trump's election, with a 10.1% year-on-year increase in U.S. imports from China in December 2024 and a 15.6% increase in Chinese exports to the U.S. [2]. - In January 2025, U.S. container imports reached a record 2.487 million TEU, with a month-on-month increase of 10.6% from China [2]. - The manufacturing sector's performance is bolstered by the "export grabbing," with the equipment manufacturing production index remaining above 54% in February [2]. Group 3: Price Trends - In February, the main raw material purchase prices and factory gate prices indices increased by 1.3 and 1.1 percentage points, respectively, providing positive guidance for the PPI data [3]. Group 4: Trade Tensions and Policy Outlook - The intensification of U.S.-China trade tensions since February raises concerns about the sustainability of the "export grabbing" window, with new tariffs announced by the U.S. [4]. - The manufacturing PMI's production and raw material inventory indices declined by 0.8 and 0.7 percentage points, indicating uncertainty in export performance [4]. - Current domestic policies are focused on stabilizing the economy, with monetary policy emphasizing coordination rather than aggressive measures, and fiscal policy prioritizing debt management [5][6].