Group 1 - The core viewpoint is that the A-share market is experiencing significant upward momentum, with the Shanghai Composite Index approaching 3900 points, supported by liquidity and global easing expectations from the Federal Reserve [1] - Current market indicators suggest that the market is in an expensive range, with the equity risk premium (ERP) levels indicating that broad indices are above two standard deviations, and valuation metrics are higher than in 2021, reaching a historically expensive 90% range [1][2] - Short-term market momentum is upward, but there is a need to be cautious about potential adjustments due to increasing volatility [1] Group 2 - Investment opportunities are expected to continue in strong sectors with industrial logic, particularly in technology growth and non-bank financial sectors [2] - Beneficiaries of the Federal Reserve's interest rate cut expectations include non-ferrous metals, military industry driven by events and orders, and semiconductors, which are seen as offensive branches of the current liquidity-driven market [2] - For the entire year, sectors such as artificial intelligence, low-altitude economy, and robotics are anticipated to have upward potential, while the non-bank financial sector remains valuable for diversified allocation [2]

Group 1 - Federal Reserve Chairman Powell's speech at the Jackson Hole conference indicated a shift towards a more dovish stance compared to previous years, which has led to significant market reactions globally [1][20] - Powell highlighted the risks in the employment market and suggested that while inflation risks remain, the impact of tariffs on inflation is more "one-time" in nature, providing a clear indication for a potential rate cut in September [20][11] - The market responded with notable volatility, including a decline in U.S. Treasury yields, an increase in gold prices, a drop in the U.S. dollar index, and a rise in U.S. stock markets [11][13][14][18] Group 2 - The dovish shift from Powell is expected to provide more room for interest rate cuts in China, potentially leading to a more accommodative monetary policy [20] - The U.S. stock market is anticipated to remain strong in the short term due to the significant liquidity injection, although concerns about the long-term implications of the U.S. national balance sheet remain [21][23] - Investors are advised to be cautious with long-term U.S. Treasury bonds and consider short-term bonds for better value, as the political pressures influencing Powell's decisions may have delayed effects on inflation [23][21]

- The report suggests maintaining a certain level of "anti-fragile" assets to hedge against potential strengthening of the dollar, while also taking advantage of the liquidity premium in mid-cap stock indices such as the Hang Seng MidCap LOF, STAR 200 ETF, ChiNext 200 ETF, CSI 1000, and 2000 Enhanced ETFs[1][6][9] - The ETF combination strategy - equity-biased - XinXuan technical quantification has achieved an absolute return of 42.75% from the beginning of 2024 to the present, with an excess return of 18.65% relative to the CSI 300 and 13.08% relative to the ETF equal weight[10][60] - The ETF combination strategy - debt-biased - Quantitative All-Weather has a single-week increase of 0.28%, cumulative return of 8.91%, and a maximum drawdown of 3.26%[10][60] - The report highlights the importance of maintaining a high position in Japanese stocks following the removal of trade barriers due to the Japan-US tariff agreement, and the relative peace in the Russia-Ukraine conflict, which benefits Japan as an oil-importing country[3][42] - The report also mentions the potential for a rapid adjustment in the US market, suggesting an increase in allocation if such an adjustment occurs, given the relatively strong economic data in the US compared to other major regions[2][41] - The report indicates that the Hong Kong stock market sentiment has improved, with significant net buying from southbound funds, and highlights the independent capital logic of Hong Kong stocks, favoring non-bank financials, automobiles, and innovative drugs[6][48][49] - The report suggests that the liquidity-driven market favors sectors such as non-ferrous metals, engineering machinery, non-bank financials, agriculture, forestry, animal husbandry, and fishery[7][57] - The report notes that the gold market is expected to continue benefiting from the ongoing rate cut expectations before the September FOMC meeting, with the Chinese central bank continuing to increase its gold reserves, reinforcing the long-term value of gold as a hedge against uncertainty[7][58][59]

Report Industry Investment Rating - Not provided in the content Core Views - Since late June, the A-share market has been rising, primarily driven by loose liquidity. International capital inflows into non - US dollar assets due to the "weak dollar" trend, and domestic enterprise deposit - loan data has improved, making the stock market more attractive. However, fundamental data remains at a low level, and there are pressures for the index to continue rising. In this context, the index is expected to fluctuate in the short term, and different investment strategies can be adopted [3]. Summary by Relevant Catalogs 1. Market Performance in July - **1.1: Liquidity - driven Index Rise** - In July, the liquidity - driven market led to an index increase. Wind All - A rose by 4.75%, reaching a new high for the year, with significantly higher average daily trading volume. The large - cap growth style was strong, and the barbell strategy that performed well in the first half of the year underperformed the average. Specific index gains include: CSI 1000 up 4.8%, CSI 500 up 5.25%, SSE 50 up 2.36%, and SSE 300 up 3.54% [6]. - **1.2: Index Valuation at 1 - standard - deviation Level** - The index valuation is at the 1 - standard - deviation level, but no further detailed analysis is provided in the text [7]. - **1.3: Volatility and Margin Trading** - The implied volatility of index options rebounded. The 1000IV closed at 22.87%, and the 300IV at 19.11%. Margin trading balance increased significantly, rising by 132.4 billion yuan in July to 1.96 trillion yuan [14]. - **1.4: Sector - driven Index Rise** - In July, the pharmaceutical, electronics, and non - bank financial sectors drove the index up, as shown by their positive contributions to various major indices such as CSI 1000, CSI 500, SSE 300, and SSE 50 [15]. 2. Market Influencing Factors - **2.1: Sino - US Capital Market Linkage** - There are multiple ways of linkage between Sino - US capital markets, including economic - related (SSE 300 moves in tandem with US stocks), capital - related (CSI 1000 moves in tandem with US stocks), negative - related (due to the rise of the US AI industry), risk re - balancing (international funds increase positions in China), and non - related (due to different domestic pressures in the two countries) [23]. - **2.3: Foreign Capital Inflow Preference** - Foreign capital inflows tend to favor the large - cap growth style [26]. - **2.4: Increase in Corporate Deposits and Loans in June** - In June, both corporate deposits and loans increased, but no specific data is provided in the text [28]. - **2.5: Domestic Capital Inflow into the Stock Market** - Due to the relatively high equity risk premium, domestic capital is more inclined to flow into the stock market [32]. - **2.6: Capital Flow to Low - Valued Non - Core Themes** - Capital in the capital market tends to flow to low - valued non - core themes that were undervalued in the early stage [33]. 3. Index and Option Performance - **3.1: CSI 1000 Index** - The CSI 1000 index rose by 4.8% in July, and the annualized convergence of the basis discount was observed [41]. - **3.2: CSI 500 Index** - The CSI 500 index rose by 5.26% in July, with a relatively high annualized convergence of the basis discount [45]. - **3.3: SSE 300 Index** - The SSE 300 index rose by 3.54% in July, and the annualized convergence of the basis discount was observed [47]. - **3.4: SSE 50 Index** - The SSE 50 index rose by 2.36% in July, and the annualized convergence of the basis discount was observed [51]. - **3.5: CSI 1000 Option Indicators** - Various indicators of CSI 1000 options, such as historical volatility, volatility cone, and PCR, are presented, but no detailed analysis is provided [55]. - **3.6: SSE 300 Option Indicators** - Various indicators of SSE 300 options, such as historical volatility, volatility cone, and PCR, are presented, but no detailed analysis is provided [64]. - **3.7: SSE 50 Option Indicators** - Various indicators of SSE 50 options, such as historical volatility, volatility cone, and PCR, are presented, but no detailed analysis is provided [73]. 4. Trading Slippage - **4.1: IM Trading Slippage** - The trading slippage of IM contracts, including long - and short - position slippage, is presented, but no detailed analysis is provided [81]. - **4.2: IC Trading Slippage** - The trading slippage of IC contracts, including long - and short - position slippage, is presented, but no detailed analysis is provided [84]. - **4.3: IF Trading Slippage** - The trading slippage of IF contracts, including long - and short - position slippage, is presented, but no detailed analysis is provided [86]. - **4.4: IH Trading Slippage** - The trading slippage of IH contracts, including long - and short - position slippage, is presented, but no detailed analysis is provided [89].