- The report introduces a "Total Heat Indicator" as a proxy for market sentiment, which aggregates the browsing, watchlist, and click counts of individual stocks, normalized as a percentage of the total market activity and scaled by 10,000, with a range of [0, 10,000][7] - A "Broad-based Index Heat Rotation Strategy" is constructed based on the weekly moving average (MA2) of heat change rates for major indices (CSI 300, CSI 500, CSI 1000, CSI 2000, and "Others"). The strategy involves buying the index with the highest heat change rate at the end of each week, or staying in cash if "Others" has the highest rate[13][15] - The backtest results of the "Broad-based Index Heat Rotation Strategy" show an annualized return of 8.74% since 2017, with a maximum drawdown of 23.5%. The strategy achieved a return of 28.5% in 2025[15] - A "Concept Heat Strategy" is developed by selecting the top 5 concepts with the highest weekly heat change rates. Two portfolios are constructed: a "TOP" portfolio holding the top 10 stocks with the highest total heat within these concepts, and a "BOTTOM" portfolio holding the bottom 10 stocks with the lowest total heat[30] - The backtest results of the "BOTTOM" portfolio in the "Concept Heat Strategy" indicate an annualized return of 15.71% with a maximum drawdown of 28.89%. The portfolio achieved a return of 37% in 2025[32]

Market Overview - The Shanghai Composite Index has achieved a four-day winning streak, reaching a new high for the year at 3639.67 points, with a slight increase of 0.16% [2][4] - The Shenzhen Component Index closed at 11157.94 points, down by 0.18% [2] - The market showed mixed performance, with over 3000 stocks declining, indicating a lack of significant profit-making opportunities [4] Sector Performance - The top-performing sectors included Non-ferrous Metals (1.20%), Beauty Care (0.99%), Real Estate (0.82%), Textiles and Apparel (0.81%), and Transportation (0.73%) [3][4] - Conversely, the worst-performing sectors were Pharmaceutical Biology (-0.92%), Electric Equipment (-0.74%), Communication (-0.47%), Defense and Military Industry (-0.39%), and Household Appliances (-0.29%) [3][4] - Concept indices that performed well included Rare Earth Permanent Magnet (3.24%), Brain-Computer Interface (2.69%), Hyperbaric Oxygen Chamber (2.56%), Terahertz (1.65%), and Blood Oxygen Monitor (1.62%) [3][4] Economic Indicators - In July, China's total imports and exports reached 3.91 trillion yuan, marking a growth of 6.7%. Exports were 2.31 trillion yuan, up by 8%, while imports were 1.6 trillion yuan, increasing by 4.8% [4] - The Ministry of Industry and Information Technology and other departments issued opinions to promote the development of the brain-computer interface industry [4] Future Outlook - The overall market trend remains strong, supported by a recovery in the funding environment and fundamentals, with the margin financing balance returning to over 2 trillion yuan, indicating rising market confidence [4] - However, the Shanghai Composite Index is approaching previous high levels, suggesting potential selling pressure in the near term [4] - Recommended sectors for future investment include Financials, Non-ferrous Metals, Construction Decoration, Agriculture, Forestry, Animal Husbandry, and Machinery Equipment [4]