Economic Data - The US GDP for Q2 2025 showed a seasonally adjusted annualized growth rate of +3.0%, exceeding expectations of +2.4%[17] - Personal Consumption Expenditures (PCE) increased by 0.4% month-on-month in June, with a year-on-year increase of 4.7%[19] - Non-farm payrolls added only 73,000 jobs in July, significantly below the expected 110,000, with prior months' data revised down by a total of 258,000 jobs[27] Market Trends - The S&P 500 index decreased by 2.36% to 6238.01, while the Nasdaq index fell by 2.17% to 20650.13[2] - The US 10-year Treasury yield dropped by 17 basis points to 4.23%, and the 2-year yield fell by 22 basis points to 3.69%[2] - The US dollar index rose by 1.04% to 98.6900, indicating a stronger dollar amidst economic uncertainty[2] Inflation and Employment - The unemployment rate increased to 4.25% in July, up from 4.11% in the previous month, while the U3 unemployment rate reflects a cooling labor market[29] - Core PCE inflation rose to 2.8% year-on-year, slightly above the expected 2.7%[23] - Job openings in June decreased to 7.437 million, with a vacancy rate of 4.4%, indicating a tightening labor market[25] Policy and Trade - President Trump announced a new tariff list affecting nearly 70 countries, raising concerns about potential inflationary pressures and trade negotiations with China[3] - The Federal Reserve's decision-making is complicated by the dual pressures of weakening economic data and ongoing tariff implications, with a 80% probability of a rate cut in September following the weak non-farm payroll data[11]

Market Overview - The Hang Seng Index fell by 3.5% last week, closing at 24,507 points, while the Hang Seng Tech Index dropped by 4.9% to 5,397 points, indicating a short-term pullback after a recent upward trend[1] - The average daily trading volume reached over HKD 282 billion, with net inflows into Hong Kong Stock Connect amounting to HKD 53.1 billion, suggesting a renewed acceleration in capital inflow[1] Economic Data - China's July official and Caixin PMI fell below the expansion threshold for four consecutive months, reflecting economic weakness[2] - The U.S. Q2 GDP growth slowed to 2.0%, with July non-farm payrolls adding only 73,000 jobs, significantly below the expected 104,000[3] - The labor force participation rate in the U.S. decreased to 62.2%, while the unemployment rate rose to 4.2%, indicating a growing number of unemployed individuals[3] Sector Performance - NIO's stock rose by 8.6% on Friday after the launch of its new L90 SUV, while its stock increased by 38% in July[4] - The healthcare sector saw a 1.9% increase in the Hang Seng Healthcare Index, driven by positive sentiment towards innovative drug companies[4] - The renewable energy sector experienced declines, with major solar stocks like Xinyi Solar and GCL-Poly Energy falling by 4.9% and 5.7%, respectively[5] Company Insights - WuXi AppTec's revenue for H1 2025 is projected to grow by 20.6% to RMB 20.8 billion, with Non-IFRS adjusted net profit expected to rise by 44.4% to RMB 6.31 billion[6] - The company plans to distribute a mid-term dividend of RMB 3.50 per 10 shares, which is expected to boost market confidence[8] - The target price for WuXi AppTec has been raised to HKD 121.00, with an upgraded rating to "Buy" based on improved revenue forecasts[9]

Group 1 - The core viewpoint emphasizes that the current market rally may be perceived as a liquidity-driven "water buffalo," potentially overlooking the significant recovery in profitability as the main theme [2][7] - Historical data shows that since 2000, the non-financial ROE in A-shares has experienced four significant recoveries, indicating a pattern where valuation-driven market behavior precedes profitability recovery [2][3] - The current economic environment reflects a similarity to the 2016 supply-side reform, where spontaneous economic adjustments occurred before policy implementation, particularly in sectors like photovoltaic manufacturing [2][14] Group 2 - The conditions for a potential interest rate cut by the Federal Reserve are maturing, as recent employment data indicates a weakening U.S. economy, although signs of marginal improvement have emerged in July [3][20] - The recent U.S.-China trade negotiations have highlighted existing differences, with potential trade issues posing a risk to market stability, though the impact is expected to be less severe than earlier in the year [4][30] - Despite recent market adjustments, the long-term trend of improving profitability for Chinese enterprises remains intact, with recommendations for investment in upstream resources and consumer sectors [5][34][35]

Group 1: Economic Indicators - The U.S. non-farm payrolls increased by 73,000 in July, falling short of the expected 104,000 and marking a nine-month low [1] - The combined job additions for May and June were revised down by 258,000, indicating a significant slowdown in employment growth [1] Group 2: Oil Production - Major oil-producing countries, including Saudi Arabia, Russia, Iraq, and the UAE, plan to approve a significant production increase of 548,000 barrels per day in September [2] - These countries had previously announced voluntary production cuts of 2.2 million barrels per day, which have been extended until March 2025 [2] Group 3: Monetary Policy - The People's Bank of China is committed to implementing a moderately loose monetary policy, including lowering reserve requirements and interest rates to support economic growth [4] - The central bank aims to maintain ample liquidity and improve the financing costs for the economy [4] Group 4: Taxation Changes - Starting from August 8, 2025, the Ministry of Finance and the State Taxation Administration will reinstate VAT on interest income from newly issued government bonds and other financial instruments [5] Group 5: Digital Transformation in Manufacturing - Eight departments in China have issued a plan for the digital transformation of the machinery industry, aiming to establish at least 200 exemplary smart factories by 2027 [6][7] - The plan emphasizes the widespread application of digital technologies in various manufacturing processes and aims for 50% of enterprises to achieve a maturity level of at least two in smart manufacturing capabilities [6][7] Group 6: Corporate Actions - China Shenhua announced plans to issue shares and pay cash to acquire assets from its controlling shareholder, leading to a temporary suspension of its stock [8] Group 7: Market Analysis and Strategies - Major brokerages are focusing on sectors such as AI, innovative pharmaceuticals, and resources, indicating a trend towards high-consensus stocks rather than low-positioned stocks [9] - The market is expected to experience fluctuations, with a potential return to an upward trend in late August, driven by earnings reports and geopolitical events [12][13] - Analysts suggest that the current market environment remains conducive to a slow bull market, supported by ample liquidity and positive investor sentiment [18][20]

Group 1: Market Reactions - The U.S. stock market experienced significant volatility following the release of disappointing non-farm payroll data, with major indices declining sharply: Nasdaq down 2.24%, Dow Jones down 1.23%, and S&P 500 down 1.6% [3][4] - The non-farm payroll report showed only 73,000 jobs added in July, the lowest increase since October of the previous year, with substantial downward revisions for May and June, totaling a reduction of 258,000 jobs [6][7] - Following the employment data, the probability of a rate cut in September rose to 64%, up from less than 40% prior to the report, indicating a shift in investor sentiment towards easing monetary policy [6] Group 2: Berkshire Hathaway's Financial Performance - Berkshire Hathaway reported Q2 2025 revenue of $92.515 billion, slightly above market expectations, but down 1.22% year-over-year, with net income falling 59% to $12.37 billion [8][10] - The company continued its trend of stock sales, offloading approximately $6.92 billion in stocks while purchasing only $3.9 billion, marking the 11th consecutive quarter of net stock sales [8][10] - A significant write-down of $3.76 billion was announced for its stake in Kraft Heinz, attributed to non-temporary impairment, reflecting concerns over the company's financial health [8][10] Group 3: Economic and Political Context - The release of the non-farm payroll data led to political backlash, with President Trump calling for the dismissal of the Labor Statistics Bureau head, alleging manipulation of employment figures for political purposes [7] - Analysts suggest that the current economic environment and uncertainties may lead to continued volatility in the market, with Berkshire Hathaway's cash reserves of $344.1 billion indicating a cautious investment stance [10][11]

Commodity Market Overview - Domestic bulk commodity futures mainly declined during the week from July 28 to August 1, with the black series experiencing a high-level correction after reaching new highs the previous week [1] - In the energy and chemical sector, fuel oil rose by 0.03%, crude oil increased by 2.92%, while lithium carbonate fell by 14.41% [1] - The black series saw coking coal drop by 17.14%, coke down by 10.10%, and iron ore down by 2.43% [1] - Basic metals experienced declines with Shanghai silver down 5.05%, lead down 1.20%, and nickel down 3.69% [1] - Agricultural products saw live pig prices decrease by 2.29%, soybean meal down by 0.36%, and palm oil down by 0.29% [1] - The shipping sector saw a decline in the European shipping index by 6.78% [1] Gold Market Insights - The market's risk aversion sentiment increased, pushing gold prices up, with COMEX gold rising by 2.32% to $3416.0 per ounce, and London gold up by 0.77% to $3362.6850 per ounce [1] - According to the World Gold Council's report, global gold demand reached 1249 tons in Q2 2025, a 3% year-on-year increase, with total demand by value soaring 45% to $132 billion, setting a new historical high [2] - Gold ETF investments were a key driver, with inflows of 170 tons in Q2, contrasting with minor outflows in the same period of 2024 [2] - The supply of gold increased by 3% to 1249 tons, with recycled gold supply up by 4%, although still relatively subdued in the high gold price environment [2] - Analysts predict that gold prices may fluctuate within a narrow range in the second half of the year due to macroeconomic uncertainties, but any significant deterioration in the global economy or geopolitical situation could enhance gold's appeal as a safe-haven asset [2][3] Oil Market Dynamics - Oil prices experienced a slight rebound, with Brent crude rising by 1.65% to $69.52 per barrel and WTI crude up by 1.36% to $67.26 per barrel [4] - The anticipated peak in refined oil consumption in the Northern Hemisphere during Q3 is expected to boost crude oil demand, supported by a decrease in EIA crude oil inventories [4] - However, the U.S. EIA reported an unexpected increase in crude oil inventories by approximately 7.7 million barrels, exceeding market expectations and leading to a decline in international oil prices [4] - Long-term projections indicate that OPEC+ may continue to increase production, potentially leading to oversupply pressures on oil prices [5] Agricultural Products Overview - The average price of live pigs increased by 0.22 yuan to 14.19 yuan per kilogram, while futures prices for live pigs showed mixed trends [10] - The second quarter saw a 2% increase in live pig stocks compared to the previous quarter and year, indicating higher expected outflows in the second half of the year [10] - Despite the increase in stocks, the current supply-demand balance does not appear to be overly strained, with future price movements likely influenced by the weight of pigs at the time of sale [10]

Commodity Market Overview - Domestic commodity futures mainly declined during the week from July 28 to August 1, with the black series experiencing a high-level correction after reaching new highs the previous week [1] - In the energy and chemical sector, fuel oil rose by 0.03%, crude oil increased by 2.92%, while lithium carbonate fell by 14.41% [1] - The black series saw coking coal drop by 17.14%, coke down by 10.10%, and iron ore down by 2.43% [1] - In the basic metals sector, silver fell by 5.05%, lead by 1.20%, and nickel by 3.69% [1] - Agricultural products saw live pig prices decrease by 2.29%, soybean meal down by 0.36%, and palm oil down by 0.29% [1] - The shipping sector experienced a decline, with the European shipping index down by 6.78% [1] Gold Market Insights - Market risk aversion increased gold prices, with COMEX gold rising by 2.32% to $3416.0 per ounce, and London gold up by 0.77% to $3362.6850 per ounce [2] - The World Gold Council reported that global gold demand reached 1249 tons in Q2 2025, a 3% year-on-year increase, with total demand value soaring by 45% to $132 billion, setting a new historical high [2] - Gold ETF investments were a key driver, with inflows of 170 tons in Q2, contrasting with outflows in the same period of 2024 [2] - Gold supply increased by 3% to 1249 tons, with recycled gold supply up by 4%, although still relatively subdued in the high gold price environment [2] Future Gold Price Trends - Analysts suggest that gold prices may oscillate within a narrow range in the second half of the year due to a strong first half performance, with a 26% increase in USD gold prices [3] - The macroeconomic outlook remains uncertain, which could further support gold as a safe-haven asset [3] - Diverging market views exist, with some analysts noting that strong US economic data may lead to a weakening of international gold prices [3] Oil Market Dynamics - Oil prices experienced a slight rebound, with Brent crude rising by 1.65% to $69.52 per barrel and WTI crude up by 1.36% to $67.26 per barrel [5] - The anticipated increase in refined oil consumption in the Northern Hemisphere during Q3 is expected to boost oil demand [5] - However, the EIA reported an unexpected increase in US crude oil inventories by approximately 7.7 million barrels, exceeding market expectations and causing a decline in international oil prices [5] - OPEC+ has increased production significantly, with a total increase of 1.8 million barrels per day over the past four months, which may continue to exert downward pressure on oil prices [5] Economic Policy Insights - The Politburo meeting on July 30 outlined a more positive assessment of internal and external economic conditions compared to the April meeting, indicating a potential "timely increase" in policy support for the second half of the year [7] - Key focuses include ensuring the implementation of previous policy arrangements, improving supply-demand relationships, and emphasizing the importance of capital markets [8] - The meeting highlighted the need for a smooth transition from the "14th Five-Year Plan" to the upcoming "15th Five-Year Plan," with a focus on sustainable growth and risk management [9] Sector-Specific Analysis - In the lithium carbonate sector, supply disruptions are expected due to regulatory compliance issues, which may support prices in the short term [10] - The coking coal market is seeing a decrease in total inventory, indicating reduced supply pressure, while demand remains stable due to recovering coking profits [11] - The nickel market is experiencing volatility, with a potential shift back to fundamental factors as speculative trading cools down [11] - The agricultural sector, particularly live pigs, is expected to see increased supply in the latter half of the year, which may stabilize prices around production costs [11]

Economic Overview - The Federal Reserve maintained the federal funds rate at 4.25% to 4.5% during the July FOMC meeting, marking the highest number of dissenting votes since the pause in rate cuts began this year[3] - July non-farm payrolls added only 73,000 jobs, significantly below the expected 104,000, with the unemployment rate rising to 4.2%[3] - The downward revision of May and June non-farm payrolls totaled 258,000, indicating a weakening labor market[3] Market Performance - Global equity markets experienced a downturn, with the S&P 500 closing at 6238.01, down 2.36% for the week[8] - The 10-year U.S. Treasury yield fell by 17 basis points to 4.23%, while the U.S. dollar index remained below 100, indicating a continued weak dollar environment[3][9] - The A-share index saw a majority decline, with the Hang Seng Tech index leading the losses, while only the Argentine index showed slight gains among emerging markets[3][8] Capital Flows - Significant capital inflows were observed in U.S. and European equity markets, while Chinese markets experienced substantial outflows, with domestic investors withdrawing $3.085 billion and foreign investors adding $882 million[3][14] - Over the past week, overseas active funds withdrew $285 million from Chinese markets, while passive funds saw inflows of $1.167 billion[3][14] Valuation Metrics - The ERP for the CSI 300 index rose to 64%, indicating a slight improvement in valuation compared to historical levels[3][12] - The risk-adjusted returns for the CSI 300 increased from 71% to 79%, while the S&P 500's risk-adjusted returns remained stable at 48%[3] Risk Sentiment - Despite significant adjustments in the U.S. stock market, retail investor sentiment remains optimistic, as indicated by a decrease in the put-call ratio from 1.13 to 1.00[3] - In the A-share market, over 50% of stocks are trading below their 30-day moving average, reflecting a shift in sentiment towards caution[3] Economic Data - The U.S. manufacturing PMI showed marginal weakness, while new orders PMI remained below the expansion threshold[3] - The probability of a Fed rate cut in September increased to 80.3%, with a 58.4% chance of a further cut to 3.75%-4.00% in October[3]

Group 1 - The report emphasizes that the current market rally may be perceived as a "water buffalo" driven by liquidity, potentially overlooking the crucial theme of profit recovery [3][15][26] - Historical data shows that since 2000, there have been four instances of a trend reversal in ROE for the entire A-share non-financial sector, occurring in 2006 Q2, 2009 Q3, 2016 Q3, and 2020 Q2 [3][15] - The report draws parallels between the current anti-involution policies and the supply-side reforms of 2016, noting that the focus has shifted from traditional industries like steel and coal to emerging manufacturing sectors such as photovoltaics [3][25] Group 2 - The conditions for interest rate cuts in the U.S. are maturing, with recent employment data indicating a weakening economy, although this does not equate to a full-blown recession [4][40] - The report highlights that the recent adjustments in the market reflect a retraction in trading scales rather than a change in the long-term trend of improving corporate profits in China [6][49] - Recommendations for investment include focusing on upstream resource products and capital goods that benefit from both overseas manufacturing recovery and domestic anti-involution policies [6][49] Group 3 - Trade issues between China and the U.S. are identified as potential market disturbances, but their impact is expected to be less severe than in April due to lower tariff rates announced in July [5][46][47] - The report notes that the recent fluctuations in the market are more about the retraction of previous gains rather than a fundamental shift in the long-term outlook for supply clearing [3][26] - The report suggests that the focus of domestic policies will revolve around "people's livelihood," recommending attention to dividend-type consumption sectors such as food and beverages, as well as certain service industries [6][49]

Core Viewpoint - The article discusses the potential risks of an unexpected downturn in the US economy, emphasizing the importance of monitoring unemployment rates and the implications of tariffs on trade and economic growth [1][5]. Economic Forecasts - The IMF has revised the global GDP growth forecast for 2025 down to 2.8%, a decrease of 0.5 percentage points from January [2][3]. - The US GDP growth forecast for 2025 has been lowered from 2.7% to 1.8%, reflecting a decline of 0.9 percentage points [2]. Key Economic Indicators - A rise in the unemployment rate to the range of 4.4-4.6% could trigger a "recession trade" in the market [1][5]. - The article highlights the uncertainty in trade, industrial production, and economic growth due to the implementation of Tariff 2.0 [1]. Currency Trends - There is a possibility of further depreciation of the US dollar, which may lead to an appreciation of the Chinese yuan against the dollar, similar to the situation observed in August-September 2024 [1][9]. - The potential for a gradual depreciation of the dollar may continue if the US government pursues fiscal balance and creates more room for interest rate cuts [9]. Economic Scenarios - The article outlines three possible scenarios for the US economy, indicating the risks associated with stagflation and the "triple whammy" of stocks, bonds, and currency [7][6].