Market Overview - The A-share market has shown strong performance recently, with the Shanghai Composite Index breaking the 3600-point mark, driven by financial stocks and increased market liquidity [1][2] - As of July 28, the Shanghai Composite Index reached a high of 3606.27 points, closing at 3597.94 points, up 0.12%, while the Shenzhen Component Index and the ChiNext Index also saw gains [1] Market Drivers - The current market rally is primarily driven by liquidity and fundamentals, contrasting with the previous policy-driven surge [2] - Analysts suggest that the market is in a "bull market second phase," indicating continued growth potential, with many industry leaders having doubled their stock prices since September 2024 [3] Sector Performance - There is a rotation among industry sectors, with previously strong banking stocks experiencing profit-taking, while growth sectors such as innovative pharmaceuticals and AI are on the rise [2] - Beneficiary sectors of economic transformation, including smart driving, robotics, and drones, are expected to rebound in the second half of the year [2] Investment Strategies - Short-term focus should be on sectors with favorable mid-year performance, while long-term strategies should emphasize three main lines: domestic consumption, technological self-reliance, and dividend stocks [4] - Specific sectors to watch include high-dividend low-valuation blue-chip stocks, technology growth areas, and consumer recovery sectors [4] - Current market conditions suggest that holding stocks may be a more effective strategy, with attention on sectors like non-ferrous metals, communications, innovative pharmaceuticals, military industry, and gaming [4]

Core Viewpoint - The recent performance of A-shares indicates a typical liquidity-driven market trend, with optimism in trading sentiment and stable incremental capital suggesting a good continuation of the current market rally [1] Group 1: Market Performance - All three major A-share indices experienced an upward trend last week, reflecting positive market dynamics [1] - The market is expected to maintain a strong oscillating trend in August, characterized by a "cyclical support with growth focus" [1]

Group 1 - The A-share market experienced a significant upward trend, with the Shanghai Composite Index rising by 1.67%, the Shenzhen Component Index by 2.33%, and the ChiNext Index by 2.76% last week, driven by liquidity and optimistic trading sentiment [2][5] - The market consensus focused on "low valuation cyclical recovery" and "technology growth industry trends," with strong performances in infrastructure, coal, steel, and semiconductor sectors [3][4] - The financing balance of the two markets has returned to above 1.9 trillion yuan, indicating a continuous inflow of institutional funds and an acceleration of retail investor participation [2][5] Group 2 - The cyclical sector is unlikely to replicate the 2016 supply-side reform rally, as the current "anti-involution" market dynamics suggest limited sustainability in simply betting on upstream price increases [6][7] - Investment strategies should focus on sectors with strong structural elasticity, such as technology and non-bank dividend assets, while maintaining a "barbell" strategy [6][7] - The AI industry chain, humanoid robots, and innovative pharmaceuticals are expected to remain the main investment themes in the medium to long term [7]

Core Viewpoint - The A-share market has been on the rise, with the Shanghai Composite Index closing above 3600 points on July 24, reflecting a rebound of over 16% since its year-to-date low in early April. In contrast, the bond market is experiencing significant adjustments, leading to a "stock-bond seesaw" effect driven by liquidity changes rather than traditional growth expectations [1][2]. Group 1: Stock Market Performance - The stock market has shown strong performance, with the Shanghai Composite Index reaching 3600 points, indicating a notable recovery since April [1]. - The rise in the stock market is attributed to strong performance in cyclical sectors, particularly driven by bank stocks and small-cap stocks [7]. Group 2: Bond Market Adjustments - The bond market has faced rare adjustments, with significant declines in various government bond futures, including a 0.92% drop in the 30-year bond contract [1]. - A large number of medium- and long-term pure bond funds have reported declines, with 2905 out of 3182 funds experiencing downturns during the week of July 21 to July 23 [2]. - The bond market's recent adjustments are linked to concerns over rising commodity prices and tightening short-term liquidity as the month-end approaches [2]. Group 3: Fund Redemption Trends - There has been a notable occurrence of large redemptions in bond funds, with over ten funds announcing significant redemptions to ensure net asset value accuracy [3][4]. - Despite the redemption trends, some fund managers indicate that the overall impact on the bond market is limited, as the majority of investors remain stable in their allocations [3]. Group 4: Liquidity and Market Dynamics - The current "stock-bond seesaw" is primarily driven by liquidity rather than economic growth expectations, suggesting a unique market dynamic compared to typical scenarios [6][7]. - The bond market is expected to see increased allocations from institutional investors following adjustments, indicating a potential for rebound opportunities [6][7].

Core Viewpoint - Under the backdrop of normalized global geopolitical risks, weakened dollar credit system, and rising economic uncertainty, gold has emerged as a "yardstick" for measuring asset value [1] Asset Performance - Since March 2018, only a few cryptocurrencies have recorded positive returns when priced in gold, while other asset classes have generally underperformed [2] - The report highlights that the performance of cryptocurrencies is driven by payment convenience, technological innovation premiums, and supply scarcity, particularly Bitcoin's halving mechanism, which reinforces its "digital gold" status [4] - Equity assets have shown nominal growth but remain weak when priced in gold, primarily relying on liquidity injections, with a peak growth rate of 26.7% in the US M2 money supply [4] - Real estate in the US and India has underperformed relative to gold, despite benefiting from economic resilience and demographic dividends [4] Industry Performance - All major industries have underperformed gold since 2018, but resource sectors and new momentum industries, such as high-dividend coal and banking, have shown relative strength [6] - New momentum industries, represented by electric new energy and TMT, have outperformed traditional sectors like real estate [7] - In the secondary industry, precious metals have been the standout performer since 2018, with emerging technologies like semiconductors outperforming traditional tech [8] Style and Strategy - Small-cap stocks have emerged as the absolute winners, with the micro-cap index outperforming gold since 2018 due to a reverse investment mechanism, low valuations, and liquidity premiums [10][13] - The report indicates that small-cap factors have significantly outperformed gold, while large-cap stocks have lagged, reflecting a preference for emerging small-cap industries [14]

Core Viewpoint - The market is shifting from risk-driven to liquidity-driven, with personal investors benefiting the most from indices like the North Securities 50 and micro-cap stocks as tariff easing is fully priced in [1][2]. Market Dynamics - Economic pressures are emerging, and the difficulty of U.S. interest rate cuts is increasing. The market has fully priced in expectations of tariff war easing, and the recovery of growth sectors driven by rising risk appetite is nearing its end. The lowest point of the current export chain's price increase was on April 9, with an acceleration phase starting in late April. The current pressure comes from rising U.S. inflation, which, alongside tariff-related disturbances, is expected to exert upward pressure on inflation into the second quarter of 2025 due to rising housing prices and manufacturing recovery [2]. Participant Structure Changes - There is a notable return of speculative funds, regaining pricing power as implicit risks like tariffs have materialized. In mid to late May, the market will shift from risk appetite improvement to liquidity-driven dynamics. Monitoring models indicate that speculative trading began to bottom out in late April, with significant non-linear characteristics observed in market capitalization, where large-cap indices like the Shanghai Composite and micro-cap stocks are leading gains, while mid-cap indices are lagging [3]. Financial Sector Outlook - The financial sector, which has been long undervalued, is expected to see a recovery. Public fund positions in the consumer sector have increased from 11.46% to 15.65% since the lowest point on March 4. However, their holdings in the financial sector remain low at 5.57%, with banks at 3.31% and non-banks at 1.75%. Despite this, the public fund regulations limit significant reductions in the already underweighted financial sector. The financial sector is favored by the market due to its valuation gap, and various factors are expected to contribute to its recovery, which will likely exhibit a stepwise characteristic [4].