Group 1 - The short-term logic of the bond market may have shifted from "fundamentals + liquidity" to "asset allocation" since July, with the bond market under pressure despite a relatively loose funding environment [6][10][28] - The 10-year government bond yield has shown an upward trend, primarily due to the thin safety cushion of fixed-income products and the cooling of fixed-income assets under the asset allocation effect [6][10][28] Group 2 - Key clues to the evolution of bond market logic include: 1) Reallocation of resident assets due to declining deposit rates since 2022, leading to a weakening of the bond market's profit-making effect [14][16] 2) An increase in residents' risk appetite, with equity assets potentially becoming the focus of asset reallocation [17][20] 3) Low odds and win rates for bond assets, as long-term bond yields have already priced in future rate cuts [18][21] Group 3 - The critical points for the rebalancing of stock and bond value include: 1) The relative comparison of dividend yields and bond yields [30] 2) Fund flows, with a potential shift in investor enthusiasm from bonds to stocks [30] 3) Changes in fundamentals, where unexpected pressures on the economy could lead to a resurgence in the bond market [30] Group 4 - The bond market strategy indicates that while risks are being released, a cautious judgment is maintained, with the 10-year government bond yield around 1.7% being unattractive [28][31] - The bond market may experience volatility from August to October, with the yield expected to range between 1.65% and 1.80%, and the potential for a steepening yield curve [28][31]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The Chinese economy is in a marginal de - leveraging process, with the liability growth rate of the real - sector expected to decline. The government aims to stabilize the macro - leverage ratio, and the monetary policy will generally remain neutral and difficult to be continuously loose. The market is currently affected by risk preference, and the subsequent trends of risk preference, economic recovery, and the US economy need to be focused on [2][3][7] - In the context of the contraction of the national balance sheet, the allocation of financial assets should adopt a dumbbell - shaped strategy. The bond market is the large base, and the stock market is the small head. The stock allocation strategy is dividend plus growth, and the bond allocation strategy is duration plus credit - sinking [25] - In the contraction cycle, the equity - bond ratio favors equities to a limited extent, and the value style is more likely to be dominant. Red - dividend stocks with characteristics of non - expansion, good profitability, and survival are recommended [12][67] 3. Summary by Relevant Catalogs 3.1 National Balance Sheet Analysis - **Liability Side**: In July 2025, the liability growth rate of the real sector was 9.0%, with a lower - than - expected rebound. It is expected to decline to 8.9% in August and further to 8% by the end of the year. The government's liability growth rate is also expected to decline from 15.7% in July to 14.8% in August and 12.5% by the end of the year. The money market has tightened marginally, and the peak of the money market in August was likely in the first week [2][3][21] - **Monetary Policy**: The trading volume of funds decreased last week, and the price was stable. The one - year Treasury yield rose to 1.37%, and the term spread widened. The estimated lower limit of the one - year Treasury yield is 1.3%, the ten - year Treasury yield is about 1.6%, and the thirty - year Treasury yield is about 1.8% [3][22] - **Asset Side**: After a brief stabilization in June, the physical volume data declined again in July. The annual real economic growth target for 2025 is about 5%, and the nominal economic growth target is about 4.9%. Whether this will be the central target for the next 1 - 2 years needs further observation [4][23] 3.2 Stock - Bond Ratio and Stock - Bond Style - **Market Performance Last Week**: The money market tightened marginally, but risk preference increased. Stocks rose, and bonds fell. The equity growth style was dominant, and the stock - bond ratio favored stocks, breaking through the previous high on August 15th [6][26] - **Future Outlook**: The trend of risk preference is uncertain. There are three possible scenarios: range - bound fluctuations, a short - term upward trend, or a fundamental change in the subjective weighting of Chinese profitability. A portfolio of growth - type equity assets and long - term bonds is recommended, with a 70% position in the CSI 1000 Index and a 30% position in the 30 - year Treasury ETF [10][11][29] 3.3 Industry Recommendation - **Industry Performance Review**: The A - share market rose this week. The communication, electronics, non - bank finance, power equipment, and computer sectors had the largest increases, while the bank, steel, textile and apparel, coal, and public utilities sectors had the largest declines [35] - **Industry Crowding and Trading Volume**: As of August 15th, the top five crowded industries were electronics, computer, power equipment, machinery, and non - bank finance. The trading volume of the whole A - share market increased this week, with non - bank finance, real estate, and other sectors having the highest growth rates [36][38] - **Industry Valuation and Profitability**: The PE (TTM) of the comprehensive, communication, and other sectors increased the most this week, while the bank, steel, and other sectors declined. Industries with high 2024 full - year profit forecasts and relatively low current valuations include banks, coal, and oil and petrochemicals [41][42] - **Industry Prosperity**: External demand generally declined. The global manufacturing PMI decreased in July, and the CCFI index fell. Domestic indicators such as port throughput and industrial capacity utilization showed mixed trends [46] - **Public Fund Market Review**: In the second week of August, most active public equity funds outperformed the CSI 300. As of August 15th, the net asset value of active public equity funds was slightly higher than that in Q4 2024 [62] - **Industry Recommendation**: In the contraction cycle, the equity - bond ratio favors equities to a limited extent, and the value style is more likely to be dominant. An A + H red - dividend portfolio of 20 stocks and an A - share portfolio of 20 stocks, mainly concentrated in banks, telecommunications, and other industries, are recommended [12][67]

Core Viewpoint - The article presents five key judgments regarding the current economic situation in China, indicating that the worst period of economic circulation is likely over, and emphasizes a shift away from reliance on extraordinary policies and the loosest monetary policy phase [2][18]. Group 1: Economic Circulation - The worst period of economic circulation is likely passing, with a GDP growth rate of 5.3% in the first half of the year and leading indicators showing objective improvement [2][3]. - Key indicators of economic circulation include the difference in growth rates between corporate and household deposits, M1 growth, and various measures of household savings behavior, all of which have shown signs of recovery over the past 6-9 months [3][4]. Group 2: Policy Changes - The reliance on extraordinary policy measures is diminishing, with a focus on the effectiveness of existing policies rather than new ones, as evidenced by a 8.9% increase in fiscal spending in the first half of the year [7][8]. - The potential for new incremental policies in the second half of the year is significantly reduced, with a focus on monitoring the release of household deposits and leading indicators [7][8]. Group 3: Monetary Policy - The period of the most accommodative monetary policy is likely coming to an end, as indicated by the current state of household deposits and the relationship between deposit behavior and monetary policy [9][12]. - The total household deposits have reached 160 trillion, with a significant portion being precautionary savings, suggesting a shift in monetary policy dynamics [9][12]. Group 4: Investment Landscape - The relative attractiveness of bonds compared to stocks is changing, with a notable increase in the Sharpe ratio for stocks, indicating a potential shift in asset allocation from bonds to stocks [12][14]. - The capital market's stability and attractiveness are being reinforced by policy interventions, which have reduced volatility and downside risks in the stock market [12][14]. Group 5: Competition and Market Dynamics - The current phase of intense competition driven by unfair practices is likely coming to an end, with ongoing efforts to regulate and optimize market competition [14][16]. - The government is focusing on enhancing market order and addressing issues related to unfair competition, which may positively impact economic circulation and pricing [16][17].

Core Viewpoint - The market is experiencing a rebound driven by increased expectations of interest rate cuts by the Federal Reserve, following downward revisions in U.S. employment data, alongside significant technological advancements in AI and robotics [1] Market Performance - The A-share market showed a notable rebound, with the Shanghai Composite Index reaching a new high for the year after a five-day winning streak, despite a slight pullback on Friday [1] - The Shenzhen Component Index also rebounded but underperformed compared to the Shanghai index, with its peak occurring on Thursday followed by two days of adjustment [1] - Average daily trading volume in both markets was below 17,000 billion, indicating a slight contraction compared to the previous week [1] Sector Focus - Market hotspots were primarily concentrated in the military and non-ferrous metals sectors, with small-cap stocks leading in gains [1] Technical Analysis - The Shanghai Composite Index has quickly recovered and consistently remained above the upper boundary of a weekly trading range, indicating a shift from resistance to support [1] - Other indices did not reach new highs, suggesting ongoing market divergence and differing opinions among investors, with a focus on the five-day moving average for short-term trends [1]

1. Report Industry Investment Rating The report does not mention the industry investment rating. 2. Core Viewpoints - The resumption of VAT on the interest income of new - issued treasury bonds, local government bonds, and financial bonds after August 8, 2025, may lead to a "long old bonds, short new bonds" strategy in the market. The mid - term trend of treasury bond futures remains oscillating and bearish, and the basis difference will fluctuate bidirectionally to a reasonable range. The inter - period spread may widen further, and the curve may steepen in the medium term. Credit bonds may be favored in the short - term, and the stratification of credit spreads will be more reasonable in the medium term, benefiting the real economy. The tax adjustment on interest - rate bonds indirectly benefits equity assets, but short - term discount expectations of underlying bond assets of some companies need attention [6]. - There is a large supply - demand gap for soybeans in China before the Spring Festival in 2026. Whether China purchases US soybeans or not, the cost of imported soybeans is difficult to decrease significantly, which will push up the prices of soybean products. It is recommended to buy soybean oil and soybean meal at low prices [10]. 3. Summary by Related Catalogs 3.1 Treasury, Local, and Financial Bond Interest VAT Resumption - **Market Reaction**: After the policy was announced, the interest rate of 25 Attached - interest Treasury Bond 11 showed a "first up then down" trend, indicating that the market first understood the negative impact of the "tax increase" and then realized the value of "old bonds" [6]. - **Bond Market Strategy**: A "long old bonds, short new bonds" strategy may emerge. The CTD of active contracts and corresponding old bonds may have a short - term rally, but the medium - term trend is hard to change. The basis difference will gradually fluctuate bidirectionally from the low - level operation of the past two years to a reasonable range [6]. - **Inter - period Spread**: The inter - period spread between the 09 and 12 contracts may widen further as the pricing will incorporate the tax difference between new and old bonds [7]. - **Curve Shape**: The curve may steepen in the medium term [7]. - **Bond Type Comparison**: Credit bonds may be favored in the short - term, and the stratification of credit spreads will be more reasonable in the medium term, attracting capital inflows to support the real economy. The tax adjustment on interest - rate bonds indirectly benefits equity assets, but short - term discount expectations of underlying bond assets of some companies such as banks and insurance need attention [7][9]. 3.2 Soybean and Its Products - **Supply - demand Situation**: There is a large supply - demand gap for soybeans in China before the Spring Festival in 2026. Whether China purchases US soybeans or not, the cost of imported soybeans is difficult to decrease significantly [10]. - **Price Forecast**: The low - price range of soybean meal is about 3050 yuan/ton, and the high - price range is about 3450 yuan/ton. The low - price range of soybean oil is about 8150 yuan/ton, and the high - price range is about 8650 yuan/ton. It is recommended to buy soybean oil and soybean meal at low prices [10]. 3.3 Other Commodities - **Precious Metals**: Gold shows a weakening trend due to weak non - farm payroll data, and silver has fallen from a high level. The trend intensities of both are - 1 [13][16][21]. - **Base Metals**: Copper's spot premium is firm, limiting price declines, with a trend intensity of 0; zinc is oscillating downward, with a trend intensity of - 1; lead's inventory reduction limits price drops, with a trend intensity of 0; tin is oscillating within a range, with a trend intensity of - 1; aluminum's center of gravity is moving down, alumina is accumulating inventory, and cast aluminum alloy follows electrolytic aluminum, all with a trend intensity of - 1 [13][23][26][29][31][36]. - **Energy and Chemicals**: Products such as crude oil, fuel oil, and asphalt have different trends. For example, fuel oil continues to decline, and asphalt is oscillating at a high level, with corresponding trend intensities [13][39][65]. - **Agricultural Products**: Different agricultural products have different trends. For example, palm oil is waiting to be bought at low levels, and corn is oscillating [13][15].

Report Industry Investment Rating Not provided in the content Core Viewpoints - The market performance from July 5 to August 3 exceeded expectations, with abnormal financial sector liquidity in June and greater - than - expected fiscal front - loading. The financial sector liquidity peaked around the first week of July and then converged marginally. The government and entity sector debt growth rate reached their highs in July, and the entity sector debt growth rate is likely to decline unilaterally until the end of the year, with a slight expansion in late September or early October [1][39]. - Looking ahead to August, the two major factors affecting asset prices are stable earnings and marginally converging liquidity. As risk preference is an endogenous variable of earnings and valuation, it will decline over time. When risk preference drops, the stock - bond ratio will shift back to bonds, and the equity style will return to value - dominance. It is advisable to focus on bonds and wait for value - type equity assets to show an intervention window [1][12][39]. Summary by Directory 1.全社会债务情况 - As of the end of June, China's total social debt balance was 491.5 trillion yuan, a year - on - year increase of 8.6%. The financial institution (inter - bank) debt balance was 90.0 trillion yuan, a year - on - year increase of 7.6%. The entity sector debt balance was 401.5 trillion yuan, a year - on - year increase of 8.8%. Among them, household debt grew at 2.9%, government debt at 15.3%, and non - financial enterprise debt at 7.9% [14][16][19]. - In June, industrial enterprise profits decreased by 4.3% year - on - year, and the debt balance increased by 5.4% year - on - year. State - owned enterprise profits decreased by 4.0% year - on - year [24]. 2.金融机构资产负债详解 - As of the end of June, the debt balance of broad financial institutions was 165.2 trillion yuan, a year - on - year increase of 7.6%. Bank debt was 134.0 trillion yuan, a year - on - year increase of 6.9%, and non - bank financial institution debt was 31.1 trillion yuan, a year - on - year increase of 10.7% [27]. - In June, the bank's excess reserve ratio was 1.7%, and the money multiplier was 8.62. The year - on - year growth rate of base money supply decreased from 2.8% to 2.0%. The new broad - money supply indicator NM2 showed a similar trend to M2, but with a lower absolute level since 2017 [29][35][36]. 3.资产配置 - From July 5 to August 3, the domestic stock market was bullish and the bond market was bearish, with growth stocks outperforming. The core logic driving the market shifted from liquidity improvement to rising risk preference. The stock market was positively correlated with the Nanhua Composite Index [1][39]. - In June, the year - on - year growth rate of bank bond investment balance was 18.7%, and the growth rate of the central bank and bank's total foreign asset balance was 3.5%. The year - on - year growth rate of the US Treasury balance was 4.0%, and fiscal deposits decreased by $102 billion to $334.6 billion [40][43].

Group 1 - The A-share market has recently shown a reasonable valuation level, but it is still slightly undervalued in the long term, leading to a cautiously optimistic outlook for future performance [2][18] - Fund managers suggest increasing equity asset allocation as a clear strategy for this year, focusing on themes such as "anti-involution," domestic demand recovery, and new productivity [2][12] - The current market environment is characterized by a low interest rate, making equity assets more attractive compared to bonds, with equity risk premiums remaining favorable [12][17] Group 2 - The market is expected to continue a trend of oscillating upward, supported by policies aimed at counter-cyclical measures and "anti-involution" [6][22] - Key investment themes include high-dividend stocks, strong consumer and pharmaceutical leaders, and sectors benefiting from the "anti-involution" policy [10][30] - The focus on sectors like AI, new consumption, and innovative pharmaceuticals indicates a shift towards industries that align with national strategic goals and technological advancements [29][34] Group 3 - Fund managers emphasize the importance of asset allocation based on individual risk tolerance, suggesting a shift from fixed-income assets to equity assets as market conditions improve [36][37] - For conservative investors, options include "fixed income plus" products, while balanced investors may consider high-dividend low-volatility assets [36][37] - The overall sentiment is that the market is entering a phase where risk appetite is increasing, and investors should be mindful of macroeconomic indicators and policy developments [21][36]

Core Viewpoint - The A-share market remains attractive, with opportunities in "anti-involution," domestic demand recovery, and new productivity directions as the Shanghai Composite Index breaks through the 3600-point mark for the first time since October 2024 [2][3]. Market Valuation and Risk-Return Analysis - Current market valuations are approaching historical averages, with equity assets still presenting a favorable risk-return profile compared to bonds due to low interest rates [16][13]. - The overall risk-return ratio is considered reasonable, with certain sectors like banking showing low price-to-book ratios and high dividend yields, making them attractive in the current environment [17][18]. - The market is expected to continue a trend of cautious optimism, supported by favorable macroeconomic conditions and policy measures [9][22]. Investment Directions - Key investment themes include high-dividend stocks, consumer staples, and pharmaceutical leaders, which are expected to benefit from policy support and economic recovery [11][30]. - The "anti-involution" policy is anticipated to shift industries from price competition to high-quality development, benefiting midstream manufacturing and upstream raw materials [35]. - The focus on new productivity areas such as AI, innovative pharmaceuticals, and high-end manufacturing reflects China's strengths in research and engineering [35][31]. Asset Allocation Strategies - A clear strategy for increasing equity asset allocation is recommended, particularly in a low-interest-rate environment where equities are more attractive than bonds [24][26]. - Investors are advised to consider a "barbell" strategy, balancing low-volatility, high-dividend assets with higher-growth, more volatile investments [26][37]. - Dynamic asset allocation frameworks are suggested to adjust equity and bond positions based on market conditions and risk premiums [27][29]. Sector-Specific Insights - The insurance sector is viewed positively due to potential recovery from previous pessimistic pricing, while the healthcare sector is expected to benefit from demographic trends and policy improvements [32][30]. - Gold remains a long-term investment consideration despite short-term pressures, as it serves as a hedge against uncertainty [33][30]. - The focus on cyclical recovery suggests that sectors like steel, cement, and consumer goods may see renewed interest as economic conditions improve [21][30].

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - A-share index has a clear bottom line, and the trading volume in the two markets has increased, driving the index to fluctuate upwards. The "anti-involution" policy has led to a full recovery of theme stocks. The 1.2 trillion hydropower project in the Yarlung Zangbo River has directly promoted the entire infrastructure industry chain such as water conservancy and building materials to strengthen. The market shows the characteristic of "blue-chip stocks setting the stage, and theme stocks performing". Futures index should be intervened after a pullback [3]. - Although the international situation is complex, the current market expectations are sufficient, and the disturbances caused by Sino-US and Iran-Israel issues are limited. The US has lifted the restrictions on H20 chips. The external influence is mainly the Fed's interest rate decision. A rate cut is beneficial for the appreciation of the RMB, the return of foreign capital, and the inflow of new incremental funds, which may start as early as September. Currently, policies to stabilize the capital market are positive, the bottom line of the stock index is clear, and new technologies and new consumption are promoting the economic expectation to stabilize and recover. After the risk-free interest rate drops to a low level, the entry of medium and long-term funds and residents into the market will enter a new cycle. A breakthrough must be accompanied by an increase in trading volume. This week, the trading volume in the two markets exceeded 1.5 trillion (MA5), and the index still has upward momentum [4]. Summary by Relevant Catalogs Market Performance - This week, domestic stock indices continued to strengthen. As of July 24, 2025, the Shanghai Composite Index closed at 3605.73, up 2.02% for the week and 7.58% year-to-date; the Shenzhen Component Index closed at 11193.06, up 2.56% for the week and 7.47% year-to-date; the ChiNext Index closed at 2345.37, up 3.00% for the week and 9.51% year-to-date; the Science and Technology Innovation 50 Index closed at 1032.84, up 2.51% for the week and 9.51% year-to-date; the SSE 50 Index closed at 2812.44, up 1.73% for the week and 4.76% year-to-date; the CSI 300 Index closed at 4149.04, up 2.23% for the week and 5.44% year-to-date; the CSI 500 Index closed at 6293.60, up 3.18% for the week and 9.92% year-to-date; the CSI 1000 Index closed at 6701.12, up 2.27% for the week and 12.48% year-to-date [13]. - Among the global indices, the Nasdaq Composite Index rose 0.78%, the S&P 500 Index rose 1.00%, and the Biotechnology Index rose 3.68%. In terms of industries, most of the 31 first-level Shenwan industry indices rose this week. Sectors such as building materials, coal, steel, and non-ferrous metals rose significantly, while a few sectors such as banks and communications fell [16]. Liquidity - In June, the total social financing exceeded expectations, and the growth rate reached a new high, rising to 4.6% (a month-on-month increase of 2.3 pct), the highest growth rate since 2023, indicating a significant improvement in corporate liquidity [14][15]. - The capital interest rate (the 7-day reverse repurchase rate of deposit-taking financial institutions in the interbank market, DR007) remained at a low level. In May, the net MLF injection was 37.5 billion yuan. The yield of the 10-year treasury bond was around 1.65%. In June, the total social financing rebounded strongly, mainly driven by policies, and the endogenous driving force still needs to be consolidated. The new social financing was 4.20 trillion yuan, an increase of 900.8 billion yuan year-on-year, and the stock growth rate rose to 8.9% (a month-on-month increase of 0.2 pct), reaching a new high this year. Government bonds increased by 507.2 billion yuan year-on-year (contributing 58% of the social financing increment), reflecting an accelerated pace of fiscal efforts, with special bonds and special-purpose bonds advancing simultaneously. New RMB loans were 2.24 trillion yuan, an increase of 110 billion yuan year-on-year, and short-term corporate loans became the main driving force. The growth rate of M2 rebounded, and M1 improved significantly. In June, the year-on-year growth rate of M2 was 8.3% (a month-on-month increase of 0.4 pct), mainly driven by the low-base effect (deposit diversion caused by manual interest compensation supervision in the same period in 2024) and an increase in corporate deposits [17]. Trading Data and Sentiment - This week, the trading volume increased, and the stock index continued to fluctuate strongly. The number of new accounts opened in January was 1.57 million, in February was 2.83 million, in March was 3.06 million, in April dropped to 1.92 million, in May continued to drop to 1.555 million, and in June slightly increased to 1.6464 million. On July 23, the Shanghai Composite Index reached 3600 points during intraday trading, the second-highest point since October 2024. The trading volume in the two markets (MA5) exceeded 1.5 trillion, and the index showed strong momentum, with prominent structural market conditions [26]. Index Valuation - As of July 24, 2025, the latest PE of the Shanghai Composite Index was 15.64, with a percentile of 73.34; the latest PE of the entire market was 20.81, with a percentile of 78.73. Among the major stock indices, the valuation percentiles were in the order of CSI 1000 > CSI 500 > CSI 300 > SSE 50. Note: The starting time of the valuation percentile is January 1, 2009 [34]. Index Industry Weights (as of June 30, 2025) - In the SSE 50 Index, the weights of banks, non-bank finance, and food and beverage were relatively high, at 21.34%, 11.18%, and 8.31% respectively. The electronics industry became the fourth-largest weighted industry [43]. - In the CSI 300 Index, the weights were relatively dispersed, and the top three weighted industries were banks, non-bank finance, and electronics [43]. - In the CSI 500 Index, the top three weighted industries were electronics, pharmaceutical biology, and non-bank finance [48]. - In the CSI 1000 Index, the top three weighted industries were electronics, pharmaceutical biology, and computers [48].

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The high point of this round of liquidity has basically been confirmed. The debt - to - GDP ratio of the real sector is expected to decline, and the country is in a marginal deleveraging process. The liquidity of the financial sector has marginally tightened, and the focus is on when the stock - bond ratio will return to favoring bonds. Currently, long - term bonds have a slightly better cost - performance than value - type equity assets. [2][7] - In the contraction cycle, the extent to which the stock - bond ratio favors equities is limited, and the value style is more likely to be dominant. Red - chip stocks are recommended, including an A + H red - chip portfolio of 20 stocks and an A - share portfolio of 20 stocks, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation. [8][62] Summary by Directory 1. National Balance Sheet Analysis - **Liability Side**: In May 2025, the debt growth rate of the real sector was 8.9%, down from 9.0% previously. April is expected to be the high point of the debt growth rate of the real sector this year, with a decline starting in June, a rebound in July, and then a return to deleveraging. By the end of the year, the debt growth rate of the real sector is expected to drop to around 8%. The local government debt growth rate reached a new high of 15.3% in June, exceeding market expectations, and is expected to decline to around 12.5% by the end of the year. The liquidity of the financial sector has marginally tightened, and the peak of the loose liquidity since early June was from July 4th to 8th. [2][16][17] - **Fiscal Policy**: Last week, the net increase in government bonds was 32.14 billion yuan (higher than the planned 340 million yuan), and this week, the planned net increase is 17.83 billion yuan. [3][17] - **Monetary Policy**: Last week, the average weekly trading volume of funds increased, the price of funds decreased, and the term spread slightly narrowed. The yield of one - year treasury bonds trended upward, closing at 1.37% at the weekend. The estimated lower limit of the one - year treasury bond yield is about 1.3%, the term spread between the ten - year and one - year treasury bonds is about 30 basis points, and the lower limit of the ten - year treasury bond yield is about 1.6%. The spread between the thirty - year and ten - year treasury bonds is estimated to be 20 basis points, and the lower limit of the thirty - year treasury bond yield is about 1.8%. [3][17] - **Asset Side**: In May, the physical volume data was weaker than in April. The focus is on the duration of the current economic slowdown. The target for the annual real economic growth rate in 2025 is around 5%, and the nominal economic growth rate target is around 4.9%. It remains to be seen whether a nominal economic growth rate of around 5% will become the central target for China's nominal economic growth in the next 1 - 2 years. [4][5][18] 2. Stock - Bond Cost - Performance and Stock - Bond Style - **Last Week's Situation**: The liquidity marginally tightened. It was a bull market for stocks and a bear market for bonds. The equity style rotated back to growth - dominance, exceeding expectations. Bond yields rose across the board, with the ten - year treasury bond yield rising 2 basis points to 1.67%, the one - year treasury bond yield rising 3 basis points to 1.37%, and the thirty - year treasury bond yield rising 2 basis points to 1.87%. The stock - bond cost - performance favored stocks. The broad - based rotation strategy underperformed the CSI 300 index by - 0.4 pct last week but has outperformed the CSI 300 index by 4.48 pct since its establishment in July, with a maximum drawdown of 12.1% (compared to 15.7% for the CSI 300). [6][20] - **Trend Judgment**: In 2025, the real GDP growth rate on the asset side is expected to run smoothly between 4 - 5%. On the liability side, the debt growth rate of the real sector will decline. The stock - bond cost - performance will trend towards favoring bonds, and the equity style will trend towards favoring value. Currently, long - term bonds have a slightly better cost - performance than value - type equity assets. If equity - type value assets continue to fall, there may be a good entry opportunity. This week, the recommended portfolio includes the Dividend Index (40% position), the SSE 50 Index (40% position), and the 30 - year Treasury Bond ETF (20% position). [7][19][22] 3. Industry Recommendation 3.1 Industry Performance Review - The A - share market rose this week, with trading volume similar to last week. The Shanghai Composite Index rose 1.1%, the Shenzhen Component Index rose 1.8%, and the ChiNext Index rose 2.4%. Among the Shenwan primary industries, real estate, steel, non - bank finance, comprehensive, and building materials had the largest increases, rising 6.1%, 4.4%, 4%, 3.8%, and 3.3% respectively. Coal, banking, automobiles, and household appliances had the largest declines, with weekly declines of 1.1%, 1%, 0.4%, and 0.3% respectively. [27] 3.2 Industry Crowding and Trading Volume - **Crowding**: As of July 11th, the top five industries in terms of crowding were computer, electronics, non - bank finance, pharmaceutical biology, and power equipment, with crowding levels of 11.2%, 9.9%, 8.9%, 7.4%, and 6.8% respectively. The bottom five were comprehensive, beauty care, coal, petroleum and petrochemicals, and environmental protection, with levels of 0.2%, 0.3%, 0.7%, 0.7%, and 0.8% respectively. The top five industries with the largest increase in crowding this week were non - bank finance, non - ferrous metals, computer, banking, and real estate, with increases of 3.9%, 2%, 1.3%, 1%, and 0.7% respectively. The top five with the largest decline were electronics, power equipment, national defense and military industry, pharmaceutical biology, and basic chemicals, with changes of - 3.7%, - 1.4%, - 0.9%, - 0.8%, and - 0.8% respectively. [30] - **Trading Volume**: The average daily trading volume of the entire A - share market this week was 1.5 trillion yuan, slightly up from 1.44 trillion yuan last week. Real estate, public utilities, non - bank finance, building materials, and comprehensive had the highest year - on - year growth rates in trading volume, with changes of 78.3%, 58.3%, 48.6%, 37.8%, and 34.5% respectively. National defense and military industry, automobiles, electronics, environmental protection, and basic chemicals had the smallest increases in trading volume, with changes of - 36.7%, - 15%, - 14.4%, - 12.8%, and - 6.8% respectively. [32] 3.3 Industry Valuation and Earnings - **PE(TTM) Changes**: Among the Shenwan primary industries this week, real estate, steel, non - bank finance, comprehensive, and environmental protection had the largest increases in PE(TTM), with changes of 6.1%, 4.8%, 3.9%, 3.8%, and 3.7% respectively. Banking, coal, automobiles, and household appliances had the largest declines, with valuation changes of - 1%, - 0.9%, - 0.5%, and - 0.4% respectively. [35] - **Valuation - Earnings Matching**: As of July 11, 2025, industries with high full - year 2024 earnings forecasts and relatively low current valuations compared to history include banking, coal, petroleum and petrochemicals, transportation, beauty care, and consumer electronics. [36] 3.4 Industry Prosperity - **External Demand**: Generally rebounded. The global manufacturing PMI rose from 49.5 to 50.3 in June, with most major economies' PMIs rising. The CCFI index fell 2.18% week - on - week in the latest week. Port cargo throughput decreased. South Korea's export growth rate rose from - 1.3% in June to 4.3%, and to 9.5% in the first 10 days of July. Vietnam's export growth rate slightly decreased from 20.7% in May to 19.3% in June. [40] - **Domestic Demand**: Second - hand housing prices fell in the latest week, and quantitative indicators showed mixed trends. Highway truck traffic decreased. The fitted industrial capacity utilization rate of ten industries significantly declined in April 2025, rebounded from May to June, and continued to rise slightly in July. Automobile sales were at a relatively high level for the same period in history, new - home sales remained at a historical low, and second - hand home sales declined seasonally compared to history. As of July 6th, the national urban second - hand housing listing price index fell 0.27% week - on - week. As of July 4th, the producer price index rose 0.6% week - on - week. [40] 3.5 Public Fund Market Review - In the second week of July (July 7 - 11), half of the active public equity funds outperformed the CSI 300. The 10%, 20%, 30%, and 50% weekly returns were 2.1%, 1.6%, 1.3%, and 0.7% respectively, while the CSI 300 rose 0.8% this week. - As of July 11th, the net asset value of active public equity funds was estimated to be 3.57 trillion yuan, slightly down from 3.66 trillion yuan in Q4 2024. [56] 3.6 Industry Recommendation - In the contraction cycle, the extent to which the stock - bond ratio favors equities is limited, and the value style is more likely to be dominant. Red - chip stocks are recommended to have three characteristics: no expansion, good profitability, and survival. Combining these characteristics with the under - allocation in the public fund's quarterly reports, the recommended A + H red - chip portfolio includes 20 A + H stocks, and the A - share portfolio includes 20 A - share stocks, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation. [62]