Market Overview - In the past five trading days (July 4 - July 10), major indices mostly rose, with the Shanghai Composite Index increasing by 1.40% and the ChiNext Index rising by 1.18% [2] - The average daily trading volume decreased to 1.42 trillion yuan, down by 180.52 billion yuan compared to the previous five trading days [2] - Among industries, real estate, media, and comprehensive sectors saw the highest gains, while non-ferrous metals, defense, and home appliances experienced the largest declines [2] Inflation and Price Trends - On July 9, the National Bureau of Statistics released June inflation data, showing that the CPI year-on-year growth turned positive, with a marginal reduction in the month-on-month decline [2] - The PPI continued to decline both year-on-year and month-on-month in June, with expectations of ongoing negative growth due to global demand uncertainties and seasonal factors affecting domestic pricing [3] Policy Developments - The "anti-involution" initiative has expanded its scope, with preliminary effects observed. On July 7, 33 construction-related state-owned and private enterprises jointly called for resisting "involutionary" competition [3] - The solar industry has shown positive price signals, with polysilicon prices rising by 33.3% since the beginning of July, indicating a potential supply-side clearing [3] Investment Strategy - The decline in PPI indicates continued short-term profit pressures for companies, but the effectiveness of the "anti-involution" policy strengthens medium to long-term profit recovery expectations [4] - Future market trends will depend on the balance between weak short-term performance and strong long-term expectations, with potential for continued upward movement if economic data does not show significant decline [4] Industry Opportunities - Investment opportunities in the banking sector are driven by multiple measures to encourage insurance capital entry and a low interest rate environment [4] - The "anti-involution" policy is expected to drive supply-side clearing, presenting recovery opportunities in the power equipment and building materials sectors [4] - The TMT sector, pharmaceuticals, and defense industries may present thematic investment opportunities due to AI trends and international expansion [4]

(*seasonally adjusted by GS) Main points: 1. China's headline CPI edged up to +0.1% yoy in June from -0.1% yoy in May, as non-food goods prices picked up (Exhibit 1). In month-on-month terms, headline CPI rose to +1.9% (annualized, seasonally adjusted) in June (vs. +0.5% mom s.a. ann in May). China's headline CPI inflation edged up to +0.1% yoy in June (vs. -0.1% yoy in May), as non-food goods prices (such as household items) picked up. Headline PPI inflation declined to -3.6% yoy in June (vs. -3.3% yoy in ...

Group 1 - Key Point 1: Focus on the economic outlook as Federal Reserve officials, including Waller and Daly, are scheduled to speak on July 11, 2025 [2] - Key Point 2: Key economic data releases from the UK include May GDP, manufacturing output, trade balance, and industrial output, all set to be announced at 14:00 [2] - Key Point 3: France's final CPI for June will be released at 14:45, while Switzerland's consumer confidence index for June will be available at 15:00 [2] Group 2 - Key Point 1: The IEA will publish its monthly oil market report at 16:00, which may provide insights into global oil supply and demand trends [2] - Key Point 2: Canada's employment numbers for June will be released at 20:30, which could impact market sentiment regarding the Canadian economy [2] - Key Point 3: The total number of oil rigs in the US will be reported for the week ending July 11 at 01:00 the following day, indicating activity levels in the oil sector [2]

CPI Outlook for the Second Half of the Year - The core CPI has been rising since the beginning of the year, with June's core CPI at 0.7%, the highest since May 2024, driven mainly by core goods rather than services [2] - Service retail growth has slowed, with a year-on-year increase of 5.2% from January to May 2025, significantly lower than the 20% and 6.2% growth rates in 2023 and 2024 respectively [2] - The core goods CPI is expected to remain resilient in Q3, supported by the "old-for-new" policy, while facing high base pressure in Q4 [5][6] Service Prices - Service prices have shown a downward trend since 2020, with a year-on-year increase of only 0.4% expected in 2025 [8] - Tourism prices have weakened significantly, with a monthly average growth rate of -0.4% from January to June 2025, indicating a bottleneck in domestic cultural and tourism consumption recovery [9] Food Prices - Food items account for about 18% of the CPI, with pork prices being particularly volatile due to the pig cycle [13] - Pork prices are expected to remain low in Q3, with a potential slight recovery in Q4 as seasonal demand increases [14] Oil Prices - Oil-related products account for approximately 3.5% of the CPI, with Brent crude oil prices averaging $71.9 per barrel in the first half of the year, down 14.7% year-on-year [18] - Oil prices are expected to face downward pressure in the second half due to weak demand and ongoing supply pressures [19] PPI Outlook for the Second Half of the Year - The PPI has been in negative territory for 33 consecutive months, with significant price pressures across various industries [20] - Real estate investment and traditional infrastructure growth are dragging down building materials prices, contributing to a 0.9 percentage point decline in PPI [21] - The "anti-involution" policy is expected to impact prices in certain industries, potentially providing some support to related commodity prices [29] Overall Economic Indicators - The forecast for PPI in the second half of the year is a slight recovery to around -2.3%, with Q3 PPI growth expected at -2.5% [30] - The GDP growth target for the second half of the year is set at 4.6%-4.7% to achieve an annual growth rate of 5.3%-5.4% [30]

Group 1 - The Consumer Price Index (CPI) increased by 0.1% year-on-year in June, marking the first rise after four consecutive months of decline [2][3] - The Producer Price Index (PPI) decreased by 3.6% year-on-year, indicating ongoing pressure on industrial prices, particularly in coal, electricity, and black metal smelting sectors [2][5] - The marginal improvement in CPI is attributed to the recovery in industrial consumer goods prices, which saw a reduction in the year-on-year decline from 1.0% to 0.5% [3][4] Group 2 - Food prices experienced a year-on-year decline of 0.3%, with beef prices rising by 2.7% after 28 months of continuous decline, while pork prices fell by 8.5% [3][4] - Energy prices showed a slight recovery, with gasoline prices increasing by 0.4% month-on-month, contributing to a 0.1% rise in overall energy prices [4] - The core CPI rose by 0.7% year-on-year, the highest increase in nearly 14 months, indicating a stable rise in service prices [4][5] Group 3 - Industrial prices remain under significant pressure, with coal mining and washing prices dropping by 5.5% and 3.4% respectively, primarily due to ample supply and reduced thermal power demand [5][6] - Export-oriented industries, such as computer communication equipment and textiles, are facing price declines, reflecting weak external demand and trade barriers [5][6] - Some high-tech sectors, including wearable smart devices and aerospace manufacturing, are showing positive price growth, indicating resilience in new momentum industries [6]

| 项目类别 | 数据指标 | 最新 | 环比 数据指标 | 最新 | 环比 | | --- | --- | --- | --- | --- | --- | | 期货市场 | 纯碱主力合约收盘价(日,元/吨) | 1231 | 37 玻璃主力合约收盘价(日,元/吨) | 1083 | 48 | | | 纯碱与玻璃价差(日,元/吨) | 148 | -11 纯碱主力合约持仓量(日,手) | 1427563 | -187579 | | | 玻璃主力合约持仓量(日,手) | 1372230 | -154075 纯碱前20名净持仓 | -391471 | -1826 | | | 玻璃前20名净持仓 | -386664 | 5285 纯碱交易所仓单(日,吨) | 3736 | -297 | | | 玻璃交易所仓单(日,吨) | 799 | -3 纯碱9月-1月合约价差 | -43 | -3 | | | 玻璃合约9月-1月价差 | -97 | 0 纯碱基差(日,元/吨) | -26 | -6 | | | 玻璃基差(日,元/吨) | 41 | -10 | | | | | 华北重碱(日,元/吨) | 1174 | 6 华中重 ...

Group 1: CPI Trends - June CPI shows a month-on-month decrease of -0.1% and a year-on-year increase of 0.1%, ending a four-month streak of negative values[1] - The contribution of new price factors to the June CPI year-on-year growth is 0.1 percentage points, while the tailing factors contribute 0.0 percentage points[1] - The CPI structure reveals that food items decreased by -0.3% year-on-year, while non-food items increased by 0.1% year-on-year[1] Group 2: PPI Trends - June PPI shows a month-on-month decrease of -0.4% and a year-on-year decrease of -3.6%, marking 33 consecutive months of negative values[1] - The contribution of new price factors to the June PPI year-on-year growth is -2.0 percentage points, while tailing factors contribute -1.6 percentage points[3] - The PPI structure indicates that the production materials category decreased by -4.4% year-on-year, while the living materials category decreased by -1.4% year-on-year[3] Group 3: Future Outlook - For Q2 2025, the average year-on-year growth rate of CPI is projected at -0.03%, while PPI is projected at -3.20%, indicating a potential decline in nominal GDP growth compared to Q1[4] - The central government's emphasis on addressing low-price disorder in competition may lead to improvements in product quality and a gradual exit of outdated production capacity[4] - The contribution of tailing factors to PPI is expected to rise, potentially alleviating the extent of PPI declines in the coming months[4]

Report Industry Investment Rating No relevant content provided. Core Views of the Report - In June 2025, the CPI continued to recover, with the core CPI rising steadily, indicating that domestic demand is still steadily recovering. However, there are signs of a slowdown in consumption momentum. The PPI continued to decline due to structural and seasonal factors, which will drag down the profits of industrial enterprises and is not conducive to the continuous recovery of the CPI. The "anti-involution" policy may be accelerated to promote re - inflation [1][7]. Summary According to Related Catalogs 1. Core CPI YoY Continues to Rise, and Domestic Demand Recovery Continues - In June, the CPI rose 0.1% YoY, up 0.2 percentage points from the previous month, slightly better than market expectations. The decline in the MoM rate narrowed. The recovery of consumer goods prices was the main driving force for the CPI to turn from decline to growth. The service CPI rose 0.5% YoY, while the consumer goods CPI fell 0.2% YoY, with the decline narrowing [8]. - Food prices fell 0.3% YoY, with the decline narrowing. Beef prices turned positive after 28 months of decline, while pork prices fell for the first time after consecutive increases. Energy prices saw a narrower decline, mainly due to rising oil prices [8]. - The core CPI rose 0.7% YoY in June, up 0.1 percentage points from the previous month, showing a continuous upward trend since February. The MoM growth rate was flat compared to the previous month, slightly better than the seasonal average [8]. - In June, prices of clothing, education, culture and entertainment, healthcare, and other goods and services rose YoY, with the growth rates increasing compared to the previous month. Endogenous consumption continued to recover. With the support of the "trade - in" policy, prices of household appliances and cars continued to recover, but the price of communication tools turned negative for the first time this year [9]. - The recovery of the CPI in June was driven by factors such as the rise in crude oil prices due to the Middle East situation, the improvement of consumer confidence since September 2024, and the "trade - in" policy. However, prices of some policy - supported consumer goods have shown signs of decline [9]. 2. Structural and Seasonal Factors Affect the Decline of PPI Growth - In June, the PPI fell 3.6% YoY, exceeding market expectations of a 3.2% decline and down 0.3 percentage points from the previous month. The MoM decline was 0.4%, the same as the previous month. Prices of the mining, processing, and raw material industries all declined, with the decline rates widening [18]. - By industry, coal mining and washing, ferrous metal mining, and ferrous metal smelting and rolling had relatively large MoM declines, while oil and gas extraction and non - ferrous metal mining had relatively large increases. The decline in coal prices was due to increased alternative energy generation in summer and sufficient coal stocks. The decline in ferrous metal prices was due to the impact of weather on construction and sufficient supply. The rise in oil prices was mainly due to the escalation of the Israeli - Palestinian conflict [23]. - Since September 2024, China's macro - economy has been generally stable, and the PPI decline rate has briefly narrowed. However, since February 2025, the continuous decline in PPI may be due to supply - side structural factors [23]. 3. Persistent Low Inflation May Accelerate the "Anti - Involution" Policy - Since the Politburo meeting in July 2024 first mentioned preventing "involution - style" competition, "anti - involution" has been mentioned in many important occasions. Given the current low levels of CPI and PPI, the urgency and practical significance of "anti - involution" are stronger, and it may become an important means to promote re - inflation [24]. - The Sixth Meeting of the Central Financial and Economic Commission on July 1st clearly required to legally regulate the disorderly low - price competition of enterprises and promote the orderly withdrawal of backward production capacity. On July 3rd, relevant departments and industry associations also took actions related to "anti - involution." Under the expectation of "anti - involution," prices of many commodities have risen. The "anti - involution" is a systematic project of supply - demand re - balance. If policy coordination is achieved, the PPI may turn positive from late 2025 to early 2026 [24][26].

| 项目类别 | 数据指标 | 最新 | 环比 | 数据指标 | 最新 | 环比 | | --- | --- | --- | --- | --- | --- | --- | | | SM主力合约收盘价（日，元/吨） | 5,808.00 | +90.00↑ | SF主力合约收盘价（日，元/吨） | 5,576.00 | +184.00↑ | | | SM期货合约持仓量（日，手） | 589,143.00 | +6757.00↑ | SF期货合约持仓量（日，手） | 433,593.00 | +24431.00↑ | | 期货市场 | 锰硅前20名净持仓（日，手） | -45,999.00 | -15137.00↓ | 硅铁前20名净持仓（日，手） | -51,970.00 | -1588.00↓ | | | SM1-9月合约价差（日，元/吨） | 36.00 | -4.00↓ | SF1-9月合约价差（日，元/吨） | 38.00 | -4.00↓ | | | SM 仓单（日，张） | 85,444.00 | -547.00↓ | SF 仓单（日，张） | 17,855.00 | +5028.00↑ | | ...

Core Viewpoint - The inflation data for June shows a divergence between CPI and PPI, with CPI rising slightly while PPI continues to decline, indicating a complex interplay of commodity prices and domestic demand [2][8][69]. Group 1: Divergence in Commodity Prices - In June, PPI fell by 0.3 percentage points to -3.6% year-on-year, primarily due to falling prices of upstream commodities like coal and steel, while CPI rose by 0.1% year-on-year, supported by strong food prices and precious metals [2][9][69]. - The decline in PPI was influenced by oversupply in sectors such as steel, cement, and coal, which contributed to a 0.4% month-on-month drop in PPI, while rising international oil prices provided some support [2][9][69]. - Food prices, particularly fresh vegetables and beef, saw significant increases, with fresh vegetable prices rising by 7.9 percentage points to -0.4% year-on-year, contributing positively to CPI [12][47][69]. Group 2: Core Commodity PPI and CPI Trends - Core commodity PPI remains at historical lows, reflecting the impact of tariffs and low capacity utilization in domestic industries, with a slight recovery of 0.4 percentage points to -1% year-on-year [3][21][70]. - The decline in prices for industries with high export ratios, such as computer communications and electrical machinery, indicates ongoing price pressures [21][70]. - Conversely, core commodity CPI increased by 0.3 percentage points to 0.6% year-on-year, driven by consumer stimulus policies, with notable price increases in durable goods and household textiles [27][70]. Group 3: Service CPI and Housing Market - Service CPI remained stable at 0.5% year-on-year, with core service CPI also holding steady at 0.8% [30][61][71]. - The rental component of the service CPI showed weakness, with a month-on-month increase of only 0.1%, below the historical average [30][71]. - The overall stability in service demand contrasts with the weaker performance of housing-related costs, indicating potential challenges in the housing market [30][71]. Group 4: Future Outlook - The combination of policy measures and recovery in domestic demand is expected to alleviate inflationary pressures, although significant downward pressure on commodity prices is anticipated in the second half of the year [35][70]. - Factors such as tariff disruptions, low global oil inventories, and weakened investment in real estate and manufacturing are likely to constrain commodity prices further [35][70]. - The low capacity utilization in downstream sectors poses challenges for PPI recovery, suggesting that PPI will likely remain weak compared to CPI in the coming months [35][70].