Core Insights - The report emphasizes the potential for market breakthroughs amid current volatility, driven by "policy expectations + industry prosperity" as dual certainties, suggesting an optimized holding structure to prepare for the third quarter's performance and policy resonance [1][10][20]. Market Overview - The market continues to show strength supported by capital and policy expectations, with the upcoming disclosure of second-quarter economic data expected to influence market sentiment [10][20]. - The overall A-share index, excluding financial and micro-cap stocks, has seen a cumulative increase of 32.8% from August 30, 2024, to July 11, 2025, with a 7.0% increase year-to-date [22][25]. Industry Performance - Midstream industries, such as steel, electric new energy, real estate, and building materials, have significantly contributed to the upward movement of the index, indicating a recovery in valuations driven by "anti-involution" policy expectations [22][26]. - The report highlights the ongoing "anti-involution" trading, with sectors like electric new energy and steel showing continued recovery, while the banking sector experienced notable adjustments [20][21]. Domestic Computing Power Industry - The domestic computing power industry is entering a high-growth cycle, with significant developments in the GPU sector, including the IPO acceptance of domestic GPU manufacturers, which fills a gap in the A-share market for full-function GPUs [26][28]. - Industrial Fulian's mid-year earnings forecast indicates a substantial increase in net profit, driven by AI-related business growth, suggesting a positive outlook for the computing power industry [29][30]. Capital Flow and ETF Trends - The A-share market saw a net capital inflow of 61.57 billion yuan, with non-bank financials, computing, and real estate being the most favored sectors [35][36]. - The report notes a shift in ETF trends, with a significant net subscription of 4.89 billion yuan, marking the largest inflow in three weeks [35][36].

Economic Situation - The current economic environment is characterized by oversupply, weak prices, and subdued profits, with fiscal spending growth expected at 3.4-3.5% against a budgeted 5% due to income uncertainties [2] - Retail sales growth is projected around 4%, while fixed asset investment is also expected to be in the range of 3%-4%, indicating a lack of strong demand [2] - Inflation forecasts suggest a PPI of -1.7% and a CPI around 0%, with nominal GDP growth estimated between 4.3%-4.5%, indicating a weak pricing environment [2] Trading Volume - A-share trading volume is anticipated to remain high, primarily driven by the significant increase in non-bank deposits, which reached historical peaks [3][4] - The increase in non-bank deposits is largely attributed to residents moving their savings, which influences the dynamics between stocks and bonds [4] - There remains potential for further deposit migration, with estimates suggesting a possible 3.5 trillion yuan in additional savings movement based on current disposable income levels [5] Market Style - There is no clear market style identified, with a focus on industry prosperity rather than specific investment styles [6] - The potential for industry clustering is noted, particularly in sectors benefiting from increased AI investments, which could see growth rates of 20%-30% [7] - High dividend stocks are expected to present opportunities, as they may provide absolute returns in a market with low profit elasticity [7] A-shares vs. Hong Kong Stocks - The probability of Hong Kong stocks outperforming A-shares is considered high, with key assets like Alibaba and Tencent listed in Hong Kong, which may lead to more active capital operations [8] - The overall risk-reward profile for Hong Kong stocks remains favorable despite some reduction in potential gains after recent price increases [8]