Market Overview - The reopening of the government led to a market selloff, with the Nasdaq Composite and Russell 2000 down 2.3% and 2.8% respectively, while the S&P 500 and Dow Jones Industrial Average fell 1.6% [2] - The current market environment is characterized by a reset in asset valuations rather than panic, as bond prices remained stable despite falling equities and rising volatility [3][4] Economic Indicators - The Federal Reserve's uncertainty regarding interest rate cuts has contributed to a loss of confidence, with the probability of a rate cut in December now at 50% [4] - Recent earnings growth of approximately 13% year-over-year has not been sufficient to maintain elevated valuations, leading to a market adjustment [4] Cryptocurrency Impact - Bitcoin prices fell below the critical support level of $100K, trading down to $95K, which may raise broader investor concerns [5] Artificial Intelligence Investments - Companies investing heavily in AI are yet to demonstrate returns on those investments, with the focus primarily on capital expenditures rather than profitability [6] Employment and Consumer Sentiment - Notable layoffs, including Verizon's announcement of 15,000 to 20,000 job cuts, indicate a weakening employment situation, compounded by low consumer sentiment [7] Upcoming Market Events - Key earnings reports from Walmart and Target will provide insights into the health of the overall economy, particularly regarding the holiday season [9] - The release of minutes from the last Federal Reserve meeting is anticipated to shed light on internal debates and monetary policy discussions [9] Investment Opportunities - Stocks that have experienced significant pullbacks may present opportunities for dollar-cost averaging, while increased volatility could benefit options traders [10]

Group 1 - The core viewpoint indicates a strategic shift in capital flow, with short-term funds targeting bank stocks while growth stocks are being quietly absorbed, driven by a decline in interest rates and a corresponding decrease in discount rates, enhancing the future cash flow value of growth stocks [2] - A notable observation is that despite the overall market not showing significant gains, the trading structure reveals signs of strategic adjustments, with institutions reallocating from dollar-denominated assets to A-shares, particularly those with undervalued valuations [2][4] - The influx of foreign capital is not merely a reaction to the "China story," but rather a pursuit of cost-effectiveness and liquidity opportunities, as highlighted by a macro analyst's perspective on the nature of foreign investment [6] Group 2 - The data on capital flows indicates that while northbound capital net purchases reached a peak in August, the distribution of funds is highly uneven, with a few core industries attracting significant investment, suggesting a targeted approach rather than a broad-based strategy [8] - The valuation gap between A-shares and major Western stock indices has been frequently discussed, with some comparable companies in sectors like semiconductors and new energy showing price-to-earnings ratios that are even 20% lower than their US counterparts, indicating a tangible investment appeal [10] - The market is witnessing a shift from passive acceptance of foreign capital to actively seeking a new balance between passive reception and proactive engagement, as the rhythm of capital inflow becomes clearer [14]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - In 2025, the new industrial pattern is basically formed. Group companies continue the incremental trend, breeding port profits expand, some large - scale farms and individual farmers switch to the professional fattening mode, and flexibility is enhanced again. The dual - drive of raw materials and management leads to a further downward shift of the cost center. The supply increment in the first half of the year is not fully realized, and the social inventory is at a low level, in the inventory accumulation stage. In the second half of the year, the supply increment is gradually released, but the demand seasonally rebounds in the fourth quarter, in a stage of both supply and demand increase. The monthly supply change is relatively stable, and the inventory cycle rotation determines the price direction [2][40]. - The futures market has over - traded the multi - round inventory cycle in the distant future. As time approaches, both the supply data and the spot price center may falsify this expectation, and there may be an opportunity for re - evaluating the valuation. The industry is still in the profit stage, and the industry arranges hedging for the distant loss cycle according to the expected profit [3]. Summary by Relevant Catalogs 2025 H1 Review of Live Pig Futures and Spot Trends - The live pig futures and spot market in H1 2025 showed a reality repair after the expected over - reaction. The high profits in H2 2024 led to the expectation of large capacity increment in 2025, and each contract was anchored to the cost in advance. However, the low social inventory in Q1 and continuous high profits led to strong inventory accumulation space and willingness, and the supply increment was not effectively released [6]. - **Phase 1 (January - February)**: Weak expectation over - reaction, anchoring to cost. The market expected the industry to enter the production - increasing cycle in advance, and the January contract was once at a discount of nearly 3,000 yuan/ton to the spot. All contracts were priced based on the low - level cost [7]. - **Phase 2 (March - May)**: Reality was stronger, and the futures price recovered. After the Spring Festival, the social inventory and weight decreased. From February, the industry entered the stage of replenishing and accumulating inventory. The feed cost was low, and the group started the active weight - increasing trend. The low frozen - product inventory supported the off - season demand, and the futures price recovered [8]. - **Phase 3 (June)**: Policy influence increased volatility. The low - inventory and high - profit pattern in H1 led to strong inventory - accumulation persistence. The back structure of near - month contracts continued. The announcements of leading enterprises to reduce weight and ban secondary fattening intensified short - term volatility [9]. 2025 H2 Live Pig Operation Logic: Inventory Rotation, Valuation Reset Supply Side - **Supply Increment Trend in H2 is Certain**: The industry has been in continuous profit, and the production - increasing trend is hard to change. The increase in the number of fertile sows in 2024 indicates an increase in the supply of standard pigs in H2 2025. The expansion of the stocking group in H1 2025 also needs attention for the supply in H2 [13]. - **Monthly Standard Pig Supply is Relatively Stable**: The change in the industrial structure and the division of labor mode based on group advantages make the slaughter rhythm smoother. The proportion of small - scale farmers has been decreasing, while the proportion of large - scale enterprises has been increasing. Different groups have different advantages in breeding and fattening, and the division of labor is more refined [19]. - **Inventory Cycle Rotation has a Greater Impact on Quarterly Supply**: The speculation behavior of professional stocking and secondary fattening groups will have a more obvious impact on the supply rhythm. The inventory level is relatively high in H1 2025. The third quarter is expected to be in the de - stocking stage, and it is necessary to pay attention to whether the fat - to - standard price difference can drive the re - stocking in the fourth quarter [25]. Demand Side - **Total Pork Demand Increases Year - on - Year, and Demand Elasticity Strengthens**: The consumption of frozen products has shifted to fresh products, and the demand elasticity has increased. The slaughter volume in H1 2025 is significantly higher than that of the same period in 2024, and the consumption capacity has increased. The low frozen - product inventory stimulates the shift from frozen to fresh consumption, and the demand will still be supported in H2 [31]. - **The Seasonal Influence of Demand will Strengthen**: The consumption of live pigs still follows the seasonal law. The new industrial pattern makes the monthly supply rhythm smoother, and the influence of cross - month demand fluctuations on price will increase. The consumption in the peak season before the Spring Festival in 2026 is expected to increase by more than 30% compared with the third quarter [35]. - **The Cost Center Further Declines, and Bottom - Level Consumption is Supported**: The feed cost is low, and the management cost is optimized. The average cost of the live pig industry in H1 2025 is expected to decline to the range of 13 yuan/kg. If the pig price falls below the cost line, it may stimulate short - term consumption [39]. Conclusion and Investment Outlook Conclusion - Pay attention to the rotation rhythm of the inventory cycle. The supply increment in H1 2025 is not fully realized, and the industry is in the inventory accumulation stage. In H2, the supply increment is gradually released, and the demand seasonally rebounds in the fourth quarter. The inventory cycle rotation determines the price direction [40]. - **Supply Side**: The industry is in the profit stage in H1 2025, and there is no driving force for active capacity reduction. The supply in H2 is relatively excessive, and there is pressure in the centralized de - stocking stage. The supply of standard pigs from August to October 2025 is expected to be under greater pressure [41]. - **Demand Side**: The slaughter volume in H1 2025 is higher than that of the same period in 2024, and the real pork consumption is strong. In addition to regular demand, the speculative demand is also strong in 2025. The cost center further declines in H2, and there is still seasonal demand increment in the peak season, giving price elasticity [42]. Investment Outlook - The supply in H2 2025 will increase marginally, but the price center will be significantly lower than that of the same period in 2024. The core fluctuation range of the spot price in H2 is expected to be 12,000 - 17,000 yuan/ton. In the third quarter, the supply is relatively loose, and the core fluctuation range is expected to be 12,000 - 15,000 yuan/ton, with the futures index fluctuating between 12,000 - 14,500 yuan/ton. In the fourth quarter, if de - stocking is achieved in the third quarter, the peak price in the peak season can be expected, with the core fluctuation range of 14,000 - 17,000 yuan/ton and the futures index between 13,000 - 16,000 yuan/ton. The main trading logic in H2 2025 is the inventory cycle, and there may be an opportunity for re - evaluating the valuation. The industry should arrange hedging according to the expected profit [43].