Macro Strategy - The report discusses the potential growth of bond ETFs, suggesting that despite the inherent advantages of actively managed bond funds, there is room for ETFs to leverage their product strengths. It highlights the significant improvement in liquidity for credit bonds through ETFs and suggests expanding the range of tracked indices [1][16]. - The report emphasizes the expected growth in the management scale of domestic index bond funds, particularly credit bond index ETFs and equity-linked ETFs, as the equity market recovers [1][16]. Macro Commentary - The July FOMC meeting maintained interest rates at 4.25-4.5%, signaling a hawkish stance as inflation targets remain distant compared to employment goals. This may delay rate cuts until Q4 2025, with expectations for 2-year and 10-year U.S. Treasury yields to rise to 4.05% and 4.5% respectively [2][17]. - The second quarter GDP growth in the U.S. was reported at +3.0%, reversing the previous quarter's -0.5% and exceeding market expectations. However, the core GDP indicator, PDFP, only grew by +1.2%, indicating that the growth was largely driven by inventory adjustments rather than strong internal economic growth [3][19]. Fixed Income Analysis - The report notes that the issuance of secondary capital bonds totaled 109.9 billion yuan, with a trading volume of approximately 288.1 billion yuan, reflecting an increase in market activity [7]. - Green bond issuance reached 35.9 billion yuan, with a trading volume of 61 billion yuan, indicating a growing interest in sustainable finance [7]. Company-Specific Insights - Su Shi Testing (300416) reported a 26% year-on-year increase in net profit for Q2, driven by strong growth in the integrated circuit sector. The profit forecasts for 2025-2027 have been adjusted to 280 million, 350 million, and 430 million yuan respectively, maintaining a "buy" rating [10]. - Contemporary Amperex Technology Co., Ltd. (300750) slightly exceeded profit expectations, with net profit forecasts for 2025-2027 set at 66.1 billion, 80.2 billion, and 96.6 billion yuan, maintaining a "buy" rating due to its leading position in the global battery market [11]. - Yonghui Supermarket (601933) plans to raise 4 billion yuan through a private placement to support store renovations, with adjusted profit forecasts reflecting a potential recovery in performance [13]. - Huaneng International (600011) reported a 24.3% increase in net profit for the first half of 2025, benefiting from a 9.2% decrease in coal costs. The profit forecasts for 2025-2027 have been adjusted to 13.78 billion, 16.02 billion, and 17.53 billion yuan, maintaining a "buy" rating [14].

Macro Strategy - The report concludes that China's service sector employment and wage levels are not low compared to 43 economies, but there are three areas for improvement: the employment share in the service sector is still low compared to high-income economies, particularly in health and social work and real estate; the construction sector's employment is close to saturation, while the real estate sector has room for growth; and there is a significant income disparity across different service industries, with telecommunications and finance having higher wages compared to education and real estate [4][5][6]. Fixed Income Analysis - The report discusses the phenomenon of "deflation," characterized by a continuous decline in money supply and prices, leading to economic recession. It highlights that the main causes of deflation include supply-demand imbalances and a decrease in nominal money supply or circulation speed. Historical examples from Japan and the US illustrate how these countries responded to deflation through fiscal expansion and monetary easing [7][8]. - As of the first half of 2025, China's CPI showed a slight decline, averaging -0.07%, while PPI remained in negative territory, averaging -2.77%. The report attributes the low CPI to declines in food and transportation costs, while PPI is affected by weak real estate and infrastructure investment [7][8]. Company Analysis - 聚星科技 (Juxing Technology) is identified as a "small giant" in the electrical contact products sector, with a strong focus on technological innovation. The company was established in November 1996 and went public on the Beijing Stock Exchange in November 2024, becoming the first company from Wenzhou to list there. In 2024, it achieved a net profit of 116 million yuan, a year-on-year increase of 51.12%, and in Q1 2025, the net profit was 23 million yuan, up 44.97% year-on-year [2][10]. - The electrical contact products industry is expanding, with a compound annual growth rate of 10.98% from 2015 to 2023. The low-voltage electrical equipment market is also growing, driven by increasing fixed asset investments and rising demand in household appliances and industrial control sectors [10]. - 聚星科技 emphasizes core product focus and technological innovation, holding a competitive gross margin compared to peers. The company has established strong relationships with major low-voltage electrical manufacturers, enhancing customer loyalty [10]. - The report forecasts that the company's net profit will reach 130 million, 158 million, and 194 million yuan in 2025, 2026, and 2027, respectively, reflecting year-on-year growth rates of 12%, 21%, and 23%. The company is rated as "overweight" due to its strong growth potential and sufficient production capacity [3][10].

Group 1 - The report highlights that in the first half of 2025, China's CPI and PPI showed a downward trend, with CPI averaging -0.1% and PPI averaging -2.8%, indicating a decline compared to 2024 [1][10] - The report discusses the characteristics of deflation, which is defined as a continuous decline in money supply and prices, leading to economic recession, and emphasizes the self-reinforcing nature of deflationary cycles [3][11] - The report outlines the responses of Japan and the United States to deflationary pressures, including Japan's fiscal expansion and introduction of inflation targets, and the U.S.'s monetary easing and fiscal stimulus during the 2008 financial crisis [4][15][26] Group 2 - The report forecasts a mild recovery in CPI for the second half of 2025, while PPI is expected to remain low but with a narrowing decline [5][33] - In the first half of 2025, CPI was influenced negatively by food and transportation costs, with food prices dragging down CPI by an average of -0.24 percentage points [35][40] - The report notes that PPI remained in negative territory, averaging -2.77%, primarily due to weak demand in the real estate and infrastructure sectors, as well as international price declines [42][44] Group 3 - The report provides a structural analysis of CPI and PPI, indicating that high-weight categories such as food and housing significantly impact overall inflation, with food prices being a major drag on CPI [49][50] - It highlights that despite consumption stimulus policies, the overall inflation level remains low, as the effects of these policies have not translated into widespread price increases [44][51] - The report emphasizes that the structural characteristics of CPI and PPI are shaping the current inflation environment, with persistent low demand and external economic pressures limiting price recovery [44][45]