Market Overview - The Shanghai Composite Index is expected to maintain a volatile pattern in the short term due to a vacuum in incremental policy, with the Politburo meeting removing references to "rate cuts," indicating a lower probability of new stimulus policies [2][5] - The A-share market's profitability may decline amid overseas disturbances, despite a high likelihood of an extension of the US-China tariff exemption period [2][5] - Investment strategies should focus on two main areas: defensive stocks such as banks and non-bank financials, and opportunities in rare earths due to US-China tensions and price increases [2][5] Stock Market Factors - Last week, small-cap stocks outperformed, with a balanced preference for value and growth styles; however, volatility in both large and small-cap stocks increased [7] - The dispersion of excess returns among industry indices slightly increased, while the speed of industry rotation remained stable, with a significant decline in the proportion of rising constituent stocks [7] - Trading concentration remained consistent, with the top 100 stocks and the top five industries maintaining their previous levels of trading volume [7] Market Activity - Market volatility rose sharply last week, and turnover rates continued to increase [8] Commodity Market Factors - In the commodity market, the strength of trends across all sectors slightly decreased; however, the basis momentum for precious metals increased, while other sectors remained stable [15] - Volatility across all sectors rose, and liquidity in the non-ferrous metals sector declined rapidly [15] Options Market Factors - Implied volatility for the SSE 50 and CSI 1000 indices, which had been rising, began to decline, indicating that many market participants are starting to take risk precautions after a period of continuous gains [22] Convertible Bond Market Factors - The convertible bond market demonstrated its defensive characteristics as the equity market adjusted, with the premium rate for bonds exceeding 100 yuan continuing to rise, surpassing the May peak [24] - The proportion of bonds with low conversion premiums has increased, indicating structural differences, while the trading volume in the convertible bond market remained stable [24]