1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The Chinese economy is in a marginal de - leveraging process, with the liability growth rate of the real - sector expected to decline. The government aims to stabilize the macro - leverage ratio, and the monetary policy will generally remain neutral and difficult to be continuously loose. The market is currently affected by risk preference, and the subsequent trends of risk preference, economic recovery, and the US economy need to be focused on [2][3][7] - In the context of the contraction of the national balance sheet, the allocation of financial assets should adopt a dumbbell - shaped strategy. The bond market is the large base, and the stock market is the small head. The stock allocation strategy is dividend plus growth, and the bond allocation strategy is duration plus credit - sinking [25] - In the contraction cycle, the equity - bond ratio favors equities to a limited extent, and the value style is more likely to be dominant. Red - dividend stocks with characteristics of non - expansion, good profitability, and survival are recommended [12][67] 3. Summary by Relevant Catalogs 3.1 National Balance Sheet Analysis - **Liability Side**: In July 2025, the liability growth rate of the real sector was 9.0%, with a lower - than - expected rebound. It is expected to decline to 8.9% in August and further to 8% by the end of the year. The government's liability growth rate is also expected to decline from 15.7% in July to 14.8% in August and 12.5% by the end of the year. The money market has tightened marginally, and the peak of the money market in August was likely in the first week [2][3][21] - **Monetary Policy**: The trading volume of funds decreased last week, and the price was stable. The one - year Treasury yield rose to 1.37%, and the term spread widened. The estimated lower limit of the one - year Treasury yield is 1.3%, the ten - year Treasury yield is about 1.6%, and the thirty - year Treasury yield is about 1.8% [3][22] - **Asset Side**: After a brief stabilization in June, the physical volume data declined again in July. The annual real economic growth target for 2025 is about 5%, and the nominal economic growth target is about 4.9%. Whether this will be the central target for the next 1 - 2 years needs further observation [4][23] 3.2 Stock - Bond Ratio and Stock - Bond Style - **Market Performance Last Week**: The money market tightened marginally, but risk preference increased. Stocks rose, and bonds fell. The equity growth style was dominant, and the stock - bond ratio favored stocks, breaking through the previous high on August 15th [6][26] - **Future Outlook**: The trend of risk preference is uncertain. There are three possible scenarios: range - bound fluctuations, a short - term upward trend, or a fundamental change in the subjective weighting of Chinese profitability. A portfolio of growth - type equity assets and long - term bonds is recommended, with a 70% position in the CSI 1000 Index and a 30% position in the 30 - year Treasury ETF [10][11][29] 3.3 Industry Recommendation - **Industry Performance Review**: The A - share market rose this week. The communication, electronics, non - bank finance, power equipment, and computer sectors had the largest increases, while the bank, steel, textile and apparel, coal, and public utilities sectors had the largest declines [35] - **Industry Crowding and Trading Volume**: As of August 15th, the top five crowded industries were electronics, computer, power equipment, machinery, and non - bank finance. The trading volume of the whole A - share market increased this week, with non - bank finance, real estate, and other sectors having the highest growth rates [36][38] - **Industry Valuation and Profitability**: The PE (TTM) of the comprehensive, communication, and other sectors increased the most this week, while the bank, steel, and other sectors declined. Industries with high 2024 full - year profit forecasts and relatively low current valuations include banks, coal, and oil and petrochemicals [41][42] - **Industry Prosperity**: External demand generally declined. The global manufacturing PMI decreased in July, and the CCFI index fell. Domestic indicators such as port throughput and industrial capacity utilization showed mixed trends [46] - **Public Fund Market Review**: In the second week of August, most active public equity funds outperformed the CSI 300. As of August 15th, the net asset value of active public equity funds was slightly higher than that in Q4 2024 [62] - **Industry Recommendation**: In the contraction cycle, the equity - bond ratio favors equities to a limited extent, and the value style is more likely to be dominant. An A + H red - dividend portfolio of 20 stocks and an A - share portfolio of 20 stocks, mainly concentrated in banks, telecommunications, and other industries, are recommended [12][67]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The high point of this round of liquidity has basically been confirmed. The debt - to - GDP ratio of the real sector is expected to decline, and the country is in a marginal deleveraging process. The liquidity of the financial sector has marginally tightened, and the focus is on when the stock - bond ratio will return to favoring bonds. Currently, long - term bonds have a slightly better cost - performance than value - type equity assets. [2][7] - In the contraction cycle, the extent to which the stock - bond ratio favors equities is limited, and the value style is more likely to be dominant. Red - chip stocks are recommended, including an A + H red - chip portfolio of 20 stocks and an A - share portfolio of 20 stocks, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation. [8][62] Summary by Directory 1. National Balance Sheet Analysis - **Liability Side**: In May 2025, the debt growth rate of the real sector was 8.9%, down from 9.0% previously. April is expected to be the high point of the debt growth rate of the real sector this year, with a decline starting in June, a rebound in July, and then a return to deleveraging. By the end of the year, the debt growth rate of the real sector is expected to drop to around 8%. The local government debt growth rate reached a new high of 15.3% in June, exceeding market expectations, and is expected to decline to around 12.5% by the end of the year. The liquidity of the financial sector has marginally tightened, and the peak of the loose liquidity since early June was from July 4th to 8th. [2][16][17] - **Fiscal Policy**: Last week, the net increase in government bonds was 32.14 billion yuan (higher than the planned 340 million yuan), and this week, the planned net increase is 17.83 billion yuan. [3][17] - **Monetary Policy**: Last week, the average weekly trading volume of funds increased, the price of funds decreased, and the term spread slightly narrowed. The yield of one - year treasury bonds trended upward, closing at 1.37% at the weekend. The estimated lower limit of the one - year treasury bond yield is about 1.3%, the term spread between the ten - year and one - year treasury bonds is about 30 basis points, and the lower limit of the ten - year treasury bond yield is about 1.6%. The spread between the thirty - year and ten - year treasury bonds is estimated to be 20 basis points, and the lower limit of the thirty - year treasury bond yield is about 1.8%. [3][17] - **Asset Side**: In May, the physical volume data was weaker than in April. The focus is on the duration of the current economic slowdown. The target for the annual real economic growth rate in 2025 is around 5%, and the nominal economic growth rate target is around 4.9%. It remains to be seen whether a nominal economic growth rate of around 5% will become the central target for China's nominal economic growth in the next 1 - 2 years. [4][5][18] 2. Stock - Bond Cost - Performance and Stock - Bond Style - **Last Week's Situation**: The liquidity marginally tightened. It was a bull market for stocks and a bear market for bonds. The equity style rotated back to growth - dominance, exceeding expectations. Bond yields rose across the board, with the ten - year treasury bond yield rising 2 basis points to 1.67%, the one - year treasury bond yield rising 3 basis points to 1.37%, and the thirty - year treasury bond yield rising 2 basis points to 1.87%. The stock - bond cost - performance favored stocks. The broad - based rotation strategy underperformed the CSI 300 index by - 0.4 pct last week but has outperformed the CSI 300 index by 4.48 pct since its establishment in July, with a maximum drawdown of 12.1% (compared to 15.7% for the CSI 300). [6][20] - **Trend Judgment**: In 2025, the real GDP growth rate on the asset side is expected to run smoothly between 4 - 5%. On the liability side, the debt growth rate of the real sector will decline. The stock - bond cost - performance will trend towards favoring bonds, and the equity style will trend towards favoring value. Currently, long - term bonds have a slightly better cost - performance than value - type equity assets. If equity - type value assets continue to fall, there may be a good entry opportunity. This week, the recommended portfolio includes the Dividend Index (40% position), the SSE 50 Index (40% position), and the 30 - year Treasury Bond ETF (20% position). [7][19][22] 3. Industry Recommendation 3.1 Industry Performance Review - The A - share market rose this week, with trading volume similar to last week. The Shanghai Composite Index rose 1.1%, the Shenzhen Component Index rose 1.8%, and the ChiNext Index rose 2.4%. Among the Shenwan primary industries, real estate, steel, non - bank finance, comprehensive, and building materials had the largest increases, rising 6.1%, 4.4%, 4%, 3.8%, and 3.3% respectively. Coal, banking, automobiles, and household appliances had the largest declines, with weekly declines of 1.1%, 1%, 0.4%, and 0.3% respectively. [27] 3.2 Industry Crowding and Trading Volume - **Crowding**: As of July 11th, the top five industries in terms of crowding were computer, electronics, non - bank finance, pharmaceutical biology, and power equipment, with crowding levels of 11.2%, 9.9%, 8.9%, 7.4%, and 6.8% respectively. The bottom five were comprehensive, beauty care, coal, petroleum and petrochemicals, and environmental protection, with levels of 0.2%, 0.3%, 0.7%, 0.7%, and 0.8% respectively. The top five industries with the largest increase in crowding this week were non - bank finance, non - ferrous metals, computer, banking, and real estate, with increases of 3.9%, 2%, 1.3%, 1%, and 0.7% respectively. The top five with the largest decline were electronics, power equipment, national defense and military industry, pharmaceutical biology, and basic chemicals, with changes of - 3.7%, - 1.4%, - 0.9%, - 0.8%, and - 0.8% respectively. [30] - **Trading Volume**: The average daily trading volume of the entire A - share market this week was 1.5 trillion yuan, slightly up from 1.44 trillion yuan last week. Real estate, public utilities, non - bank finance, building materials, and comprehensive had the highest year - on - year growth rates in trading volume, with changes of 78.3%, 58.3%, 48.6%, 37.8%, and 34.5% respectively. National defense and military industry, automobiles, electronics, environmental protection, and basic chemicals had the smallest increases in trading volume, with changes of - 36.7%, - 15%, - 14.4%, - 12.8%, and - 6.8% respectively. [32] 3.3 Industry Valuation and Earnings - **PE(TTM) Changes**: Among the Shenwan primary industries this week, real estate, steel, non - bank finance, comprehensive, and environmental protection had the largest increases in PE(TTM), with changes of 6.1%, 4.8%, 3.9%, 3.8%, and 3.7% respectively. Banking, coal, automobiles, and household appliances had the largest declines, with valuation changes of - 1%, - 0.9%, - 0.5%, and - 0.4% respectively. [35] - **Valuation - Earnings Matching**: As of July 11, 2025, industries with high full - year 2024 earnings forecasts and relatively low current valuations compared to history include banking, coal, petroleum and petrochemicals, transportation, beauty care, and consumer electronics. [36] 3.4 Industry Prosperity - **External Demand**: Generally rebounded. The global manufacturing PMI rose from 49.5 to 50.3 in June, with most major economies' PMIs rising. The CCFI index fell 2.18% week - on - week in the latest week. Port cargo throughput decreased. South Korea's export growth rate rose from - 1.3% in June to 4.3%, and to 9.5% in the first 10 days of July. Vietnam's export growth rate slightly decreased from 20.7% in May to 19.3% in June. [40] - **Domestic Demand**: Second - hand housing prices fell in the latest week, and quantitative indicators showed mixed trends. Highway truck traffic decreased. The fitted industrial capacity utilization rate of ten industries significantly declined in April 2025, rebounded from May to June, and continued to rise slightly in July. Automobile sales were at a relatively high level for the same period in history, new - home sales remained at a historical low, and second - hand home sales declined seasonally compared to history. As of July 6th, the national urban second - hand housing listing price index fell 0.27% week - on - week. As of July 4th, the producer price index rose 0.6% week - on - week. [40] 3.5 Public Fund Market Review - In the second week of July (July 7 - 11), half of the active public equity funds outperformed the CSI 300. The 10%, 20%, 30%, and 50% weekly returns were 2.1%, 1.6%, 1.3%, and 0.7% respectively, while the CSI 300 rose 0.8% this week. - As of July 11th, the net asset value of active public equity funds was estimated to be 3.57 trillion yuan, slightly down from 3.66 trillion yuan in Q4 2024. [56] 3.6 Industry Recommendation - In the contraction cycle, the extent to which the stock - bond ratio favors equities is limited, and the value style is more likely to be dominant. Red - chip stocks are recommended to have three characteristics: no expansion, good profitability, and survival. Combining these characteristics with the under - allocation in the public fund's quarterly reports, the recommended A + H red - chip portfolio includes 20 A + H stocks, and the A - share portfolio includes 20 A - share stocks, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation. [62]

1. Report Industry Investment Rating The document does not provide the industry investment rating. 2. Core Viewpoints of the Report - The Chinese economy is in a marginal de - leveraging process. The growth rate of the real - sector debt is expected to decline, and the government aims to stabilize the macro - leverage ratio. The large - scale debt resolution is beneficial for the overall economy [1][17]. - In the short term, the stock - bond ratio may fluctuate, but in the long run, it tends to favor bonds. The stock style tends to favor value stocks, and the bond configuration window is open, but the trading space is limited [16][22]. - During the de - leveraging cycle, the stock - bond ratio favors equities to a limited extent, and value stocks are more likely to outperform. The recommended investment portfolio includes the Dividend Index (40% position), the Shanghai 50 Index (40% position), and the 30 - year Treasury Bond ETF (20% position) [7][16][23]. 3. Summary by Relevant Catalogs 3.1 National Balance Sheet Analysis - **Liability Side**: In May 2025, the real - sector debt growth rate was 8.9%, down from 9.0% previously. It is expected to decline to around 8% by the end of the year. The government debt growth rate is expected to rise to 15.3% in June and then decline to around 12.5% by the end of the year. The money market has been loosening recently, but it is unlikely to remain so [1][17][18]. - **Asset Side**: The physical volume data in May was weaker than in April. The annual nominal economic growth target is around 4.9%. It remains to be seen whether this will be the central target for the next 1 - 2 years [5][19]. 3.2 Stock - Bond Ratio and Stock - Bond Style - Last week, the money market continued to loosen. The stock market was bullish, and the bond market was stable. The stock - bond ratio favored stocks, but the equity style shifted to value stocks. The short - and long - term bond yields were relatively stable [6][21]. - In the long run, during the de - leveraging cycle, the stock - bond ratio favors bonds, and the equity style favors value stocks. Currently, long - term bonds have a slightly higher cost - performance ratio than value - type equity assets [7][22]. 3.3 Industry Recommendation 3.3.1 Industry Performance Review - This week, the A - share market rose, with the Shanghai Composite Index up 1.4%, the Shenzhen Component Index up 1.25%, and the ChiNext Index up 1.5%. Among the Shenwan primary industries, steel, building materials, banks, pharmaceutical biology, and comprehensive sectors had the largest increases, while computer, non - bank finance, beauty care, transportation, and commercial retail sectors had the largest declines [28]. 3.3.2 Industry Crowding and Trading Volume - As of July 4, the top five crowded industries were electronics, computer, pharmaceutical biology, power equipment, and machinery equipment, while the bottom five were comprehensive, beauty care, petroleum and petrochemical, coal, and real estate. - This week, the top five industries with increased crowding were pharmaceutical biology, public utilities, electronics, machinery equipment, and building materials, while the top five with decreased crowding were non - bank finance, computer, banks, national defense and military industry, and automobiles. - The average daily trading volume of the whole A - share market slightly decreased compared to last week. Steel, building materials, agriculture, forestry, animal husbandry, and fishery, pharmaceutical biology, and coal had the highest trading volume growth rates [30][31]. 3.3.3 Industry Valuation and Earnings - This week, among the Shenwan primary industries, steel, banks, building materials, pharmaceutical biology, and media had the largest increases in PE(TTM), while computer, non - bank finance, beauty care, transportation, and commercial retail had the largest declines. - As of July 4, 2025, industries with high 2024 full - year earnings forecasts and relatively low current valuations compared to history included coal, petroleum and petrochemical, transportation, beauty care, and consumer electronics [35][37]. 3.3.4 Industry Prosperity - **External Demand**: It generally recovered. The global manufacturing PMI rose from 49.5 to 50.3 in June, and most major economies' PMIs increased. The CCFI index decreased by 1.92% week - on - week. Port cargo throughput increased. South Korea's export growth rate rose from - 1.3% in May to 4.3% in June, and Vietnam's export growth rate slightly decreased from 21% in April to 20.7% in May [39]. - **Domestic Demand**: The second - hand housing price remained flat last week, and quantity indicators showed mixed trends. Highway truck traffic increased. The capacity utilization rate of ten industries rebounded in May and continued to rise in June. Automobile trading volume was at a relatively high level in the same period of history, new - home trading volume was at a historical low, and second - hand home trading volume declined seasonally [39]. 3.3.5 Public Fund Market Review - In the first week of July (June 30 - July 4), most active public equity funds underperformed the CSI 300. As of July 4, the net asset value of active public equity funds was 3.55 trillion yuan, slightly down from 3.66 trillion yuan in Q4 2024 [55]. 3.3.6 Industry Recommendation - During the de - leveraging cycle, the stock - bond ratio favors equities to a limited extent, and value stocks are more likely to outperform. Dividend - type stocks should generally have three characteristics: no balance - sheet expansion, good earnings, and survival. - Based on these characteristics and the under - allocation situation in the public fund quarterly reports, the recommended A + H dividend portfolio includes 20 A + H stocks, and the A - share portfolio includes 20 A - share stocks, mainly concentrated in industries such as banks, telecommunications, petroleum and petrochemical, and transportation [9][59].

Report Investment Rating There is no mention of the industry investment rating in the provided content. Core Viewpoints - China remains in the process of marginal balance sheet contraction, with the debt growth rate of the real - sector expected to decline to around 8% by the end of the year, and the government - sector debt growth rate to around 12.5% [2][3] - The short - term liquidity relaxation since early June is difficult to sustain, and the peak of this round of liquidity is expected to occur between June 23 and July 4 [7] - The U.S. economic growth is expected to return to the trend level, and attention should be paid to whether and when the U.S. quarterly real GDP growth rate will fall below the trend level [7] - In the balance sheet contraction cycle, the cost - performance ratio of stocks and bonds tends to favor bonds, and the equity style tends to favor value. Currently, long - term bonds have a slightly better cost - performance ratio than value - type equity assets [7] Summary by Directory 1. National Balance Sheet Analysis - **Liability Side**: In May 2025, the debt growth rate of the real sector was 8.9%, down from 9.0% previously. It is expected to decline to around 8.8% in June and further to around 8% by the end of the year. The government debt increased by 6703 billion yuan last week, higher than the planned 5754 billion yuan. The government debt growth rate is expected to rise to 15.3% in June and then decline, reaching around 12.5% by the end of the year [2][3] - **Monetary Policy**: Last week, the average weekly trading volume of funds decreased, the price increased, and the term spread widened. The one - year Treasury yield closed at 1.35% on the weekend, with an estimated lower limit of about 1.3%. The term spread between the ten - year and one - year Treasuries widened to 30 basis points, and the estimated central value of the term spread was adjusted down to 40 basis points [3] - **Asset Side**: The physical volume data in May was weaker than in April. The annual real economic growth target for 2025 is around 5%, and the nominal economic growth target is around 4.9%. It is necessary to observe whether 5% will become the central target for China's nominal economic growth in the next 1 - 2 years [4][5] 2. Stock - Bond Cost - Performance and Stock - Bond Style - Last week, the liquidity was marginally relaxed, the risk appetite rebounded, stocks rose while bonds were flat, and the growth style was dominant. The ten - year Treasury yield rose by 1 basis point to 1.65%, the one - year Treasury yield fell by 1 basis point to 1.35%, and the 30 - year Treasury yield rose by 1 basis point to 1.85% [6] - The broad - based rotation strategy underperformed the CSI 300 index by - 1.58 pct last week but has outperformed the CSI 300 index by 4.73 pct since July, with a maximum drawdown of 12.1% [6] - In the balance sheet contraction cycle, the cost - performance ratio of stocks and bonds tends to favor bonds, and the equity style tends to favor value. Currently, long - term bonds have a slightly better cost - performance ratio than value - type equity assets. This week, the recommended assets are the dividend index (40% position), the SSE 50 index (40% position), and the 30 - year Treasury ETF (20% position) [7] 3. Industry Recommendation 3.1 Industry Performance Review - This week, A - shares rose with increased trading volume. The Shanghai Composite Index rose 1.91%, the Shenzhen Component Index rose 3.73%, and the ChiNext Index rose 5.69%. Among the Shenwan primary industries, computer, national defense and military industry, non - bank finance, communication, and power equipment had the largest increases, while petroleum and petrochemical, food and beverage, and transportation had the largest declines [28] 3.2 Industry Crowding and Trading Volume - As of June 27, the top five industries in terms of crowding were electronics, computer, power equipment, non - bank finance, and communication, while the bottom five were comprehensive, beauty care, building materials, coal, and steel [31] - The industries with the top five increases in crowding this week were non - bank finance, computer, national defense and military industry, non - ferrous metals, and automobile, while those with the top five decreases were pharmaceutical biology, mechanical equipment, media, food and beverage, and petroleum and petrochemical [31] - The average daily trading volume of the entire A - share market this week was 1.49 trillion yuan, up from 1.22 trillion yuan last week. Non - bank finance, national defense and military industry, bank, electronics, and computer had the highest year - on - year growth rates in trading volume [33] 3.3 Industry Valuation and Earnings - This week, among the Shenwan primary industries, computer, national defense and military industry, non - bank finance, communication, and power equipment had the largest increases in PE(TTM), while petroleum and petrochemical, food and beverage, transportation, public utilities, and coal had the largest declines [36] - As of June 27, 2025, industries with high full - year earnings forecasts in 2024 and relatively low current valuations compared to history include coal, petroleum and petrochemical, public utilities, transportation, pharmaceutical biology, and consumer electronics [37] 3.4 Industry Prosperity - **External Demand**: There were mixed trends. The global manufacturing PMI fell from 49.8 in May to 49.6, while most of the disclosed PMIs of major economies in May rebounded. The CCFI index rose 2% in the latest week, and the port cargo throughput increased. South Korea's export growth rate dropped to - 1.3% in May and rose to 8.3% in the first 20 days of June. Vietnam's export growth rate slightly decreased from 21% in April to 20.7% in May [40] - **Domestic Demand**: The second - hand housing price rose slightly this week, and the quantity indicators showed mixed trends. The highway truck traffic volume increased. The capacity utilization rate of ten industries decreased significantly in April 2025, rebounded slightly in May, and continued to rise in June. The automobile trading volume was at a relatively high level in the same period of history, new - house sales were at a historical low, and second - hand house sales were still at a high level relative to historical seasonality [40] 3.5 Public Fund Market Review - In the fourth week of June (June 23 - 27), most active public equity funds outperformed the CSI 300. The 10%, 20%, 30%, and 50% weekly returns were 4.9%, 4%, 3.5%, and 2.5% respectively, while the CSI 300 rose 2% [56] - As of June 27, the net asset value of active public equity funds was estimated to be 3.5 trillion yuan, slightly down from 3.66 trillion yuan in Q4 2024 [56] 3.6 Industry Recommendation - In the balance sheet contraction cycle, the cost - performance ratio of stocks and bonds favors stocks to a limited extent, and the value style is more likely to be dominant. Dividend - type stocks should generally have three characteristics: no balance sheet expansion, good earnings, and survival [8] - The recommended A + H dividend portfolio includes 20 A + H stocks, and the A - share portfolio includes 20 A - share stocks, mainly concentrated in industries such as banks, telecommunications, petroleum and petrochemical, and transportation [9]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In 2025, China is in a marginal de - leveraging process. The government aims to stabilize the macro - leverage ratio, and the growth rate of the real - sector's liabilities is expected to decline. The fiscal policy is front - loaded, and the monetary policy is moderately neutral [2][17]. - The economic recovery in the current round is better than expected, but it is necessary to observe whether the physical volume data will weaken in the future. The target for the annual real economic growth rate in 2025 is around 5%, and the nominal economic growth rate target is around 4.9% [4][19]. - The stock - bond relationship shows a pattern of a strong stock market and a weak bond market, with the style shifting towards value - based stocks. The stock - bond ratio continues to favor stocks, but in the de - leveraging cycle, the trading value of both stocks and bonds is currently limited. If the yield of the 10 - year Treasury bond rises above 1.7%, the trading value of bonds may gradually emerge [6][22]. - In the de - leveraging cycle, the probability of value - based stocks outperforming is higher. The recommended A + H dividend portfolio and A - share portfolio mainly focus on industries such as banking, telecommunications, petroleum and petrochemicals, and transportation [8][9]. 3. Summary by Relevant Catalogs 3.1 National Balance Sheet Analysis Liability Side - In March 2025, the real - sector's liability growth rate was 8.7% (previous value: 8.4%), expected to rebound slightly to around 9.0% in April, reach an annual high, and then decline steadily in May and return to de - leveraging. By the end of the year, it is expected to drop to around 8% [2][17]. - The government's liability growth rate was 13.9% at the end of March 2025 (previous value: 12.9%), expected to rise to around 14.8% in April, reach an annual high, and then decline. By the end of the year, it is expected to drop to around 12.5% [3][18]. - Last week, the money market continued to loosen marginally. The one - year Treasury bond yield oscillated upwards, closing at 1.45% at the weekend. The estimated lower limit of the one - year Treasury bond yield is about 1.3%, the lower limit of the 10 - year Treasury bond yield is about 1.7%, and the lower limit of the 30 - year Treasury bond yield is about 1.9% [3][18]. Asset Side - In March, the physical volume data improved comprehensively compared to January - February. The economic recovery in this round is better than expected, but it is necessary to pay attention to whether the physical volume data will weaken in the future. The target for the annual real economic growth rate in 2025 is around 5%, and the nominal economic growth rate target is around 4.9% [4][19]. 3.2 Stock - Bond Cost - Effectiveness and Stock - Bond Style - Last week, the money market continued to loosen marginally. The stock market was strong, and the bond market was weak, with the style shifting towards value - based stocks. The yields of both short - term and long - term bonds increased, and the stock - bond ratio continued to favor stocks [6][22]. - The 10 - year Treasury bond yield increased by 4 basis points to 1.68% throughout the week, and the one - year Treasury bond yield increased by 3 basis points to 1.45%. The term spread between the 10 - year and one - year Treasury bonds slightly widened to 23 basis points [6][22]. - The wide - based rotation strategy underperformed the CSI 300 index by - 0.02 pct last week. Since the position was established in July, it has outperformed the CSI 300 index by 6.28 pct, with a maximum drawdown of 12.1% (compared to 15.7% for the CSI 300 index) [6][22]. - Considering the de - leveraging cycle, the trading value of both stocks and bonds is currently limited. If the yield of the 10 - year Treasury bond rises above the predicted lower limit of 1.7%, the trading value of bonds may gradually emerge. This week, a bond position is added, with recommended allocations of 40% for the dividend index, 40% for the SSE 50 index, and 20% for the 30 - year Treasury bond ETF [7][23]. 3.3 Industry Recommendation 3.3.1 Industry Performance Review - This week, the A - share market rose with shrinking trading volume. The Shanghai Composite Index rose 0.8%, the Shenzhen Component Index rose 0.5%, and the ChiNext Index rose 1.4%. Among the Shenwan primary industries, beauty care, non - bank finance, automobiles, transportation, and basic chemicals had the largest increases, while computer, national defense and military industry, media, electronics, and social services had the largest declines [31]. 3.3.2 Industry Crowding and Trading Volume - As of May 16, the top five industries in terms of crowding were machinery and equipment, electronics, automobiles, computers, and basic chemicals, while the bottom five were comprehensive, steel, coal, building materials, and petroleum and petrochemicals [34]. - The top five industries with increased crowding this week were basic chemicals, transportation, automobiles, pharmaceutical biology, and non - ferrous metals, while the top five with decreased crowding were computers, national defense and military industry, electronics, communications, and media [34]. - The trading volume of the entire A - share market decreased this week. Beauty care, transportation, non - bank finance, textile and apparel, and coal had the highest year - on - year growth rates in trading volume, while real estate, media, household appliances, building materials, and steel had the smallest increases [35]. 3.3.3 Industry Valuation and Earnings - This week, among the Shenwan primary industries, beauty care, non - bank finance, automobiles, basic chemicals, and transportation had the largest increases in PE(TTM), while national defense and military industry, computer, media, electronics, and social services had the largest declines [38]. - In terms of valuation - earnings matching, as of May 16, 2025, industries with relatively high full - year earnings forecasts for 2024 and relatively low current valuations compared to history included coal, petroleum and petrochemicals, non - ferrous metals, power equipment, pharmaceutical biology, and consumer electronics [40]. 3.3.4 Industry Prosperity - In terms of external demand, there were mixed trends. The global manufacturing PMI fell from 50.3 in April to 49.8, and the PMIs of major economies that have been released in April showed mixed trends. The CCFI index decreased by 0.14% week - on - week in the latest week, and port cargo throughput declined. South Korea's export growth rate rose to 3.7% in April and then dropped to - 23.8% in the first 10 days of May. Vietnam's export growth rate rose from 13.2% in March to 21% in April [42]. - In terms of domestic demand, the second - hand housing price decreased in the latest week, and the quantitative indicators showed mixed trends. The traffic volume of trucks on expressways declined. The capacity utilization rate of ten industries rose to a relatively high level in March 2025, significantly declined in April, and slightly rebounded in May. Automobile trading volume was at a relatively high level compared to the same period in history, new - home sales remained at a historical low, and second - hand home sales were still at a high level compared to the historical seasonality [42]. 3.3.5 Public Fund Market Review - In the second week of May (May 12 - 16), most active public equity funds underperformed the CSI 300. The 10%, 20%, 30%, and 50% weekly returns were 1.4%, 1%, 0.8%, and 0.3% respectively, while the CSI 300 rose 1.1% [58]. - As of May 16, based on the latest net value and share estimates, the net asset value of active public equity funds was 3.4 trillion yuan, slightly lower than the 3.66 trillion yuan in Q4 2024 [58]. 3.3.6 Industry Recommendation - In the de - leveraging cycle, the stock - bond ratio favors equities to a limited extent, and the probability of value - based stocks outperforming is higher. Dividend - type stocks generally should have three characteristics: no balance - sheet expansion, good profitability, and survival ability [8][62]. - Combining the above three characteristics and the under - allocation situation in the public fund's quarterly report, the recommended A + H dividend portfolio includes 20 A + H stocks, and the A - share portfolio includes 20 A - share stocks, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation [9][62].