Core Viewpoint - The current trend in the Chinese capital market is supported by three main pillars: the breaking of economic globalization under a century of changes, the historical elevation of the capital market's positioning since the 20th National Congress, and the risk appetite boost from strategic adjustments towards the U.S. [1] Market Dynamics - The market is currently in the "valuation-driven" phase, focusing on three core themes: hard power (such as military industry), technology to counter "neck-holding" issues, and leading manufacturing companies expanding internationally [1] - Once the market confirms the prospects of China's deepening role in global development, it will shift to a "fundamentals-driven" phase, characterized by diverse performance across sectors as they improve based on enhanced global discourse power [1] Market Assessment - The overall market valuation is deemed reasonable, with market capitalization not aligning with economic status, stable investor sentiment, and diversified institutional holdings reducing the risk of a market crash [1] - The transition from the bond market to the stock market, along with foreign capital inflows, presents significant potential for incremental funding, indicating that the market is still in the early stages of the "valuation-driven" phase [1] - Systematic risks for market fluctuations are considered manageable at this stage [1]

Core Viewpoint - The current bull market is primarily driven by liquidity, potentially entering its mid-stage, with TMT (Technology, Media, and Telecommunications) likely becoming the main focus in this phase [4][7]. Group 1: Bull Market Types and Stages - Bull markets can be categorized into two types: fundamental-driven and liquidity-driven, with significant price increases observed since 2010 [4]. - The stages of a bull market are divided into three phases: early, mid, and late, based on the presence of significant pullbacks in the Shanghai Composite Index [4]. Group 2: Historical Sector Rotation Patterns - Historically, there is no consistent long-term leading sector in bull markets; instead, sectors exhibit phase-specific opportunities [5]. - In liquidity-driven markets, sectors such as advanced manufacturing, TMT, and finance tend to show phase-specific opportunities, while in fundamental-driven markets, consumption, cyclical, and finance sectors are more favorable [5]. Group 3: Current Investment Focus - Currently, TMT is highlighted as a key sector to watch, with potential catalysts including strong domestic substitution demand and an anticipated interest rate cut by the Federal Reserve [7][8]. - If the market transitions to a fundamental-driven phase, advanced manufacturing will be a sector of interest, with real estate becoming more relevant in the later stages of the bull market [8].

Group 1 - The upcoming military parade on September 3 is expected to influence the military industry sector, with investors keen on understanding the potential changes and future trends in this area [1] - The defense and military industry index experienced a decline of 3.04% as of September 2, indicating a cooling off period after previous gains, attributed to profit-taking behavior following strong performance and the conclusion of interim reports [1][2] - The military industry is anticipated to see improved order demand as the "14th Five-Year Plan" concludes and the "15th Five-Year Plan" begins, with some companies already reporting significant orders, suggesting a recovery in demand [2] Group 2 - The military industry faced challenges last year due to pricing pressures, but these are gradually easing, and new revenue streams from sectors like commercial aerospace and military intelligence are emerging [2] - The long-term outlook for the military industry remains robust, driven by the strategic goal of building a world-class military, marking the beginning of a new golden era for the sector [2][3] - The military sector is transitioning from being driven by event-based expectations to a phase where fundamental performance will play a more significant role, indicating a stable upward trajectory with limited downside risk [3]

Core Insights - The article highlights the recent adjustments made by large private equity firms in their stock holdings based on the performance of listed companies' semi-annual reports, indicating a focus on companies with strong earnings certainty [1] Group 1: Private Equity Adjustments - As of August 26, 27 large private equity firms have been identified in the top ten shareholders of 94 A-share listed companies, with a total holding value of 34.731 billion yuan [1] - These firms increased their stakes in 18 companies, entered the top ten shareholders of 19 new companies, reduced holdings in 10 companies, and maintained their positions in 47 companies [1] Group 2: Sector Focus - The electronic and pharmaceutical sectors have attracted significant interest from top private equity firms, with a notable increase in investments in these areas [1] - For instance, Ningquan Asset increased its stake in Zhouming Technology by 816,000 shares, bringing its total holdings to 8.113 million shares, valued at nearly 60 million yuan [1][2] - Similarly, Ruijun Asset entered the top ten shareholders of Yangjie Technology with 2.553 million shares, benefiting from a 20.58% year-on-year revenue growth [3] Group 3: Performance and Strategy - The article emphasizes that private equity firms are increasingly focusing on companies with strong earnings certainty as the market transitions from liquidity-driven growth to fundamentals-driven performance [5] - A private equity partner noted that the current favorable conditions in the stock market include a loose funding environment and low interest rates, suggesting that companies with solid earnings support should be prioritized in investment strategies [6]

Group 1 - The core viewpoint is that the market is experiencing a trend-driven upward phase, supported by both liquidity and fundamental factors, with a focus on companies representing economic transformation [4] - As of August 15, the stock private equity position index reached 74.86%, marking a continuous increase over two weeks, with 54.8% of private equity firms fully invested [2] - Billion-level private equity firms have shown significant buying activity, with their position index rising to 82.29%, the highest weekly increase this year, and 61.97% of these firms are fully invested [3] Group 2 - The optimistic market outlook is driving billion-level private equity firms to increase their positions, with expectations of a recovery in corporate performance and a stable domestic demand [4] - Two trends are expected to support the sustainability of market trends: a low-interest-rate environment encouraging risk appetite and a shift in household balance sheets towards equity investments [5][6] - Key sectors for private equity investment include technology, innovative pharmaceuticals, and new consumption, with a focus on companies benefiting from the "anti-involution" policy [7][8]

Market Performance - The market showed strong performance last week, with the China Securities Xinhua National Brand Index rising by 3.64% to 1780.22 points [1] - Major indices also saw significant increases: Shanghai Composite Index up 1.70%, Shenzhen Component Index up 4.55%, ChiNext Index up 8.58%, and CSI 300 Index up 2.37% [1] Strong Stock Performances - Notable performers among the index constituents included: - Sungrow Power Supply up 15.54% - Oriental Fortune up 15.34% - Zhongji Xuchuang up 13.74% - Darentang up 10.92% - Several others, including Shield Environment, Fosun Pharma, and Visionox, rose over 8% [1] - Since the beginning of the second half of the year, Zhongji Xuchuang has surged by 63.20%, leading the gains, followed by Covestro at 57.31% and WuXi AppTec at 40.62% [2] Market Sentiment and Trends - The market's risk appetite has improved since July, with a structural market rally observed, particularly in technology stocks [2] - The shift from a defensive to an offensive market sentiment is evident, with traditional high-dividend sectors like banking and utilities underperforming [2] - The market is currently experiencing a liquidity-driven phase, with expectations for a transition to a fundamental-driven phase as domestic demand stabilizes and corporate earnings improve [3] Future Outlook - The market is expected to maintain high risk appetite and trading sentiment, with ample liquidity providing numerous investment opportunities [3] - Continued policy support is anticipated to stabilize domestic demand, leading to improved corporate performance and a more sustainable market rally [3]

Market Overview - The A-share market has shown strong performance recently, with the Shanghai Composite Index breaking the 3600-point mark, driven by financial stocks and increased market liquidity [1][2] - As of July 28, the Shanghai Composite Index reached a high of 3606.27 points, closing at 3597.94 points, up 0.12%, while the Shenzhen Component Index and the ChiNext Index also saw gains [1] Market Drivers - The current market rally is primarily driven by liquidity and fundamentals, contrasting with the previous policy-driven surge [2] - Analysts suggest that the market is in a "bull market second phase," indicating continued growth potential, with many industry leaders having doubled their stock prices since September 2024 [3] Sector Performance - There is a rotation among industry sectors, with previously strong banking stocks experiencing profit-taking, while growth sectors such as innovative pharmaceuticals and AI are on the rise [2] - Beneficiary sectors of economic transformation, including smart driving, robotics, and drones, are expected to rebound in the second half of the year [2] Investment Strategies - Short-term focus should be on sectors with favorable mid-year performance, while long-term strategies should emphasize three main lines: domestic consumption, technological self-reliance, and dividend stocks [4] - Specific sectors to watch include high-dividend low-valuation blue-chip stocks, technology growth areas, and consumer recovery sectors [4] - Current market conditions suggest that holding stocks may be a more effective strategy, with attention on sectors like non-ferrous metals, communications, innovative pharmaceuticals, military industry, and gaming [4]

Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core View - ICE cotton has rebounded due to the recovery of overall risk appetite in the financial and commodity markets, but the lack of obvious fundamental drivers and factors like good US cotton growth and weak global consumption prospects limit its upside potential [1][6][19]. - Domestic cotton futures have risen significantly with an expanding 9 - 1 spread, mainly driven by concerns over tight old - crop inventories. The bullish sentiment in the domestic commodity market has strengthened this positive factor, showing a stronger near - term and weaker long - term trend in futures. However, the accelerated rise is more influenced by technical buying and market sentiment than fundamentals, and there is a risk of decline when market sentiment cools or fundamental negatives appear [2][19]. 3. Summary by Directory 3.1 Market Data | Futures | Opening Price | High Price | Low Price | Closing Price | Change | Change Rate (%) | Volume (Lots) | Volume Change (Lots) | Open Interest (Lots) | Open Interest Change (Lots) | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | ICE Cotton Main Contract | 67.44 | 69.15 | 67.36 | 68.76 | 1.34 | 1.99 | 89187 | - 1938 | 152744 | 1339 | | Zhengzhou Cotton Main Contract | 13880 | 14375 | 13765 | 14270 | 385 | 2.77 | 1456374 | 487140 | 580773 | 25216 | | Cotton Yarn Main Contract | 20070 | 20600 | 19980 | 20520 | 425 | 2.11 | 39318 | 3115 | 19058 | - 3547 | [5] 3.2 Fundamental Analysis 3.2.1 International Cotton Situation - **ICE Cotton**: Rebounded this week due to the recovery of overall risk appetite in the financial and commodity markets, and supported by commercial bargain - hunting [1][6]. - **US Cotton Weekly Export Sales Data**: As of the week ending July 10, 2024/25 US upland cotton weekly contracts decreased by 93% week - on - week and 89% compared to the four - week average. 2025/26 US upland cotton weekly contracts were 1.66 tons. The total signed sales volume of 2024/25 US upland and Pima cotton accounted for 108% of the annual forecast export volume, and the cumulative export shipment volume accounted for 90% of the total annual contracts [7]. - **Other Cotton - Producing and Consuming Countries**: - **India**: Sowing progress is slightly slower than last year. Cotton planting area as of July 11 was 9.3 million hectares. Cotton textile product exports in June decreased by 4% month - on - month and 3% year - on - year, and ready - made garment exports decreased by 13% month - on - month [8]. - **Brazil**: The US tariff increase on Brazilian goods has raised concerns in the domestic textile industry. The trading of new cotton in the 2025 season is slow, and farmers have sold about 70% of the total output [9]. - **Pakistan**: Cotton import demand is moderate. Local cotton production is expected to be between 6.5 - 7.5 million bales, and the price of new cotton in Punjab in 2025/26 is about 16,500 - 16,700 rupees per mound [9]. - **Bangladesh**: Focusing on US tariff negotiations. Cotton imports in June were 12.3 tons, lower than in May and the same period last year. The cumulative imports in the first 11 months of this year increased by 11% compared to the same period in 2023/24 [10]. - **Southeast Asian Textile Industry Startup Rates**: As of the week ending July 18, the startup rates of textile enterprises in India, Vietnam, and Pakistan were 73%, 64%, and 62% respectively [11]. 3.2.2 Domestic Cotton Situation - **Cotton Spot Market**: Spot trading is weak, but prices have risen sharply. Spinning mills mainly make rigid - demand purchases, and some large spinning mills locked in basis prices for better procurement on July 16 [12]. - **Cotton Warehouse Receipts**: As of July 18, there were 9532 registered warehouse receipts and 223 pending warehouse receipts for No. 1 cotton, totaling 9755 receipts, equivalent to 409,710 tons [13]. - **Downstream Market**: The price of pure - cotton yarn has continued to rise, and actual transactions are gradually following up. The profit of spinning mills has not improved significantly, and the startup rate of inland spinning mills has continued to decline. The off - season in the cotton - fabric market continues, with low startup rates, slow sales, and increasing inventory [14]. 3.3 Operation Suggestions - ICE cotton needs to wait for a driver to break through the oscillation range this year. For domestic cotton, continue to monitor the profit, startup rate, and finished - product inventory of downstream textile enterprises, especially the startup rate of Xinjiang spinning mills. Pay attention to supply - related policies (such as reserve policies and import quota policies) and demand - related policies (such as "anti - involution" in the industrial sector). Be aware of the risk of decline when market sentiment cools or fundamental negatives appear [19].

Group 1 - Nickel prices are experiencing a range-bound fluctuation, with the main contract closing at 121,100 yuan/ton, down 0.07% [1] - The Indonesian government has increased the 2025 nickel ore quota to 364 million tons, but mining has been affected by rainfall, leading to tight overall supply [1] - Recent price movements in nickel ore have shown a slight decline, with domestic 1.3% nickel ore transactions settling at CIF 43 and CIF 44.5 [1] Group 2 - The refined nickel market lacks significant contradictions in fundamentals, with continued oversupply limiting price increases [2] - Short-term market sentiment is heavily influenced by macroeconomic factors, while the reality of consumption remains pessimistic [2] - The overall expectation for the nickel market is weak, with macro uncertainties and high nickel-iron inventories contributing to a bearish outlook [2]

Report Industry Investment Rating - PX/PTA/PF/PR are rated neutral [5] Core Viewpoints - After the easing of the Israel-Iran conflict, the polyester industry chain declined significantly due to the sharp drop in crude oil prices caused by the ceasefire. The industry will return to fundamental trading, and future market trends are affected by multiple factors including geopolitics, supply and demand fundamentals, and device operations [1] - In the short term, the oil market pressure is limited as it enters a stage of both increasing supply and demand. However, in the fourth quarter of this year, the market may turn bearish as demand growth elasticity is expected to be significantly less than supply [2] - The gasoline crack spread has limited upside, and the aromatics market is affected by factors such as export volume and short - process device profitability [2] - Each product in the polyester industry chain has different situations in terms of price, profit, inventory, and production plans, and attention should be paid to the implementation of production reduction plans and inventory changes [3][4] Summary by Directory 1. Price and Basis - Present the TA main contract, basis, and inter - period spread trends, PX main contract trends, basis, and inter - period spread trends, PTA East China spot basis, and short - fiber basis [10][11][13] 2. Upstream Profits and Spreads - Include PX processing fees (PXN), PTA spot processing fees, South Korean xylene isomerization profits, and South Korean STDP selective disproportionation profits [19][22] 3. International Spreads and Import - Export Profits - Cover the toluene US - Asia spread, toluene South Korean FOB - Japanese naphtha CFR spread, and PTA export profits [27][29] 4. Upstream PX and PTA Start - up - Show the operating rates of PTA in China, South Korea, and Taiwan, as well as the operating rates of PX in China and Asia [30][33][35] 5. Social Inventory and Warehouse Receipts - Provide information on PTA weekly social inventory, PX monthly social inventory, PTA total warehouse receipts + forecast volume, PTA warehouse warehouse receipt inventory, PX warehouse receipt inventory, and PF warehouse receipt inventory [38][41][42] 6. Downstream Polyester Load - Include filament sales volume, short - fiber sales volume, polyester load, direct - spinning filament load, polyester staple fiber load, polyester bottle - chip load, filament factory inventory days, Jiangsu and Zhejiang loom start - up rates, Jiangsu and Zhejiang texturing machine start - up rates, Jiangsu and Zhejiang dyeing start - up rates, and filament profits [49][51][62] 7. PF Detailed Data - Contain polyester staple fiber load, polyester staple fiber factory equity inventory days, 1.4D physical inventory, 1.4D equity inventory, recycled cotton - type staple fiber load, difference between original and recycled fibers, pure polyester yarn start - up rate, pure polyester yarn production profit, polyester - cotton yarn start - up rate, and polyester - cotton yarn processing fee [75][82][86] 8. PR Fundamental Detailed Data - Provide polyester bottle - chip load, bottle - chip factory bottle - chip inventory days, bottle - chip spot processing fees, bottle - chip export processing fees, bottle - chip export profits, bottle - chip inter - month spreads [90][92][101]