Market Overview - The A-share market has surpassed the 3600-point mark, with the Shanghai Composite Index closing at 3605.73 points, up 0.65%, and the Shenzhen Component Index rising by 1.21% [1] - The total market turnover reached 1.8739 trillion yuan, a decrease of 24.5 billion yuan from the previous day, with over 4300 stocks experiencing gains [1] - The bond market faced challenges, with the yield on the 10-year government bond rising from 1.632% to 1.73%, marking a seven-day decline [1][2] Foreign Investment Trends - Despite the surge in A-shares, foreign capital showed a net sell-off in Hong Kong stocks, with a net outflow of 1.32 billion HKD, primarily from Tencent, which saw a net sell-off of 1.129 billion HKD [3][4] - From April 24 to July 23, foreign capital recorded a cumulative net sell-off of 52.6 billion HKD [9] - In the first half of the year, foreign capital net increased holdings in domestic stocks and funds by 10.1 billion USD, reversing a two-year trend of net reductions [14] Fund Flows and ETF Activity - Margin financing in the A-share market increased by 2.647 billion yuan, reaching a new high of 1.92 trillion yuan, indicating strong leverage activity [18] - Stock ETFs, which had been experiencing net outflows since mid-April, saw three consecutive days of net inflows, totaling 5.468 billion yuan [20][22] - The most significant inflows were observed in ETFs tracking construction materials, Hong Kong internet, and infrastructure indices, with inflows of 2.813 billion yuan, 2.805 billion yuan, and 1.501 billion yuan, respectively [22][24] Sector Performance - Various sectors have shown strong performance, with construction materials and infrastructure stocks experiencing significant gains [25] - The year-to-date performance of sectors indicates that non-ferrous metals, steel, and pharmaceutical industries have seen increases of 31.13%, 20.52%, and 19.05%, respectively [27][28] - The market is witnessing a trend where funds are actively seeking to eliminate low-priced stocks, with a notable rise in sectors such as coal and steel [25]

Group 1: Foreign Exchange Management - The State Administration of Foreign Exchange (SAFE) is exploring integrated management of domestic and foreign currencies, aiming for "one set of rules, one-stop processing" [1] - SAFE reported that foreign investment in domestic stocks and funds increased by $10.1 billion in the first half of the year, reversing a two-year trend of net selling [2] - The resilience of China's foreign exchange market is improving, with enhanced ability to respond to external shocks and a more flexible exchange rate mechanism [3] Group 2: Foreign Investment Trends - Foreign investors' holdings of domestic bonds exceeded $600 billion, indicating a stable macroeconomic environment for investment [2][4] - The proportion of foreign investors holding domestic bonds and stocks is around 3%-4%, with expectations for gradual increases in allocation to RMB assets [4] - As of June 2025, foreign institutions held 4.23 trillion yuan in the interbank bond market, accounting for 2.5% of the total [8] Group 3: Data and Technology Initiatives - The National Data Bureau is promoting high-quality data set construction and has initiated actions to establish data labeling bases in seven cities [6][7] - The bureau aims to create a closed-loop ecosystem for data elements, focusing on market-oriented reforms and the "Artificial Intelligence +" initiative [10] Group 4: Capital Market Developments - Shenzhen is expected to see reforms including the return of Hong Kong-listed companies to the Shenzhen Stock Exchange [9] - The Science and Technology Innovation Board (STAR Market) has supported over 580 "hard technology" companies, raising more than 1.1 trillion yuan in IPO and refinancing funds [11]

Core Viewpoint - The press conference highlighted the stable inflow of foreign capital into China's financial markets, with a significant increase in foreign investment in both bonds and stocks, indicating a positive outlook for the allocation of RMB assets by foreign investors [1][3][4]. Group 1: Foreign Investment Trends - As of 2025, foreign investment in RMB-denominated bonds has reached over $600 billion, marking a historically high level [3]. - In the first half of the year, foreign investors net purchased $10.1 billion in domestic stocks and funds, reversing a two-year trend of net selling [3]. - The net increase in foreign stock holdings surged to $18.8 billion in May and June, reflecting a growing willingness among global investors to allocate capital to China's stock market [3]. Group 2: Economic and Policy Environment - The stable macroeconomic environment in China, with a GDP growth of 5.3% year-on-year, supports foreign investment [5][6]. - The contribution of domestic demand to economic growth has increased, with final consumption and capital formation accounting for 77% of growth in the second quarter, up 17 percentage points [5]. - China's commitment to high-level opening-up and the continuous improvement of the financial market's connectivity have created a favorable policy environment for foreign investment [4][6]. Group 3: Currency and Market Stability - The proportion of RMB cross-border receipts in goods trade reached approximately 30% in the first half of the year, a historical high [6]. - The resilience of the foreign exchange market is bolstered by a stable economic foundation and improved mechanisms for market-oriented exchange rate formation [6]. - The increasing awareness of exchange rate risk among enterprises and the growth of RMB cross-border transactions contribute to a more rational trading environment [6].

Core Insights - The external environment has become increasingly complex and variable since 2025, with rising unilateralism and protectionism, leading to a slowdown in global economic and cross-border trade growth [1] - China's macro policies are being implemented more actively to expand domestic demand and effectively respond to external challenges, resulting in overall stable economic operation and continued consolidation of high-quality development [1] Group 1: Foreign Exchange Market Performance - In the first half of the year, China's foreign exchange receipts and payments showed several characteristics: steady increase in foreign-related receipts and payments, continued net inflow of cross-border funds, basic balance in foreign exchange market supply and demand, active foreign exchange market trading, and stable foreign exchange reserve scale [1] - The foreign exchange market has effectively responded to external shocks, maintaining overall stability [1] Group 2: Foreign Investment in RMB Assets - Since 2025, foreign investment in RMB assets has remained stable, with foreign holdings of domestic RMB bonds exceeding $600 billion, a historically high level [2] - In the first half of the year, foreign investors net increased their holdings of domestic stocks and funds by $10.1 billion, reversing the net selling trend of the past two years [2] - The proportion of foreign investors holding domestic bonds and stocks is approximately 3% to 4%, with expectations for gradual and sustainable growth in foreign investment in RMB assets supported by a stable macro environment and high-quality financial market development [2] Group 3: Innovation Policies in Free Trade Zones - The foreign exchange bureau plans to promote a series of innovative policies to more free trade pilot zones, focusing on expanding cross-border trade facilitation policies and advancing high-level openness in cross-border investment and financing [3] - Policies include optimizing international trade settlement, expanding the range of trade payment netting, and simplifying processes for cross-border trade [3] - These measures aim to enhance cross-border investment channels and improve financing efficiency, supporting foreign investment and high-level openness [3] Group 4: Outlook for the Foreign Exchange Market - The foreign exchange market is expected to remain stable in the second half of the year, supported by high-quality economic development, steady progress in opening up, and increasing market resilience [4] - The solid foundation for stable operation of the foreign exchange market is backed by a robust economic fundamental, with GDP growth of 5.3% year-on-year in the first half of the year [5] - The contribution of domestic demand to economic growth has increased, with final consumption and capital formation accounting for 77% of growth, up 17 percentage points from the previous quarter [5] Group 5: Resilience of the Foreign Exchange Market - The resilience of the foreign exchange market has improved, enhancing its ability to respond to external shocks [6] - The market has accumulated rich experience in counter-cyclical regulation and has a robust reserve of policy tools to mitigate external risks [6] - The awareness of exchange rate risk among enterprises has increased, with a historical high of 30% in both the foreign exchange hedging ratio and the proportion of RMB cross-border receipts and payments under goods trade [6]