Core Viewpoint - The A-share market in July is experiencing a bottom-up bull market atmosphere driven by improved liquidity and positive policy expectations, with retail investors being the core driving force [1] Market Dynamics - The market's enthusiasm is a result of positive changes in the external environment [1] - Market funds are categorized into four types: state-owned funds, institutions, retail investors, and foreign capital [1] - Retail investors are identified as the main driving force behind the current market trend [1] Capital Flow - Foreign capital is showing signs of spontaneous recovery [1] - Institutional capital flows are exhibiting divergence [1] - The support from state-owned funds in stabilizing the market has weakened [1] Long-term Support - Insurance capital is providing long-term support to the market [1]

Group 1: Importance of Sector Selection - Sector selection is crucial in stock investment as it significantly impacts investment returns [1] - Understanding and mastering sector selection methods is fundamental for constructing a reasonable investment portfolio [1] Group 2: Macroeconomic Environment - The macroeconomic environment is a key consideration in sector selection, with different economic cycles affecting various industries differently [1] - During economic expansion, cyclical sectors like energy tend to perform well due to increased demand, leading to higher revenues and stock prices [1] - Conversely, defensive sectors such as utilities may exhibit more resilience during economic contraction due to stable demand for essential resources [1] Group 3: Industry Development Trends - Industry development trends are essential for sector selection, with emerging industries like renewable energy and artificial intelligence showing significant growth potential [2] - The renewable energy sector benefits from global emphasis on environmental protection and sustainable development, presenting vast opportunities for related companies [2] - Traditional industries may face limitations due to market saturation but can find new growth opportunities through technological upgrades and industry transformation [2] Group 4: Policy Guidance - Government policies significantly influence sector performance, with initiatives like subsidies for electric vehicles promoting industry growth [2] - Support for the environmental sector through increased investment and stricter regulations enhances the competitiveness of related companies [2] Group 5: Market Capital Flow - Market capital flow reflects the level of interest in specific sectors, with substantial capital inflow indicating positive market sentiment [3] - Analyzing capital flow through metrics like trading volume and net capital inflow helps assess sector strength [3] - Investors can utilize financial analysis tools to track these dynamics and make informed decisions regarding sector selection [3]

Group 1: Macro Liquidity - The US dollar index has declined again, and the degree of the China-US interest rate "inversion" has deepened, with inflation expectations rising [2][13] - Offshore dollar liquidity is generally loose, and the domestic interbank funding environment is balanced and loose [2][18] Group 2: Market Trading Activity - Overall market trading activity has decreased but remains at a relatively high level since March, with over half of the sectors maintaining trading activity above the 80th percentile [3][24] - The volatility of major indices, except for the CSI 1000 and CSI 500, has decreased, with most industry volatilities below the 60th percentile [3][30] Group 3: Analyst Predictions - Analysts have raised net profit forecasts for the entire A-share market for 2025 and 2026, with an increasing proportion of stocks seeing upward revisions [3][4][19] - Specific sectors such as machinery, coal, and non-bank financials have also seen upward adjustments in profit forecasts for 2025 and 2026 [3][21][22] Group 4: Northbound Trading Activity - Northbound trading activity has decreased, with an overall net sell-off in A-shares, particularly in sectors like machinery, electronics, and non-ferrous metals [4][31] - Northbound funds have primarily net bought sectors such as automobiles, military, and machinery, while net selling occurred in sectors like computers and pharmaceuticals [4][33] Group 5: Margin Financing Activity - Margin financing activity has dropped to a near three-week low, with net purchases mainly in electronics, machinery, and pharmaceuticals [5][35] - The proportion of financing purchases in sectors like machinery, media, and building materials has increased [5][38] Group 6: Fund Activity - Actively managed equity funds have continued to increase their positions, particularly in sectors like pharmaceuticals, media, and computers, while reducing positions in non-ferrous metals and electronics [6][45] - The correlation between actively managed equity funds and small-cap growth/value has risen, indicating a shift in investment focus [6][48]