1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - 7 - 8 months have obvious seasonal suppression on the equity market, but there is usually an opportunity for a market rally in the second half of the year. It is recommended to pay attention to upstream and growth sectors in July [1][9]. - The valuation of convertible bonds is currently at a high level, with limited upside potential. It is advisable to focus on rotational opportunities in upstream and growth sectors and adopt a trading - based strategy [3]. 3. Summary by Directory 3.1 7 - Month Equity Calendar Effect: Emphasize Upstream and Growth - Historically, A - shares usually have two overall market opportunities a year, in February - March and October - November respectively. The market is generally suppressed from July to August due to the disclosure of mid - year reports. It is expected that the wide - based index will continue to fluctuate in the short term, and attention should be paid to the second overall opportunity in the second half of the year after the mid - year report disclosure [1][9]. - In July, upstream industries such as steel, non - ferrous metals, agriculture, forestry, animal husbandry, and fishery, and basic chemicals have positive returns, with a winning rate of no less than 50% in the past 10 years. Growth sectors represented by electronics, military, and new energy also have high returns and winning rates [1][9]. - Seasonal factors in production and consumption in July are favorable for upstream industries. As the traditional consumption peak season approaches in the second half of the year and Q3 is the production peak season, the prices of industrial products, metals, and energy - chemical products have generally shown an upward trend in the past 20 years. Additionally, the strengthening of anti - involution policies may lead to price increases in upstream products [2][13]. 3.2 Valuation Outlook: Reaching the Previous High, Suggesting Prudence and Neutrality - As of last Friday, the premium rate per 100 yuan of convertible bonds reached over 25%, approaching the previous highs in October 2024 and March 2025. To break through the previous high, more factual changes are needed. From the perspective of the comparison between convertible bonds and the implied volatility of valuation options, convertible bonds are currently overvalued. It is recommended to focus on rotational opportunities in upstream and growth sectors, and the current is not a good time for allocation [3]. - In June, the convertible bond valuation showed different trends. The convertible bond style shifted to a more conservative one, with the index elasticity and trading volume lower than that of the A - share market. The trading concentration of technology - sector convertible bonds decreased, showing a shift towards cyclical and financial sectors [25]. 3.3 Key Focused Convertible Bonds - From June 4th to July 3rd, the convertible bond portfolio in June had a return of 1.80%, underperforming the benchmark index by 1.98 pct. Rongtai, Mingli, and Zhanggu had relatively high returns, while Huitong had a decline due to unexpected early redemption [33]. - The "Huachuang Convertible Bond" July key - focused portfolio has been adjusted to include Xingqiu, Mingli, Fenggong, Liqun, Rongtai, Zhanggu, Qingnong, Xingye, Huayi, Yifeng, Ziyin, and Zhongyin. The portfolio's bond - selection strategy combines top - down and bottom - up approaches, and the bond - selection requirements include specific criteria for holdings, ratings, and liquidity [36][40][41]. 3.4 Market Review: Slight Increase in Convertible Bonds and Underlying Stocks, Significant Increase in Valuation - In June, the underlying stock market and the convertible bond market both rose. As of June 27th, the Shanghai Composite Index, Shenzhen Component Index, Wind All - A Index, and CSI Convertible Bond Index all increased, with the overall valuation rising by 2.04 pct. Small - cap stocks outperformed, and technology and financial sectors were relatively strong [42]. - In terms of industry performance, most sectors of the underlying stocks and convertible bonds rose in June. The hot concepts mainly included stablecoins, circuit boards, and solid - state batteries. The market hotspots were concentrated in the financial real - estate and TMT sectors [46]. - The trading volume of both the convertible bond and equity markets increased in June. The margin trading balance also recovered rapidly, and most industries received net margin purchases [51][53]. 3.5 Supply and Demand Situation: Increase in New Convertible Bond Supply Month - on - Month, Slowdown in Pre - plan Pace - In June, 6 new convertible bonds were issued, and the Hengshuai Convertible Bond was listed. The online subscription for new convertible bonds heated up, with an average effective subscription amount of 7.25 trillion yuan and an online winning rate of 0.00186595%. The scale of convertible bonds awaiting issuance exceeded 35 billion yuan, and the pre - plan pace slowed down [58][59][64]. - In June, 3 convertible bonds announced downward revisions, 5 announced early redemptions, and many others announced non - redemptions or expected to meet redemption conditions [71][76]. - In May, the holders of convertible bonds on the Shanghai and Shenzhen Stock Exchanges were cautious, and the overall scale continued to decrease. Public funds reduced their holdings, enterprise annuities increased their holdings on the Shanghai Stock Exchange and reduced them on the Shenzhen Stock Exchange, securities company self - operations reduced their holdings, and asset management and collective wealth management increased their holdings [79][83][86].