Summary of Stablecoin Industry Discussion Industry Overview - The stablecoin industry is gaining regulatory approval globally, with varying degrees of strictness across regions such as Hong Kong and the EU [1][4][16] - Stablecoins are primarily pegged to fiat currencies or various assets to maintain value stability, with USD-pegged stablecoins being particularly popular due to the dollar's dominance in the digital currency market [1][5][29] Core Insights and Arguments - **Core Applications of Stablecoins**: - Stablecoins facilitate easy conversion to local currencies, even in regions with strict regulations [2] - They maintain a stable value, supported by 1:1 backing with fiat assets and regular audits, enhancing user trust [2][5] - They are compatible with various blockchain networks, allowing for efficient transactions and liquidity [2][6] - **Regulatory Landscape**: - Different regions have begun issuing licenses for stablecoin operations, with Hong Kong planning to start its licensing program in August 2025 [2][4][16] - The regulatory environment varies, with the US and EU taking different approaches to stablecoin issuance and oversight [18][23] - **Market Dynamics**: - The popularity of USD-pegged stablecoins is attributed to their stability and the transparency of major issuers like Circle and Tether [5] - Stablecoins are increasingly used in e-commerce, providing lower transaction costs compared to traditional payment methods [7][11] - **Cross-Border Payments**: - Stablecoins offer significant advantages in cross-border transactions, enabling faster transfers compared to traditional systems like SWIFT [12] - They are particularly valuable in countries with high inflation, where residents convert local currency to stablecoins for value preservation [12] - **Investment Potential**: - Stablecoins are seen as both a reliable store of value and a potential investment tool, facilitating exchanges between different digital assets [13][26] - The ability to anchor stablecoins to multiple assets could enhance their value and expand their use cases [26][27] Additional Important Insights - **Technological and Compliance Roles**: - Technology providers play a crucial role in the stablecoin ecosystem, ensuring compliance with KYC and anti-money laundering regulations [19] - The integration of stablecoins into decentralized platforms can yield benefits such as interest earnings for users [14] - **Global Trends**: - Financial institutions and payment companies are becoming the primary issuers of stablecoins, with a growing demand for regulatory frameworks to ensure safety and liquidity [18][20] - The competitive landscape is evolving, with regions like Dubai and Singapore adopting different strategies to attract stablecoin development [22] - **Future of Stablecoins**: - There is potential for stablecoins to evolve beyond strict 1:1 fiat backing, allowing for more innovative financial products [26][28] - The rise of stablecoins is reinforcing the dollar's status as the world's primary currency, particularly in international trade [29] - **Internationalization of the Renminbi**: - To promote the internationalization of the Renminbi, strategies could include creating a Hong Kong dollar stablecoin and leveraging existing global networks [30]

Investment Rating - The investment rating for the computer industry is "Positive" (maintained) [1] Core Viewpoints - The stablecoin and AI industries are continuously catalyzing growth, with major players actively positioning themselves and policies enhancing the landscape, marking a "singularity" moment for stablecoins [5][12] - AI computing power remains robust, with the upcoming release of GPT-5 expected to further enhance reasoning capabilities and stimulate AI application growth [6][13] Summary by Sections Weekly Perspective - The Shanghai Composite Index rose by 1.54% while the computer index fell by 1.28% during the week of June 30 to July 4, 2025 [4][11] Industry Trends - The People's Bank of China is expanding the application scenarios of the digital RMB in foreign trade, while Ant Group and JD.com are advancing into the stablecoin space, aiming to reduce cross-border payment costs by 90% and improve efficiency to within 10 seconds [5][12] - Oracle signed a significant cloud service agreement expected to generate over $30 billion annually starting from the 2028 fiscal year, indicating strong demand for AI computing power [6][13] Investment Recommendations - For stablecoins and RWA, recommended companies include Langxin Group and Zhuoyi Information, with beneficiaries such as Zhongke Software and New Morning Technology [14] - For AI applications, recommended companies include Kingsoft Office and iFlytek, with beneficiaries like Meitu and Hanbang High-Tech [7][14] - In the computing power sector, recommended companies include Zhongke Shuguang and Chunzhi Technology, with beneficiaries such as Cambrian and Unisplendour [7][14]

Summary of Stablecoin Industry Conference Call Industry Overview - The stablecoin industry is entering a rapid growth phase, with the U.S. and Hong Kong advancing legislation to regulate stablecoins, which is beneficial for healthy industry development [1][4] - Domestic policies will significantly impact future developments, with the potential for RMB stablecoins to expand into inter-enterprise payments, bank-to-business transactions, and international trade, aiding in the internationalization of the RMB [1][4] Core Insights and Arguments - Stablecoins offer significant advantages in cross-border payments, with settlement times under one hour compared to five business days for traditional bank transfers, and lower transaction costs, making them particularly suitable for countries with volatile commodity values [1][5] - The two largest USD stablecoins are USDT, issued by Tether with a supply of approximately $150 billion, and USDC, issued by Circle with a supply of around $60 billion, with over 80% and 92% of their reserves in U.S. Treasury securities, respectively [1][6] - The business model of stablecoin issuers primarily relies on earning interest from reserve assets, with Circle projected to earn $1.66 billion in interest income in 2024, accounting for 99% of its total revenue [1][8][9] Key Players and Market Dynamics - Key segments in the stablecoin industry include licensed issuers, virtual asset distributors, and cryptocurrency exchanges, with Hong Kong serving as a significant testing ground for stablecoin initiatives [3][10] - Traditional financial institutions are exploring new stablecoin applications, with companies like Walmart, Amazon, and JPMorgan collaborating on stablecoin issuance [3][12] - Notable companies in the secondary market include Yuanbi Technology, which is linked to the USDC project, and JD.com, which has shown market performance [11] Future Directions and Regulatory Landscape - The Hong Kong Monetary Authority is expected to release stablecoin issuance guidelines and open license applications by Q3 2025, with regulations likely to take effect in Q4 2025 [3][13] - Ant Group is actively exploring Real World Assets (RWA) and has partnered with various companies to advance asset digitization, which could revitalize China's computing power industry [14] Risks and Considerations - Potential risks include policy changes, particularly with upcoming regulations expected in Q3 2023, which may lead to volatility in stablecoin-related assets during the transitional period [19] - Technological changes related to distributed ledgers and cryptocurrencies may also pose risks, along with the pace of implementation not meeting expectations [19] Investment Opportunities - Three key areas to focus on for investment include issuers with scarce license advantages, infrastructure service providers, and the cross-border payment ecosystem [18]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The report emphasizes the continuous optimism towards investment opportunities in stablecoins and AI applications, driven by recent regulatory advancements and significant growth in the AI sector [5][6][12][14] Summary by Sections Market Review - During the week of June 16-20, 2025, the CSI 300 index decreased by 0.45%, while the computer index fell by 1.83% [4][12] Stablecoin Developments - The U.S. Senate passed the Stablecoin Innovation Act, marking a significant step in regulatory legislation for stablecoins. This is complemented by the EU's Crypto Asset Market Regulation and Hong Kong's Stablecoin Ordinance, which is set to take effect on August 1, 2025. These developments are expected to foster a compliant and robust growth environment for the stablecoin industry [5][13] AI Application Growth - OpenAI reported an ARR of $10 billion in June 2025, nearly doubling year-over-year. Other AI tools like Cursor and Kuaishou also reported significant revenue growth, indicating a strong commercial momentum in AI applications across the U.S. and China [6][14] Investment Recommendations - For stablecoins and RWA, recommended companies include Longxin Group and Zhuoyi Information, with beneficiaries such as Sifang Jingchuang and Jinqiao Information. In AI applications, recommended companies include Kingsoft Office and iFlytek, with beneficiaries like Meitu and Hanbang High-Tech. In the computing power sector, recommended companies include Zhongke Shuguang and Chunzhi Technology [7][15]

Group 1 - The liquidity easing may not be sustainable, with a gradual entry into semi-annual funding assessments starting in late June, leading to weaker fluctuations in on-site liquidity [1][14] - The U.S. stock market showed mixed results, with the Dow Jones Industrial Average down 44.14 points, or 0.10%, while the Nasdaq rose by 0.13% [4] - The Nasdaq China Golden Dragon Index fell by 0.8%, with notable declines in major Chinese tech stocks such as JD.com, Baidu, Alibaba, and NetEase [5] Group 2 - The Federal Reserve maintained the federal funds rate range at 4.25%-4.50%, aligning with market expectations, while also lowering economic growth forecasts and raising inflation predictions [6] - The Central Financial Committee issued opinions to support the construction of Shanghai as an international financial center, focusing on high-quality development of multi-level equity markets and enhancing the competitiveness of the Shanghai financial center [7] - The China Securities Regulatory Commission announced that starting from October 9, 2025, qualified foreign investors will be allowed to participate in on-site ETF options trading, aimed at expanding investment opportunities for foreign institutions [9] Group 3 - Yinstar plans to invest 650 million yuan in a rare earth permanent magnet materials integrated application project in Baotou, which will enhance the company's market position in various motor applications [11][12] - Dazhong Mining intends to invest 1 billion yuan in a project to produce 3,000 tons of lithium battery materials annually, aligning with the trends in the new energy industry [13] - Wolong Electric Drive is planning to issue shares and list on the Hong Kong Stock Exchange to enhance its global strategy and competitiveness, with specific details yet to be determined [14]

Group 1 - The core viewpoint emphasizes increasing allocation in the AI sector, particularly focusing on core leading companies as the overall valuation levels have significantly declined after previous adjustments [2][6] - June is identified as a month with a high success rate for the computer sector, suggesting a favorable time for investment [2] - Recent policies are actively promoting areas such as data elements and connected vehicles, which are expected to benefit the AI industry [2] Group 2 - The global AI technology conference held on June 7-8 showcased advancements in autonomous driving systems by Baidu and the latest model by Alibaba Cloud, indicating rapid deployment of AI across various scenarios [2] - The overseas AI industry is experiencing high prosperity, with core company stock prices resonating with the industry, suggesting a potential acceleration in the domestic AI sector [2] - The recommendation is to increase investment in AI computing power and application leaders during this bottom phase [2]