Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - The industrial economy is making steady progress, and economic growth remains resilient. In the second half of 2025, the economic growth rate is not expected to decline significantly, and structural issues such as prices are expected to improve. There will be a continued shift in the allocation between stocks and bonds, with bond yields and the stock market expected to rise. [4][8] - In the bond market, against the backdrop of revised economic expectations, bond yields are expected to rise trend - wise. [8] 3. Summary by Relevant Catalogs Overall Economic Situation - **Production**: In September, the added value of industrial enterprises above designated size increased by 6.5% year - on - year and 0.64% month - on - month. The mining and manufacturing industries drove the year - on - year growth. The equipment manufacturing industry continued to play a key role, with its added value increasing by 9.7% year - on - year in the first three quarters, accounting for 35.9% of all industrial enterprises above designated size. The high - end manufacturing industry also advanced, with the added value of high - tech manufacturing industries above designated size increasing by 10.3% year - on - year in September. [4] - **Consumption**: In September, the total retail sales of consumer goods reached 419.71 billion yuan, a year - on - year increase of 3.0%, a decrease of 0.4 percentage points from August. The catering revenue was under pressure, with a year - on - year increase of 0.9% and a 1.6% decline in catering revenue of units above the designated size. [5] - **Investment**: From January to September, fixed - asset investment decreased by 0.5% year - on - year. Infrastructure investment increased by 1.1% year - on - year, driving the overall investment growth. Real estate investment continued to bottom out, with a 13.9% year - on - year decline from January to September, and a further decline in the national real estate climate index to 92.78. [6] Market Situation - The Sino - US situation sent a signal of relaxation. After the economic data was released, the bond market was insensitive to the data. Due to the low - interest - rate environment, the market paid more attention to the trends of equities and commodities. With the Sino - US signal of relaxation and the strengthening of the equity market, bond yields fluctuated upwards. [7]

Core Viewpoint - The majority of economists have maintained their outlook on the UK economy, anticipating a further 25 basis point rate cut by the Bank of England this year, followed by another cut in early 2026 due to persistent inflation driven by economic resilience [1] Group 1 - The Bank of England recently lowered interest rates by 25 basis points to 4.00% following a rare second round of voting by the Monetary Policy Committee, with a close vote of 5 to 4 [1] - Bank of England Governor Bailey emphasized that policy easing should not be executed "too quickly or too much" [1] - Among 62 economists surveyed between August 13 and 19, 50 indicated that the Bank of England is likely to implement another 25 basis point cut, most probably during the November meeting, which will also provide updated forecasts [1]

Economic Growth Outlook - After the reduction of tariffs between China and the US in May, there was a brief uptick in economic activity, but concerns remain about potential changes in growth momentum in the second half of the year[2] - Leading indicators suggest that both domestic and external demand will show resilience until the end of Q3, with year-on-year growth rates expected to gradually strengthen[2] - However, both domestic and external demand may peak and decline towards the end of Q3, leading to a notable growth "cliff" effect[2] Economic Indicators - The PMI for May improved to 49.5%, indicating a slowdown in contraction, but still below the expansion threshold, primarily due to weak demand[16] - High-frequency data shows that production in May was weaker than in April, while demand showed some improvement, particularly in infrastructure and consumer sectors[18] - Following the tariff adjustments, export production saw a significant year-on-year improvement, but signs of weakening emerged by the end of May[26] Investment Trends - Manufacturing investment is expected to fluctuate in line with export trends, while infrastructure investment is projected to peak in August, and the decline in real estate investment is anticipated to narrow gradually in the second half of the year[8] - The nominal growth perspective indicates that the DVI index, which leads the GDP deflator, has remained flat without significant signs of recovery, suggesting potential downward pressure on actual GDP growth in Q3[8] Policy Response - The anticipated growth cliff may exceed market expectations, posing challenges for "responsive" policy measures, which typically require time to take effect[9] - There are three scenarios where policy measures could mitigate the growth cliff: weaker-than-expected export pulses, significant pressure on price indices, and changes in external trade policy environments[9] Risks - Uncertainties surrounding tariff policies remain a significant risk factor[10] - New growth drivers may smooth out economic fluctuations, but there is a possibility of missing key leading indicators in decision-making[10]