Report Industry Investment Rating - Not provided in the content Core Viewpoints - Despite the decline in economic and financial data in July 2025, a series of policies are expected to take effect, and the economy in the second half of 2025 is expected to remain stable, in the second half of the economic L-shaped curve [7]. - The current deviation between the stock-bond market trend and economic data may follow a similar logic to the first quarter of 2023. Policy signals have led to an upward revision of expectations, resulting in rising stocks and falling bonds [6]. - In the bond market, the target for the 10-year Treasury yield in the second half of 2025 is expected to be 1.9 - 2.2%. If inflation normalizes, the reasonable range of the 10-year Treasury yield may also rise accordingly [7]. - In the equity market, considering the upward revision of economic expectations and the continuous upgrading of the technology industry, the stock market is expected to continue its upward trend in the second half of the year [7]. Summaries by Related Content Economic Data Overview - In July 2025, the added value of industrial enterprises above the designated size increased by 5.7% year-on-year, the service production index increased by 5.8% year-on-year, and the total retail sales of consumer goods was 387.8 billion yuan, a year-on-year increase of 3.7%. From January to July, the national fixed - asset investment (excluding rural households) was 2.88229 trillion yuan, a year-on-year increase of 1.6% [3]. - In July 2025, RMB loans decreased by 5 billion yuan, the first decrease since August 2005 [4]. Market Performance - On August 15, 2025, the Shanghai Composite Index rose 0.83%, and the 10-year Treasury yield rose 1.2 BP, showing a trend of rising stocks and falling bonds [4]. Historical Comparison - In the first quarter of 2023, there was also a deviation between the fundamentals and market trends. The PMI in February - March reached 52.6% and 51.9% respectively, but the Shanghai Composite Index fluctuated and the 10-year Treasury yield declined [5]. Policy Impact - A series of policies since July 2025 have released positive signals, including promoting inflation recovery, boosting domestic investment, subsidizing childbirth, and promoting consumption and credit recovery [6].

Group 1 - Report Industry Investment Rating - Information not provided Group 2 - Core View of the Report - In the second half of 2025, the target for the 10-year Treasury bond yield is expected to be between 1.9% and 2.2%. With the economic growth rate likely not to decline significantly in the second half of 2025, bond yields are expected to rise due to the revision of economic expectations. Historically, the reasonable level of the 10-year Treasury bond yield has generally been in the range of DR007 + 40 to 70BP. If policies to counter内卷 are effective in the second half of 2025 and inflation normalizes, the DR007 central level is expected to rise above the inflation level, and the reasonable range of the 10-year Treasury bond yield is also expected to increase accordingly [6]. Group 3 - Summary Based on Related Catalogs Law 1: Two Ways for Bond Yields to Reach the Bottom - Historically, there are two forms of bond yields reaching the bottom: V-shaped reversal and W-shaped reversal. For V-shaped reversals, significant policy stimuli lead to a rapid economic upswing, causing bond yields to show a V-shaped reversal, as seen in 2009 and 2020. For W-shaped reversals, bond yields experience a double bottom because the economy stabilizes in an L-shape and market expectations for the economy are uncertain. After the first bottom and rebound, yields usually decline again, even to new lows, such as in Q3 2012 and Q2 2013, Q1 2016 and Q3 2016. In the case of a W-shaped reversal, market congestion is usually low when bond yields are at the first low and high when at the second low. Also, the upward amplitude of a W-shaped reversal is greater than that of a V-shaped reversal, with the upward amplitudes in 2009 and 2020 being around 100BP and 80BP respectively, and those in 2013 and 2016 being around 140BP and 130BP respectively [3]. Law 2: Bond Yield Increases Lag Behind the Stock Market's Upward Trend - Four logics suggest that the stock market's upward trend leads bond yields. Firstly, the stock market is more sensitive to the economy as stock trading is often bottom-up and more sensitive to micro - entity changes. Secondly, the stock market represents the market's endogenous driving force, and its upward trend may indicate continuous improvement in this force. Thirdly, bond investors have strong long - position stickiness because of the coupon income of bond assets. Fourthly, the performance evaluation mechanism of bond funds, which is mainly based on relative returns, has made it difficult for bond investors to reduce their duration since 2021. Historically, in 2009, 2013, 2016, and 2020, the stock market rose first, and bond yields increased later [4][5]. Law 3: The Direct Triggering Reasons for Bond Yield Increases Vary - Historically, the logic for bond yield increases is usually economic recovery and rising funds, but by the time investors confirm these, bond yields have often risen significantly. The direct triggering reasons for bond yield increases at inflection points have been different each time, making it difficult to accurately predict yield inflection points. For example, in January 2009, the trigger was credit data; in June 2013, it was the "money shortage"; in August 2016, it was tight funds; and in April 2020, it was the change in epidemic prevention policies [5].

Summary of Key Points Overall Market Perspective - The economic cycle is expected to enter an upward phase in the second half of 2025, similar to the period of 2016-2017, driven by local government debt solutions and policy digestion [4][9][10] - The market anticipates a significant upward adjustment in expectations, with current asset prices reflecting a weak pricing environment, indicating potential for stock and bond market shifts [7][10] Industry Insights - **Hydropower Construction**: The commencement of the Yarlung Tsangpo River downstream hydropower project represents a significant opportunity for the infrastructure sector, with a total investment of approximately 1.2 trillion yuan, expected to drive over 100 billion yuan in annual infrastructure investment [12][15] - **Chemical Industry**: The glyphosate market is poised for recovery due to supply optimization and stable demand, with a focus on reducing excessive competition within the industry [16][17] - **Real Estate and Rental Market**: The introduction of the Housing Rental Regulations aims to standardize the rental market, enhancing transparency and stability, which is expected to benefit rental companies and real estate firms [19][24] - **Agriculture**: The poultry market is currently facing price pressures due to weak demand, but a potential recovery in restaurant demand could support prices in the coming months [25][26] Company-Specific Developments - **Lizu Group**: The company has shown promising results in its IL-17A/F psoriasis treatment, outperforming the control group, indicating strong potential for future growth and profitability [31][32] - **Mise Snow Group**: The company has expanded significantly, becoming the largest beverage chain in China, with plans for further global expansion and a projected revenue growth of 25.8% in 2025 [34][35] - **Great Wall Motors**: The company reported record high earnings in Q2 2025, driven by strong sales across its brands, particularly in the new energy vehicle segment, indicating robust growth prospects [38][39]

Group 1: Report Industry Investment Rating - Not provided in the given content Group 2: Report's Core View - The economic cycle in the second half of 2025 is in an upward phase, and the current situation is similar to that from 2016 - 2017, in the second half of the L - shaped curve [2] - The upward correction of market expectation differences may drive the market to rise, and the current asset prices in the stock, bond, and commodity markets are all priced weakly [5] - In the context of the correction of economic expectations, there is a possibility of a stock - bond switch, with bond yields and the stock market expected to rise [7] Group 3: Summary by Related Directory 2025 Economic Situation and Factors Driving Recovery - The local debt resolution plan in November 2024 may promote continuous economic recovery, as debt rectification every about 5 years usually leads to economic rebound after completion [2] - The completion of policy digestion since November 2024 has led to a continuous rebound in the growth rate of social financing stock [3] - The supply - side anti - involution policy proposed on July 1, 2025, is similar to the 2015 supply - side reform and is conducive to the rebound of PPI year - on - year [3] Market Expectation Difference and Its Impact - The economic recovery in the second half of 2025 may not be as significant as that in 2016 - 2017, but there is a large upward space in market expectations, and the upward correction of expectation differences may drive the market to rise [4][5] - As of July 22, 2025, the equity risk premium rate of Wind All A was 3.14%, at the 72.1% historical quantile in the past 10 years; the 10 - year Treasury bond yield was 1.69%, at the 4.0% historical quantile in the past 10 years; the Nanhua Industrial Products Index was at the 43.2% historical quantile since 2022, indicating that asset prices are priced weakly [5] - The market's weak pricing logic is that the pressure to achieve the annual GDP target is not large, and the policy expectation for the second half of the year is low. However, there is an obvious expectation difference in the market's pricing of the expected economic recovery [5] Stock - Bond Switch in the Context of Economic Expectation Correction - The current economic situation is similar to that from 2016 - 2017, having ended the downward phase and entering a stabilization stage, with demand remaining stable. Policy is addressing structural issues to promote the stabilization of real estate and the normalization of inflation [7] - Although the economic recovery in the second half of 2025 may not be as significant as that in 2016 - 2017, in the context of the correction of economic expectations, there is a possibility of a stock - bond switch, with bond yields and the stock market expected to rise [7]