Core Insights - The 2025 Capital Market Summer Strategy Conference held by Shenwan Hongyuan emphasizes the transition to high-quality economic development in China, focusing on technology innovation, industrial upgrading, and green transformation [1] - The conference featured discussions on various investment strategies and macroeconomic trends, with participation from nearly 500 listed company executives and over 2,200 investors [1] Macroeconomic Perspective - The policy framework for the new transformation phase is taking shape, emphasizing high-quality development and sustainable practices, with a shift from investment-driven to people-centered approaches [2] - New consumption trends, such as experiential and self-care spending, are emerging, indicating a shift in consumer confidence and preferences towards services [2] A-Share Market Strategy - The A-share market shows potential for a bull market, driven by increased equity allocation from residents and a peak in asset reallocation expected in 2025 [3] - Improvements in corporate governance and shareholder returns are anticipated to enhance A-share returns, with a significant supply clearing cycle on the horizon [3] - Key investment opportunities identified include AI, embodied intelligence, and defense industries, with a focus on high-cost performance themes in a volatile market [3] Hong Kong Stock Market Analysis - The Hong Kong stock market is likely to lead in a potential bull market, serving as a crucial link in China's financial external circulation [4] - The trend of A-share representative assets listing in Hong Kong is becoming more common, with Hong Kong's internet sector positioned as a leader in the domestic AI industry [4] - High dividend yields from state-owned enterprises in Hong Kong are attracting insurance capital, while the market is seen as a convergence point for domestic and foreign investments [4] Bond Market Outlook - The bond market is expected to exhibit two characteristics in the second half of the year: a return to pricing anchors and favorable conditions for testing the market from June to August [4]

Core Viewpoint - The upcoming tariff "storm" is expected to impact China the most, but the country is also the most prepared for it. The focus of domestic policy in the second quarter is becoming clearer, emphasizing supply control and demand support [2][3]. Group 1: Tariff Impact and Preparation - The investigation results of the "America First Trade Policy" memorandum are anticipated to lead to the highest tariffs and the broadest scope for China. However, Chinese companies have diversified their global presence over the past few years, making them better prepared compared to the shocks experienced in April 2018 [3]. - As of the end of 2023, 49% of Amazon's best-selling sellers are from China, indicating a strong presence in the U.S. retail market. The diversification of U.S. retail has increased, making it unrealistic for retailers to pass on tariff costs entirely to overseas suppliers [3]. Group 2: Domestic Policy Direction - Fiscal spending in the first two months of the year has shifted towards social welfare, with social-related projects increasing by 5.6% year-on-year, while infrastructure spending decreased by 5.6%. This marks the first negative growth in infrastructure spending since 2021 [5]. - The proportion of infrastructure spending is expected to rise from 22.2% to 23.3% by the end of 2024, while social spending will decrease from 43.7% to 42.1% [5]. - The monetary policy is waiting for synchronization with the U.S. to avoid significant currency fluctuations and financial risks. The central bank has indicated potential interest rate cuts to calm the market [6]. Group 3: Market Recovery Expectations - Following the tariff "storm," A-shares are expected to recover, while Hong Kong stocks may undergo a correction. The overseas market's recent volatility is primarily driven by tariff concerns and recession expectations, rather than actual economic downturns [7][8]. - The core operating indicators of major U.S. companies are showing improvement, suggesting that the market may recover after the tariff situation stabilizes [8]. Group 4: Core Asset Resilience - Core assets have demonstrated strong operational resilience, with many companies in the "new core assets" category showing improved performance. As of March 28, 2025, the revenue growth rate for these companies increased to 13.9% in Q4 2024, up from 8.4% in Q3 2024 [10][12]. - The overall revenue growth for non-financial A-shares was only 2.7%, highlighting the relative strength of core assets [12]. Group 5: Investment Strategy - The current investment strategy emphasizes technology-driven growth, supply-side initiatives, and consumption recovery. The focus remains on sectors like AI, domestic computing power, and innovative pharmaceuticals [15][16]. - There is a recommendation to maintain positions in technology while also considering sectors that benefit from insurance capital allocation, such as Hong Kong dividend stocks [16].