Market Performance Review - The A-share market recovered from last week's decline, with significant volatility remaining a characteristic feature. Major indices mostly rose, with the ChiNext index rebounding by 5.48% after a previous drop of 5.42%. The CSI A50 and SSE 50, which are heavily weighted by large-cap stocks, lagged behind in terms of growth. Growth style stocks showed a strong rebound, while financial stocks had smaller gains. Small-cap stocks significantly outperformed large-cap stocks, with the Ning and Mao indices both rising, the Ning combination increasing by 1.95% and the Mao index slightly up by 0.40% [3][12][29]. Industry Overview - The industry saw a general rebound but lacked a clear leading theme. Among the Shenwan first-level industries, electronics (6.15%), real estate (5.98%), agriculture, forestry, animal husbandry, and fishery (4.81%), media (4.27%), and non-ferrous metals (3.76%) led the gains. Conversely, sectors like social services (-0.28%), pharmaceuticals and biology (-0.36%), oil and petrochemicals (-0.41%), banking (-0.66%), and comprehensive (-1.43%) performed poorly. The current market is still entangled in narratives around AI infrastructure investment, potential Fed rate cuts, and anti-involution policies [4][13][29]. Future Outlook and Investment Views - The report suggests that lower volatility presents better participation opportunities. Although there was a significant single-day rise in the A-share market, it does not imply that short-term downward volatility risks have been fully alleviated. Intense bull-bear battles are common at the tail end of a trend, indicating that time is needed for consolidation before the next upward phase. Future volatility in the A-share market is expected to be more influenced by overseas factors, particularly following disappointing U.S. non-farm payroll data in August, which solidifies expectations for a Fed rate cut in September. The A-share market will likely use the rate cut as a key pricing logic point after completing its adjustment [4][29]. Stock Selection Strategy - The report emphasizes that individual stock alpha logic is superior to industry beta logic, focusing on identifying "turnaround" opportunities in individual stocks. The TMT growth sectors, represented by AI applications, computing power chains, and optical modules, which have been adjusting since March, are expected to see valuation recovery opportunities. The report highlights that simply buying stocks with "earnings exceeding expectations" during the mid-year reporting season may not yield sustained relative returns. Instead, the "turnaround" strategy is deemed more effective for performance discovery during this period. The report constructs a portfolio of stocks expected to exceed earnings expectations for the mid-year report, aiming to capture excess returns from individual stock alpha in September and October [5][29].