Economic Growth - Saudi Arabia's GDP grew by 3.9% year-on-year in Q2, with non-oil activities increasing by 4.7%, surpassing oil activities' growth of 3.8% and government activities' growth of 0.6% [1] - Seasonally adjusted GDP growth for the quarter was 2.1%, up from 1.1% in the previous quarter [1] Non-Oil Sector Performance - The IMF report highlights the resilience of the Saudi economy, noting the expansion of non-oil economic activities and controlled inflation [1][5] - The PMI for July was recorded at 56.3, slightly down from 57.2 in June, indicating continued robust growth in the non-oil sector driven by output growth, new orders, and employment improvements [1] Trade and Exports - Non-oil exports reached 31.11 billion riyals in May, marking a 6% year-on-year increase, with the UAE being the largest export destination [1] Inflation and Consumer Prices - The CPI in June rose by 2.3% year-on-year, driven primarily by a 6.5% increase in housing, water, electricity, and gas prices [2] - Rent prices surged by 7.6%, with villa rents increasing by 7.1% [2] Employment Statistics - The overall unemployment rate in Q1 was 2.8%, with a decrease of 0.7% both year-on-year and quarter-on-quarter [3] - The labor force participation rate reached 68.2%, reflecting a 1.8% increase from the previous quarter [3] Fiscal Policy and Budget - Saudi Arabia continues to implement expansionary fiscal policies to support sustainable economic growth [4] - In the first half of the year, total fiscal revenue was 565.21 billion riyals, a 13% decrease year-on-year, with oil revenue down by 24% [4] - Non-oil revenue increased by 5%, accounting for approximately 50% of total revenue in Q2 [4] IMF Outlook - The IMF commended Saudi Arabia's strong performance amid global economic uncertainties and external shocks, maintaining an optimistic outlook for the economy [5]

Market Overview - A-shares have regained upward momentum, with the Shanghai Composite Index reaching a new high since October 8 of last year [1] - The CSI 1000 index has also performed strongly, hitting a new high not seen in over two years [1] - Weekly trading volume decreased to 8.48 trillion yuan [1] Fund Inflows - The machinery equipment sector has seen significant net inflows, with over 43.7 billion yuan this week and over 101.1 billion yuan in the last 20 trading days [1] - The electronics sector attracted over 25.6 billion yuan this week, with 91.2 billion yuan in the last 20 trading days [1] - Other sectors such as defense, automotive, non-ferrous metals, and power equipment also received over 10 billion yuan in net inflows this week [1] Financing Activities - Margin traders have net bought over 32.6 billion yuan this week, marking the seventh consecutive week of net purchases exceeding 10 billion yuan [1] - Total net purchases over the past seven weeks have reached over 197.9 billion yuan, with margin balances nearing 2 trillion yuan, the highest in nearly a decade [1] - The electronics sector saw over 6 billion yuan in net purchases, while machinery equipment and biopharmaceuticals received over 5 billion yuan and 4.3 billion yuan, respectively [1] Sector Performance - The defense and military industry, brain-computer interface, rare earth permanent magnets, and electronic consumption sectors have shown strong performance, with several indices reaching historical highs [2] - The engineering machinery sector has maintained good momentum, with a year-to-date increase of 26.86% [2] - Notable stocks in the engineering machinery sector have seen significant gains, with Hengli Drilling Tools up over 286% this year [2] Sales Data - The China Construction Machinery Association reported that excavator sales are expected to reach 17,138 units by July 2025, a year-on-year increase of 25.2% [2] - Domestic sales are projected to be 7,306 units, up 17.2%, while exports are expected to reach 9,832 units, up 31.9% [2] - For the first seven months of 2025, total excavator sales reached 137,658 units, a 17.8% increase year-on-year [2] Price Adjustments - The gas sector has experienced a continuous five-day increase, with several companies reaching new highs [3] - Natural gas prices have been raised in multiple regions due to rising costs, with specific increases in Haikou and Guangzhou [3] - Leshan Electric announced price adjustments for residential gas, effective September 1, 2025, with increases ranging from 0.1 to 0.15 yuan per cubic meter [3] Market Outlook - Zhongyuan Securities warns of potential short-term technical adjustment pressures, but the medium-term upward trend remains intact [4] - CITIC Construction Investment notes that as deposit rates decline, more funds are shifting from low-risk bank deposits to higher-yielding assets like stocks and funds [4] - The market is transitioning to the second phase of a bull market, characterized by fundamental improvements and significant inflows into growth sectors [4]

Core Viewpoint - The sales of excavators in China are showing a significant recovery, indicating a gradual revival of the engineering machinery industry and a rebound in domestic demand [3][5]. Group 1: Sales Data - In June 2025, a total of 18,804 excavators were sold, representing a year-on-year increase of 13.3%, with a notable rise of 11.18% compared to the previous month [1]. - For the first half of 2025, 120,520 excavators were sold, marking a year-on-year growth of 16.8%, with domestic sales at 65,637 units (up 22.9%) and exports at 54,883 units (up 10.2%) [2]. Group 2: Infrastructure and Policy Support - The issuance of special bonds is crucial for supporting infrastructure development, with new special bond issuance reaching approximately 21,607 billion yuan in the first half of 2025, a 44.7% increase from 14,935 billion yuan in the same period of 2024 [4]. - The Ministry of Finance is implementing more proactive fiscal policies to enhance investment in areas that benefit people's livelihoods and stimulate consumption [4]. Group 3: Market Outlook - According to Guotai Junan Securities, domestic excavator sales are expected to continue rising due to counter-cyclical fiscal policies and an upward industry cycle [5]. - Everbright Securities estimates a compound growth of around 30% in replacement demand for construction machinery in 2025 and subsequent years, which will strongly support future excavator sales [6].

Group 1 - In April 2025, total sales of excavators reached 22,142 units, representing a year-on-year growth of 17.6%. Domestic sales accounted for 12,547 units, up 16.4%, while exports totaled 9,595 units, increasing by 19.3% [1][2] - From January to April 2025, a total of 83,514 excavators were sold, marking a year-on-year increase of 21.4%. Domestic sales during this period were 49,109 units, up 31.9%, and exports were 34,405 units, growing by 9.02% [2] - The domestic sales accounted for 57% of total sales in April 2025, while exports made up 43%. For the first four months of 2025, domestic sales represented 59% of total sales, with exports at 41% [2] Group 2 - The average working hours for major construction machinery in April 2025 increased by 3.20% year-on-year, with excavators averaging 85 hours of operation [3] - The overall operating rate for major construction machinery in April 2025 was 62%, showing a year-on-year decline of 4.29 percentage points, although it increased by 1.17 percentage points compared to the previous month [3] - The utilization rate of tower cranes from Pangyuan Leasing improved significantly, reaching 49.7% in March 2025, which is a year-on-year increase of 3.5% and a month-on-month increase of 20.5% [3] Group 3 - The risk exposure of most Chinese construction machinery manufacturers to the U.S. market is relatively low, with companies like XCMG and Zoomlion having less than 1% and around 1% of their total revenue from the U.S., respectively [4] - Recommended stocks include SANY Heavy Industry, Zoomlion, XCMG, and Hengli Hydraulic, with LiuGong identified as a beneficiary [5]

Group 1: Fiscal Policy and Economic Context - In 2025, China plans to implement a more proactive fiscal policy with a fiscal deficit rate set at 4.0% and an additional government debt scale of 11.86 trillion yuan[1] - China's fiscal deficit rate is currently below the average level, with developed countries and emerging markets projected at 4.5% and 5.5% respectively for 2025, indicating that China's target is not excessively high[2] - The central government's debt burden rate is approximately 25.3%, which is relatively low compared to major global economies, providing ample room for leveraging[3] Group 2: Government Debt and Financial Assets - By the end of 2025, the total government debt is estimated to reach about 96.0 trillion yuan, approximately 66.5% of GDP, significantly lower than the debt burden rates of the US (124.1%), Japan (245.7%), and the EU (83.2%)[4] - The net financial assets of the Chinese government were recorded at 109.3 trillion yuan in 2022, supporting the capacity for large-scale borrowing[4] Group 3: Monetary Policy and Financing Costs - The government plans to implement a moderately loose monetary policy, which is expected to lower financing costs, allowing for the issuance of special bonds and long-term treasury bonds at a lower cost[5] - In 2024, government interest payments accounted for 4.5% of the general public budget expenditure, and this is projected to rise to about 5.0% in 2025, still lower than the IMF's estimates for developed and emerging markets[5] Group 4: Economic Growth and Structural Transformation - The proactive fiscal policy aims to counter short-term economic challenges while promoting long-term structural transformation, with a target economic growth rate of 5% for 2025[6][7] - The shift in fiscal spending towards consumption is expected to enhance domestic demand, with household deposits reaching 152.2 trillion yuan, indicating significant consumption potential[8] - The government plans to issue 1.3 trillion yuan in special treasury bonds in 2025, with 300 billion yuan allocated for consumer goods replacement programs, reflecting a focus on boosting consumption[8] Group 5: Debt Management and Investment Space - The ongoing debt management efforts are expected to enhance transparency and reduce risks, while also freeing up investment space for key sectors such as technology and green initiatives[9][10] - The fiscal policy is designed to guide the economy towards an innovation-driven model, with a budget allocation of 1.2 trillion yuan for scientific and technological expenditures in 2025[11]