Macroeconomic Insights - Consumption has exceeded expectations, showing a moderate recovery in economic activity, with May's data indicating a further rebound in consumption and a slight increase in production[4] - The Consumer Price Index (CPI) remains negative year-on-year, but core inflation has stabilized above 0.5%[4] - Industrial added value growth rate fell to 5.8% year-on-year in May, indicating a relatively mild production environment[4] Market Strategy - The market is experiencing increased disturbances, particularly due to geopolitical tensions affecting oil prices, which has led to a rise in gold prices[6] - Despite market adjustments, the overall trend remains a stable upward trajectory, with expectations for a structural bull market starting in the third quarter[6] - The A-share market is transitioning from quantitative to qualitative changes, with a significant focus on sectors like innovative pharmaceuticals and new consumption[6] Fixed Income Outlook - Recent weeks have seen a general decline in interest rates across various maturities, with short-term rates dropping significantly, indicating a supportive monetary policy environment[28] - The average rates for DR001 and DR007 have decreased by over 10 basis points, reflecting a downward trend in funding costs[28] - The current environment presents opportunities for investment in time deposits as rates are expected to continue declining[29] Banking Sector Analysis - The banking sector shows stable profitability, with credit growth slightly slowing but deposit growth rebounding[36] - The price adjustments following interest rate cuts are expected to alleviate pressure on net interest income, with a controlled decline in net interest margins anticipated[36] - The banking index has outperformed the broader market, indicating strong relative performance[35] Real Estate Market Trends - New home sales have seen a narrowing decline, with a year-to-date cumulative sales area growth rate of -0.3% across 33 cities[38] - The government is emphasizing a multi-faceted approach to stabilize the real estate market, aiming to activate demand and optimize supply[38] - Policies are expected to support a gradual recovery in the real estate sector, with a focus on leading companies with strong market capabilities[40] Non-Banking Financial Institutions - The securities market remains stable, with daily trading volumes in major exchanges ranging from 1.1 to 1.5 trillion yuan[42] - The impact of U.S. tariffs on global trade is significant, but domestic policies aimed at boosting consumption may mitigate some adverse effects[42] - The upcoming Lujiazui Forum is anticipated to introduce significant policies that could enhance market confidence and investment value[43]