Investment Rating - The report indicates an improved sentiment towards A-shares, with a weighted Morgan Stanley A-share Sentiment Indicator (MSASI) at 66%, up 5 percentage points from the previous cutoff date [2][8]. Core Insights - Investor sentiment has improved significantly, with a higher willingness to allocate to Chinese equities driven by global diversification demand and increased confidence in technology and new consumption sectors despite a challenging macroeconomic environment [1][15]. - The London trade talks between the US and China have led to a Framework Agreement, although the scope may be limited, focusing primarily on non-tariff measures [4]. - Southbound trading recorded net inflows of US$2.4 billion from June 5 to June 11, contributing to a year-to-date total of US$86 billion [3]. Summary by Sections Investor Sentiment - A-share investor sentiment has improved, with the weighted MSASI rising to 66% and the simple MSASI to 53% [2][8]. - Average daily turnover for ChiNext, A-shares, equity futures, and Northbound increased by 18%, 14%, 5%, and 3% respectively compared to the previous cycle [2]. Trade and Economic Developments - The London trade talks are seen as a step forward but may not resolve structural tensions such as the trade deficit and fentanyl-related issues [4]. - China has partially suspended its consumer goods trade-in programs due to funding limitations and subsidy rollout issues, but a complete suspension is deemed unlikely [5]. Market Performance - MSCI China reported earnings in line with consensus for the first quarter of 2025, with a slight decline of 3.8% in the number of companies reporting, but a weighted surprise of 3.1% [13]. - The report advises investors to focus on technology and innovation sectors, preferring offshore investments over onshore A-shares in the near term [14].