Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The manufacturing PMI for June increased by 0.2 percentage points month-on-month to 49.7, slightly surpassing consensus expectations of 49.6, driven by strong fiscal front-loading [7] - Export momentum is weakening, with the new export order index rising only 0.2 percentage points month-on-month, remaining significantly below pre-tariff levels, indicating a potential end to strong US-bound shipping [3][4] - Real GDP growth is expected to decline from 5% year-on-year in Q2 to 4.5% in Q3 due to fading export front-loading and muted stimulus measures anticipated from the government [4][7] Summary by Sections Manufacturing Sector - The June manufacturing PMI rose to 49.7, supported by stronger new orders and production, particularly in consumer goods and base materials [2][7] - The construction PMI also saw a notable increase of 1.8 percentage points month-on-month to 52.8, reflecting ongoing fiscal support for infrastructure spending [2] Export Dynamics - The new export orders index showed a slight increase but remains low compared to historical levels, suggesting a slowdown in export activities [3][4] - Container throughput has weakened, indicating a broader decline in export volumes to various destinations [3] Economic Outlook - The report anticipates a decrease in real GDP growth to 4.5% year-on-year in Q3, influenced by the diminishing impact of export front-loading and a lack of significant new fiscal stimulus [4][7] - A modest supplementary fiscal stimulus of Rmb0.5-1 trillion is expected to be introduced by the government in late Q3 or early Q4 if economic data continues to show weakness [4]