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]

Investment Rating - The report indicates a robust year-on-year (YoY) broad credit growth of 9%, aligning with market expectations [2][7]. Core Insights - The report highlights that new Total Social Financing (TSF) reached Rmb2,287 billion, slightly below the consensus of Rmb2,330 billion, with outstanding credit YoY remaining unchanged at 9% [2][7]. - Fiscal front-loading, particularly through government bond issuance, is identified as a key driver supporting infrastructure capital expenditure [2][7]. - Despite the strong overall credit growth, private sector credit demand remains weak, evidenced by a net decline in short-term household loans and a slowdown in long-term corporate loans [2][4][7]. - The credit mix is imbalanced, with corporate loans growing at 8.9% YoY, significantly outpacing household loans at 3%, reflecting a supply-demand imbalance [4][7]. Summary by Sections Credit Growth - Broad credit YoY growth is expected to sustain at approximately 9% in June and July, but may soften afterward due to a high base effect from the previous year [3][7]. - A potential real GDP growth of less than 4.5% in Q3 could prompt new fiscal stimulus measures in September or October, estimated at Rmb0.5-1 trillion, which may not be sufficient to counteract the high base effect [3][7]. Credit Structure - The report emphasizes that the overall credit structure has been supply-centric, primarily driven by public funding for infrastructure projects [7]. - The persistent growth in corporate loans compared to household loans indicates ongoing challenges in private credit demand and a lack of balance in the credit market [4][6][7].