1. Report's Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In the fourth week of July, production maintained a certain level of resilience, with good freight volume in the industrial sector and stable开工率 in coking, chemical, and automotive industries. In the construction industry, cement supply was low, demand marginally improved, and asphalt开工率 decreased. In the real estate sector, both new and second - hand housing sales recovered, but the trend needs further observation, and housing prices need to stabilize. External demand saw an increase in throughput, and freight rates showed a differentiated trend. Consumption showed a convergence in travel enthusiasm, with a differentiation between urban travel data and flights, while automobile consumption remained resilient. Prices of most commodities, such as black metals, were strong, while crude oil prices were volatile [2]. 3. Summary by Relevant Catalogs 3.1 Consumption - Travel: The resilience of travel enthusiasm converged, with a decline in the year - on - year growth of subway travel and congestion delay index, an increase in the total number of flights, and a flight execution rate basically the same as last year [2]. - Commodity consumption: Automobile consumption remained popular, textile consumption decreased, and express delivery collection was at a high level [2]. 3.2 Real Estate - New housing: The transaction volume of new housing increased, with third - tier cities leading [3]. - Second - hand housing: Second - hand housing transactions also increased, with the markets in Beijing, Shanghai, and Chengdu warming up slightly, and the market in Shenzhen cooling down. The recovery of second - and third - tier cities needs further observation. The listing price and quantity of second - hand housing decreased [3]. - Land: Last week, land transaction volume was weak, but the premium rate improved [3]. 3.3 Production - Freight volume remained high, and开工率 data showed a differentiated performance [4]. 3.4 Construction Industry - The year - on - year arrival of construction funds decreased. Cement demand was stronger than supply, black metal supply and demand were weak, and asphalt开工率 decreased [5]. - The开工率 of asphalt decreased both year - on - year and month - on - month, and its price also decreased. The开工率 of styrene and PVC improved [6]. 3.5 External Demand - Freight volume: Port cargo throughput and container throughput increased [7]. - Freight rates: The RJ/CRB index increased year - on - year, the Baltic Dry Index (BDI) rose significantly, and international shipping rates showed a differentiated trend. The CCFI index decreased month - on - month, while the SCFI index increased [7]. 3.6 Prices - Agricultural products: The price index of agricultural products decreased slightly [10]. - Industrial products: The domestic Nanhua Industrial Products Index and the overseas RJ/CRB Index both increased. Crude oil prices were volatile, while the prices of black metals, glass, and most other commodities, such as manganese silicon, lithium carbonate, coking coal, and ferrosilicon, were strong [2][10].

Core Viewpoint - The initiation of 1.2 trillion yuan hydropower projects is expected to drive the valuation recovery of infrastructure stocks, particularly benefiting undervalued, high-dividend leading construction companies [1] Group 1: Industry Overview - The construction industry faced pressure in Q1 due to weaker-than-expected resumption of work, but Q2 is anticipated to see a boost in demand from accelerated issuance of special bonds and funding for "two heavy" projects, with over 300 billion yuan allocated in the third batch [1] - It is expected that investment will stabilize and gradually increase in the second half of the year, leading to improved quarterly performance for the sector [1] - As the industry enters a phase of stock management, the concentration of leading companies continues to rise, with the top 8 state-owned construction enterprises' market share in revenue expected to increase by 6.6 percentage points to 28.2% by Q1 2025 compared to 2022, and new order market share rising by 17.4 percentage points to 58.4% [1] Group 2: Policy and Financial Outlook - Policy measures are being implemented to promote debt resolution and payment clearance, alongside an optimization of dividend policies for state-owned construction enterprises, which is expected to enhance long-term dividend ratios [1] - The value of dividends is becoming increasingly prominent in the industry [1] Group 3: Investment Products - The Hongguo Dividend ETF (510720) tracks the Shangguo Dividend Index (000151), which selects stocks with high dividend characteristics to reflect the overall performance of companies with strong dividend capabilities and ample cash flow [1] - The Shangguo Dividend Index includes companies across various industries, focusing on those that can maintain stable dividends, possess strong profitability, and have good financial conditions, with an overall emphasis on value investing [1]

Group 1: Macro Liquidity - The US dollar index has declined again, and the degree of "inversion" in the China-US interest rate spread has narrowed, with inflation expectations continuing to rise [1][11][14] - Offshore dollar liquidity has marginally eased, while the domestic interbank funding situation has shown a pattern of first easing and then tightening [1][14] Group 2: Market Trading Activity - Overall market trading activity has continued to rise, with most industry trading heat above the 80th percentile [2][20] - The volatility of major indices has also increased, with most industry volatilities below the 40th historical percentile [2][26] Group 3: Institutional Research - The electronic, computer, retail, communication, and pharmaceutical sectors have seen high research activity, while real estate and non-bank sectors have also experienced a rise in research heat [3][36] Group 4: Analyst Forecasts - Analysts have simultaneously lowered the net profit forecasts for the entire A-share market for 2025/2026, while increasing forecasts for sectors such as non-ferrous metals, light industry, steel, and utilities [4][19] - The net profit forecasts for the CSI 500 index for 2025/2026 have been raised, while those for the CSI 300, SSE 50, and ChiNext have been lowered [4][23] Group 5: Northbound Trading Activity - Northbound trading activity has rebounded, with overall net purchases of A-shares, particularly in sectors like non-ferrous metals, pharmaceuticals, and chemicals [4][31] - The ratio of buy/sell amounts for the top 10 active stocks has increased in sectors such as non-ferrous metals and pharmaceuticals [4][32] Group 6: Margin Financing Activity - Margin financing activity has continued to rise, reaching a year-to-date high, with significant net purchases in sectors like machinery, non-ferrous metals, and pharmaceuticals [6][10] - The proportion of financing purchases in real estate, consumer services, and utilities has increased [6][38] Group 7: Fund Activity - Active equity funds have slightly reduced their positions, primarily increasing allocations in sectors like computers, electronics, and banks [5][45] - ETFs have seen overall net subscriptions, particularly in sectors such as construction, steel, and chemicals, while electronic, pharmaceutical, and banking sectors have experienced net redemptions [5][53]

Market Overview - The macro environment shows signs of marginal improvement in growth and inflation, with liquidity remaining loose[4] - The CSI 500 index leads the A-share market with a gain of 3.28%, reflecting a structural market rally[4] - The total trading volume in the A-share market increased by 19.3% week-on-week, indicating enhanced investor participation[61] Asset Allocation Recommendations - Fixed Income: Focus on medium to short-duration high-grade credit bonds while avoiding long-duration bonds due to rising interest rate risks[5] - A-shares: Maintain a cautious approach due to valuation pressures, while looking for rotation opportunities in undervalued sectors[5] - Commodities: Overall underweight position, with a focus on opportunities in new energy and domestic demand-related sectors[5] Risk Factors - Key risks include policy adjustments, market volatility, geopolitical shocks, economic data validation risks, and liquidity transmission risks[6] International Markets - Recent U.S. economic data has marginally exceeded expectations, suggesting potential opportunities in U.S. equities[8] - The U.S. dollar index fell by 0.82%, indicating a weakening dollar which may benefit non-U.S. assets[58] Inflation and Growth Indicators - The Producer Price Index (PPI) continues to show downward pressure, while the Consumer Price Index (CPI) has shown marginal improvement, rising by 0.1% year-on-year[53] - The Business Conditions Index (BCI) recorded a value of 49.3, indicating a contraction in business conditions[44]

Group 1 - Kouzi Jiao's controlling shareholder plans to reduce holdings by up to 10 million shares, accounting for 1.67% of total shares [1] - Blue Shield Optoelectronics' actual controller intends to reduce holdings by up to approximately 185,000 shares, representing 1% of total shares [1] - Blue Shield Optoelectronics' revenue composition for 2024 shows 99.6% from instrument manufacturing [2] Group 2 - NIO Holdings has increased its registered capital from approximately 8.257 billion RMB to about 11.115 billion RMB [3] - Anli Co., Ltd. announced the resignation of director Li Zhongya due to work changes [4] - Anli Co., Ltd.'s revenue composition for 2024 indicates 98.35% from synthetic leather [5] Group 3 - Tongguan Copper Foil announced that 600 million restricted shares will be unlocked and listed for trading on July 28, 2025, accounting for 72.38% of total shares [6] - Tongguan Copper Foil's revenue composition for 2024 is 100% from manufacturing [7] Group 4 - Crystal Integrated expects a net profit increase of 39.04% to 108.55% for the first half of 2025, with revenue projected between 5.07 billion to 5.32 billion RMB [8] - Tongling Nonferrous Metals has successfully registered its electrolytic copper for delivery at the LME designated warehouse in Hong Kong [9] Group 5 - Jiangjian Co., Ltd. won a bid for the Shenzhou Yuewang Valley Cultural Tourism Project with a bid price of 1.533 billion RMB [10] - Shanying International's wholly-owned subsidiary plans to establish the Zhiyuan Fund, with an investment of 99 million RMB [11]

- Model Name: Diffusion Index Model; Construction Idea: The model is based on the principle of price momentum, capturing industry trends through diffusion indices; Construction Process: The model tracks the weekly and monthly changes in the diffusion indices of various industries, ranking them accordingly. The formula for the diffusion index is not explicitly provided; Evaluation: The model has shown varying performance over the years, with significant drawdowns during market reversals[24][25][28] - Model Name: GRU Factor Model; Construction Idea: The model utilizes GRU (Gated Recurrent Unit) deep learning networks to process minute-level volume and price data, aiming to capture trading information; Construction Process: The model ranks industries based on GRU factors, which are derived from the deep learning network's analysis of trading data. The specific formula for GRU factors is not provided; Evaluation: The model has performed well in short cycles but has shown general performance in longer cycles[31][32][35] - Diffusion Index Model, Average Weekly Return: 0.89%, Excess Return Since July: -3.47%, Excess Return YTD: -0.45%[28] - GRU Factor Model, Average Weekly Return: 4.27%, Excess Return Since July: 1.34%, Excess Return YTD: -4.25%[35] - Factor Name: Diffusion Index; Construction Idea: The factor is based on the momentum of industry prices, capturing upward trends; Construction Process: The factor is calculated by observing the weekly and monthly changes in the diffusion indices of various industries. The specific formula is not provided; Evaluation: The factor has shown varying performance, with significant drawdowns during market reversals[24][25][28] - Factor Name: GRU Factor; Construction Idea: The factor is derived from GRU deep learning networks, capturing trading information from minute-level volume and price data; Construction Process: The factor is calculated by ranking industries based on the GRU network's analysis of trading data. The specific formula is not provided; Evaluation: The factor has performed well in short cycles but has shown general performance in longer cycles[31][32][35] - Diffusion Index Factor, Top Industries: Comprehensive Finance (1.0), Steel (1.0), Non-Bank Finance (0.999), Comprehensive (0.998), Non-Ferrous Metals (0.997), Home Appliances (0.995)[25] - GRU Factor, Top Industries: Banking (3.3), Real Estate (0.58), Oil & Petrochemicals (-1.26), Textile & Apparel (-1.73), Light Manufacturing (-2.49), Electric Power & Utilities (-2.83)[32]

Core Viewpoint - The market is expected to experience a volatile upward trend, with a focus on three main lines of investment, particularly in the technology sector and the potential for a rebound in the STAR Market [1][3]. Group 1: Market Performance - The Shanghai Composite Index rose by 1.67% this week, the Shenzhen Component Index increased by 2.33%, and the ChiNext Index gained 2.76% [1]. - The current market has shown characteristics typical of a "water buffalo" trend, indicating a potential for further upward movement [1]. Group 2: Investment Strategies - Citic Securities suggests that the STAR Market may see a rebound due to the accumulation of retail investor inflows and the strengthening narrative of "anti-involution" [1]. - The recommendation includes focusing on sectors such as non-ferrous metals, telecommunications, innovative pharmaceuticals, military industry, and gaming during the upcoming reporting season [2]. Group 3: Sector Focus - Everbright Securities highlights three main lines for medium to long-term investment: domestic consumption, technological self-reliance, and dividend stocks [3]. - Xiangcai Securities emphasizes the importance of defensive dividend stocks, particularly in banking and insurance, as well as consumer-related sectors like education and passenger vehicles [4]. Group 4: Policy Impact - Huajin Securities notes that the current cycle of rising sectors is driven by policy improvements in fundamental expectations and low valuations in certain industries [5]. - Suggested industries benefiting from the "anti-involution" policy include automotive, new energy, chemicals, construction, and coal [5].

Economic Growth - Hong Kong's economy has shown resilience, with a growth of 3.1% in Q1 2023 following a 2.5% growth in 2022, and is expected to continue this upward trend for the tenth consecutive quarter [1][3] - The growth is driven by export activities, overall investment, and private consumption, with optimistic forecasts for the upcoming Q2 GDP figures [1][3] Private Consumption - Private consumption is gaining momentum due to sustained economic activity, inflow of funds, a favorable stock market, and a stabilizing property market [3][4] - Retail sales recorded their first year-on-year growth in 14 months in May, indicating a recovery in consumer sentiment, with expectations for a positive June [4] Employment and Wages - The employment market in Hong Kong remains stable, with a notable increase in median monthly income for full-time employees, rising by 6.8% year-on-year to HKD 25,000 [4][5] - New industries are developing rapidly, and traditional sectors are also adapting, leading to increased hiring and wage adjustments, although some labor-intensive sectors like retail and dining face challenges [5] Government Initiatives - The government is actively seeking new economic growth points and supporting innovation and technology development to attract more businesses and create high-quality jobs [5][6] - Efforts are being made to explore overseas markets and develop supply chain management centers to enhance Hong Kong's competitiveness in a complex geopolitical landscape [6]

Group 1: Macro and Market Overview - The A-share market showed positive performance in July, with the Shanghai Composite Index, CSI 300, and ChiNext Index rising by 4.3%, 4.9%, and 8.7% respectively [1][10] - The bond market weakened, with an overall decline of 0.6%, and government bond yields increased, with 1-year, 5-year, and 10-year yields rising by 4.3bp, 10.3bp, and 8.3bp respectively [1][10] - The external markets also performed well, with the Hang Seng Index rising by 5.5% and major US indices, including the Dow Jones, Nasdaq, and S&P 500, increasing by 1.8%, 3.6%, and 3.0% respectively [1][10] Group 2: A-share Market Analysis - The A-share market is approaching a critical trading zone, with the Shanghai Index nearing the October 2024 trading volume of 3 trillion, indicating potential resistance to breaking through this level [2][22] - External risks are increasing, particularly regarding US-China tariff negotiations and potential sanctions from the EU against Chinese financial institutions [2][22] Group 3: Sector Focus and Investment Strategy - Investment strategies should focus on technology and anti-involution sectors, with particular attention to humanoid robotics and the broader AI industry [3][23] - The anti-involution strategy is expected to drive demand policies, suggesting investments in undervalued chemical blue-chip stocks, vitamins, phosphorus chemicals, TDI, and coking coal sectors [3][25] - The technology sector is highlighted for potential growth, especially with upcoming IPOs in humanoid robotics and increased capital expenditure in AI services [3][24] Group 4: Bond Market Strategy - The upcoming Central Political Bureau meeting is expected to address the current economic situation and may reinforce anti-involution policies, which could lead to rising inflation expectations and government bond yields [3][27] - The 10-year government bond yield has been on an upward trend, reaching approximately 1.73% as of late July, with expectations of continued increases [3][27][30]

Core Viewpoint - The launch of the Yaxia Hydropower Station indicates a clear trend of central government leverage, with expectations for a series of major projects and regional development strategies to stabilize overall infrastructure investment and total demand [1][2] Infrastructure Investment and Major Projects - The central government is expected to introduce significant projects and regional strategies to maintain infrastructure investment and total demand, especially in light of declining economic indicators such as fixed asset investment and real estate sales [2][6] - Key upcoming projects include major transportation initiatives like the China-Kyrgyzstan-Uzbekistan Railway and the New Tibet Railway, with substantial investments planned [6][10] Beneficiaries of Infrastructure Projects - Recommended beneficiaries include leading state-owned construction enterprises such as China Energy Engineering, China State Construction, and China Railway Construction, which are expected to benefit from large-scale infrastructure projects [1][7] - Specific companies highlighted for their roles in construction and materials include China Communications Construction, China Railway Group, and regional players like Qing Song Jian Hua in Xinjiang [1][10] Canal Projects and Economic Impact - The development of major canal projects is anticipated to enhance logistics efficiency and stimulate economic growth, with significant investments planned for projects like the Pinglu Canal and the Zhejiang-Jiangxi-Guangdong Canal [11][14] - The estimated total investment for these canal projects is approximately 620.4 billion, which is expected to provide strong support for investment in 2023 [11][14] Xinjiang Regional Strategy and Coal Chemical Industry - The Xinjiang region is expected to receive increased support from the central government, with significant investments in coal chemical projects projected to exceed 800 billion by 2025 [16][19] - Key players in this sector include China Chemical Engineering and local construction firms, which are well-positioned to capitalize on the anticipated growth in coal chemical investments [16][19] Strategic Hinterland Development - Sichuan has been identified as a strategic hinterland for national development, with policies expected to support infrastructure and investment growth in the region [21][24] - Companies involved in transportation infrastructure, such as Sichuan Road and Bridge, are likely to benefit from these strategic initiatives [21][24]