1. Report Industry Investment Rating There is no information about the industry investment rating in the report. 2. Core Views of the Report - Overall, most credit spreads of different industries and ratings narrowed to varying degrees this week, while a few industries' credit spreads widened. The credit spreads of urban investment bonds fluctuated slightly, the 3Y industrial bond credit spreads adjusted significantly, and the AA medium - long - end spreads decreased. The 3Y bank secondary perpetual bond credit spreads widened significantly, and the spreads of other maturities widened slightly [3][39]. - The report continues to expect the 10Y Treasury yield to be between 1.6% - 1.8% in the second half of the year. After the recent pull - back, the 10Y Treasury is close to 1.75%, with prominent cost - effectiveness. The report is bullish on the 10Y Treasury yield returning to around 1.65%, and the 5Y national and joint - stock secondary capital bonds falling below 1.9%. The growth of wealth management scale is beneficial to credit bonds. It is bullish on long - duration and credit - sinking urban investment and capital bonds, urban investment dim - sum bonds and US dollar bonds, strongly recommends perpetual bonds of Minsheng, Bohai, and Hengfeng Banks, and suggests paying attention to capital bond opportunities of Tianjin Bank, Beibu Gulf Bank, and China Property Insurance [3][40]. 3. Summary by Relevant Catalogs 3.1 Primary Market 3.1.1 Net Financing Scale - The net financing of credit bonds (excluding asset - backed securities) this week was 16.8 billion yuan, a decrease of 298 billion yuan compared with last week. The total issuance was 323.4 billion yuan, a decrease of 175 billion yuan, and the total repayment was 306.6 billion yuan, an increase of 122.9 billion yuan [7]. - The net financing of asset - backed securities this week was 27.8 billion yuan, an increase of 17 billion yuan compared with last week [7]. - By product type, the net financing of urban investment bonds was 35.4 billion yuan, a decrease of 40.2 billion yuan; the net financing of industrial bonds was 17.9 billion yuan, a decrease of 131.4 billion yuan; the net financing of financial bonds was - 36.5 billion yuan, a decrease of 126.4 billion yuan [7]. - In terms of issuance and redemption quantity, the issuance of urban investment bonds decreased by 21, and the redemption increased by 32; the issuance of industrial bonds decreased by 50, and the redemption increased by 39; the issuance of financial bonds decreased by 10, and the redemption increased by 14 [9]. 3.1.2 Issuance Cost - The weighted average issuance rate of AA industrial bonds increased significantly this week, while the issuance costs of other bond types were below 2.5%. The issuance rate of AA industrial bonds increased by 61BP compared with last week, mainly due to the "25 Xiangqiao Bond" [17]. 3.2 Secondary Market 3.2.1 Transaction Volume and Turnover - The trading volume of credit bonds (excluding asset - backed securities) decreased by 15.8 billion yuan compared with last week. The trading volume of urban investment bonds was 217 billion yuan, a decrease of 10.8 billion yuan; the trading volume of industrial bonds was 341 billion yuan, an increase of 9.4 billion yuan; the trading volume of financial bonds was 384.6 billion yuan, a decrease of 14.4 billion yuan. The trading volume of asset - backed securities was 18.3 billion yuan, an increase of 9.3 billion yuan [18]. - The turnover rate of credit bonds fluctuated slightly compared with last week. The turnover rate of urban investment bonds was 1.39%, a decrease of 0.07pct; the turnover rate of industrial bonds was 1.88%, an increase of 0.04pct; the turnover rate of financial bonds was 2.59%, a decrease of 0.09pct; the turnover rate of asset - backed securities was 0.5%, an increase of 0.24pct [18]. 3.2.2 Yield - The yields of credit bonds with different maturities increased to varying degrees this week, and the adjustment range of medium - long - term bonds was greater than that of short - term bonds. For example, the yields of AA, AAA -, and AAA + credit bonds within 1Y increased by 2BP, 2BP, and 1BP respectively; those of 3 - 5Y increased by 5BP; and those of over 10Y increased by 3 - 5BP [20][21]. - Taking AA + 5Y bonds of each type as an example, the yields of different types of bonds increased to varying degrees. For industrial bonds, the yields of privately - issued and perpetual industrial bonds increased by 6BP and 7BP respectively; for urban investment bonds, the yield of AA + 5Y urban investment bonds increased by 4BP; for financial bonds, the yields of commercial bank ordinary bonds and secondary capital bonds increased by 7BP and 8BP respectively; for asset - backed securities, the yield of AA + 5Y asset - backed securities increased by 6BP [22]. 3.2.3 Credit Spreads - Overall, most credit spreads of different industries and ratings narrowed to varying degrees this week, while a few industries' credit spreads widened. For example, the credit spread of AA non - bank finance widened by 6BP, and that of AA building materials narrowed by 6BP; the credit spreads of AA + electrical equipment and textile and apparel widened by 6BP and 17BP respectively, and that of AA + non - bank finance narrowed by 7BP. The fluctuations of other industries' and ratings' bond credit spreads did not exceed 5BP [2][24]. - **Urban Investment Bonds**: The credit spreads of urban investment bonds with different maturities fluctuated slightly. The 0.5 - 1Y credit spread compressed by less than 1BP, the 1 - 3Y spread widened by 1BP, the 3 - 5Y spread compressed by 1BP, the 5 - 10Y spread compressed by 1BP, and the over 10Y spread compressed by 2BP. Regionally, the fluctuations of urban investment credit spreads were within 5BP. For example, the AA credit spread in Shaanxi compressed by 5BP, and the AA + credit spread in Hebei compressed by 5BP [29][30]. - **Industrial Bonds**: The 3Y industrial bond credit spreads adjusted significantly this week, and the AA medium - long - end spreads decreased. The credit spreads of 3Y AAA -, AA +, and AA private and perpetual industrial bonds widened to varying degrees, while the 5Y and 10Y AA private and perpetual industrial bond credit spreads compressed [33]. - **Bank Capital Bonds**: The 3Y bank secondary perpetual bond credit spreads widened significantly this week, and the spreads of other maturities widened slightly [35]. 3.3 This Week's Bond Market Sentiment - 26 bond implicit ratings were downgraded this week, including 10 by Joy City Holdings Group Co., Ltd., 10 by Shanghai Waigaoqiao Group Co., Ltd., 4 by Chongqing Yerui Real Estate Development Co., Ltd., and 2 by Zhengxinglong Real Estate (Shenzhen) Co., Ltd. The "20 Huaxia EB" issued by China Fortune Land Development Holdings Co., Ltd. was extended [36]. 3.4 Investment Recommendations - The report continues to expect the 10Y Treasury yield to be between 1.6% - 1.8% in the second half of the year. After the recent pull - back, the 10Y Treasury is close to 1.75%, with prominent cost - effectiveness. It is bullish on the 10Y Treasury yield returning to around 1.65%, and the 5Y national and joint - stock secondary capital bonds falling below 1.9%. The growth of wealth management scale is beneficial to credit bonds [3][40]. - It is bullish on long - duration and credit - sinking urban investment and capital bonds, urban investment dim - sum bonds and US dollar bonds, strongly recommends perpetual bonds of Minsheng, Bohai, and Hengfeng Banks, and suggests paying attention to capital bond opportunities of Tianjin Bank, Beibu Gulf Bank, and China Property Insurance [40].

Monetary Market Overview - The central bank's OMO net withdrawal this week was CNY 414.9 billion, with a total of CNY 300 billion in net injections from reverse repos throughout the month[3] - The average daily transaction volume of pledged repos increased to CNY 8.15 trillion, with a notable drop on Friday[3] - The DR001 rate remained above 1.3%, indicating that expectations for a lower bound adjustment have not materialized[3] Credit and Financing Trends - New social financing in July was only CNY 1.1 trillion, significantly lower than the expected CNY 1.5 trillion, with a notable reliance on government bonds and direct corporate financing[3] - July saw the first negative growth in credit since 2005, with a decline of CNY 500 billion, despite a surge in bill financing exceeding CNY 800 billion[3] - The central bank's loan interest rates are expected to show a reduced year-on-year decline in Q3 due to lower base effects[3] Government Debt and Issuance - The actual net payment of government bonds this week was CNY 410.4 billion, expected to decrease to CNY 294.1 billion next week[4] - Cumulative issuance of new general bonds in 2025 reached CNY 575.9 billion, with special bonds at CNY 28.369 trillion[4] - The issuance of local government bonds is projected to accelerate, with a total of CNY 3.692 billion expected next week[4] Market Sentiment and Risks - The bond market showed weakness, with a notable reduction in non-bank financial institutions' holdings of certificates of deposit and financial bonds[3] - The central bank's cautious stance on further easing is reflected in its emphasis on preventing "capital turnover" and improving fund utilization efficiency[3] - Potential risks include monetary policy not meeting expectations and unexpected fluctuations in the funding environment[3]

Group 1: Core Insights - The report highlights a significant shift in the Chinese stock market, with A-shares showing strong performance, particularly in the technology sector, driven by increased non-bank deposits and a shift in resident investment behavior [1][10][11] - The report notes that non-bank deposits increased by 4.69 trillion yuan year-to-date as of July, marking a new high since 2015, while resident deposits decreased by 1.11 trillion yuan in July, indicating a potential "money migration" towards the stock market [2][17][20] - The report emphasizes that the current market conditions resemble the early stages of a bull market, with small-cap stocks outperforming large-cap stocks and growth sectors leading over cyclical sectors [5][20] Group 2: Industry and Company Recommendations - The report recommends focusing on the copper-clad laminate (CCL) upstream sector, as the demand for high-frequency and high-speed materials is increasing due to AI server and chip requirements, with price increases already observed in the industry [6][23] - The banking sector is also highlighted for its stability amid potential macroeconomic risks, although it may not offer the same growth potential as the technology sector [6][23] - The report suggests that the strong performance of Tencent in Q2 2025, driven by AI integration across its core businesses, positions it as a key player in the technology sector [11][12]

Core Viewpoints - The report indicates a gradual upward trend in the market, with a focus on mid-year performance guidance. The A-share market continues to show resilience, with the ChiNext index leading gains, while the overall market remains active with daily trading volumes exceeding 2 trillion yuan, a 23.9% increase from the previous period [2][15]. Economic Data - In July, the economy showed steady progress, with new growth drivers emerging. The total social financing increased by 1.13 trillion yuan, with a year-on-year growth of 9.0%. The industrial added value grew by 5.7% year-on-year, while high-tech industries saw a growth of 9.3% [2][3]. Financial Data - The report highlights a significant increase in M1 and M2 money supply, with M1 growing by 5.6% year-on-year and M2 by 8.8%. The M1-M2 gap continues to narrow, indicating an improvement in monetary activity [4][5]. Policy Tracking - Recent policies aimed at boosting consumption include the implementation of fiscal interest subsidies for personal consumption loans and service industry loans, effective from September 1, 2025. These measures are expected to enhance economic circulation and stimulate consumer spending [7]. Market Performance - The A-share market saw a broad-based increase, with 22 out of 31 sectors rising. The communication, electronics, and non-bank financial sectors led the gains, with increases ranging from 6% to 8%. Conversely, sectors such as banking and steel experienced declines [13][15]. Investment Opportunities - The report suggests focusing on sectors with high certainty of growth, including technology growth driven by AI and semiconductors, sectors benefiting from "anti-involution" policies like new energy and traditional cyclical industries, and stable financial sectors [2][15].

Investment Rating - The report maintains an "Increase" rating for the non-bank financial industry [1] Core Insights - The non-bank financial sector has shown strong performance, with all sub-sectors outperforming the CSI 300 index in recent trading days [9][10] - The insurance sector's asset management balance has surpassed 36 trillion yuan, with a continued increase in stock allocation [21][27] - The securities industry has experienced a significant increase in trading volume, with a year-on-year rise of 212.23% in August [15][19] - The multi-financial sector is transitioning into a stable growth phase, with trust assets growing but profits declining [29][32] Summary by Sections Non-Bank Financial Sub-Sector Performance - In the recent five trading days (August 11-15, 2025), the non-bank financial sector outperformed the CSI 300 index, with the securities sector rising by 8.18%, multi-financial by 4.73%, and insurance by 3.28% [9][10] Non-Bank Financial Sub-Sector Insights Securities - Trading volume has significantly increased, with an average daily trading amount of 21,549 billion yuan in August, up 212.23% year-on-year [15][19] - The first unprofitable company under the "Science and Technology Innovation Board" has been approved for IPO, indicating a more inclusive policy for tech firms [19][20] Insurance - The insurance sector's asset management balance reached 36.23 trillion yuan, with a year-to-date increase of 8.9% [21][27] - The allocation to stocks has increased to 8.8%, while the bond allocation is at 51.9% [21][27] Multi-Financial - The trust industry saw its asset scale reach 29.56 trillion yuan, with a year-on-year profit decline of 45.5% [29][32] - The futures market experienced a trading volume of 10.59 billion contracts in July, with a year-on-year increase of 48.89% [33][40] Industry Ranking and Key Company Recommendations - The industry ranking is as follows: Insurance > Securities > Other Multi-Financial [45] - Recommended companies include China Ping An, New China Life, China Pacific Insurance, CITIC Securities, Tonghuashun, and Jiufang Zhitu Holdings [45]

Group 1 - The market is expected to focus on five key industries: innovative pharmaceuticals, resources, communications, military industry, and gaming in the short term [3] - The A-share market has shown positive signals with increased trading volume and a shift of household wealth towards financial assets, indicating a new stable state [1] - The AI industry chain, anti-involution, and non-bank financial sectors are anticipated to experience rotation under active market conditions [2] Group 2 - The supply-side focus on anti-involution and demand-side profit extraction is identified as a significant medium to long-term investment theme [3] - The growth sectors are expected to show high prosperity due to the AI technology revolution and emerging industry trends [2] - The market is characterized by a dual driving force, with global technology growth providing strong elasticity and anti-involution leading to a recovery in cyclical and counter-cyclical trades [4]

Group 1 - The report emphasizes that the current market is experiencing a liquidity-driven bull market, with the potential for a transition to a fundamental bull market by the end of the year, contingent on external factors such as global tariff resolutions and fiscal expansions in major economies [3][4][87] - The report identifies a significant performance gap between growth stocks, particularly in the ChiNext index, and value stocks, suggesting that the ChiNext index is currently undervalued and poised for further gains [2][31][50] - The report highlights the increasing inflow of southbound funds into Hong Kong stocks, particularly in the technology sector, indicating a shift in investor sentiment towards growth-oriented assets [12][32][44] Group 2 - The report outlines a "three-headed bull" market scenario, which includes a short-term liquidity bull market, a mid-term fundamental bull market, and a long-term transition from old to new economic drivers, suggesting a comprehensive market recovery [3][4][5] - The report notes that the current market environment is conducive to a structural shift towards "middle assets," which are expected to outperform as the economy stabilizes and earnings begin to recover [46][47][56] - The report indicates that the current valuation of the ChiNext index is at a historical low, with a price-to-earnings ratio of 33.89, suggesting a relative valuation advantage compared to other major indices [50][51][52]

Core Insights - The report indicates that there are signs of accelerated inflow of resident funds into the market, driven by a combination of improved market liquidity and a shift in deposit behavior towards non-bank financial institutions [2][4][17]. - The overall A-share valuation level has increased, with the Wind All A Index PE (TTM) rising to 16.62, which is at the 63.0% historical percentile [3]. - The market is currently characterized by a strong preference for technology growth and small-cap styles, with the ChiNext 200 and the ChiNext Index leading in performance [6][36]. Financial Data Summary - In July, the new social financing (社融) increased by 1.13 trillion yuan, a year-on-year increase of 361.3 billion yuan, while RMB loans decreased by 500 billion yuan, reflecting a weak demand for credit in the real economy [7][9]. - The M1 growth rate rose from 4.6% to 5.6%, while the M2-M1 gap narrowed, indicating a shift of deposits from residents to non-bank sectors [12][17]. - Resident deposits decreased by 780 billion yuan year-on-year, while non-bank deposits increased by 1.39 trillion yuan, highlighting a clear trend of funds moving towards non-bank financial institutions [5][12]. Market Style and Trends - The current market style is dominated by technology growth and small-cap stocks, with the ChiNext 200 and ChiNext Index showing significant gains [36][40]. - The report notes that the inflow of funds from private equity, margin financing, and active retail investors has played a crucial role in driving market performance [35][39]. - The report emphasizes that the active participation of thematic ETFs has further reinforced the structural market trends, contributing to the overall positive market sentiment [28][35]. Investment Opportunities - The report highlights the potential investment opportunities in the marine economy, particularly in emerging industries such as offshore wind power and marine biomedicine, as part of the "14th Five-Year Plan" [4]. - The active performance of private equity funds and the increase in personal investor accounts suggest a growing interest in equity markets, which may lead to further investment opportunities [23][25]. - The report indicates that the strong performance of active equity funds, which have outperformed major indices, signals a favorable environment for equity investments [18][19].

- The report introduces a "Total Heat Indicator" as a proxy variable for tracking market sentiment. This indicator is defined as the sum of browsing, watchlist additions, and clicks for individual stocks, normalized as a percentage of the total market on the same day, and then multiplied by 10,000. The value range is [0, 10,000][7] - A "Broad-based Index Heat Rotation Strategy" is constructed based on the weekly heat change rate (MA2) of major indices. The strategy involves buying the index with the highest heat change rate at the end of each week, or staying in cash if the "Others" group has the highest rate. The strategy achieved an annualized return of 8.74% since 2017, with a maximum drawdown of 23.5%, and a 2025 return of 24.5%[13][16] - A "Concept Heat Strategy" is developed by selecting the top 5 concepts with the highest weekly heat change rates. Two portfolios are constructed: 1. "TOP Portfolio" includes the top 10 stocks with the highest total heat within each concept 2. "BOTTOM Portfolio" includes the bottom 10 stocks with the lowest total heat within each concept Historical results show the BOTTOM Portfolio achieved an annualized return of 15.71% with a maximum drawdown of 28.89%, and a 2025 return of 33%[31][33]

Market Overview - A-shares experienced a significant increase during the week of August 11 to 15, with the Shanghai Composite Index rising by 1.69% to close at 3696.77 points, while the Shenzhen Component Index increased by 4.55% and the ChiNext Index surged by 8.58% [1] - The non-bank financial sector led the gains with a 7.07% increase, followed by electronics, power equipment, and non-ferrous metals, while banking, steel, and defense industries showed weaker performance [1] - Approximately 70% of the companies that underwent institutional research during the week achieved positive returns, with notable gains from HaiNeng Technology (over 42%), Feilong Co., Changcheng Securities, and Zhejiang Huaye (all over 30%) [1] Company Highlights Nanwei Medical - Nanwei Medical reported a revenue of 1.565 billion yuan for the first half of the year, a year-on-year increase of 17.36%, and a net profit attributable to shareholders of 363 million yuan, up 17.04% [2] - The company achieved a remarkable 45% growth in overseas revenue, which now accounts for 58% of total revenue [2] - Nanwei Medical focuses on minimally invasive medical devices, with products covering over 90 countries and regions [2] Anjieshi - Anjieshi's revenue for the first half of the year reached 302 million yuan, reflecting a year-on-year growth of 14.56%, while net profit attributable to shareholders was 126 million yuan, a growth of 1.26% [4] - The company reported a domestic sales gross margin of 67.58%, which decreased due to the impact of centralized procurement on high-margin products [6] - Anjieshi is actively expanding its marketing network and adapting to ongoing healthcare policy reforms [6] Jinchengzi - Jinchengzi announced plans to acquire a 55% stake in Samit, aiming to enhance product synergy and technical collaboration in precision optical control products [8] - The acquisition is expected to improve Jinchengzi's competitive position in high-end precision mirror fields [8] Xinqianglian - Xinqianglian reported a net profit of 400 million yuan for the first half of the year, recovering from a loss of 101 million yuan in the same period last year [9] - The company attributed its improved profitability to cost reduction strategies, including increased self-supply of core components and optimization of production processes [10] - Xinqianglian is focusing on the wind power bearing business, with strong demand and sufficient orders for the second half of the year [10]