Core Viewpoint - The market consensus is gradually shifting towards the initiation of a bull market, but there are significant short-term divergences among investors regarding market conditions and expectations [3][4]. Short-term Market Challenges - The market faces several short-term challenges, including expectations of economic slowdown in Q3 2025 and a policy focus on structural adjustments, which may not support a breakout in indices [2][3]. - The main structural narrative of the bull market has yet to be established, with current high momentum sectors like pharmaceuticals and overseas computing being seen as independent trends rather than the core narrative of the bull market [3][4]. Potential Bull Market Directions - Two potential directions for the bull market structure include: 1. Breakthroughs in domestic technology, particularly in AI and robotics, which could lead to a broader market expansion across infrastructure, hardware, software applications, and business models [3][4]. 2. High global market share manufacturing engaging in anti-involution strategies, which could enhance industry concentration and pricing power [3][4]. Market Sentiment and Future Outlook - The bull market atmosphere is expected to persist despite unfavorable macroeconomic conditions in Q3, as the long-term supply-demand dynamics are projected to improve by 2026 [4][5]. - Key factors that could impact the bull market sentiment include significant demand declines around mid-2026 and constraints on China's manufacturing competitiveness [5][6]. Sector Performance and Investment Opportunities - Short-term strong sectors include pharmaceuticals and overseas computing, which reflect high growth expectations but may face challenges in maintaining independent performance [7][8]. - The defense and military sector is anticipated to have repeated opportunities before early September, while new consumption sectors may see rotational gains [8][10]. - The Hong Kong stock market is highlighted as a potentially leading market in the bull cycle, with a focus on pricing trends that align with fundamental expectations [8][10].

Market Performance - The three major indices experienced an increase this week, with the Shanghai Composite Index rising by 2.11%, the Shenzhen Component Index by 1.25%, and the ChiNext Index by 0.49% [1] - Over 4,000 stocks saw gains, particularly in the defense, rare earth permanent magnet, PEEK materials, and robotics sectors [1] Index Summary - On Friday, the Shanghai Composite Index closed at 3,932 with a decrease of 0.12% and a trading volume of 71.36 billion [3] - The Shenzhen Component Index closed at 11,129, down 0.26%, with a trading volume of 99.67 billion [3] - The ChiNext Index closed at 2,334, down 0.38%, with a trading volume of 50.03 billion [3] Top Gainers and Losers - 42 stocks increased by over 30%, with Jiarun Technology leading at a 63.29% rise, followed by Guoji Precision Engineering at over 60% [4] - The defense and basic chemical industries each had three stocks among those with gains exceeding 40% [4] - On the downside, 57 stocks fell by more than 10%, with Hangu Group, *ST Guangdao, and Hualan Group each dropping over 20% [4] Active Stocks - 77 stocks had a turnover rate exceeding 100%, with Beifang Changlong leading at 302.24% [6] - Other notable stocks with high turnover rates included Wanlima and Weiman Sealing, both exceeding 200% [6] - The majority of stocks with high turnover rates were from the defense, machinery, electronics, and computer sectors [6] Main Capital Flows - The non-ferrous metals and beauty care sectors attracted net inflows of 6.87 billion and 34.35 million, respectively [8] - Major net inflows were seen in stocks like Dazhu Laser (1.02 billion), Chutianlong (781 million), and Tianqi Lithium (662 million) [8] - Conversely, stocks such as Zhongji Xuchuang, Xinyi Sheng, and Hikvision experienced significant net outflows, exceeding 1 billion [8] Margin Financing - A total of 2,088 stocks received net margin purchases, with 1,108 stocks exceeding 10 million in net purchases [10] - Haiguang Information topped the list with a net purchase of 787 million, followed by Beifang Rare Earth and Borui Pharmaceutical [10] Institutional Research - 82 companies were researched by institutions this week, with Zhongchong Co. receiving the most attention from 251 institutions [12] - Other companies like Jerey Co. and Tianen Kang were also highlighted, receiving attention from 143 and 92 institutions, respectively [12] First-Time Institutional Attention - 63 stocks received first-time attention from institutions, with 15 stocks assigned target prices [15] - Notable mentions include Top Cloud Agriculture, which received a "Buy" rating from GF Securities with a target price of 132.27 [15]

Core Insights - The report indicates that the liquidity-driven market may still have room for growth, supported by incremental capital inflows, particularly from trading funds and long-term investors [3][8][6] - The report highlights a recovery in public fund meetings and a potential increase in market volatility due to the upcoming mid-year reports and new trade negotiations, although the downside risk appears limited [3][4] - The "anti-involution" policy is showing initial effectiveness, with July's PPI expected to rebound from its low point, influenced by the policy's implementation and macroeconomic factors [4][5] Market Structure - The report notes that the two-margin balance has reached a nearly 10-year high of 2 trillion yuan, indicating a significant recovery in trading funds [3][8] - The report emphasizes the importance of equity public funds as a key channel for residents to move their deposits, with a notable increase in the number of public fund meetings since mid-July [3][4] - The report suggests tactical allocations in sectors showing improvement and potential for catch-up, including storage, software, general automation, certain chemicals, insurance, and coal [6][8] Tactical and Strategic Recommendations - The report recommends tactical investments in sectors with improving sentiment and catch-up potential, such as storage, software, and certain chemicals, while maintaining a strategic focus on large financials, pharmaceuticals, and military industries [6][8] - The report anticipates that the market may experience fluctuations in risk appetite due to macroeconomic disturbances, but the overall downside appears limited [6][8] - The report suggests that the upcoming September 3 military parade could serve as a positive catalyst for market sentiment [6][8]

Group 1 - The A-share market has shown strong performance this week, with major indices such as the Shanghai Composite Index and the Wind All A Index recording significant gains, while the ChiNext Index and the Sci-Tech 50 Index lagged behind [1][14][16] - The market style this week favored small-cap growth and small-cap value stocks, while large-cap growth and mid-cap growth stocks underperformed [1][16] - Most sectors in the Shenwan first-level industry classification saw gains, with defense, non-ferrous metals, and machinery equipment leading the way, while pharmaceuticals, computers, and retail sectors experienced declines [1][16] Group 2 - The overall domestic market is performing well, supported by accumulating internal and external favorable factors, with expectations for continued strong performance in the future [2][22] - The weak U.S. labor market, highlighted by July's non-farm payrolls adding only 73,000 jobs and an increase in the unemployment rate to 4.2%, has raised concerns about the U.S. economy and increased expectations for a Federal Reserve rate cut in September [2][22][23] - Domestic policies are actively supporting the market, with July exports growing by 7.2% year-on-year, indicating resilience in foreign trade despite a complex international environment [4][48] Group 3 - The market is expected to reach new highs in the second half of the year, driven by short-term expectations and liquidity improvements, with a shift from policy-driven to fundamentals and liquidity-driven market dynamics [5][62] - Short-term focus should be on previously lagging sectors and those likely to benefit from improved overseas liquidity, while long-term attention should be on consumption, technological self-reliance, and dividend stocks [5][63][67][68][69] - Specific sectors to watch include machinery equipment and power equipment for short-term gains, and pharmaceuticals, home appliances, and food and beverage sectors for long-term benefits from overseas liquidity improvements [5][63][68]

Group 1: Overall Market and Fund Position - The CSI 300 index rose 1.23% from August 4th to August 8th, 2025. The overall estimated stock position of active equity and partial - equity hybrid funds increased by 1.92% to 86.50%, but decreased by 1.72% compared to the quarterly report [3][7] - Active equity funds' estimated stock position increased by 0.78% to 89.47% this week, while partial - equity hybrid funds' position increased by 2.18% to 85.82% [7] Group 2: Active Equity and Partial - Equity Hybrid Fund Industry Allocation - The top 5 industries held by active equity and partial - equity hybrid funds this week are Electronics (13.20%), Power Equipment (8.27%), Medicine and Biology (7.19%), Automobile (6.25%), and Communication (6.21%) [4][17] - The top 3 industries with increased positions are National Defense and Military Industry (+0.45%), Media (+0.14%), and Machinery and Equipment (+0.11%); the top 3 industries with decreased positions are Electronics (-0.32%), Medicine and Biology (-0.18%), and Communication (-0.14%) [4][17] Group 3: Active Equity and Partial - Equity Hybrid Fund Characteristics - The number of active equity and partial - equity hybrid funds with a position change ranging from 0% to 1% this week is 634, followed by 182 funds with a change from - 1% to 0% [11] - Funds with scales below 20 billion, between 20 - 50 billion, 50 - 80 billion, and over 100 billion slightly increased their positions this week, while other scale funds slightly decreased their positions [11] - In terms of investment style, the proportion of growth stocks in fund holdings is relatively high. Both value and growth stocks had a slight increase in positions this week. The proportion of small - cap stocks in fund holdings is relatively high, with large - cap and small - cap stocks slightly increasing positions and mid - cap stocks slightly decreasing positions [14] Group 4: Bond Fund Duration - The yield to maturity of the 10 - year China Development Bank bond increased by 2bps this week. The median estimated duration of medium - and long - term pure bond funds decreased by 0.06 to 3.60 years, at the 99.20% quantile in the past 5 years. The average median duration in the past 4 weeks was 3.57 years. The duration divergence decreased, with the estimated duration standard deviation decreasing by 0.15 to 1.74 years. The median duration of short - term pure bond funds increased by 0.18 to 1.21 years [4][20] - The median duration of credit bond funds increased by 0.08 to 3.23 years, with 7% of funds being actively managed and 24% being conservatively managed. The median duration of interest - rate bond funds increased by 0.15 to 5.00 years, with 48% of funds being actively managed and 7% being conservatively managed [4] - The median estimated duration of credit bond funds increased by 0.08 to 3.23 years, at the 100.00% quantile in the past 5 years. The average median duration in the past 4 weeks was 3.10 years, and the duration divergence increased, with the estimated duration standard deviation increasing by 0.03 to 1.46 years. The median estimated duration of interest - rate bond funds increased by 0.15 to 5.00 years, at the 98.10% quantile in the past 5 years. The average median duration in the past 4 weeks was 4.93 years, and the duration divergence increased, with the estimated duration standard deviation increasing by 0.06 to 2.03 years [22] - The estimated duration of credit bond funds this week is concentrated in the range of [3, 3.5) (150 funds), followed by [3.5, 4) (124 funds). The estimated duration of interest - rate bond funds is concentrated in the range of [5, +∞) (184 funds), followed by [4, 4.5) (43 funds) [26] - Among credit bond funds, 7.06% of funds had an actively managed duration (above the 80% quantile of their own duration in the past year), and 24.04% had a conservatively managed duration (below the 20% quantile of their own duration in the past year). Among interest - rate bond funds, 47.83% of funds had an actively managed duration, and 7.34% had a conservatively managed duration [27] - The yield to maturity of the 1 - year China Development Bank bond remained unchanged this week. The median estimated duration of short - term pure bond funds increased by 0.18 to 1.21 years, at the 94.80% quantile in the past 5 years. The average median duration in the past 4 weeks was 1.02 years. The duration divergence decreased, with the estimated duration standard deviation remaining unchanged at 0.48 years. The estimated duration of passive policy - bank bond funds decreased by 0.01 to 3.86 years [32]

Core Viewpoint - The bullish sentiment in the A-share market is expected to persist, supported by stable conditions, despite short-term market divergences and uncertainties [1][4]. Market Sentiment and Structure - Investors generally expect a bull market, but there is significant disagreement regarding short-term market movements. The consensus is that the bull market is gradually starting, but confidence in demand remains low, which may hinder upward index breakthroughs [2][4]. - The main structural narrative of the bull market has not yet been established, with current high-performing sectors like pharmaceuticals and overseas computing likely not being the core drivers of the bull market [2][3]. Sector Analysis - Short-term strong sectors include pharmaceuticals and overseas computing, which reflect high expectations for the bull market. However, their relative value has decreased, suggesting that these sectors may move in tandem with the broader market in the future [5][6]. - New consumption is identified as a relatively high-value sector that may see rotation and catch-up in the near term [5][6]. - The mid-term structural focus is expected to shift towards domestic technology and manufacturing sectors, particularly those addressing "anti-involution" trends, which may become the main narrative of the bull market [3][6]. Market Dynamics - The A-share market is anticipated to experience fluctuations before early September, with potential internal adjustment pressures afterward. However, the overall bullish atmosphere is expected to remain intact [5][6]. - The Hong Kong stock market is viewed as a leading market in the bull cycle, with pricing more aligned with fundamental expectations, making it a relatively attractive option in the short to medium term [1][6]. Future Outlook - The macroeconomic environment is projected to improve by 2026, with potential fiscal stimulus from major economies possibly exceeding market expectations. This could enhance China's economic influence on non-U.S. countries [4][5]. - Despite potential market adjustments, opportunities are expected to arise, particularly in sectors with high micro-level activity and small-cap growth stocks [4][5].

Market Overview - A-share market showed structural recovery from August 4 to August 8, with most broad indices experiencing gains. The Shanghai Composite Index rose by 2.11%, while the Shenzhen Index and ChiNext Index increased by 1.25% and 0.49%, respectively [2] - The Wind first-level average increase was 1.88%, with 90% of sectors achieving positive returns. Notably, defense, machinery, and non-ferrous metals sectors performed well, increasing by 6.53%, 4.89%, and 4.67% respectively [2] - Fund issuance totaled 34 funds, including 13 equity funds, 7 mixed funds, 11 bond funds, and 3 FOF funds, with a total issuance of 39.74 billion units [2][4] Fund Performance - The Wind All Fund Index rose by 0.91%, with the ordinary equity fund index increasing by 1.49% and the mixed equity fund index rising by 1.73% [3] - The Wind stock fund index showed a year-to-date return of 12.85%, while the mixed fund index returned 12.67% [8] Global Asset Review - Global asset classes continued to show divergence, with US tech giants leading the market, particularly driven by Apple's domestic investment plan and AI breakthroughs [5] - The CRB commodity index remained weak, with energy and metal sectors showing contrasting performances. Gold prices reached over $3530 per ounce due to safe-haven demand [5] Domestic Fund Market Review - The Wind China Fund Total Index reported a weekly return of 0.91%, with the stock fund index at 1.45% and the mixed fund index at 1.44% [8] - The market sentiment remained high, with small-cap stocks seeing increased trading volume, and the daily trading volume average slightly rising to 1.8 trillion [9] Domestic Bond Market Review - The national bond futures index saw a slight increase of 0.15%, while short-term funding spreads showed minimal change [13]

Group 1 - Investors generally expect a bull market, but there is increasing divergence regarding the short-term market outlook. Key short-term obstacles include economic downturn expectations for Q3 2025 and a policy focus on structural adjustments, which temporarily do not support an upward breakthrough of the index. The main bull market structure has yet to be established, with potential directions being domestic technological breakthroughs and high global market share manufacturing reversing inward competition [1][5][6] Group 2 - The bull market atmosphere is unlikely to disappear easily. Although the macroeconomic combination in Q3 is unfavorable, it will not affect the expected improvement in the supply-demand structure in 2026, only leading to minor adjustments. Key factors that could genuinely impact the bull market atmosphere include significant demand decline around mid-2026 and the competitiveness of Chinese manufacturing. If the competitive advantage of Chinese manufacturing is constrained, it could undermine the bull market atmosphere [7][8][9] Group 3 - Even if the market experiences adjustments, there will still be opportunities. Before the bull market main line is established, the market can maintain characteristics seen in recent times, such as sector rotation and high micro-activity, with small-cap growth continuing to outperform. This environment is characterized by a lack of demand highlights, a need for time in supply adjustments, and controllable risks in the stock market [9][10] Group 4 - The core view of the market remains unchanged: A-shares may experience fluctuations before early September, with inherent adjustment pressures afterward. Policies to stabilize capital market expectations may be re-initiated. Time is a friend of the bull market, as it supports fundamental improvements and incremental capital inflows. The expectation is that Q4 2025 will perform better than Q3 2025, with 2026 showing further improvements [10][11] Group 5 - Short-term strong sectors such as pharmaceuticals and overseas computing are high-prosperity directions that reflect market expectations for the bull market. However, the relative cost-effectiveness of these sectors has decreased, indicating that future performance may align more closely with the overall market. New consumption is currently a relatively high-cost-effective direction that may see a rotation in the near term [10][11]

Group 1 - During the past week, 77 stocks had a turnover rate exceeding 100%, with Beifang Changlong leading at a turnover rate of 302.24% [1] - Other notable stocks with turnover rates above 200% include Wanlima, Weiman Sealing, and Xinhenghui [1] - The majority of stocks with turnover rates over 100% belong to the defense, machinery, electronics, and computer industries according to Shenwan's primary industry classification [1] Group 2 - Among the stocks with turnover rates exceeding 100%, Jiyuan Technology, Kexin Innovation Source, Anli Co., Beifang Changlong, and Xinhang New Materials had significant cumulative gains, all exceeding 45% for the week [1]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In the first week of August, convertible bonds rebounded strongly, recovering losses from the end of July and reaching new highs. High - priced bonds performed strongly, while low - priced bonds were mediocre. Tech and cyclical sectors led the gains, and the pharmaceutical sector declined. The industry theme showed high rotation. The strong performance of convertible bonds was supported by three factors: the resilience of the equity market, high bullish sentiment and continuous inflow of funds into the convertible bond market, and a high forced - redemption rate leading to an imbalance in supply - demand. The positive sentiment in the convertible bond market is expected to continue. It is recommended to pay attention to dividend - low - volatility convertible bonds such as bank convertible bonds and bottom - up opportunities of high - elasticity varieties [1][5]. 3. Summary According to Relevant Catalogs 3.1 Week's Viewpoint and Outlook - In the first week of August, convertible bonds rebounded strongly. Structurally, high - priced bonds were strong and low - priced bonds were mediocre. Tech and cyclical sectors led the gains, and the pharmaceutical sector declined. The industry theme had high rotation. The strong performance was due to the resilience of the equity market, high bullish sentiment and fund inflow, and a high forced - redemption rate. There are no obvious short - term negative factors, and the positive sentiment in the convertible bond market is expected to last. Attention should be paid to the cost - performance switch between pure bonds and convertible bonds, especially bank convertible bonds, and bottom - up opportunities of high - elasticity varieties. The future will shift from position - winning to structure - winning [1][5]. 3.2 Convertible Bond Valuation - This week, convertible bonds and underlying stocks rebounded, with valuations rising strongly and convertible bonds having strong follow - up ability. The 100 - yuan premium rate of the whole - market convertible bonds was 33%, up 1.68% week - on - week, and the latest quantile was at the 91.10% percentile since 2017. The valuation increase of high - and low - rated convertible bonds was similar this week, and the valuation quantile of high - rated convertible bonds was higher than that of low - rated ones. - This week, convertible bonds rose strongly following the underlying stocks, and the yield to maturity hit a new low since 2017, reporting - 5.60%. As of now, the conversion premium rate index, pure bond premium rate index, and yield to maturity were 42.35%, 39.35%, and - 5.60% respectively, changing + 0.29%, + 3.87%, and - 0.86% from last week, and their current quantile levels were at the 62.60, 68.90, and 0.00 percentiles since 2017 [4][6][9]. 3.3 Clause Tracking 3.3.1 Redemption - This week, Youzu, Baidian, Haopeng, Dongcai, Xince, and Longhua Convertible Bonds issued early - redemption announcements. Currently, there are 24 convertible bonds that have issued forced - redemption or maturity - redemption announcements and have not delisted, with a potential conversion or maturity balance of 5.1 billion yuan. There are 45 convertible bonds currently in the redemption process, and 10 are expected to meet the redemption conditions next week. Three convertible bonds issued non - redemption announcements this week [4][14][18]. 3.3.2 Downgrade - This week, Ou22 Convertible Bond proposed a downgrade, and Zhongzhuangzhuan 2 announced a downgrade to the bottom. As of now, 139 convertible bonds are in the non - downgrade period, 24 cannot be downgraded due to net - asset constraints, 1 has triggered the condition but the stock price is still below the downgrade trigger price without an announcement, 31 are accumulating downgrade days, and 4 have issued board - of - directors' plans for downgrades but have not gone to the general meeting of shareholders [4][21]. 3.3.3 Put - back - This week, Tianchuang Convertible Bond issued a put - back announcement. As of now, 2 convertible bonds have issued put - back announcements, 4 are accumulating put - back trigger days, 3 of which are in the non - downgrade period and 1 has proposed a downgrade [4][24]. 3.4 Primary Issuance - This week, Weidao Convertible Bond issued an issuance announcement. According to the latest announcement, there are no bonds to be listed next week. As of now, there are 6 convertible bonds in the approval - registration process, with a to - be - issued scale of 5.7 billion yuan, and 4 in the listing - committee - approval process, with a to - be - issued scale of 9 billion yuan [4][26][28].