Investment Rating - The report maintains a "Buy" rating for several key stocks in the financial and manufacturing sectors, including Beike-W, China Resources Land, New China Life Insurance, Qilu Bank, Sungrow Power Supply, and others [54]. Core Insights - The report highlights the investment outlook for the financial and manufacturing industries, emphasizing the recovery of corporate earnings and the potential for stock price appreciation in the context of macroeconomic conditions and policy expectations [5][10][11]. Financial Sector Summary - The financial sector is expected to see a continuation of performance recovery in Q2, with a focus on high-elasticity stocks. The insurance sector is projected to benefit from improved new business value and investment returns [20][21]. - Qilu Bank is noted for its strong growth in credit market share and improving asset quality, with a projected net profit growth of 16.5% in the first half of 2025 [22][26]. Real Estate Sector Summary - The real estate sector is anticipated to experience a rebound due to policy easing and potential for price recovery. Key companies like Beike-W and China Resources Land are highlighted for their strong fundamentals and growth potential [11][12][19]. Manufacturing Sector Summary - The manufacturing sector, particularly in machinery and electrical new energy, is expected to benefit from global competitiveness and accelerated overseas expansion. Companies like Haitian International are positioned to gain from increased export demand [27][35]. - The report emphasizes the importance of new technologies and market trends in the electrical new energy sector, with a focus on storage and solar energy [27][29]. Environmental Sector Summary - The environmental sector, particularly waste incineration and water services, is highlighted for its long-term investment value, with companies like Hanlan Environment and Beijing Water Group recommended for their stable cash flow and growth potential [46][50].

Group 1 - The market sentiment is becoming more optimistic, with A-shares showing a five-week consecutive rise in weekly K-line performance, indicating a growing profit effect for investors [1] - Institutional funds have seen widespread net inflows, with public mutual funds exceeding estimated net redemptions in June, and private equity registrations surpassing 30 billion yuan, a 125% year-on-year increase [2] - Retail investors are also increasing their participation, with margin balances exceeding last year's peak, and active private equity positions remaining high at 82% [2] Group 2 - Historical data suggests that bull markets characterized by a divergence between fundamentals and liquidity typically last no more than four months, raising questions about the sustainability of the current market trend [3] - The current anti-involution narrative indicates potential investment opportunities in undervalued cyclical manufacturing sectors, particularly in construction materials, basic chemicals, steel, and transportation [4] - The upcoming World Artificial Intelligence Conference in 2025 is expected to catalyze growth in various sectors, with the STAR Market likely to experience a rebound due to supportive policies [5] Group 3 - Strategies for responding to the market surpassing 3600 points include balancing investments between Hong Kong and A-shares, with a focus on technology sectors and cyclical industries [6][7] - Investor sentiment is leaning towards a bullish outlook, with 55% of surveyed investors believing the market is in a bull phase, and a majority expecting the market to stabilize above 3600 points [9] - The technology sector remains a favored investment direction, with 46% of investors maintaining a focus on this area, while consumer sectors are also gaining attention [10]

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].

Group 1 - The current cycle sector has seen significant increases due to policy-driven improvements in fundamental expectations and relatively low valuations in certain industries [1][9] - The "anti-involution" policy has led to improved fundamental expectations in cyclical industries, with notable price increases in commodities such as lithium carbonate (up 22.3%), polysilicon (up 63.6%), and glass (up 28.4%) as of July 24, 2025 [2][9] - As of July 1, 2025, the PE valuation percentiles for agriculture, forestry, animal husbandry, and fishery, non-ferrous metals, and electric power equipment are at historical lows of 6%, 23%, and 32% respectively, indicating potential for upward valuation adjustments [2][9] Group 2 - The strength of the "anti-involution" policy suggests that cyclical market trends may continue in the short term, with historical precedents from 2016 and 2020 indicating that strong policy measures can lead to significant price increases in affected industries [3][17] - Current cyclical industries still have room for valuation increases, with historical data showing that during major cyclical markets, valuations can rise above 70% [3][27] - Industries such as automotive, electric new energy, chemicals, construction, and coal are expected to benefit from improved fundamentals due to the "anti-involution" policy [4][31] Group 3 - The automotive sector is facing challenges due to price wars in the new energy vehicle market, but recent government meetings aim to stabilize pricing and improve profitability [31] - The electric new energy sector, particularly solar energy, is a focus of the "anti-involution" policy, which aims to eliminate low-price competition and enhance product quality [31] - The chemical industry has seen weakened product prices and low capacity utilization, but the "anti-involution" policy may help restore prices for high-involution products like plastics [31]

Group 1: Non-ferrous Metals Industry - In Q2 2025, the holdings of heavy stocks in the non-ferrous metals sector by actively managed equity funds increased significantly, with notable increases in rare earth and small metal stocks [4] Group 2: Petrochemical Industry - The Ministry of Industry and Information Technology is expected to introduce a growth stabilization plan for the petrochemical industry, which aims to eliminate outdated production capacity and optimize the industry structure [4] - The current phase of eliminating outdated capacity in the chemical industry is in the assessment stage, and its implementation is expected to enhance the overall competitiveness of chemical facilities [4] Group 3: Construction and Building Materials - The Yarlung Zangbo River downstream hydropower station has officially commenced construction, with a total investment of approximately 1.2 trillion yuan, expected to generate substantial construction and material orders [4] - The project, which is six times the investment of the Three Gorges Project, is anticipated to effectively boost infrastructure investment growth in China [4] Group 4: Renewable Energy - The Yarlung Zangbo River downstream hydropower project has a total investment scale of about 1.2 trillion yuan, with an installed capacity of 60 million to 81 million kilowatts, benefiting the "duopoly" in hydropower equipment [5] - The construction of the hydropower project is expected to contribute to incremental orders for the leading companies in the sector, providing strong support for their performance in 2025 [5] Group 5: Textile and Apparel - Lin Qingxuan, a high-end skincare brand, has maintained its position as the top-selling facial oil product in China for 11 consecutive years since its launch in 2014, focusing on natural camellia oil-based skincare solutions [4] - According to a report, Lin Qingxuan ranks first among all high-end domestic skincare brands in China by retail sales in 2024, being the only domestic brand among the top 15 high-end skincare brands [4] Group 6: Banking Sector - Changshu Bank reported a revenue of 6.06 billion yuan for the first half of 2025, representing a year-on-year growth of 10.1%, with a net profit of 1.97 billion yuan, up 13.5% year-on-year [6] - The bank's return on average equity (ROAE) stands at 13.3%, reflecting a slight increase, and it maintains a low non-performing loan ratio with a high provision coverage ratio [6]

Group 1 - The core viewpoint is that the cash flow index and related ETF are showing strong performance, with significant increases in individual stocks and the ETF itself [1][3] - The cash flow ETF fund has seen a 1.84% increase over the past week, indicating positive momentum [1][3] - The fund's trading volume has been robust, with a turnover rate of 3.24% and a monthly average trading volume of 35.97 million yuan [3] Group 2 - The cash flow ETF fund has a monthly profit percentage of 100% since its inception, with a high probability of monthly profitability at 80.95% [3] - The maximum drawdown since the fund's inception is 2.14%, which is relatively low compared to its benchmark [3] - The fund's management fee is 0.50%, and the tracking error over the past month is 0.186% [3] Group 3 - The cash flow index tracks 100 companies with high cash flow rates, reflecting the overall performance of companies with strong cash flow generation capabilities [4] - The top ten weighted stocks in the cash flow index account for 57.48% of the index, including major companies like China National Offshore Oil Corporation and Gree Electric Appliances [4]

Core Viewpoint - The recent rebound in domestic industrial commodity prices is attributed to the implementation of policies aimed at reducing "involution" in various industries, with expectations for sustained price strength, though caution is advised regarding potential adjustments due to rapid price increases [1]. Group 1: Policy and Market Response - The Central Financial Committee's sixth meeting emphasized the need to address low-price disorderly competition and promote product quality, interpreted as a swift response to "involution" in the market [2]. - The Ministry of Industry and Information Technology (MIIT) is focusing on high-quality development in the photovoltaic industry, indicating strong governmental support for this sector [2]. - Industrial commodity futures have seen a continuous rebound since July, with the Wenhua Industrial Commodity Index rising by 4.18% this month, and specific sectors like coal, building materials, and steel experiencing significant gains of 12.17%, 9.99%, and 8.61% respectively [3]. Group 2: Sector-Specific Developments - The photovoltaic sector has led the price increases, with polysilicon futures rising over 30% this month, followed by coking coal, glass, alumina, and iron ore, all exceeding 10% gains [3]. - The recent policy signals regarding the photovoltaic industry have heightened market expectations for supply-side reforms and structural adjustments, driving up industrial silicon prices [3]. - The emphasis on addressing "involution" is expected to impact various sectors, including steel, petrochemicals, and new energy vehicles, with a focus on industries characterized by high inventory, capital expenditure, and low capacity utilization [4][5]. Group 3: Future Outlook and Challenges - The government plans to implement specific measures for key industries such as steel, non-ferrous metals, and construction materials to stabilize growth and promote structural adjustments [6]. - Despite the positive policy environment, challenges remain in maintaining stable industrial economic performance and addressing structural contradictions within the industry [5][6].

Core Viewpoint - Under the backdrop of normalized global geopolitical risks, weakened dollar credit system, and rising economic uncertainty, gold has emerged as a "yardstick" for measuring asset value [1] Asset Performance - Since March 2018, only a few cryptocurrencies have recorded positive returns when priced in gold, while other asset classes have generally underperformed [2] - The report highlights that the performance of cryptocurrencies is driven by payment convenience, technological innovation premiums, and supply scarcity, particularly Bitcoin's halving mechanism, which reinforces its "digital gold" status [4] - Equity assets have shown nominal growth but remain weak when priced in gold, primarily relying on liquidity injections, with a peak growth rate of 26.7% in the US M2 money supply [4] - Real estate in the US and India has underperformed relative to gold, despite benefiting from economic resilience and demographic dividends [4] Industry Performance - All major industries have underperformed gold since 2018, but resource sectors and new momentum industries, such as high-dividend coal and banking, have shown relative strength [6] - New momentum industries, represented by electric new energy and TMT, have outperformed traditional sectors like real estate [7] - In the secondary industry, precious metals have been the standout performer since 2018, with emerging technologies like semiconductors outperforming traditional tech [8] Style and Strategy - Small-cap stocks have emerged as the absolute winners, with the micro-cap index outperforming gold since 2018 due to a reverse investment mechanism, low valuations, and liquidity premiums [10][13] - The report indicates that small-cap factors have significantly outperformed gold, while large-cap stocks have lagged, reflecting a preference for emerging small-cap industries [14]

Core Insights - The report emphasizes the potential for market breakthroughs amid current volatility, driven by "policy expectations + industry prosperity" as dual certainties, suggesting an optimized holding structure to prepare for the third quarter's performance and policy resonance [1][10][20]. Market Overview - The market continues to show strength supported by capital and policy expectations, with the upcoming disclosure of second-quarter economic data expected to influence market sentiment [10][20]. - The overall A-share index, excluding financial and micro-cap stocks, has seen a cumulative increase of 32.8% from August 30, 2024, to July 11, 2025, with a 7.0% increase year-to-date [22][25]. Industry Performance - Midstream industries, such as steel, electric new energy, real estate, and building materials, have significantly contributed to the upward movement of the index, indicating a recovery in valuations driven by "anti-involution" policy expectations [22][26]. - The report highlights the ongoing "anti-involution" trading, with sectors like electric new energy and steel showing continued recovery, while the banking sector experienced notable adjustments [20][21]. Domestic Computing Power Industry - The domestic computing power industry is entering a high-growth cycle, with significant developments in the GPU sector, including the IPO acceptance of domestic GPU manufacturers, which fills a gap in the A-share market for full-function GPUs [26][28]. - Industrial Fulian's mid-year earnings forecast indicates a substantial increase in net profit, driven by AI-related business growth, suggesting a positive outlook for the computing power industry [29][30]. Capital Flow and ETF Trends - The A-share market saw a net capital inflow of 61.57 billion yuan, with non-bank financials, computing, and real estate being the most favored sectors [35][36]. - The report notes a shift in ETF trends, with a significant net subscription of 4.89 billion yuan, marking the largest inflow in three weeks [35][36].

Key Insights - As of June 2025, China's foreign exchange reserves stood at 33,174 billion USD, indicating a stable economic environment [1] - The convertible bond market showed a 3.3% increase in June, following a 4.7% rise in the stock market, driven by policy stimuli and geopolitical factors [2][3] - The life sciences upstream sector is experiencing a turning point, with a projected revenue growth of 10.75% year-on-year in 2024, driven by stable investment and domestic substitution trends [7][8] - The North Exchange is expected to maintain high trading activity and market attention, with a focus on new industries such as artificial intelligence and commercial aerospace for the second half of 2025 [12][17] Convertible Bond Market - The convertible bond market's valuation is not overly high, with structural opportunities still available, particularly in sectors showing improved economic conditions such as non-ferrous metals, machinery, agriculture, and computing [4][3] - The market is transitioning from a policy-driven focus to a fundamental pricing approach, with expectations of a 5% economic growth target being met [3][4] - Recommended convertible bonds for July include Guotou Convertible Bond, Ran 23 Convertible Bond, and others, indicating a strategic focus on sectors benefiting from policy support [4] Life Sciences Upstream Sector - The life sciences upstream sector is characterized by high specialization and significant barriers to entry, with major companies expanding and exploring international markets [7][8] - The sector is poised for growth due to the booming demand for innovative drugs, with the Chinese antibody drug market expected to reach 510.8 billion RMB by 2030 [8] - Mergers and acquisitions are becoming more prevalent, with domestic companies looking to replicate the growth paths of global giants, enhancing industry concentration and growth potential [9][10] North Exchange - The North Exchange's trading activity has slightly decreased, with an average daily turnover of approximately 279.83 billion RMB, but it remains higher than other markets [13] - The North Exchange's overall price-to-earnings ratio is around 50.4 times, indicating a slight decline but still higher than other boards, with the electronics sector showing the highest ratios [14] - The North Exchange is optimizing its evaluation system to support the high-quality development of small and medium-sized enterprises, focusing on innovation and market ecology improvement [15][17]