Core Viewpoint - The report highlights a mixed performance across various sectors in Q2 2025, with technology showing strong potential for exceeding expectations, while consumer sectors are experiencing deterioration. The financial sector is performing well, and industrial sectors are seeing varied results based on sub-segments [2][5][6]. Group 1: Technology Sector - The technology sector is expected to outperform in Q2 2025, driven by strong AI infrastructure demand and IT spending. The communication and software segments are likely to see significant growth, while the consumer electronics segment is expected to meet company guidance due to seasonal factors [3][8][13]. - AI infrastructure is projected to be a key growth driver, with companies in this space likely to revise their revenue guidance upwards for 2025 [8][13]. Group 2: Industrial Sector - The industrial sector is experiencing overall recovery, with the MSCI global capital goods index up 21% year-to-date. However, performance is mixed across sub-segments, with discrete automation showing improvement while process automation faces pressure due to high base effects [4][17]. - The U.S. power equipment demand remains strong, but major suppliers may not exceed expectations due to reliance on past order volumes [23][24]. Group 3: Consumer Sector - The consumer sector is facing challenges, particularly in discretionary spending, with notable declines in sectors like luxury goods and apparel. Essential goods are showing more resilience, but overall momentum remains weak [5][41][44]. - The automotive sector is seeing mixed results, with traditional automakers performing well in the U.S. and Europe, while electric vehicle penetration is under pressure [32][33]. Group 4: Financial Sector - The financial sector in the U.S. has recorded positive absolute and relative returns in the first half of 2025, driven by earnings improvements and regulatory easing. The outlook for the second half remains optimistic [6][70]. Group 5: Mining and Commodities - The mining sector, particularly gold and copper, has shown strong performance in Q2 2025, with gold prices reaching historical highs. The agricultural sector is stable, while the chemical sector has downgraded its outlook due to currency headwinds and weak demand [7][74][91]. Group 6: Regional Performance - U.S. companies are benefiting from a weaker dollar, while European firms face headwinds from currency fluctuations. Japanese companies are under pressure from weak domestic growth [2][5].

Group 1: Overall Market Overview - The overall fund market is dominated by mixed funds, totaling 4,702, followed by bond funds and equity funds. The growth rate for equity funds in the current quarter is the highest at 7.45%, followed by REITs at 6.15%. The largest scale is in money market funds, reaching 142,311.36 billion yuan [3][4] - As of the end of Q2 2025, there are 581 ordinary equity funds, 1,359 flexible allocation funds, 26 balanced mixed funds, and 2,613 equity mixed funds. The number of equity mixed funds increased by 41 compared to Q1 2025 [3][4] Group 2: Active Equity Fund Positioning - The highest equity position is in ordinary equity funds at 89.61%, followed by 88.19% in equity mixed funds. The stock positions of various active equity funds are close to historical highs since 2015, with flexible allocation funds reaching their highest ever [4] - The highest industry allocation for active equity funds is in Hong Kong Stock Connect at 19.91%, followed by electronics at 15.07%. The allocation to Hong Kong Stock Connect has reached its highest level since Q1 2015 [4][5] Group 3: Stock and Individual Stock Configuration - The highest valued stock held by active equity funds is Tencent Holdings. Among the top twenty holdings, six are from Hong Kong Stock Connect, accounting for 33.79% of the total value of the top 20 stocks. The food and beverage and electronics sectors each have three stocks in the top holdings, accounting for 12.44% and 11.72%, respectively [4][5] - The stock with the highest increase in holdings is Zhongji Xuchuang, with an increase of 139.45 billion yuan. Other stocks with increases exceeding 100 billion yuan include Xinyi and Shunfeng Holdings, all from the communication sector [5]

Investment Rating - The report suggests a positive outlook on the AI sector, highlighting significant growth potential and investment opportunities in both domestic and international markets [4][9]. Core Insights - The AI sector is experiencing a robust growth trajectory, with the U.S. AI industry showing an 80.19% increase since the beginning of 2024, significantly outperforming the Nasdaq index, which rose by 38.47% during the same period [9][13]. - Domestic AI tools are rapidly gaining market share through low-cost strategies, fostering user habits that could lead to long-term profitability [9][12]. - The report emphasizes the importance of building a complete AI ecosystem in China, driven by domestic innovation and a large user base, which is expected to enhance the commercial value of AI applications [9][34]. Summary by Sections 1. U.S. AI Market Review - The U.S. AI sector has shown a clear upward trend in 2024, driven by technological advancements and product upgrades, with significant contributions from major companies like OpenAI and Google [13][17]. - The report notes that the AI applications in the U.S. have established a solid commercial foundation, particularly in B2B models, which is expected to diversify application scenarios and promote industry development [17][21]. 2. Comparison of U.S. and Chinese AI Industries - The U.S. maintains a lead in AI due to early advantages in foundational research and chip technology, while China is accelerating its catch-up through policy support and a rich application landscape [24][28]. - Chinese companies are narrowing the performance gap with innovative models and open-source strategies, which are expected to enhance global AI development [24][28]. 3. Investment Recommendations - The report recommends focusing on companies such as Alibaba, Meitu, Kuaishou, and others that are well-positioned to benefit from the ongoing AI revolution [9][12]. - It highlights the potential for significant returns in the AI sector, particularly as applications become more integrated across various industries [9][12]. 4. AI Application Categories - The report categorizes AI applications into several areas, including advertising, content generation, e-commerce, and education, each showing substantial growth potential [11][47]. - AI's role in advertising is particularly emphasized, with advancements in content generation and targeted marketing strategies expected to reshape the industry [47][48]. 5. Future Market Projections - The report forecasts that China's AI core industry will exceed 750 billion yuan by 2025, with a compound annual growth rate of 14.5% expected through 2030 [34][36]. - The increasing penetration of AI across various sectors, including healthcare and education, is anticipated to drive significant market growth [34][36].

Group 1: Overall Market Outlook - The current market situation is similar to 2013 and 2019, with a high probability of evolving into a comprehensive bull market, although tactical breakthroughs may take time [6][12] - The market is characterized by low valuation levels, weak corporate earnings, positive policy tone, and active thematic opportunities, indicating potential for a bull market [12][14] - A possible market pullback in July is expected, but the extent is manageable, with a return to bull market conditions likely in Q3 or Q4 if earnings or policies turn optimistic [12][14] Group 2: Industry Allocation Insights - The report suggests a value-oriented approach in the current quarter, with plans to increase exposure to more elastic sectors in Q3 [12][14] - Key sectors for investment include: - New Consumption: Benefiting from domestic demand stability and potential supportive policies [14] - Media: Attractive valuation with a focus on AI application changes [14] - Military Industry: Likely to see continuous thematic events due to unique demand cycles [14] - Banking and Non-Banking: Low sensitivity to overseas economic fluctuations and high sensitivity to domestic policies [14] - Non-ferrous Metals: Strong capacity structure with resilience to economic fluctuations [14] - Real Estate: Positioned for new policy initiatives with low valuation levels [14] Group 3: Top Stock Picks - The top stock picks for July 2025 include: - 分众传媒 (002027.SZ) in Media and Internet - 顺丰控股 (002352.SZ) in Transportation - 药师帮 (9885.HK) in Pharmaceuticals - 万辰集团 (300972.SZ) in Food and Beverage - 青岛银行 (002948.SZ) in Banking - 新集能源 (601918.SH) in Utilities - 豆神教育 (300010.SZ) in Education - 兖矿能源 (600188.SH) in Energy - 江淮汽车 (600418.SH) in Automotive - 卓易信息 (688258.SH) in Computing [3][15] Group 4: Company-Specific Insights - 分众传媒 (002027.SZ) is focusing on offline advertising with a significant share of daily consumer goods advertisers [16] - 顺丰控股 (002352.SZ) has shown remarkable growth in logistics volume, outperforming industry growth rates, driven by customer penetration and operational optimizations [19][21] - 药师帮 (9885.HK) is expected to achieve a compound annual growth rate of approximately 164% in net profit from 2024 to 2027, benefiting from its deep market penetration and strong cash flow [25][27] - 万辰集团 (300972.SZ) maintains a competitive edge in the snack retail sector, with a focus on operational quality and profitability improvements [28][29] - 青岛银行 (002948.SZ) is expanding its business in a robust economic environment, with significant growth in deposits and loans, supported by a strong financial foundation [31][33]

Group 1: Company Developments - Banu International Holdings Limited submitted its listing application to the Hong Kong Stock Exchange, reporting revenues of 5.639 billion RMB in Q1 2024 and 7.087 billion RMB in Q1 2025, with adjusted net profits of 575 million RMB and 767 million RMB respectively [1] - Midea Group announced a share repurchase plan with a maximum amount of 10 billion RMB and a minimum of 5 billion RMB, aiming to repurchase up to 1 billion shares, which is approximately 1.30% of the total issued shares [6] - *ST Zhongdi plans to transfer its real estate development assets and liabilities to its controlling shareholder for 1 RMB, focusing on property services and asset management for strategic transformation [7] - Muyuan Foods announced that its application for H-share issuance has been accepted by the China Securities Regulatory Commission [8] - *ST Jiuyou's stock will be delisted, with the Shanghai Stock Exchange initiating the delisting process due to significant reporting violations, including a fine of 8.5 million RMB [10] - Weir Shares will change its name to Haowei Group, effective June 20, 2025 [11] - Three squirrels terminated the acquisition of Hunan Ailing Food Technology due to failure to reach agreement on core terms [12] - Bohai Automobile plans to acquire stakes in four automotive parts companies through a combination of share issuance and cash payments [13] - Zhujiang Beer elected a new chairman, Huang Wensheng, following the retirement of the previous chairman [14] Group 2: Industry Trends - The National Medical Products Administration announced measures to support innovative drug development, including a 30-day review process for clinical trial applications [3] - Guangdong Province aims to cultivate 3-5 leading enterprises in the nuclear medicine industry by 2030, enhancing innovation capabilities and establishing a competitive industry cluster [5] - The National Radio and Television Administration is implementing regulations to improve user experience in internet television services, addressing issues related to automatic renewal and user complaints [4] - Shanshui Technology plans to invest 6 billion RMB in a new chemical materials project, expected to generate an annual output value of 8 billion RMB upon completion [19]

Global Economic Outlook - The economic momentum in the US and non-US regions is expected to converge, primarily driven by a slowdown in the US economy [2][3] - Non-US regions benefit from a more accommodative monetary policy environment, with GDP output gaps still not positive according to IMF estimates [2][3] - The European market is viewed positively due to the convergence of economic growth momentum with the US, despite facing uncertainties [3][12] Industry Preferences - Analyst preferences for industries in the second half of the year are ranked as follows: Technology (Telecom, Software, Advertising > Electronics > Content), Industrial (Power Equipment > Automation), and Financials [1][2] - Caution is advised for consumer and consumer-related manufacturing sectors (home appliances, automobiles) and bulk raw materials [1] European Market Insights - The European market is expected to perform relatively well, supported by fiscal policy and defense spending, which may boost investor and consumer confidence [3][12] - The impact of tariffs on the European GDP is estimated to be a direct effect of 0.2% to 0.4%, with indirect effects around 0.2% [12][13] - The labor market remains strong, and energy prices are declining, providing additional support for the European economy [13] Emerging Markets - Emerging markets show marginal upward potential, but overall absolute performance may be limited, requiring regional selection [4][22] - Factors favoring emerging markets include continued policy rate declines and the worst trade news potentially being priced in [4][22] - Challenges include limited improvement in risk appetite due to policy uncertainties and high US Treasury yields [4] Japan's Economic Outlook - Japan's economy is expected to experience moderate recovery in the second half of 2025, with inflation remaining high [15][16] - The Bank of Japan may consider raising interest rates in response to economic conditions, with a potential increase to 0.75% [15][17] - Japanese stocks are likely to be influenced by global market trends, particularly the US market [18] Southeast Asia Economic Trends - Southeast Asian economies are projected to experience growth, with GDP growth rates for countries like Vietnam and the Philippines expected at 6.5% and 5.3% respectively [22] - The region may face pressures from inventory cycles and trade negotiations, impacting growth in the latter half of the year [22][23] - Local currencies are showing signs of recovery against the US dollar, with notable increases in the Singapore dollar and Philippine peso [23] Industrial Sector Insights - The industrial sector is expected to benefit from energy transition, infrastructure projects, and data center investments, despite a slowdown in capital expenditure growth [52][54] - The automation sector is nearing the end of inventory destocking, with a positive outlook for recovery [54] - Power equipment demand is anticipated to remain strong, with limited tariff impacts due to localized production strategies [56][58] Consumer Goods and Automotive Sector - The consumer goods sector is facing challenges from tariffs, but large appliances are less affected due to domestic production [63][64] - The automotive market is still grappling with tariff uncertainties, but the overall impact is expected to diminish [66][68] - Electric vehicle sales may be impacted by the potential removal of tax credits in the US, while European automakers are negotiating to alleviate tariff pressures [68]

Investment Rating - The report maintains an "Accumulate" rating for the media sector [5]. Core Viewpoints - The media sector has shown a positive trend, with a 2.52% increase from June 3 to June 6, 2025, driven by the gaming sector and AI themes [10][12]. - The report highlights optimism for AI applications, IP monetization, and mergers and acquisitions in the media sector by 2025 [10][16]. - Key areas of focus include new AI applications, companies with IP advantages, and state-owned enterprises due to increased funding and market value assessments [10][16]. Summary by Sections 1.1 Market Overview - The media sector's performance is noted with a 2.52% increase, outperforming other sectors such as telecommunications and non-ferrous metals [10][12]. - The top five gainers in the media sector include Gehua Cable (16.4%), Hubei Broadcasting (15.5%), and Shengxun Technology (13.6%) [12][14]. 1.2 Sub-sector Insights - Resource integration expectations are focused on companies like China Vision Media and Guangxi Broadcasting [16]. - AI-related companies to watch include Rongxin Culture and Aofei Entertainment [16]. - In gaming, strong performers include Shenzhou Taiyue and Kainet Network [16]. - State-owned enterprises of interest include Ciweng Media and Anhui Xinhua Media [16]. - In the education sector, Xueda Education is highlighted [16]. - Key Hong Kong stocks include Alibaba and Tencent, with a focus on New Oriental in the K12 education sector [16]. 2. Key Events Review - Google released the Gemini 2.5 Pro model, showcasing superior capabilities in mathematics, programming, and reasoning, achieving a 24-point increase in Elo score [18]. - Luma AI introduced the Modify Video feature, enhancing video creation flexibility, which has gained significant attention on social media [18]. 3. Sub-sector Data Tracking - The domestic film market's total box office from May 31 to June 6, 2025, reached approximately 515 million yuan, with "Mission: Impossible 8" leading at 218 million yuan [20][22]. - The top-rated series during the same period included "Cang Hai Chuan" and "Zhe Yao" [23][24].

Group 1 - The report maintains a cautiously optimistic view on the Hong Kong stock market, highlighting external risks and the need for new momentum for upward movement [1][2] - The report emphasizes the importance of AI technology and consumer sectors, suggesting a defensive allocation in high-dividend stocks due to ongoing overseas risks [2][3] - The report lists a selection of "golden stocks" with detailed financial metrics, including Tencent Holdings, Alibaba, Kuaishou, and others, indicating their potential for growth and investment value [3][72] Group 2 - Tencent Holdings is recognized for its strong competitive advantages across multiple business areas, particularly in gaming and advertising, with expectations for EPS growth driven by high-margin business expansion [11][12] - Alibaba is noted for its leadership in AI and cloud computing, with anticipated revenue growth from its cloud services and improved profitability from its core business segments [19][20] - Kuaishou is expected to benefit from its AI capabilities and content consumption trends, with projections for significant revenue growth in the coming years [24][25] - Xiaomi is highlighted for its innovative automotive business and strong performance in the smartphone market, with expectations for continued growth in high-end products [30][31] - China Petroleum & Chemical Corporation (Sinopec) is expected to see improved performance due to lower international oil prices and a high dividend payout ratio, making it attractive for income-focused investors [43][44] - Jiufang Zhitu Holdings is positioned for growth in the online investment sector, leveraging technology to enhance its product offerings and market share [51][52] - Anta Sports is recognized for its strong brand performance and strategic acquisitions, which are expected to enhance its competitive position in the market [56][57] - New Energy is anticipated to benefit from privatization efforts and improved profit structures, with a significant valuation upside [60][61] - Innovent Biologics is projected to achieve substantial revenue growth driven by its expanding product pipeline and effective cost management [66][67]

Investment Rating - The report maintains an "Outperform the Market" rating for the media industry [5][40]. Core Views - The media sector has shown a positive performance with a 1.73% increase, outperforming both the CSI 300 (-1.08%) and the ChiNext Index (-1.40%) during the week of May 24 to May 30 [12][14]. - Key developments include the formalization of the "Stablecoin Ordinance" in Hong Kong and the release of DeepSeek-R1-0528, which has significantly improved in code generation speed and inference accuracy [2][17][18]. - The report emphasizes a short-term upward trend in performance and a long-term positive outlook on AI applications and IP-driven products [4][36]. Summary by Sections Industry Performance - The media industry rose by 1.73%, ranking 5th among all sectors in terms of performance [12][14]. - Notable gainers included Yuanlong Yatu, Times Publishing, Youzu Network, and ST Fanli, while Kunlun Wanwei, Shengtong Shares, Yinsai Group, and Meiri Interactive faced declines [12][13]. Key Developments - The "Stablecoin Ordinance" in Hong Kong aims to promote financial innovation while maintaining stability in the financial sector [17]. - DeepSeek-R1-0528 has been released and open-sourced, showing performance comparable to leading models like OpenAI's o3 [18]. - Perplexity AI launched Perplexity Labs, which can complete complex tasks in about 10 minutes, enhancing productivity for knowledge workers [2][18]. Investment Recommendations - The report suggests focusing on gaming, advertising media, and film sectors, with specific stock recommendations including Kaiying Network, Giant Network, and Yaoji Technology [4][36]. - The report highlights the potential for growth in AI applications and IP-driven products, recommending companies like Pop Mart and Zhejiang Wenlian [4][36]. Company Earnings Forecasts - Key companies such as Kaiying Network, Fenzhong Media, and Mango Super Media are rated as "Outperform the Market" with projected earnings per share (EPS) growth for 2025 and 2026 [5][38].

Investment Rating - The report maintains an "Outperform" rating for the media and internet sector [5][40]. Core Viewpoints - The media sector has shown an upward trend with a 1.39% increase, although it underperformed compared to the CSI 300 (2.00%) and the ChiNext Index (3.27%) [12][14]. - Key companies such as ByteDance, Meta, and Tencent are making significant advancements in AI applications, which are expected to drive future growth in the sector [2][4][37]. - The report highlights the potential for recovery in the film industry, driven by the upcoming holiday seasons and improved supply [38]. Summary by Sections Industry Performance - The media sector's performance for the week (May 3 - May 9) was an increase of 1.39%, ranking 22nd among all sectors [12][14]. - Notable gainers included Baotong Technology (+25%), ST Zhongqingbao (+10%), and ST Huawen (+9%), while ST Tianze (-9%) and Wanda Film (-5%) were among the biggest losers [12][13]. Key Company Developments - ByteDance has open-sourced its deep research framework, DeerFlow, integrating language models with various tools for automated research and content creation [2][17]. - Meta's AI research team has released five significant breakthroughs in AI perception, marking a major advancement in the field [2][18]. - Tencent has optimized its DeepSeek communication framework, achieving performance improvements of 100% in RoCE network environments and 30% in IB network environments [2][19]. Box Office and Content Performance - The box office for the week (May 5 - May 11) reached 332 million yuan, with "Nezha: The Devil's Child" leading at 90 million yuan (27.2% market share) [3][21]. - Upcoming holiday seasons are expected to boost box office performance, with a focus on the Dragon Boat Festival and summer releases [4][38]. Investment Recommendations - The report suggests a positive outlook for AI applications and IP trends, recommending companies like Pop Mart and others in the IP and gaming sectors [4][38]. - It emphasizes the importance of the film industry recovery, recommending channels like Wanda Film and content producers like Light Media [4][38]. - The report also highlights the potential for advertising growth as the economy improves, suggesting investments in companies like Focus Media and Mango TV [4][38].