Market Overview - The A-share market experienced low volatility with major indices showing mixed results, where the Shanghai Composite Index fell by 0.21% and the Shenzhen Component Index decreased by 0.70% [2][3] - The total market turnover was 783.06 billion yuan, indicating a significant decrease compared to the previous day, with 2,925 stocks rising and 2,243 stocks falling [4] Sector Performance - The energy sector saw a collective rise, particularly in hydropower and thermal power stocks, with notable gains from companies like Huayin Power and Shaoneng Shares [12][13] - The stablecoin, cross-border payment, and digital currency sectors showed strong performance, with several stocks reaching their daily limit up [9][10] - Conversely, the CPO, CRO, and innovative pharmaceutical sectors experienced a pullback, while 6G and communication sectors faced declines [4][5] Hong Kong Market - The Hong Kong market also faced declines, with the Hang Seng Index dropping by 0.45% and the Hang Seng Tech Index falling by 0.15% [6][7] - Major players in the food delivery sector, such as Meituan and Alibaba, saw significant drops, with Meituan falling over 2% amid intensified competition in the food delivery market [16][17] Stablecoin and Cross-Border Payment Trends - The stablecoin market is rapidly expanding, with a projected transaction volume of $26.7 trillion in cross-border payments by 2024, and the market for Real World Assets (RWA) expected to reach $16 trillion by 2030 [11] - The upcoming implementation of the stablecoin regulations in Hong Kong is anticipated to boost the market, with at least nine institutions expressing interest in obtaining licenses [10][11] Energy Sector Insights - The National Energy Administration reported a record peak electricity load of 1.465 billion kilowatts, indicating a significant increase in demand due to high temperatures [13] - Analysts recommend focusing on hydropower and thermal power stocks that are expected to benefit from the ongoing construction of a unified electricity market [15] Food Delivery Competition - The ongoing "food delivery war" has led to aggressive marketing strategies, including substantial coupon distributions by major players, resulting in a surge in orders for Meituan [21] - Despite the short-term losses, analysts view these marketing expenditures as a long-term investment strategy that may enhance marketing efficiency in the future [21]

Core Viewpoint - The article discusses the upcoming implementation of the "Stablecoin Regulation" in Hong Kong, which is set to take effect in August. The regulation aims to establish guidelines for stablecoin issuance, focusing on anti-money laundering and related requirements, with a limited number of licenses expected to be issued this year [2][4]. Group 1: Stablecoin Regulation - The Hong Kong Monetary Authority (HKMA) is currently consulting the market on the implementation of the stablecoin regulation guidelines, which will be announced within the month [2][4]. - The number of stablecoin licenses issued is expected to be in the "single digits," with at least nine institutions expressing interest in applying for licenses, including three that are part of the HKMA's stablecoin issuance sandbox [4][8]. - The regulation aims to address challenges in cross-border payments, particularly in regions with high local currency risk or underdeveloped financial systems, by facilitating transactions through stablecoins backed by fiat currencies [4][9]. Group 2: Market Reaction - In the A-share market, stocks related to cross-border payments and stablecoins have shown strong performance, with several companies hitting their daily price limits [3][6]. - Notable stocks include Zhongyi Technology, which reached a 20% increase, and others like Huafeng Superfiber and Xunxing Co., which also saw significant gains [6][7]. Group 3: Future Prospects - The global cross-border payment transaction volume is projected to reach $194.6 trillion by 2024 and is expected to grow to $320 trillion by 2032, highlighting the increasing importance of stablecoins in this sector [10]. - The People's Bank of China is revising the rules for the Renminbi Cross-Border Payment System (CIPS) to adapt to the evolving needs of cross-border payment services, indicating a supportive regulatory environment for stablecoin development [7][10].

Market Overview - The three major indices opened lower on Monday, with the ChiNext index leading the decline. As of the midday close, the Shanghai Composite Index was at 3465.05 points, down 0.21%, with a turnover of 301 billion; the Shenzhen Component Index was at 10434.83 points, down 0.70%, with a turnover of 470.8 billion; the ChiNext index was at 2129.34 points, down 1.25%, with a turnover of 224.6 billion [1]. Sector Performance - In terms of sector performance, the shipbuilding sector, stablecoins, electric power, and real estate saw significant gains, while sectors such as CRO, CPO, consumer electronics, and brain-computer interfaces experienced notable declines [1][2]. Individual Stock Movement - The market saw more stocks rising than falling, with over 2900 stocks increasing in value [3]. Institutional Insights - CITIC Securities noted that the demand for computing power driven by AI is expected to remain strong. The market may adopt a cautious stance due to the rapid rise in the computing power sector and tariff issues in the U.S., leading to a potentially volatile market. They continue to recommend stocks with sustained high growth and low historical valuations, companies likely to benefit from external demand, and critical upstream segments [4]. - Rongzhi Investment highlighted that the decline in the U.S. dollar index and the appreciation of the RMB against the dollar enhance the attractiveness of RMB assets. The upcoming mid-year report season and improved China-U.S. trade relations may boost related industry data, with overall recovery in corporate profitability expected [4]. News Highlights - The Hong Kong Financial Secretary announced that the government aims to issue stablecoin licenses within this year, following the implementation of the Stablecoin Regulation in August. The number of licenses issued is expected to be in single digits, with discussions ongoing regarding the issuance of stablecoins pegged to the RMB [5]. - A domestically developed robotic dog has set a new world record by achieving a speed of 10.3 meters per second, surpassing the previous record of 8.89 meters per second held by Boston Dynamics' WildCat [6]. Financing Trends - The financing balance in the two markets decreased by 6.286 billion, with the Shanghai Stock Exchange's financing balance at 925.703 billion, down 3.185 billion, and the Shenzhen Stock Exchange's balance at 908.479 billion, down 3.101 billion [7].

Market Overview - On July 7, stablecoins, cross-border payments, and RWA-related concepts saw significant gains, with Jin Yi Culture achieving a three-day consecutive rise, Xinyada also rising consecutively, and Qingdao Jinwang hitting the daily limit. Other companies like Huafeng Superfiber and Hangzhou Garden also experienced increases exceeding 10% [1]. Stock Performance - Jin Yi Culture (002721.SZ) latest price: 4.42, up 9.95%, market cap: 11.754 billion [2] - Xinyada (600571.SS) latest price: 20.39, up 9.98%, market cap: 9.334 billion [2] - Jingbeifang (002987.SZ) latest price: 25.63, up 10.00%, market cap: 21.617 billion [2] - Qindao Jinwang (002094.SZ) latest price: 9.25, up 9.99%, market cap: 6.387 billion [2] - Huafeng Superfiber (300180.SZ) latest price: 10.29, up 15.49%, market cap: 15.287 billion [2] Events - On July 4, the People's Bank of China released a notice soliciting opinions on the draft rules for the Renminbi Cross-Border Payment System (CIPS), aiming to optimize the system's functions and services [3]. - Hainan Huatie has completed the digitalization of nearly 26 billion yuan in assets and signed a strategic cooperation agreement with the RWA Research Institute [3]. - The Hong Kong Stablecoin Regulation will take effect in August, with the Financial Secretary indicating that the Monetary Authority is consulting the market on the implementation guidelines [3]. Institutional Insights - The central bank's proposed revisions to the CIPS rules aim to lower entry barriers and simplify transaction procedures, which will help promote the internationalization of the Renminbi [4]. - The official launch of the Hong Kong FRS license in August 2025 is expected to accelerate the global settlement of USDC/PYUSD and the growth of on-chain money market funds [4]. - With Hong Kong leading the pilot projects, the integration of data rights and on-chain credit in mainland China is expected to make RWA a key component of the national strategy for "digital-physical integration" [4].

Investment Rating - The report maintains a "Recommended" rating for the computer industry [1] Core Insights - The stablecoin industry ecosystem is accelerating its construction, with significant opportunities for domestic alternatives. The recent passage of the "Stablecoin Regulation" in Hong Kong is expected to boost the adoption of stablecoins, with major e-commerce platforms like Shopify and retail giants like Amazon and Walmart exploring stablecoin issuance [2][3] - The AI sector is experiencing structural investment opportunities, particularly in domestic alternatives, financial IT, and cross-border payments. The AI sector index saw a 7.6% increase in June, outperforming major indices [2][6] - Huawei's recent developer conference showcased advancements in HarmonyOS and AI cloud services, indicating a strong potential for domestic AI computing infrastructure [2][3] Market Overview - The AI index closed at 9481.88 with a monthly increase of 7.6%, while the computer industry index rose by 7.11% [6] - The AI sector's total market capitalization reached 23666.38 billion, with 84 constituent stocks [8] AI Industry Dynamics - The report highlights the latest developments in data elements and data exchanges, emphasizing the importance of data asset development and high-quality growth in the sector [19][20] - Major AI models are being developed and released, with Huawei announcing the open-sourcing of its Pangu models, which is expected to enhance AI applications across various industries [25] Investment Recommendations - The report suggests focusing on specific segments and companies, including: 1. Domestic computing industry chain: Industrial Fulian, Zhongke Shuguang, etc. 2. IDC service providers and computing leasing: Runze Technology, Guanghuan New Network, etc. 3. Domestic software vendors: China Software, Softcom Power, etc. 4. AI applications: iFlytek, Kingsoft Office, etc. 5. Cloud computing vendors: Kingdee International, Kingsoft Cloud, etc. 6. Data element industry chain companies: Tuolisi, Shensanda A, etc. 7. Stablecoin and RWA: Hengsheng Electronics, Sifang Jichuang, etc. [2][3]

Core Viewpoint - The concept of stablecoins continues to attract significant interest, with multiple companies planning to apply for stablecoin licenses in Hong Kong following the upcoming regulations set to take effect on August 1, 2023 [1][4]. Group 1: Company Developments - Multi-Point Smart (02586.HK) announced plans to apply for a stablecoin license in Hong Kong, leading to a stock price surge of nearly 90% on July 3, 2023, and a closing increase of over 23% [1][2]. - The company, established in 2015, is the largest provider of retail digital solutions in China, with a market capitalization that has fluctuated between 40 billion and nearly 200 billion HKD since its listing in 2024 [2]. - Multi-Point Smart's CFO expressed optimism about the cryptocurrency sector, highlighting that stablecoins can enhance cross-border payment efficiency and reduce costs for retail clients [2]. Group 2: Market Trends - Several companies, including Ant International and Lianlian Digital, are accelerating their applications for stablecoin licenses in Hong Kong, aiming to submit their applications as soon as the regulations are in effect [4]. - The Hong Kong Monetary Authority (HKMA) will begin accepting license applications on August 1, 2023, and is currently consulting on specific guidelines for the new regulations [4][5]. Group 3: Industry Challenges - The profitability of stablecoin issuers remains a topic of debate, with concerns about the sustainability of their business models [6][7]. - The first stablecoin issuer, Circle (CRCL.N), has seen its stock price soar post-IPO, but its revenue model, heavily reliant on reserve income, has faced scrutiny [7][8]. - Analysts have raised concerns about Circle's business model being vulnerable to interest rate fluctuations and increasing distribution costs, which could impact profitability [8].

Core Insights - Stablecoins are gaining mainstream recognition in the financial narrative, supported by regulatory frameworks like the GENIUS Act in the US and the Stablecoin Ordinance in Hong Kong [1] - Circle, as the first publicly traded stablecoin company, saw its market capitalization exceed $50 billion and a price-to-earnings ratio of 120, indicating high market expectations for growth [1][5] - The primary revenue model for major stablecoin issuers is interest arbitrage, with Circle projected to earn $1.56 billion in interest income in 2024, constituting 99% of its total revenue [3] Business Models - Major stablecoin issuers primarily profit from interest arbitrage by investing dollar reserves into low-risk, interest-bearing assets like US Treasury bonds [3] - Tether, the largest stablecoin issuer, reported profits exceeding $13 billion, primarily from similar investment strategies [3] Market Position - Tether holds a significant first-mover advantage, capturing 60%-70% of the market share since its launch in 2014, while USDC, launched in 2018, holds about 20%-24% [4] - USDC emphasizes compliance and transparency, which has attracted regulated entities, but its market penetration is limited in less regulated environments [4] Regulatory Environment - The scarcity of stablecoin licenses in Hong Kong may increase their value, similar to the experience with virtual bank licenses [6] - Over-regulation could stifle innovation and push issuers to less regulated regions, potentially limiting the value of licenses [6] Application Scenarios - The most promising application scenarios for licensed stablecoin issuers include cross-border payments and decentralized finance (DeFi), due to their scalability and cost-effectiveness [7] - Cross-border payments are highlighted as the most certain application, with USDC significantly reducing transaction times and costs compared to traditional methods [7] Impact on Financial Institutions - Traditional financial institutions, particularly banks, may face revenue restructuring as stablecoins could replace some cross-border payment services [9] - Stablecoins enhance financial inclusion, especially in developing regions, while market power may concentrate among compliant institutions due to regulatory barriers [10] Future Trends - The emergence of multi-currency and multi-asset stablecoins could lead to a digital currency exchange rate system, potentially replicating international monetary dynamics [11] - The dominance of the US dollar in stablecoins may persist unless non-dollar stablecoins achieve significant scale, with central bank digital currencies (CBDCs) adding complexity to the competitive landscape [11]

Core Viewpoint - Morgan Stanley has issued a report on Circle, warning that its valuation is excessively high and has set a "reduce" rating with a target price of $80, a significant 56% reduction from the current stock price of $180 [1][3]. Valuation Concerns - Since its IPO at $31 on June 4, Circle's stock has surged 482%, reaching a market capitalization of $40 billion [2]. - The target price of $80 is based on a 45 times price-to-earnings ratio for an adjusted earnings per share of $1.56 in 2027, plus a $10 "investor enthusiasm premium" [6]. Business Model Challenges - Circle's revenue model heavily relies on reserve investment income, with 97% of its income derived from this source, making it highly sensitive to interest rate fluctuations [1][14]. - Distribution costs are rising, with projections indicating a drop in gross margin from 39% to 34% as the company increases partnerships to promote USDC [9][12]. Competitive Landscape - Circle faces intense competition, particularly from new entrants offering higher yields to capture market share, which could significantly impact its economic viability [1][17]. - Coinbase is Circle's largest distribution partner, expected to receive $908 million in revenue share in 2024, which constitutes 55% of Circle's reserve income [12]. Market Dynamics - The stablecoin market is projected to grow to $1.8 trillion by 2036, with USDC's market share expected to increase to 40%, but these assumptions are considered overly optimistic [7]. - A decline in interest rates could stimulate demand for stablecoins, potentially increasing USDC usage [14]. Regulatory Environment - Circle is positioned to benefit from upcoming regulatory frameworks in the U.S. and Europe, as it is considered the most compliant stablecoin issuer [16][18]. - The company is also exploring international markets, particularly in high-inflation countries, which could provide significant growth opportunities [18]. Strategic Initiatives - The launch of the Circle Payments Network (CPN) in May 2025 is seen as a critical strategic move, aiming to integrate stablecoin functionalities into existing banking channels [19]. - CPN targets the B2B cross-border payment and consumer remittance sectors, with a potential market size of $37 trillion in B2B cross-border payments [20]. Future Outlook - Success in establishing CPN could position Circle as the "stablecoin version of Swift," while failure may result in it becoming a low-margin player in the multi-currency stablecoin market [22].

Market Overview - The Hong Kong stock market is experiencing a decline, with the Hang Seng Index dropping by 0.87% as large funds adjust their positions, particularly in the financial sector [1] - In contrast, the A-share market is witnessing a collective rise, attributed to the China Securities Regulatory Commission's new logo, interpreted by investors as a sign of a "triple win" for the stock market, listed companies, and investors [1] Trade Relations and Tariffs - Concerns over tariffs remain prevalent in the Hong Kong market, with the U.S. government indicating that trade negotiations may extend beyond the initial deadline set by the Trump administration [2] - The U.S. Treasury Secretary stated that negotiations with multiple trade partners could continue until September, reflecting a lack of significant progress in talks with major partners [2] - China's firm stance against sacrificing its interests in trade negotiations has influenced other countries, such as India, to adopt a tougher approach [2] Inflation and Economic Indicators - The U.S. core PCE price index for May increased by 2.68% year-on-year, surpassing expectations and reaching its highest level since February 2025 [3] - The inflation outlook suggests that the Federal Reserve is unlikely to lower interest rates in the upcoming meetings, with expectations of inflation peaking in July or August [3] - In China, industrial profits for large enterprises declined by 1.1% year-on-year from January to May, with a significant drop of 9.1% in May alone [3] Legislative Developments - The U.S. Senate passed the "Big Beautiful Bill" with a narrow margin, which could lead to increased government debt to stimulate economic growth [4] - The bill's passage may have mixed implications, as the U.S. national debt exceeds $36 trillion, raising concerns about sustainability [4] - The bill includes compromises that may benefit sectors such as healthcare and renewable energy, positively impacting related stocks [4] Stock Performance and New Listings - Newly listed stocks like Chow Tai Fook (06168) have seen significant gains, with a 25% increase on the day, nearly doubling in value over three days [5] - Old Town Gold (06181) also benefited from the strong performance of its new Singapore store, with a nearly 15% rise in stock price [5] - Cloud Wisdom (09678), the first AGI stock in Hong Kong, surged over 44% on its debut, driven by strong revenue growth projections [6] Sector Focus - The military industry is gaining attention due to reports of Iran negotiating the purchase of Chinese fighter jets and abandoning U.S. GPS in favor of China's BeiDou navigation system [8] - The photovoltaic glass sector is addressing supply-demand imbalances, with plans for a 30% production cut starting in July to stabilize prices [9] - Companies like Eastman Chemical (00189) are expected to benefit from increased demand for refrigerants, with a significant rise in profitability anticipated [10][11]

Group 1 - The stablecoin market is gaining momentum, with traditional stocks like Lakala and Tianyuan Dike being overshadowed by low-position potential stocks closely linked to Ant Group [1] - Ant Group has taken a significant step by applying for a stablecoin license in Hong Kong, which has injected strong momentum into the application of stablecoins [1] - The central bank has expressed support for the development of financial technology, indicating a push towards digital and intelligent transformation represented by stablecoins [1] Group 2 - Notable investment institutions like Central Huijin are strategically positioning themselves to capture high-growth and high-return potential companies [3] - In the liquor sector, Wuliangye has achieved over 10 times growth due to its outstanding performance, while in the semiconductor industry, Northern Huachuang has also gained wide market recognition [3] Group 3 - Three low-position potential stocks linked to Ant Group and positioned in the core stablecoin sector have been identified: - GCL-Poly Energy has partnered with Ant Group to build the world's first photovoltaic carbon chain management platform, enhancing transparency and efficiency in the photovoltaic industry [4] - GCL-Technology has issued the first photovoltaic RWA asset in China using blockchain technology, providing efficient financing solutions for the real economy [4] - A company referred to as the "first妖股" holds a 40.66% market share in the stablecoin segment and has diversified into multiple trending areas, showcasing its strong market position [4] - This "first妖股" achieved a remarkable net profit margin increase of 8829% in Q1 2025, attracting significant institutional investment, including 20.93 million shares purchased by Central Huijin and 37.54 million shares by foreign investors [4]