Group 1: Industrial Profit Trends - In June, industrial enterprise profits decreased by 4.5% year-on-year, a narrowing of 4.6 percentage points from May, but still in a contraction zone[3] - Cumulative year-on-year profit decline was 1.8%, widening by 0.7 percentage points compared to May[3] - The main reason for the narrowing monthly decline was a reduction in operating cost drag, with its negative contribution decreasing from 9.7 percentage points in May to 3.9 percentage points in June[3] Group 2: Revenue and Demand Dynamics - June operating revenue grew by 1.0% year-on-year, remaining flat from May and marking a near 7-month low[4] - This contrasts sharply with the industrial added value, which saw a year-on-year increase of 6.8%, the second-highest growth in 16 months[4] - The Producer Price Index (PPI) fell by 3.6% year-on-year in June, the deepest decline in nearly 23 months, indicating intensified price competition[4] Group 3: Profit Pressure and Cost Dynamics - Profit pressure is transmitted upstream, forcing the mining industry to pass on profits to downstream sectors[5] - Cumulative profit margins for mining, utilities, and manufacturing were 16.95%, 6.79%, and 4.46% respectively, showing marginal improvements due to falling coal prices[5] - The overall expense ratio for industrial enterprises rose to 8.38% in June, up 9 basis points from May, highlighting intensified competition[5] Group 4: Policy Recommendations - To alleviate excessive competition, monetary policy should stabilize real estate expectations, and fiscal policy should expand effective domestic demand[6] - The central government is expected to issue special bonds to support durable consumer goods subsidies and infrastructure investments if export growth declines[6] Group 5: Risk Factors - Risks include potential underperformance of monetary easing and fiscal expansion measures[7]

Market Overview - A-shares experienced high volatility last week, with the Shanghai Composite Index briefly surpassing 3600 points before a slight pullback. Major indices posted positive returns, with a notable focus on structural characteristics. The Sci-Tech Innovation 50 Index led with a 4.63% increase, reflecting strong market interest in technology innovation sectors such as artificial intelligence and quantum technology [2] - The Shanghai Composite Index rose by 1.67%, the Shenzhen Index increased by 2.33%, and the ChiNext Index gained 2.76% during the week [2] - Among industry sectors, 87% achieved positive returns, with construction materials, coal, and steel performing particularly well, rising by 8.20%, 7.98%, and 7.67% respectively. Conversely, utilities, telecommunications, and banking sectors showed weakness, declining by 0.27%, 0.77%, and 2.87% respectively [2] Fund Issuance - A total of 35 funds were issued last week, including 23 equity funds, 3 mixed funds, 7 bond funds, and 2 QDII funds, with a total issuance of 27.604 billion units [2][4] Fund Performance - The Wind All Fund Index rose by 1.02% last week, with the ordinary equity fund index increasing by 1.77% and the mixed equity fund index rising by 1.81%. The bond fund index, however, saw a slight decline of 0.10% [3][7] - The performance of various fund categories showed that the ordinary equity fund index and the mixed equity fund index had year-to-date returns of 14.91% and 14.49% respectively, indicating strong performance in the equity space [7] Global Asset Review - Global asset performance showed significant divergence, with developed market equities generally rising due to favorable conditions from anticipated interest rate cuts by the Federal Reserve and positive corporate earnings reports. Emerging markets displayed mixed results, with the Hang Seng Index and Ho Chi Minh Index rebounding strongly, while the German DAX Index faced challenges from high energy costs and weak manufacturing [5] - In the commodities market, coking coal prices surged due to supply constraints, while oil prices faced downward pressure from demand concerns. Natural gas prices plummeted by 11.67% [5] Domestic Bond Market Review - The bond market exhibited a clear "see-saw" effect with the national bond futures index declining by 0.58%. Short-term funding spreads showed little change, while medium to long-term rates remained low [11]

Group 1 - The State Council, led by Premier Li Qiang, discussed the current flood and drought situation and plans to gradually implement free preschool education as a significant public welfare initiative [4] - The Ministry of Finance reported that the national general public budget revenue for the first half of the year exceeded 11.5 trillion yuan, with a year-on-year decline of 0.3%. Tax revenue decreased by 1.2%, while non-tax revenue increased by 3.7% [4] - The China Securities Regulatory Commission (CSRC) emphasized the need for precise risk control in key areas of the capital market and to crack down on illegal activities in private equity and securities [4] Group 2 - The CSRC is seeking public opinions on revising the "Corporate Governance Standards for Listed Companies," focusing on improving management systems and mechanisms for listed companies [4] - The Dalian Commodity Exchange received approval for the registration of futures contracts for linear low-density polyethylene, polyvinyl chloride, and polypropylene, with the CSRC ensuring a smooth launch [4] - The insurance industry association announced that the current preset interest rate for ordinary life insurance products is 1.99%, with adjustments made to the maximum preset interest rates for various insurance products [4] Group 3 - The Hong Kong Stock Exchange announced the launch of a new communication platform to enhance interaction between listed issuers and the exchange, with a trial version set to be released in the second half of 2025 [4] - The Dalian Commodity Exchange announced trading limits for non-futures company members on certain futures contracts starting from July 29, 2025 [5] - The Guangzhou Futures Exchange set a trading limit for non-futures company members on lithium carbonate futures contracts starting from July 28, 2025 [5]

Core Viewpoint - Insurance funds are showing a strong enthusiasm for allocation in the capital market, with significant increases in stock holdings and a rise in equity asset allocation ratios [1][5]. Group 1: Insurance Fund Holdings - As of the end of Q1 2025, the stock market value held by the life insurance industry reached 2.65 trillion yuan, an increase of 377.5 billion yuan from the end of 2024, representing a growth rate of 16.65% [1]. - The stock allocation ratio for insurance funds is now 8.43%, up by 0.86 percentage points from the end of 2024 [1]. - In 2025, insurance funds have made 21 stake acquisitions, surpassing the total for 2024 and marking a four-year high [1][2]. Group 2: Investment Trends - Major insurance companies have indicated plans to moderately increase their equity asset allocation in 2025, highlighting the growing importance of equity investments in a prolonged low-interest-rate environment [1][5]. - The focus of insurance funds is shifting from short-term speculation to long-term investments, acting as a stabilizing force in the capital market [5]. Group 3: Sector Focus - The banking sector has been the most frequently targeted for stake acquisitions, followed by public utilities, energy, and technology sectors [4]. - Insurance funds are increasingly interested in high-dividend and technology sectors, with a strategy that combines defensive and growth-oriented investments [8][9]. Group 4: Policy Impact - Recent policies have opened up more space for insurance funds to enter the market, including a new long-cycle assessment mechanism for state-owned commercial insurance companies [7][8]. - The adjustment in performance evaluation criteria for insurance companies aims to promote long-term stable operations and sustainable development [8]. Group 5: Research and Engagement - Over 190 insurance institutions have conducted more than 9,800 research engagements with over 1,400 A-share listed companies, indicating a significant increase in research activity compared to previous years [9][10]. - The focus of these research activities includes high-dividend sectors like banking and emerging technology sectors such as artificial intelligence and semiconductors [9][10].

Core Viewpoint - The major industry ETFs in the US stock market showed mixed performance, with regional bank ETFs declining over 1.5% and gold ETFs experiencing notable losses [1]. Group 1: ETF Performance - Regional bank ETF (KRE) fell to 61.23, down by 0.95 (-1.53%) with a trading volume of 2.3471 million shares [2]. - Gold ETF (GLD) decreased to 307.68, down by 2.59 (-0.83%) with a trading volume of 836,900 shares [2]. - Semiconductor ETF (SMH) dropped to 285.45, down by 2.35 (-0.82%) with a trading volume of 372,600 shares [2]. - Biotechnology ETF (IBB) declined to 134.84, down by 0.59 (-0.44%) with a trading volume of 57,163 shares [2]. - Energy ETF (XLE) decreased to 87.21, down by 0.22 (-0.25%) with a trading volume of 759,800 shares [2]. - Global technology ETF (IXN) fell to 95.21, down by 0.14 (-0.15%) with a trading volume of 1,600 shares [2]. - Technology sector ETF (XLK) decreased to 261.13, down by 0.26 (-0.10%) with a trading volume of 297,000 shares [2]. - Global airline ETF (JETS) fell to 24.41, down by 0.01 (-0.04%) with a trading volume of 84,256 shares [2]. - Consumer staples ETF (XLP) increased slightly to 81.41, up by 0.05 (+0.06%) with a trading volume of 893,600 shares [2]. - Utility ETF (XLU) rose to 84.41, up by 0.10 (+0.12%) with a trading volume of 1.1378 million shares [2].

Core Viewpoint - The article provides an overview of the mid-year earnings forecasts for A-shares in 2025, highlighting a significant number of companies with positive earnings expectations compared to those with negative forecasts [1][2]. Group 1: Company Earnings Forecast Types - As of July 24, over 1,500 companies have released their mid-year earnings forecasts, with 890 companies expecting positive earnings (including increases, reduced losses, and continued profits) and 685 companies anticipating negative earnings (including first losses and profit reductions) [1]. Group 2: Industry Earnings Forecast Statistics - Among the 30 industries tracked, 12 industries have more than 50% of companies forecasting positive earnings, including non-bank financials, utilities, telecommunications, automotive, electronics, and more [2]. Group 3: Earnings Forecast Rankings - 70 companies are expected to report a net profit of over 1 billion yuan, with 5 companies forecasting profits exceeding 10 billion yuan. China Shenhua leads with an expected net profit of 23.6 billion to 25.6 billion yuan [5][6]. Group 4: Top 30 Companies by Earnings Forecast - The top three companies by forecasted net profit are: 1. China Shenhua: 236-256 billion yuan [6] 2. Zijin Mining: 232 billion yuan [6] 3. Guotai Junan: 152.83-159.57 billion yuan [6]. Group 5: Year-on-Year Net Profit Growth - 29 companies with positive earnings forecasts expect net profit growth exceeding 1000% compared to last year, with Southern Precision Engineering forecasting a staggering increase of 28647%-35784% [7][8]. Group 6: Year-on-Year Net Profit Decline - Among the companies with negative earnings forecasts, *ST Nanzhi is expected to see the largest decline, with a projected drop of 18396.17%-25257.32%, resulting in a loss of 800 million to 1.1 billion yuan [9][10]. Group 7: Securities Firms Earnings Forecast - 29 listed securities firms have released their mid-year earnings forecasts, with Guotai Haitong predicting the highest net profit of 152.83-159.57 billion yuan, followed by China Galaxy with 63.62-68.01 billion yuan [11][12].

Investment Rating - The industry is rated as "stronger than the market," indicating an expected increase of over 10% in the industry index relative to the CSI 300 index over the next six months [16]. Core Viewpoints - The A-share market experienced slight fluctuations with cultural media, software development, semiconductors, and internet services performing well, while sectors like cement, construction, diversified finance, and liquor showed weaker performance [2][6] - The average price-to-earnings ratios for the Shanghai Composite Index and the ChiNext Index are 14.83 times and 40.93 times, respectively, which are at the median levels over the past three years, suggesting a suitable environment for medium to long-term investments [2][15] - The Chinese economy continues to show moderate recovery, with consumption and investment being the core driving forces [15] - There is an increasing inflow of long-term funds into the market, with steady growth in ETF sizes and continuous inflow from insurance funds, providing significant support [15] - The market is expected to maintain a steady upward trend in the short term, with a focus on policy, capital, and external market changes [15] Summary by Sections A-share Market Overview - On July 25, the A-share market faced resistance after a rise, with the Shanghai Composite Index encountering resistance around 3608 points before retreating [6] - The Shanghai Composite Index closed at 3593.66 points, down 0.33%, while the Shenzhen Component Index closed at 11168.14 points, down 0.22% [7] - Over 50% of stocks in the two markets rose, with semiconductors, education, medical devices, internet services, and software development leading the gains [6][8] Future Market Outlook and Investment Recommendations - The report suggests focusing on sectors with high mid-year performance growth and technology growth strategies, while also considering high-dividend banks, public utilities, and strategic emerging industries [15] - Short-term investment opportunities are recommended in semiconductors, cultural media, software development, and internet services [15]

Report Industry Investment Rating - No information provided Core Viewpoints - The domestic "anti-involution" policy continues to advance, and the related themes remain hot, but short-term hot trading fluctuates repeatedly. The market completed a washout in a low-open and high-go trend, and the Shanghai Composite Index successfully regained 3600 points. As the market's consensus on the "bull market" expectation gradually strengthens, margin trading funds and equity funds, as important incremental sources for this round of the market, are continuously injecting vitality into the market and promoting the spread of the profit-making effect [1][2][3] Summary by Directory 1. Market Analysis - **Domestic Policy**: The National Development and Reform Commission and the State Administration for Market Regulation solicited public opinions on the revised draft of the Price Law, improving the standards for identifying dumping at low prices, regulating market price order, and governing "involution-style" competition [1] - **Overseas Economy**: In July, the preliminary value of the US S&P Global Manufacturing PMI dropped to 49.5, the lowest since December 2024, while the preliminary value of the Services PMI was 55.2, and the preliminary value of the Composite PMI was 54.6, both hitting new highs since December 2024. The number of initial jobless claims last week was 217,000, the lowest level since mid-April, lower than the market expectation of 226,000 and the previous value of 221,000 [1] - **Spot Market**: A-share's three major indexes opened low and closed high, with the Shanghai Composite Index rising 0.65% to close at 3605.73 points, and the ChiNext Index rising 1.50%. Most sector indexes rose, with beauty care, non-ferrous metals, steel, and commercial retail industries leading the gains, while only the banking, communication, and public utilities industries closed down. The trading volume of the Shanghai and Shenzhen stock markets dropped to 1.84 trillion yuan. Overseas, the three major US stock indexes closed mixed, with the Dow Jones Industrial Average falling 0.7% and the Nasdaq rising 0.18% to 21057.96 points [2] - **Futures Market**: In the futures market, the basis of stock index futures was repaired. In terms of trading volume and open interest, the trading volume of stock index futures decreased, while the open interest increased [2] 2. Strategy - The domestic "anti-involution" policy continues to advance, and the related themes remain hot. The market completed a washout in a low-open and high-go trend, and the Shanghai Composite Index successfully regained 3600 points. As the market's consensus on the "bull market" expectation gradually strengthens, margin trading funds and equity funds are continuously injecting vitality into the market and promoting the spread of the profit-making effect [3] 3. Macro Economic Charts - The report includes charts on the US dollar index and A-share trends, US Treasury yields and A-share trends, RMB exchange rate and A-share trends, and US Treasury yields and A-share style trends, with data sources from Flush and Huatai Futures Research Institute [6][8][10] 4. Spot Market Tracking Charts - **Stock Index Performance**: The daily performance of major domestic stock indexes on July 24, 2025, shows that the Shanghai Composite Index rose 0.65%, the Shenzhen Component Index rose 1.21%, the ChiNext Index rose 1.50%, the CSI 300 Index rose 0.71%, the SSE 50 Index rose 0.32%, the CSI 500 Index rose 1.56%, and the CSI 1000 Index rose 1.42% [13] - **Market Data**: The report also includes charts on the trading volume of the Shanghai and Shenzhen stock markets and the margin balance, with data sources from Flush and Huatai Futures Research Institute [12][13] 5. Stock Index Futures Tracking Charts - **Trading Volume and Open Interest**: The trading volume of stock index futures decreased, while the open interest increased. Specifically, the trading volume of IF was 114,133 (a decrease of 16,976), the open interest was 271,368 (an increase of 2,311); the trading volume of IH was 53,842 (a decrease of 13,034), the open interest was 100,891 (an increase of 135); the trading volume of IC was 95,468 (a decrease of 9,753), the open interest was 229,789 (an increase of 1,553); the trading volume of IM was 205,106 (a decrease of 6,634), the open interest was 338,313 (an increase of 35) [16] - **Basis**: The basis of stock index futures was repaired. The report provides the basis data for different contracts of IF, IH, IC, and IM, including the current month, next month, current quarter, and next quarter contracts [38] - **Inter - delivery Spread**: The report provides the inter - delivery spread data for different contracts of IF, IH, IC, and IM, including the next month - current month, next quarter - current month, etc., and their changes [45] - **Charts**: The report includes charts on the open interest of different contracts, the latest open interest ratio, foreign investors' net open interest, basis, and inter - delivery spread, with data sources from Flush and Huatai Futures Research Institute [6][16][38]

Group 1 - Major industry ETFs showed mixed performance in early trading, with the global airline industry ETF declining over 2% [1] - The consumer discretionary ETF and regional bank ETF experienced the largest declines, with the consumer discretionary ETF down 1.02% and the regional bank ETF down 0.77% [1][2] - The gold ETF saw a slight increase of 0.63%, while the energy sector ETF and utility ETF both experienced minor declines [2] Group 2 - The global airline ETF (US JETS) closed at 24.88, down 2.64% with a trading volume of 432,200 shares [2] - The consumer discretionary ETF (US XLY) closed at 224.24, down 1.02% with a trading volume of 695,200 shares [2] - The regional bank ETF (US KRE) closed at 62.87, down 0.77% with a trading volume of 1,782,900 shares [2]

Core Viewpoint - The report highlights the phenomenon of "involution" in various industries within the A-share market, particularly emphasizing the midstream manufacturing sector's more pronounced competition compared to upstream resource industries. It notes that the willingness to expand production has significantly decreased across most industries, with over half showing strong capacity for expansion [1][2]. Existing Capacity Utilization Level - The industry capacity utilization rate is calculated using the Cobb-Douglas production function, measuring the ratio of actual output to potential maximum output under given capital and labor factors. As of Q1 2025, most industries are operating at historically low capacity utilization levels, with only the home appliance and electronics sectors showing upward trends [1]. Potential Incremental Capacity Level - The marginal changes in industry capacity will influence capacity utilization trends, particularly the timing of turning points. The willingness to expand production is assessed through the historical ratio of capital expenditures to depreciation. As of Q1 2025, most industries are at historically low levels of expansion willingness, except for utilities, coal, and non-ferrous metals, which show relatively stronger willingness. The expansion capacity is primarily determined by current cash reserves and cash flow, with most primary industries at historically high levels of expansion capacity [2]. Historical Capacity Clearing in Different Industries - In emerging industries, the clearing signal is linked to cash capability and a drop in expansion willingness. For instance, the solar industry experienced a rapid decline in capacity utilization from 2011 to 2015, reaching a low point in Q1 2013, followed by two years of low-level fluctuations until significant relief in overcapacity occurred in Q2 2014 when both cash capability and expansion willingness dropped to 0%. In traditional industries like steel and coal, the clearing signal is an improvement in cash capability, with both industries undergoing a prolonged decline in potential incremental capacity, leading to a "V" shaped trajectory in capacity utilization [3]. Current Capacity Clearing Trajectory - Drawing from past experiences, the report discusses the current capacity clearing trajectory. In the renewable energy sector, lithium battery and solar capacity utilization rates have reached historical lows, with lithium's potential incremental capacity and utilization rates declining earlier than solar. Both sectors' expansion willingness is nearing 0% for the first time in a decade, while cash capability remains around historical median levels. Traditional industries, such as steel and coal, are not facing severe overcapacity issues like in previous cycles, with current capacity utilization rates approaching 19-year lows, and signs of improving cash capability in basic chemicals and steel [4].