Core Viewpoint - The report from CITIC Securities emphasizes that resource security, Chinese enterprises going global, and technological competition will be key drivers of market structural trends in the foreseeable future. These themes correspond to an industry allocation framework of resources, globalization, and new productive forces [1]. Group 1: Resource Security - Traditional resource industries are facing frequent supply shocks due to insufficient investment in a high-interest-rate environment, particularly in developed countries where private sector investment remains weak [1]. - The capital expenditure of traditional industrial enterprises in Europe and the U.S. has been low, with Japan's machine tool orders to Europe and the U.S. showing 28 consecutive months of negative growth [1]. - Predictions for major copper mining companies indicate a downward adjustment in production forecasts from 14.89 million tons to 14.21 million tons for 2025, with growth rates dropping from 6.4% to 0.6% [1]. Group 2: Supply Chain and Geopolitical Factors - Geopolitical tensions and national security policies are leading to more frequent supply shocks, as seen in the Democratic Republic of Congo's new cobalt export policies and Indonesia's tightening of nickel exports [2]. - Countries rich in strategic resources are increasingly recognizing the unsustainability of long-term low pricing and are controlling supply to maintain favorable price levels [2]. Group 3: Enterprises Going Global - The globalization of Chinese enterprises is a core fundamental driver of the current market, with companies generating over 20% of their revenue from overseas contributing 40% of profits and 37% of market capitalization [3]. - The return on equity (ROE) for non-financial A-share companies with significant overseas revenue has increased from around 7% in early 2022 to about 10%, while other companies' ROE has declined from 9% to around 6% [3]. - A stable trade environment is crucial for the sustainability of Chinese enterprises' globalization efforts, with the recent A-share market rally linked to improved trade relations following negotiations [4]. Group 4: Technological Competition - Chinese tech giants are increasingly clarifying their AI strategies, with significant investments announced by companies like Alibaba and Tencent, indicating a shift towards aggressive AI infrastructure development [6]. - The global AI investment market is projected to grow significantly, with a compound annual growth rate (CAGR) of 31.9% from 2025 to 2029, highlighting the competitive landscape [6]. - The potential shift of AI focus from cloud to edge computing presents significant opportunities for domestic applications, allowing for a resurgence in the Chinese mobile internet sector [7].

Core Viewpoint - The Hong Kong stock market is currently in a high-level consolidation phase, with trading volume decreasing to HKD 200.9 billion, indicating a rise in cautious sentiment among investors as the mid-year reporting season approaches [1] Group 1: Market Conditions - The valuation of the Hong Kong stock market has significantly recovered in the short term, with the Hang Seng Index's forecast PE returning to the mid-point of 2018-2019 [1] - The risk premium is at historical lows, and the AH premium has reached a nearly six-year low, suggesting a more stable market environment [1] - August marks the seasonal off-peak period for Hong Kong stocks, leading to a concentrated verification of fundamentals during the mid-year reporting period [1] Group 2: Sector Analysis - The upstream resource sector is expected to see continued profit elasticity due to supply contraction driven by anti-involution policies [1] - In the technology and consumer sectors, attention should be paid to self-controllable areas such as semiconductors and AI computing power, as well as beneficiaries of fertility subsidies, including maternal and infant care and local living services [1]

Core Viewpoint - The long-term trend of improving corporate profitability in state-owned enterprises remains unchanged, with expectations for a recovery in overseas manufacturing activities under the backdrop of potential interest rate cuts by the Federal Reserve [1] Group 1: Economic Conditions - The labor market in the U.S. showed signs of weakening in the second quarter, creating conditions for the Federal Reserve to initiate interest rate cuts [1] - Since July, the external trade environment in the U.S. has stabilized, indicating marginal improvements in the economic sector [1] Group 2: Investment Recommendations - The first recommendation is to invest in upstream resource products (copper, aluminum, oil and petrochemicals) and capital goods (engineering machinery, heavy trucks, forklifts), as well as intermediate products (steel), which will benefit from the recovery of overseas manufacturing and domestic "anti-involution" policies [1] - The second recommendation suggests that equities will outperform bonds in the future, with non-bank financials benefiting from the bottoming of capital returns in the long-term asset side [1] - The third recommendation focuses on consumer sectors aligned with domestic policies centered around "people's livelihood," highlighting dividend-type consumption (food and beverages, home appliances) and certain service industries (hotels, restaurants, leisure tourism) [1]