Core Viewpoint - The A-share market has regained upward momentum in July, supported by a low interest rate environment and a recovery in risk appetite, with expectations for incremental policies to potentially break the current sideways trend [1][2]. Group 1: Market Overview - After breaking through the March high, the A-share market experienced slight fluctuations but continued to trend upwards, reaching recent highs [1]. - The market's risk appetite has improved, with sectors like non-bank financials, media, and military industry showing signs of recovery [1]. - The upcoming policy window in July is expected to further support the market's gradual upward trajectory [1]. Group 2: Sector Analysis - The market is likely to see a thematic event-driven approach in July, with a high probability of sector rotation between high and low-performing areas [2]. - Key sectors to watch include: 1. Consumer expansion and domestic demand, with a focus on dairy products, IP consumption, leisure tourism, and medical aesthetics [2]. 2. Robotics, with a trend towards domestic production and integration into daily life, particularly in humanoid and functional robots [2]. 3. Semiconductor localization, emphasizing semiconductor equipment, wafer manufacturing, materials, and IC design [2]. 4. Military industry, with expectations for order recovery and signs of bottoming out in Q1 reports across various sub-sectors [2]. 5. Innovative pharmaceuticals, which are expected to reach a turning point in fundamentals after a prolonged adjustment period [2]. Group 3: Market Performance - The A-share market has shown a continued upward trend, with electronic and other high-elasticity sectors leading the gains [3]. - Despite some fluctuations, the overall market confidence has strengthened, with over 3,200 stocks rising, indicating a positive earning effect [3]. - Leading sectors included electronics, power equipment, and pharmaceuticals, while sectors like coal, transportation, and banking faced declines [3].

Group 1 - The recent tensions in the Middle East have led to a temporary impact on A-share market sentiment, but the market has rebounded, with the Shanghai Composite Index reaching a new high in nearly a month [1] - The market is expected to maintain a slow upward trend as it approaches the policy window period at the end of June, with potential for new policies aimed at stabilizing employment and promoting high-quality development [1] - Popular sectors such as banking and innovative pharmaceuticals may experience short-term fluctuations due to accumulated gains, while TMT and technology growth sectors are anticipated to see a rebound after sufficient adjustments [1] Group 2 - The outlook for July suggests a theme-driven market with high-low sector rotation, as popular sectors like innovative pharmaceuticals and banking have shown signs of correction, while TMT and advanced manufacturing sectors are beginning to rebound [2] - Key focus areas for 2025 include expanding domestic demand and consumption, with expectations for policies to support sectors like dairy products, IP consumption, leisure tourism, and medical aesthetics [2] - The trend towards domestic production of robotics is expected to continue, with opportunities arising in sensors, controllers, and functional robots [2] - The semiconductor industry is projected to see continued domestic growth, with attention on semiconductor equipment, wafer manufacturing, materials, and IC design [2] - The military industry is anticipated to experience a rebound in orders by 2025, with signs of recovery already visible in various sub-sectors [2] - The innovative pharmaceutical sector is expected to reach a turning point in fundamentals by 2025, following a period of adjustment [2] - The AI sector is poised for new catalysts, with significant updates expected from companies like MiniMax, indicating a resurgence in AI-related investments [2] Group 3 - The A-share market has ended a month-long period of consolidation, with the Shanghai Composite Index reaching a new high, supported by a broad-based rally among individual stocks [3] - The market saw a significant increase in the number of rising stocks, with over 4,700 stocks gaining, while only a few sectors like oil and coal experienced declines due to falling international oil prices [3] - Leading sectors included electric power equipment, non-bank financials, retail, automotive, and machinery [3]

Core Viewpoint - A-shares show resilience amid external market adjustments, indicating a strengthening internal trend supported by recent monetary policy changes and trade negotiations [1][2]. Market Outlook - The current market has largely priced in the tariff events and the first phase of trade negotiations, with a need for additional catalysts to break through March highs [2]. - The extreme drop on April 7 was a one-time reaction to the "equal tariffs" event, and the market has since undergone substantial recovery [2]. - Future challenges to March highs will require new policies, trade negotiation progress, or significant economic indicators [2]. Hot Sectors - June is expected to be driven by event-based thematic trading, with focus on low-position sectors like consumption and pharmaceuticals, as well as adjusted technology growth [3]. - Key areas of interest include: 1. Consumption expansion and domestic demand as a priority for 2025, with expectations for policy support in sectors like dairy, IP consumption, leisure tourism, and medical aesthetics [3]. 2. The trend of robot localization and integration into daily life, with opportunities in sensors, controllers, and dexterous hands [3]. 3. The ongoing trend of semiconductor localization, focusing on semiconductor equipment, wafer manufacturing, materials, and IC design [3]. 4. The military industry is expected to see order recovery by 2025, with signs of bottoming out in various sub-sectors [3]. 5. Innovative drugs are entering a recovery phase after four years of adjustment, with positive net profit growth expected to continue into 2025 [3]. Market Review - A-shares experienced narrow fluctuations with reduced trading volume, while consumption and pharmaceuticals rebounded [4]. - The market showed overall weakness, with 31 primary sectors exhibiting mixed performance, led by textiles, pharmaceuticals, beauty care, environmental protection, and real estate [4].

Investment Rating - Buy (Maintain Rating) [1] Core Viewpoints - The recent military conflict between India and Pakistan has highlighted the effectiveness of Chinese military equipment, particularly in the context of military exports [2][5] - The global arms trade is expected to enter a new cycle of prosperity due to increased demand driven by geopolitical tensions, with China's military exports likely to gain market share [3][4][26] Summary by Sections 1. Overview of the India-Pakistan Conflict - The conflict began with a terrorist attack in India, leading to India's "Operation Zhusha" and Pakistan's counteraction, showcasing the effectiveness of Chinese military equipment used by Pakistan [13][20] 2. Impact on the Military Industry - Global demand for military equipment is increasing, with military spending projected to reach $2.72 trillion in 2024, a 9.4% increase [23][26] - The arms trade saw a significant increase of 29% in 2022, with a projected export value of $28.938 billion TIV in 2024 [3][26] 3. China's Military Export Potential - China's military exports have surged from $1.358 billion TIV in 2021 to $2.982 billion TIV in 2023, with 45% of exports going to Pakistan [4][33] - The report emphasizes the transition of Chinese military equipment into a "DEEPSEEK" era, indicating advancements in technology and capabilities [42] 4. Investment Recommendations - The report suggests focusing on seven key areas for military trade-related investments: aviation equipment, missile systems, radar systems, drones, low-cost munitions, ground equipment, and communication data links [5][67]

Group 1: Social Security Fund Holdings - The Social Security Fund entered the top ten circulating shareholders of 215 A-share listed companies in the first quarter [1] - Zhongtong Bus had the highest number of new holdings by the Social Security Fund, with 3 new positions [1] - Other companies with 2 new holdings include Lens Technology, Inner Mongolia First Machinery, Anke Intelligent Electric, and several others [1] Group 2: Zhongtong Bus - Zhongtong Bus saw a new holding value of 137 million yuan from the Social Security Fund in Q1 [1] - The company reported a net profit of 76.51 million yuan in Q1, a year-on-year increase of 80.52% [2] - The company has ongoing international orders, including 895 electric buses for Chile, with 300 delivered and the rest expected in Q2 [2] Group 3: Lens Technology - Lens Technology had a new holding value of 1.088 billion yuan from the Social Security Fund in Q1 [3] - The company reported Q1 revenue of 17.063 billion yuan, a year-on-year increase of 10.10%, and a net profit of 429 million yuan, up 38.71% [3] - Growth is expected from new product structures and increased demand in various sectors, including smartphones and electric vehicles [3] Group 4: Inner Mongolia First Machinery - Inner Mongolia First Machinery had a new holding value of 295 million yuan from the Social Security Fund in Q1 [4] - The company reported a net profit of 186 million yuan in Q1, a year-on-year increase of 11.03% [4] - The company is expanding its military trade product system and has developed new products for international markets [4] Group 5: Anke Intelligent Electric - Anke Intelligent Electric had a new holding value of 251 million yuan from the Social Security Fund in Q1 [4] - The company reported a net profit of 43.72 million yuan in Q1, a year-on-year decrease of 28.92% [4] - The company is actively pursuing international cooperation following discussions at the Dubai Power Exhibition [4]

Core Viewpoint - The article highlights the recent movements of social security funds in the A-share market, indicating a significant increase in holdings across various companies, with a focus on the newly added positions in the top ten circulating shareholders. Group 1: Social Security Fund Holdings - In the first quarter, social security funds entered the top ten circulating shareholders of 215 companies, with Zhongtong Bus having the highest number of new holdings at 3 [1] - Other companies with 2 new holdings each include Lens Technology, Inner Mongolia First Machinery, Anke Electric, Xueda Education, Focus Technology, Haixing Electric, Zhenhua Co., Juewei Food, Zhujiang Beer, Beidahuang, Anda Intelligent, *ST Songfa, Hehe Information, Aoshikang, and Limin Co. [1] Group 2: Company-Specific Insights - Zhongtong Bus saw a new holding value of 137 million yuan, with a net profit of 76.51 million yuan in Q1, representing a year-on-year increase of 80.52%. The company is expected to continue its upward profit trend due to strong overseas orders [2][3] - Lens Technology's new holding value reached 1.088 billion yuan, with Q1 revenue of 17.063 billion yuan, up 10.10% year-on-year, and a net profit of 429 million yuan, up 38.71% year-on-year, driven by growth in smartphone and computer-related businesses [3][4] - Inner Mongolia First Machinery's new holding value was 295 million yuan, with a Q1 net profit of 186 million yuan, reflecting an 11.03% year-on-year increase. The company is positioned to benefit from the global military trade market's upward cycle [4][5] - Anke Electric's new holding value was 251 million yuan, but it reported a net profit of 43.72 million yuan, down 28.92% year-on-year. The company is actively pursuing international collaborations following discussions at the Dubai Power Exhibition [5]