Group 1: Market Overview - In July, foreign capital inflow into Chinese stocks accelerated to $27 billion, up from $12 billion in June, with passive funds leading the trend by inflowing $39 billion [2][14] - Year-to-date, southbound capital inflow reached $110 billion, surpassing the total for the entire year of 2024 [14] Group 2: Fund Flows - Passive funds saw significant inflows, with a total of $110 billion year-to-date, exceeding the $70 billion level for 2024, while active funds experienced cumulative outflows of $11 billion, a slowdown compared to $24 billion in 2024 [4][12] - Global funds and Asia-Pacific funds (excluding Japan) slightly reduced their underweight positions in China, while emerging market funds increased their underweight positions by 3.2 percentage points [6] Group 3: Sector and Company Analysis - Active fund managers increased their holdings in media and entertainment, pharmaceuticals, and insurance sectors, while reducing their positions in consumer services and durable goods [9] - The most increased holdings among companies included Tencent, NetEase, Jiangsu Hengrui, and WuXi AppTec, while Meituan and Xiaomi saw the largest reductions [11] Group 4: Investment Trends - The inflow of foreign passive funds into China was notably concentrated at the end of July, coinciding with several antitrust announcements [4] - The overall short positions in A-shares and Hong Kong stocks increased primarily in the consumer staples, financial, and communication services sectors [21][22]

Core Insights - Goldman Sachs' investment strategy team has made significant adjustments to the U.S. sector allocation model, recommending a more balanced sector allocation strategy for investors [1] - The updated sector model indicates that an equal-weight sector allocation portfolio has a significantly higher probability of achieving over 5% excess returns compared to an equal-weight S&P 500 index over the next six months [1] Sector Recommendations - The software and services, as well as media and entertainment sectors, continue to hold their previous overweight ratings, while the new materials sector has been included in the core recommendations for the first time [1] - The consumer staples sector has been removed from the priority allocation list [1] - The report emphasizes that the current U.S. stock market exhibits an overly optimistic outlook on the economic prospects, with both downside risks and upside potential present in the actual economic performance [1] Investment Strategy - The strategy report suggests avoiding significant bias towards cyclical or defensive sectors, advocating for a balanced investment portfolio that can withstand market fluctuations [1] - In terms of specific sector selection, software and services (long-term growth expectation of 14%) and media and entertainment (long-term growth expectation of 14%) stand out due to their robust growth prospects, particularly in a moderately growing economy [1] - Defensive sectors such as utilities and real estate are favored due to the expectation of a slight decline in bond yields [1] - Among cyclical sectors, the materials sector is viewed as having a better allocation advantage compared to the energy sector, primarily based on expectations of falling oil prices [1] Adjustments and Market Outlook - The industrial sector has been downgraded due to its overall valuation being at historical highs, with the model indicating the lowest likelihood of achieving significant excess returns over the next six months [2] - Although the consumer staples and healthcare sectors are not explicitly bearish, their allocation priority has been slightly lowered compared to the model's baseline recommendations [2] - The adjustments reflect Goldman Sachs' neutral judgment on the market environment, acknowledging the reasonableness of current market optimism while diversifying allocations to hedge against potential risks [2] - The strategy team highlights that in the context of economic growth uncertainty, sectors that combine growth potential with reasonable valuations will exhibit greater investment resilience, while excessive bets on a single direction may face dual volatility risks [2]

Hong Kong Market Overview - The Hang Seng Index closed at 23,888, down 0.12% for the day but up 19.08% year-to-date[3] - The Hang Seng Tech Index rose 0.25%, while the Hang Seng China Enterprises Index fell 0.01%[3] - Net inflow from southbound funds exceeded HKD 12 billion, indicating strong buying interest in Hong Kong stocks[9] US Market Performance - The Dow Jones Industrial Average closed at 44,406, down 0.94%, marking its worst single-day performance since mid-June[3] - The S&P 500 Index fell 0.79% to 6,230, while the Nasdaq Composite dropped 0.92% to 20,413[3] - Major tech stocks like Nvidia and Apple saw declines of 0.69% and 1.69%, respectively, with Tesla experiencing a significant drop of 6.79%, losing over USD 68 billion in market value[3] Sector Highlights - In Hong Kong, large tech stocks showed mixed results, with Kuaishou and Tencent rising over 1%, while Netease and Xiaomi saw slight declines[9] - The gaming sector is expected to see high single-digit growth in total revenue for the second half of the year, with MGM China recording five consecutive days of gains[9] - The power sector was active, with Datang Power rising over 4% due to increased electricity demand amid high temperatures[9] Notable Stock Movements - Chinese dairy stock Feihe fell over 17%, while gold stocks like Zhaojin Mining and Shandong Gold dropped 6.48% and 5.96%, respectively[9] - Semiconductor stocks in the US faced a downturn, with the Philadelphia Semiconductor Index falling 1.88%[3] Economic Indicators - Japan's Nikkei 225 index closed down 0.56%, reflecting investor caution amid US tariff evaluations[13] - Japan's real wages fell 2.9% year-on-year, complicating the Bank of Japan's interest rate hike plans[13]

Market Overview - The Hang Seng Index closed at 24,221, up 0.62% for the day and 20.75% year-to-date[3] - The Hang Seng China Enterprises Index rose 0.54% to 8,725, with a year-to-date increase of 19.68%[3] - The Hang Seng Tech Index fell 0.64% to 5,269, with a year-to-date gain of 17.93%[3] Capital Flows - Southbound capital recorded a net inflow of HKD 5.036 billion on July 2[9] Sector Performance - Gold stocks performed well, with Shandong Gold rising over 5%[9] - Gaming stocks saw significant gains, with New Macau International Development increasing over 13%[9] - Semiconductor stocks declined, with Shanghai Fudan dropping over 4%[9] U.S. Market Performance - The Dow Jones Industrial Average fell 0.02% to 44,484, while the S&P 500 rose 0.47% to 6,227, and the Nasdaq increased by 0.94% to 20,393[3] - The S&P 500's performance was bolstered by gains in technology stocks, with Nvidia rising 2.58%[9] Economic Indicators - U.S. private sector employment unexpectedly declined in June, marking the first drop in over two years[13] - The U.S. Senate passed a tax reform bill that does not include provisions for wind and solar energy projects[9] Japanese Market Performance - The Nikkei 225 index fell 0.6%, with a cumulative decline of over 3% for the week[13] - The index has increased nearly 11% since April 2, despite recent declines[13] Notable Company Movements - Tesla's global quarterly sales fell 13% year-on-year but exceeded the most pessimistic analyst expectations[14] - Oracle and OpenAI reached an agreement for a significant power supply project, part of a $30 billion cloud deal[14] Investment Insights - The report indicates a mixed outlook for various sectors, with technology and gold stocks showing resilience while semiconductor stocks face challenges[9][14]

Hong Kong Market Overview - The Hang Seng Index closed at 24,072, down 0.87% for the day but up 20% year-to-date[3] - The Hang Seng China Enterprises Index fell 0.96% to 8,678, with a year-to-date increase of 19.05%[3] - The Hang Seng Tech Index decreased by 0.72% to 5,303, showing an 18.68% rise for the year[3] - In June, the Hang Seng Index, China Enterprises Index, and Tech Index rose by 3.36%, 2.92%, and 2.56% respectively[10] US Market Performance - The Dow Jones Industrial Average increased by 0.91% to 44,495, with a year-to-date gain of 4.59%[3] - The S&P 500 Index fell by 0.11% to 6,198, up 5.38% year-to-date[3] - The Nasdaq Composite dropped 0.82% to 20,203, with a year-to-date increase of 4.62%[3] - Major tech stocks showed mixed results, with Nvidia down 2.97% and Apple up 1.29%[10] Sector Trends - In the US, all sectors except Technology, Communications, and Semiconductors saw gains, with Materials up 2.59% and Healthcare up 1.42%[10] - In Hong Kong, new consumption and stablecoin concepts gained traction, while gold and precious metal stocks faced declines[10] Notable Stock Movements - Xiaomi and NetEase rose over 1%, while Meituan and Alibaba fell over 2%[10] - In the US, Tesla dropped 5.34%, while Amazon and Berkshire Hathaway saw slight increases[10] - Chinese electric vehicle manufacturers showed varied performance, with Li Auto down 1.03% and XPeng up 2.13%[11]

Core Viewpoint - The article discusses significant recent developments in the US stock market, particularly focusing on the performance of major tech companies and the Nasdaq 100 index, highlighting its long-term investment potential and the recent approval of new QDII investment quotas for domestic investors [3][19]. Group 1: Market Performance - Nvidia's stock price surged over 4% on June 25, reaching a market capitalization close to $3.8 trillion, surpassing Microsoft to reclaim the title of the world's most valuable company [4]. - On June 26, all three major US stock indices closed higher, with the Nasdaq and S&P 500 approaching historical highs [5]. - Apple's first original film premiered simultaneously in China and North America, marking its transition from a hardware manufacturer to a "tech + content" integrator, creating new growth opportunities [6]. Group 2: Nasdaq 100 Index - The Nasdaq 100 index has shown impressive performance, with a 1396.31% increase over the past 20 years, significantly outperforming other major US indices [10]. - The index's strong performance is attributed to its composition, which is heavily weighted towards technology (52.3%), communication services (23.1%), and consumer discretionary (14.0%) sectors [14]. - The current price-to-earnings ratio (PE/TTM) of the Nasdaq 100 is 36.63, indicating a relatively stable valuation compared to the Hang Seng Tech Index, showcasing its advantages in risk control and investment value [16]. Group 3: QDII Investment Quotas - Recently, the State Administration of Foreign Exchange approved new QDII investment quotas totaling $2.12 billion for 60 qualified domestic institutional investors, enhancing their ability to invest in overseas core assets, including the Nasdaq 100 index [19][20]. - The approval allows for more flexible operations for domestic professional investors in the overseas market [20]. Group 4: Investment Opportunities - The article highlights the availability of various funds tracking the Nasdaq 100 index, with the only fund currently allowing a subscription limit of 1 million yuan being the Baoying Nasdaq 100 Index (QDII) A, which closely follows the index without requiring currency exchange [23][24]. - The long-term resilience of the Nasdaq 100 index is emphasized, with a consistent upward trend over the past two decades, despite short-term volatility [25].

Group 1: Market Trends - After the tariff announcement on April 2, the US stock market quickly priced in a recessionary regime, eliminating the possibility of a "Goldilocks" (moderate growth) scenario. This trend has since reversed, with the probability of the Goldilocks regime returning to March's average level [1] - The Purchasing Managers' Index (PMIs) continues to decline, while OECD leading indicators show the economy remains in a late cycle but has not yet exited the expansion phase. The REVS regime favors late-cycle defensive sectors like communication services, but as leading indicators weaken, preferences may shift more towards utilities [2] Group 2: Earnings Adjustments - Almost all sectors have seen downward revisions in sales and earnings expectations, but the pace of these adjustments has slowed. The sectors with the largest downward revisions include automotive, durable goods, and building materials. The dispersion in earnings scores indicates the presence of alpha opportunities in the market [3] Group 3: Valuation Insights - Forward price-to-earnings ratios have mostly rebounded, returning to a "growth optimism" range. The US stock market's valuation remains higher than other global regions, with dollar-denominated earnings outperforming Europe by 10%, exceeding long-term trends [4] Group 4: Sentiment Analysis - Utilities and consumer staples sectors maintain positive sentiment. UBS crowding data indicates a persistent overweight position in the US market, although it has decreased from March's peak. The significant rotation from cyclical consumer stocks (durable goods and automotive) to defensive sectors (like consumer staples) has not fully normalized [5] Group 5: Top and Bottom Rated Stocks - The highest-rated stocks based on the REVS framework include Intercontinental Exchange, Virtu Financial, and Broadcom, with price changes since March 31 ranging from 10.9% to 37.3% [6] - The lowest-rated stocks include Ziprecruiter, Bioxcel Therapeutics, and Jetblue Airways, with price changes since March 31 ranging from 0% to 3.6% [7]

Core Viewpoint - Chinese enterprises have significantly risen on the international stage, showcasing impressive growth and transformation, becoming key players in the global economy and reshaping international trade, investment, and innovation patterns [1][3]. Group 1: Hard Power of Chinese Enterprises - In the 1995 Fortune Global 500 list, the United States had 151 companies, while Japan had 149. By 2024, the U.S. has 139 companies, and China has 128, spanning various industries such as construction, oil, insurance, banking, and technology [3]. - Among approximately 10,500 companies with revenues exceeding $1 billion globally, 25% are from China, surpassing the 19% from the U.S., indicating a greater number of large enterprises in China [3]. Group 2: Global Presence and Investment Trends - About 70% of large Chinese enterprises have subsidiaries in the U.S., over 60% in Germany, around 40% in the U.K. and the Netherlands, and at least 30% in Canada, Brazil, and Italy. Chinese enterprises are also expanding in Africa [4]. - In 2023, Chinese enterprises shifted their greenfield investments from developed economies to Asia and other emerging markets, reflecting a strategic response to changes in the global economic and political landscape [4]. Group 3: Soft Power of Chinese Brands - Historically, U.S. brands dominated the Brand Finance Global 500 list, accounting for about 40%. However, the share of Chinese brands increased from 4% in 2010 to an expected 14% by 2025 [5]. - Chinese brands have gained global recognition in sectors such as e-commerce, media and entertainment, telecommunications, and electric vehicles, altering perceptions of Chinese products beyond the traditional "Made in China" label [5]. - Despite global economic fragmentation, Chinese enterprises are optimizing their overseas strategies and focusing on the vast domestic market, with potential for further enhancement of their soft power [5].

Investment Rating - The report maintains a neutral investment rating for the U.S. stock market [1] Core Insights - The U.S. stock market is experiencing a steady recovery, led by the technology sector, with the S&P 500 rising by 5.3% and the Nasdaq increasing by 7.2% [3] - Significant capital inflows have been observed, particularly in the semiconductor and automotive sectors, indicating strong investor interest [4] - Earnings expectations for the S&P 500 constituents have been slightly adjusted upwards, with traditional industries showing the most significant upward revisions [5] Summary by Sections Price Trends - The S&P 500 increased by 5.3% and the Nasdaq by 7.2% this week, with the automotive and semiconductor sectors leading the gains at +16.2% and +13.3% respectively [3] Capital Flows - Estimated capital inflows for the S&P 500 constituents reached +$25.71 billion this week, a significant increase from the previous week's +$2.99 billion [4] - The semiconductor sector saw the highest inflow at +$9.17 billion, followed by automotive at +$6.59 billion [18] Earnings Forecasts - The dynamic F12M EPS expectations for the S&P 500 were adjusted up by 0.1%, with 19 sectors seeing upward revisions, particularly real estate (+0.7%) and materials (+0.5%) [5]