Core Insights - The Sci-Tech 100 Index has a PE ratio of 199.4 times and a PB ratio of 5.3 times, which are at the 32nd and 89th historical percentiles respectively [1] - The valuation of the electronics (semiconductor) sector is at the 86th historical percentile for PB, while the communication sector's PB valuation is at a high 93rd historical percentile, indicating significant valuation divergence within the tech sector [1] - In the TMT sector, the PE valuations for computer (IT services, software development) are at the 97th and 91st historical percentiles, reflecting high market expectations for digital economy-related fields [1] Industry Summary - The Sci-Tech 100 ETF (588120) tracks the Sci-Tech 100 Index (000698), which has a daily fluctuation limit of 20%. This index selects 100 securities from the Sci-Tech board based on moderate market capitalization and good liquidity [1] - The index covers multiple high-tech fields, including new generation information technology, biomedicine, and new materials, aiming to reflect the overall performance of listed companies with innovative and growth characteristics on the Sci-Tech board [1]

Core Viewpoint - The manager of Lobo Fund, Han Yuchen, expresses optimism about the medium to long-term performance of the A-share technology market, highlighting the Shanghai Stock Exchange Science and Technology Innovation Board Composite Price Index as a potentially valuable index for investment [1]. Group 1: Index Characteristics - The index includes nearly all eligible listed companies on the Science and Technology Innovation Board, achieving a market capitalization coverage of nearly 100%, which allows it to comprehensively reflect the overall performance of these companies [1]. - The constituent stocks of the index are highly focused on "hard technology" industries, primarily in electronics (especially semiconductors), pharmaceuticals, machinery, and computers, showcasing high R&D intensity and significant innovation capabilities [1]. - The Science and Technology Innovation Board was established to support technological innovation and deepen capital market reforms, receiving various policy supports that create a favorable environment for corporate development [1]. - The index includes a balanced distribution of large, medium, and small-cap companies, reflecting the innovative growth characteristics of the Science and Technology Innovation Board [1]. Group 2: Quantitative Enhancement Potential - The feasibility of using the index for quantitative enhancement is high, as its individual stocks, styles, and industry distribution are relatively diversified and balanced, providing a broad selection pool for stock picking [2]. - This diversified distribution is beneficial for quantitative models to leverage Alpha generation capabilities [2].

Core Viewpoint - The article discusses the recent performance of the A-share market, particularly the Shanghai Composite Index, and highlights the impact of bank stocks on the index's movements, suggesting that the market is currently in a "slow bull" phase with potential for further growth if certain conditions are met [3][4][12]. Market Performance - The Shanghai Composite Index reached a high of 3613.02 points recently, with 3700 points being the next target [3]. - The banking sector has been a significant drag on the index, with the China Securities Banking Index falling by 6.25% from July 11 to July 25, while the Shanghai Composite Index only saw a 2.39% increase during the same period [5][8]. Impact of Dividends - The decline in bank stocks is partially attributed to the dividend distribution season, which causes a "virtual decline" in price indices due to ex-dividend adjustments [6][8]. - The Shanghai Composite Index's performance was negatively impacted by bank stock adjustments, with a loss of 28.81 points attributed to banks during the observed period [8]. Sector Contributions - The article provides a breakdown of sector contributions to the Shanghai Composite Index, indicating that while banks detracted from performance, sectors like electronics and pharmaceuticals contributed positively [10]. - The electronics sector, particularly semiconductors, has been a key driver of the index's recent gains, alongside pharmaceuticals [10]. Market Sentiment - Despite the structural bull market, there is a lack of consensus among retail investors, particularly those heavily invested in previously popular sectors like food and beverage, solar energy, and automotive [11]. - The overall A-share market, represented by the Wind All A Index, has only increased by 11.93% this year, which does not raise significant concerns among regulators about a rapid market surge [11]. Technical Indicators - The 14-day RSI for the China Securities Banking Index has adjusted to 40, suggesting a potential bottoming out and a possible rebound if other strong sectors experience corrections [12]. - The article emphasizes the importance of maintaining market stability and avoiding excessive volatility, which could lead to a rapid rise followed by a sharp decline [17][20]. Liquidity and Investor Behavior - The article notes that retail investor margin balances have exceeded previous highs, indicating a steady inflow of retail funds into the market, albeit at a measured pace [18][19]. - The current market environment is characterized by a race between fundamental recovery and liquidity, with the potential for rapid changes in sentiment among investors [19][20].

Market Outlook - The market is expected to show an upward breakthrough in July, with technology and non-bank sectors likely to outperform [2][3][21] - Fiscal indices and resilient consumption have led to a marginal improvement in total demand growth in Q2, creating a favorable environment for upcoming mid-year performance disclosures [3][21] - Despite high-frequency data indicating export pressures in the second half, total demand is expected to remain stable, reducing the likelihood of significant economic downturns [3][21] Industry Recommendations - Focus on sectors with expected mid-year performance improvements, particularly in technology, consumer goods, and midstream manufacturing [4][17] - Recommended sectors include electronics (semiconductors), machinery (automation equipment), pharmaceuticals (chemical drugs), defense and military, non-ferrous metals (industrial, precious, and minor metals), and computers [4][17] - Key investment tracks for July include solid-state batteries, domestic computing power, non-bank finance, defense and military, and innovative pharmaceuticals [18] Economic Indicators - Total demand growth rebounded to 5.7% in May, indicating stability, with industrial enterprise revenue growth at 3.2% [22][23] - Government financing has significantly contributed to social financing growth, supporting economic recovery and creating a favorable financial environment for the stock market [24][27] - Fiscal spending has accelerated, with a 26% year-on-year increase in broad fiscal spending in the first five months, playing a crucial role in improving economic data [30]