Group 1 - A-shares have accelerated upward, with the Shanghai Composite Index breaking the high of 3731.69 points from February 2021, reaching 3741.29 points, marking a new high since August 2015 [1] - Since the beginning of 2025, global stock markets have shown strong performance, with the Korean Composite Index rising by 32.4%, the Hang Seng Index by 25.6%, and the German DAX by 22.1% [1] - The current low-risk interest rate environment, with the 10-year government bond yield between 1.65% and 1.80%, has driven A-share market performance, supported by dividend advantages and policy-driven capital inflows [1] Group 2 - The dynamic price-to-earnings (P/E) ratios for the CSI 300 Index and the SSE 50 Index are currently 13.5 times and 11.6 times, respectively, which are at the 75% to 85% historical percentile levels [2] - Compared to major overseas indices, A-share core indices have relatively low absolute P/E ratios, with the S&P 500 at 28.6 times and the FTSE 100 at 20 times [2] - The ChiNext Index and the STAR 50 Index have P/E ratios of 37.1 times and 149.5 times, respectively, indicating that domestic technology and growth sectors do not have a significant valuation advantage compared to overseas counterparts [2] Group 3 - The risk premium for the CSI 300 Index is currently at 5.6%, which is at a high historical percentile of 64.7%, indicating a favorable investment return compared to government bonds [3] - The dividend yield for the CSI 300 Index is 2.69%, which is at the 68.1% historical percentile, suggesting attractive dividend returns for core A-share assets [3] - Historical trends show that a declining dividend yield often accompanies a strengthening market, and the current yield remains significantly higher than the 10-year government bond yield [4] Group 4 - The current low interest rate environment enhances the attractiveness of A-shares for institutional investors seeking stable returns, with potential for significant upward movement in the CSI 300 Index if valuations align with overseas markets [4] - If the dividend yield of the CSI 300 Index approaches the current risk-free rate of around 1.75%, it could correspond to an index level of 6500 points, indicating substantial upside potential [4] - The analysis suggests that the current A-share market rally is primarily driven by valuation, with strong dividend appeal and policy support for capital inflows [4]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The Chinese economy is in a marginal de - leveraging process, with the liability growth rate of the real - sector expected to decline. The government aims to stabilize the macro - leverage ratio, and the monetary policy will generally remain neutral and difficult to be continuously loose. The market is currently affected by risk preference, and the subsequent trends of risk preference, economic recovery, and the US economy need to be focused on [2][3][7] - In the context of the contraction of the national balance sheet, the allocation of financial assets should adopt a dumbbell - shaped strategy. The bond market is the large base, and the stock market is the small head. The stock allocation strategy is dividend plus growth, and the bond allocation strategy is duration plus credit - sinking [25] - In the contraction cycle, the equity - bond ratio favors equities to a limited extent, and the value style is more likely to be dominant. Red - dividend stocks with characteristics of non - expansion, good profitability, and survival are recommended [12][67] 3. Summary by Relevant Catalogs 3.1 National Balance Sheet Analysis - **Liability Side**: In July 2025, the liability growth rate of the real sector was 9.0%, with a lower - than - expected rebound. It is expected to decline to 8.9% in August and further to 8% by the end of the year. The government's liability growth rate is also expected to decline from 15.7% in July to 14.8% in August and 12.5% by the end of the year. The money market has tightened marginally, and the peak of the money market in August was likely in the first week [2][3][21] - **Monetary Policy**: The trading volume of funds decreased last week, and the price was stable. The one - year Treasury yield rose to 1.37%, and the term spread widened. The estimated lower limit of the one - year Treasury yield is 1.3%, the ten - year Treasury yield is about 1.6%, and the thirty - year Treasury yield is about 1.8% [3][22] - **Asset Side**: After a brief stabilization in June, the physical volume data declined again in July. The annual real economic growth target for 2025 is about 5%, and the nominal economic growth target is about 4.9%. Whether this will be the central target for the next 1 - 2 years needs further observation [4][23] 3.2 Stock - Bond Ratio and Stock - Bond Style - **Market Performance Last Week**: The money market tightened marginally, but risk preference increased. Stocks rose, and bonds fell. The equity growth style was dominant, and the stock - bond ratio favored stocks, breaking through the previous high on August 15th [6][26] - **Future Outlook**: The trend of risk preference is uncertain. There are three possible scenarios: range - bound fluctuations, a short - term upward trend, or a fundamental change in the subjective weighting of Chinese profitability. A portfolio of growth - type equity assets and long - term bonds is recommended, with a 70% position in the CSI 1000 Index and a 30% position in the 30 - year Treasury ETF [10][11][29] 3.3 Industry Recommendation - **Industry Performance Review**: The A - share market rose this week. The communication, electronics, non - bank finance, power equipment, and computer sectors had the largest increases, while the bank, steel, textile and apparel, coal, and public utilities sectors had the largest declines [35] - **Industry Crowding and Trading Volume**: As of August 15th, the top five crowded industries were electronics, computer, power equipment, machinery, and non - bank finance. The trading volume of the whole A - share market increased this week, with non - bank finance, real estate, and other sectors having the highest growth rates [36][38] - **Industry Valuation and Profitability**: The PE (TTM) of the comprehensive, communication, and other sectors increased the most this week, while the bank, steel, and other sectors declined. Industries with high 2024 full - year profit forecasts and relatively low current valuations include banks, coal, and oil and petrochemicals [41][42] - **Industry Prosperity**: External demand generally declined. The global manufacturing PMI decreased in July, and the CCFI index fell. Domestic indicators such as port throughput and industrial capacity utilization showed mixed trends [46] - **Public Fund Market Review**: In the second week of August, most active public equity funds outperformed the CSI 300. As of August 15th, the net asset value of active public equity funds was slightly higher than that in Q4 2024 [62] - **Industry Recommendation**: In the contraction cycle, the equity - bond ratio favors equities to a limited extent, and the value style is more likely to be dominant. An A + H red - dividend portfolio of 20 stocks and an A - share portfolio of 20 stocks, mainly concentrated in banks, telecommunications, and other industries, are recommended [12][67]

Report Industry Investment Rating - No information provided in the documents Core Viewpoints - The A-share market has a high investment cost-performance ratio in the long term. The CSI 500 and CSI 1000 are more supported by science and innovation policies, and their high growth potential may bring higher returns. The SSE 50 and CSI 300 have more defensive value in the current macro environment. The proportion of medium and long-term funds in the capital market is expected to gradually increase, which is conducive to reducing stock market volatility. Currently, policy signals are clear, and valuations are starting to recover, but the fundamentals have not been verified [2] Summary by Relevant Catalogs I. Futures Market 1. Futures Contracts - **IF Contracts**: The closing prices of IF contracts decreased, with the current month, next month, next quarter, and the quarter after the next quarter falling by 20.00, 20.80, 16.40, and 18.20 respectively. The trading volumes were 23,577.00, 53,170.00, 12,168.00, and 3,531.00, and the open interest decreased by 4,718.00, 7,721.00, increased by 562.00, and increased by 685.00 respectively [1] - **IH Contracts**: The closing prices of IH contracts decreased, with the current month, next month, next quarter, and the quarter after the next quarter falling by 16.40, 17.00, 17.20, and 15.40 respectively. The trading volumes were 12,022.00, 30,341.00, 4,009.00, and 855.00, and the open interest decreased by 599.00, 2,625.00, 72.00, and 155.00 respectively [1] - **IC Contracts**: The closing prices of IC contracts decreased slightly, with the current month, next month, next quarter, and the quarter after the next quarter falling by 1.40, 1.80, 2.00, and 3.80 respectively. The trading volumes were 21,529.00, 39,078.00, 11,549.00, and 4,777.00, and the open interest decreased by 2,979.00, 2,797.00, 128.00, and increased by 1,671.00 respectively [1] - **IM Contracts**: The closing prices of IM contracts increased slightly, with the current month, next month, next quarter, and the quarter after the next quarter rising by 2.00, 2.20, 0.80, and 0.60 respectively. The trading volumes were 32,877.00, 98,231.00, 21,466.00, and 6,839.00, and the open interest decreased by 3,636.00, 8,546.00, 339.00, and increased by 1,231.00 respectively [1] 2. Inter - month Spreads - The inter - month spreads of IF, IH, IC, and IM contracts changed, with the current values of IF next month - IF current month, IH next month - IH current month, IC next month - IC current month, and IM next month - IM current month being - 6.80, 1.20, - 45.20, and - 62.40 respectively, compared to the previous values of - 5.80, 1.20, - 43.60, and - 57.20 [1] II. Spot Market 1. Major Indexes - **CSI 300 Index**: The index decreased by 0.53%, with a previous value of 4,127.16, a trading volume of 27.359 billion lots, and a total trading value of 430.446 billion yuan [1] - **SSE 50 Index**: The index decreased by 0.60%, with a previous value of 2,795.51, a trading volume of 5.169 billion lots, and a total trading value of 114.043 billion yuan [1] - **CSI 500 Index**: The index increased by 0.10%, with a previous value of 6,299.59, a trading volume of 23.706 billion lots, and a total trading value of 304.368 billion yuan [1] - **CSI 1000 Index**: The index increased by 0.08%, with a previous value of 6,706.61, a trading volume of 26.4 billion lots, and a total trading value of 363.14 billion yuan [1] 2. Industry Indexes - Different industries showed different trends. For example, the energy, raw materials, industry, and optional consumption sectors decreased by 1.10%, 0.59%, 1.21%, and 1.48% respectively. The main consumption, medical and health, real estate and finance, and information technology sectors decreased by 1.65%, 0.30%, 0.32%, and increased by 1.43% respectively. The telecommunications and public utilities sectors decreased by 0.53% and 0.70% respectively [1] III. Basis - The basis of IF, IH, IC, and IM contracts relative to their corresponding spot indexes changed compared to the previous two days. For example, the basis of IF current month - CSI 300 was - 4.36, compared to - 2.04 two days ago [1] IV. Other Indexes 1. Domestic Indexes - The Shanghai Composite Index decreased by 0.33%, the Shenzhen Component Index decreased by 0.22%, the Small and Medium - sized Board Index increased by 0.28%, and the ChiNext Index decreased by 0.23% [1] 2. International Indexes - The Hang Seng Index decreased by 1.09%, the Nikkei 225 decreased by 0.88%, the S&P 500 increased by 0.40%, and the DAX Index decreased by 0.32% [1] V. Macro Information - A batch of new regulations came into effect on August 1st, including the Hong Kong "Stablecoin Ordinance", the "Measures for the Administration of Anti - Money Laundering and Counter - Terrorist Financing of Precious Metals and Gemstone Institutions", etc. The US will resume imposing so - called "reciprocal tariffs" on August 1st. The State Council Executive Meeting approved the "Opinions on Deeply Implementing the 'Artificial Intelligence +' Initiative" and deployed loan interest subsidy policies. The July China Manufacturing PMI was 49.3%, a seasonal decrease of 0.4 percentage points. The National Development and Reform Commission emphasized work in nine aspects for the second half of the year [2] VI. Industry Information - The National Healthcare Security Administration formulated a new pricing mechanism for newly launched drugs and added more than 100 price items related to medical new technologies. The National Energy Administration is formulating policies for high - power charging facilities construction. In the first half of the year, the country's renewable energy new installed capacity was 268 million kilowatts, a year - on - year increase of 99.3%. The financial regulatory authority required urban commercial medical insurance to highlight its inclusive nature [2]

Report Summary 1. Report Industry Investment Rating No relevant content provided. 2. Core View - A-share major indices collectively declined significantly, with the Shanghai Composite Index falling below 3,600 points. The trading volume in the Shanghai and Shenzhen stock markets increased notably. Most industry sectors dropped, with the steel, non-ferrous metals, and real estate sectors weakening substantially. [3] - In July, China's official manufacturing PMI declined from the previous month and has been in the contraction range for four consecutive months. Although the non-manufacturing PMI and composite PMI remained above the boom-bust line, they also decreased from the previous values. The decline in manufacturing sentiment negatively affected market sentiment. [3] - China and the US reached a 90-day tariff truce extension as scheduled. The Politburo meeting on July 30 did not announce more incremental policies, which was weaker than market expectations. [3] - The third trade negotiation provided more flexibility for the market, but the decline of China's three major PMI indices in July indicated that economic recovery still faced challenges. After the Politburo meeting, without unexpected policies, market bulls might take profit, and stock index futures were expected to enter a wide-range oscillation. It is recommended to wait and see. [3] 3. Summary by Relevant Catalogs Futures Contract Prices and Spreads - IF, IH, IC, and IM main and sub-main contracts all declined. For example, the IF main contract (2509) dropped to 4,057.0, down 73.2; the IH main contract (2509) fell to 2,777.0, down 40.6; the IC main contract (2509) decreased to 6,124.0, down 85.8; the IM main contract (2509) dropped to 6,538.0, down 58.2. [2] - There were changes in the spreads between different contracts. For instance, the IF - IH current month contract spread decreased to 1,293.0, down 32.6; the IC - IF current month contract spread dropped to 2,117.0, down 7.2. [2] Futures Position Holdings - The net positions of the top 20 in IF increased by 401.0 to -24,341.00, while those in IH decreased by 729.0 to -15,476.00, IC decreased by 1,765.0 to -12,414.00, and IM decreased by 56.0 to -37,444.00. [2] Spot Prices and Basis - The spot prices of the CSI 300, SSE 50, CSI 500, and CSI 1000 all declined. The basis of the IF main contract decreased to -18.6, down 3.8; the basis of the IH main contract increased to 1.0, up 0.4; the basis of the IC main contract decreased to -102.3, down 3.1; the basis of the IM main contract decreased to -123.2, down 8.9. [2] Market Sentiment - A-share trading volume reached 19,618.49 billion yuan, up 908.73 billion yuan. Margin trading balance increased by 21.07 billion yuan to 19,847.48 billion yuan. Northbound trading volume increased by 57.13 billion yuan to 2,391.44 billion yuan. [2] - The proportion of rising stocks decreased to 19.58%, down 12.04 percentage points. The Shibor increased to 1.392%, up 0.075 percentage points. [2] Industry News - The Politburo meeting decided to hold the Fourth Plenary Session of the 20th Central Committee, emphasizing the need to continue and strengthen macro - policies, release domestic demand potential, expand high - level opening - up, and resolve local government debt risks. [2] - China and the US held economic and trade talks in Stockholm, and agreed to extend the 24% reciprocal tariff suspension and China's counter - measures for 90 days. [2] - In July, the manufacturing PMI was 49.3%, down 0.4 percentage points from the previous month; the non - manufacturing business activity index and composite PMI output index were 50.1% and 50.2% respectively, down 0.4 and 0.5 percentage points from the previous month, both remaining above the critical point. [2]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The high point of this round of liquidity has basically been confirmed. The debt - to - GDP ratio of the real sector is expected to decline, and the country is in a marginal deleveraging process. The liquidity of the financial sector has marginally tightened, and the focus is on when the stock - bond ratio will return to favoring bonds. Currently, long - term bonds have a slightly better cost - performance than value - type equity assets. [2][7] - In the contraction cycle, the extent to which the stock - bond ratio favors equities is limited, and the value style is more likely to be dominant. Red - chip stocks are recommended, including an A + H red - chip portfolio of 20 stocks and an A - share portfolio of 20 stocks, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation. [8][62] Summary by Directory 1. National Balance Sheet Analysis - **Liability Side**: In May 2025, the debt growth rate of the real sector was 8.9%, down from 9.0% previously. April is expected to be the high point of the debt growth rate of the real sector this year, with a decline starting in June, a rebound in July, and then a return to deleveraging. By the end of the year, the debt growth rate of the real sector is expected to drop to around 8%. The local government debt growth rate reached a new high of 15.3% in June, exceeding market expectations, and is expected to decline to around 12.5% by the end of the year. The liquidity of the financial sector has marginally tightened, and the peak of the loose liquidity since early June was from July 4th to 8th. [2][16][17] - **Fiscal Policy**: Last week, the net increase in government bonds was 32.14 billion yuan (higher than the planned 340 million yuan), and this week, the planned net increase is 17.83 billion yuan. [3][17] - **Monetary Policy**: Last week, the average weekly trading volume of funds increased, the price of funds decreased, and the term spread slightly narrowed. The yield of one - year treasury bonds trended upward, closing at 1.37% at the weekend. The estimated lower limit of the one - year treasury bond yield is about 1.3%, the term spread between the ten - year and one - year treasury bonds is about 30 basis points, and the lower limit of the ten - year treasury bond yield is about 1.6%. The spread between the thirty - year and ten - year treasury bonds is estimated to be 20 basis points, and the lower limit of the thirty - year treasury bond yield is about 1.8%. [3][17] - **Asset Side**: In May, the physical volume data was weaker than in April. The focus is on the duration of the current economic slowdown. The target for the annual real economic growth rate in 2025 is around 5%, and the nominal economic growth rate target is around 4.9%. It remains to be seen whether a nominal economic growth rate of around 5% will become the central target for China's nominal economic growth in the next 1 - 2 years. [4][5][18] 2. Stock - Bond Cost - Performance and Stock - Bond Style - **Last Week's Situation**: The liquidity marginally tightened. It was a bull market for stocks and a bear market for bonds. The equity style rotated back to growth - dominance, exceeding expectations. Bond yields rose across the board, with the ten - year treasury bond yield rising 2 basis points to 1.67%, the one - year treasury bond yield rising 3 basis points to 1.37%, and the thirty - year treasury bond yield rising 2 basis points to 1.87%. The stock - bond cost - performance favored stocks. The broad - based rotation strategy underperformed the CSI 300 index by - 0.4 pct last week but has outperformed the CSI 300 index by 4.48 pct since its establishment in July, with a maximum drawdown of 12.1% (compared to 15.7% for the CSI 300). [6][20] - **Trend Judgment**: In 2025, the real GDP growth rate on the asset side is expected to run smoothly between 4 - 5%. On the liability side, the debt growth rate of the real sector will decline. The stock - bond cost - performance will trend towards favoring bonds, and the equity style will trend towards favoring value. Currently, long - term bonds have a slightly better cost - performance than value - type equity assets. If equity - type value assets continue to fall, there may be a good entry opportunity. This week, the recommended portfolio includes the Dividend Index (40% position), the SSE 50 Index (40% position), and the 30 - year Treasury Bond ETF (20% position). [7][19][22] 3. Industry Recommendation 3.1 Industry Performance Review - The A - share market rose this week, with trading volume similar to last week. The Shanghai Composite Index rose 1.1%, the Shenzhen Component Index rose 1.8%, and the ChiNext Index rose 2.4%. Among the Shenwan primary industries, real estate, steel, non - bank finance, comprehensive, and building materials had the largest increases, rising 6.1%, 4.4%, 4%, 3.8%, and 3.3% respectively. Coal, banking, automobiles, and household appliances had the largest declines, with weekly declines of 1.1%, 1%, 0.4%, and 0.3% respectively. [27] 3.2 Industry Crowding and Trading Volume - **Crowding**: As of July 11th, the top five industries in terms of crowding were computer, electronics, non - bank finance, pharmaceutical biology, and power equipment, with crowding levels of 11.2%, 9.9%, 8.9%, 7.4%, and 6.8% respectively. The bottom five were comprehensive, beauty care, coal, petroleum and petrochemicals, and environmental protection, with levels of 0.2%, 0.3%, 0.7%, 0.7%, and 0.8% respectively. The top five industries with the largest increase in crowding this week were non - bank finance, non - ferrous metals, computer, banking, and real estate, with increases of 3.9%, 2%, 1.3%, 1%, and 0.7% respectively. The top five with the largest decline were electronics, power equipment, national defense and military industry, pharmaceutical biology, and basic chemicals, with changes of - 3.7%, - 1.4%, - 0.9%, - 0.8%, and - 0.8% respectively. [30] - **Trading Volume**: The average daily trading volume of the entire A - share market this week was 1.5 trillion yuan, slightly up from 1.44 trillion yuan last week. Real estate, public utilities, non - bank finance, building materials, and comprehensive had the highest year - on - year growth rates in trading volume, with changes of 78.3%, 58.3%, 48.6%, 37.8%, and 34.5% respectively. National defense and military industry, automobiles, electronics, environmental protection, and basic chemicals had the smallest increases in trading volume, with changes of - 36.7%, - 15%, - 14.4%, - 12.8%, and - 6.8% respectively. [32] 3.3 Industry Valuation and Earnings - **PE(TTM) Changes**: Among the Shenwan primary industries this week, real estate, steel, non - bank finance, comprehensive, and environmental protection had the largest increases in PE(TTM), with changes of 6.1%, 4.8%, 3.9%, 3.8%, and 3.7% respectively. Banking, coal, automobiles, and household appliances had the largest declines, with valuation changes of - 1%, - 0.9%, - 0.5%, and - 0.4% respectively. [35] - **Valuation - Earnings Matching**: As of July 11, 2025, industries with high full - year 2024 earnings forecasts and relatively low current valuations compared to history include banking, coal, petroleum and petrochemicals, transportation, beauty care, and consumer electronics. [36] 3.4 Industry Prosperity - **External Demand**: Generally rebounded. The global manufacturing PMI rose from 49.5 to 50.3 in June, with most major economies' PMIs rising. The CCFI index fell 2.18% week - on - week in the latest week. Port cargo throughput decreased. South Korea's export growth rate rose from - 1.3% in June to 4.3%, and to 9.5% in the first 10 days of July. Vietnam's export growth rate slightly decreased from 20.7% in May to 19.3% in June. [40] - **Domestic Demand**: Second - hand housing prices fell in the latest week, and quantitative indicators showed mixed trends. Highway truck traffic decreased. The fitted industrial capacity utilization rate of ten industries significantly declined in April 2025, rebounded from May to June, and continued to rise slightly in July. Automobile sales were at a relatively high level for the same period in history, new - home sales remained at a historical low, and second - hand home sales declined seasonally compared to history. As of July 6th, the national urban second - hand housing listing price index fell 0.27% week - on - week. As of July 4th, the producer price index rose 0.6% week - on - week. [40] 3.5 Public Fund Market Review - In the second week of July (July 7 - 11), half of the active public equity funds outperformed the CSI 300. The 10%, 20%, 30%, and 50% weekly returns were 2.1%, 1.6%, 1.3%, and 0.7% respectively, while the CSI 300 rose 0.8% this week. - As of July 11th, the net asset value of active public equity funds was estimated to be 3.57 trillion yuan, slightly down from 3.66 trillion yuan in Q4 2024. [56] 3.6 Industry Recommendation - In the contraction cycle, the extent to which the stock - bond ratio favors equities is limited, and the value style is more likely to be dominant. Red - chip stocks are recommended to have three characteristics: no expansion, good profitability, and survival. Combining these characteristics with the under - allocation in the public fund's quarterly reports, the recommended A + H red - chip portfolio includes 20 A + H stocks, and the A - share portfolio includes 20 A - share stocks, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation. [62]

Core Viewpoint - The performance of various stock indices shows mixed results, with some indices experiencing slight increases while others remain stable or decline [1] Index Performance - The Shanghai Stock Exchange 50 Index decreased by 0.08% - The CSI 300 Index increased by 0.04% - The CSI 500 Index increased by 0.05% - The CSI 1000 Index increased by 0.07% - The STAR 50 Index increased by 0.04% - The STAR Composite Index increased by 0.05% [1] ETF Performance - The SSE 50 ETF (510680) remained flat at 0.0% - The CSI 300 ETF (159673) increased by 0.09% - The CSI 500 ETF (159982) decreased by 0.13% - The CSI 1000 ETF (159629) decreased by 0.23% - The STAR 50 Enhanced ETF (588460) increased by 0.09% - The STAR Composite ETF (589680) increased by 0.52% [1]

1. Report Industry Investment Rating The document does not provide the industry investment rating. 2. Core Viewpoints of the Report - The Chinese economy is in a marginal de - leveraging process. The growth rate of the real - sector debt is expected to decline, and the government aims to stabilize the macro - leverage ratio. The large - scale debt resolution is beneficial for the overall economy [1][17]. - In the short term, the stock - bond ratio may fluctuate, but in the long run, it tends to favor bonds. The stock style tends to favor value stocks, and the bond configuration window is open, but the trading space is limited [16][22]. - During the de - leveraging cycle, the stock - bond ratio favors equities to a limited extent, and value stocks are more likely to outperform. The recommended investment portfolio includes the Dividend Index (40% position), the Shanghai 50 Index (40% position), and the 30 - year Treasury Bond ETF (20% position) [7][16][23]. 3. Summary by Relevant Catalogs 3.1 National Balance Sheet Analysis - **Liability Side**: In May 2025, the real - sector debt growth rate was 8.9%, down from 9.0% previously. It is expected to decline to around 8% by the end of the year. The government debt growth rate is expected to rise to 15.3% in June and then decline to around 12.5% by the end of the year. The money market has been loosening recently, but it is unlikely to remain so [1][17][18]. - **Asset Side**: The physical volume data in May was weaker than in April. The annual nominal economic growth target is around 4.9%. It remains to be seen whether this will be the central target for the next 1 - 2 years [5][19]. 3.2 Stock - Bond Ratio and Stock - Bond Style - Last week, the money market continued to loosen. The stock market was bullish, and the bond market was stable. The stock - bond ratio favored stocks, but the equity style shifted to value stocks. The short - and long - term bond yields were relatively stable [6][21]. - In the long run, during the de - leveraging cycle, the stock - bond ratio favors bonds, and the equity style favors value stocks. Currently, long - term bonds have a slightly higher cost - performance ratio than value - type equity assets [7][22]. 3.3 Industry Recommendation 3.3.1 Industry Performance Review - This week, the A - share market rose, with the Shanghai Composite Index up 1.4%, the Shenzhen Component Index up 1.25%, and the ChiNext Index up 1.5%. Among the Shenwan primary industries, steel, building materials, banks, pharmaceutical biology, and comprehensive sectors had the largest increases, while computer, non - bank finance, beauty care, transportation, and commercial retail sectors had the largest declines [28]. 3.3.2 Industry Crowding and Trading Volume - As of July 4, the top five crowded industries were electronics, computer, pharmaceutical biology, power equipment, and machinery equipment, while the bottom five were comprehensive, beauty care, petroleum and petrochemical, coal, and real estate. - This week, the top five industries with increased crowding were pharmaceutical biology, public utilities, electronics, machinery equipment, and building materials, while the top five with decreased crowding were non - bank finance, computer, banks, national defense and military industry, and automobiles. - The average daily trading volume of the whole A - share market slightly decreased compared to last week. Steel, building materials, agriculture, forestry, animal husbandry, and fishery, pharmaceutical biology, and coal had the highest trading volume growth rates [30][31]. 3.3.3 Industry Valuation and Earnings - This week, among the Shenwan primary industries, steel, banks, building materials, pharmaceutical biology, and media had the largest increases in PE(TTM), while computer, non - bank finance, beauty care, transportation, and commercial retail had the largest declines. - As of July 4, 2025, industries with high 2024 full - year earnings forecasts and relatively low current valuations compared to history included coal, petroleum and petrochemical, transportation, beauty care, and consumer electronics [35][37]. 3.3.4 Industry Prosperity - **External Demand**: It generally recovered. The global manufacturing PMI rose from 49.5 to 50.3 in June, and most major economies' PMIs increased. The CCFI index decreased by 1.92% week - on - week. Port cargo throughput increased. South Korea's export growth rate rose from - 1.3% in May to 4.3% in June, and Vietnam's export growth rate slightly decreased from 21% in April to 20.7% in May [39]. - **Domestic Demand**: The second - hand housing price remained flat last week, and quantity indicators showed mixed trends. Highway truck traffic increased. The capacity utilization rate of ten industries rebounded in May and continued to rise in June. Automobile trading volume was at a relatively high level in the same period of history, new - home trading volume was at a historical low, and second - hand home trading volume declined seasonally [39]. 3.3.5 Public Fund Market Review - In the first week of July (June 30 - July 4), most active public equity funds underperformed the CSI 300. As of July 4, the net asset value of active public equity funds was 3.55 trillion yuan, slightly down from 3.66 trillion yuan in Q4 2024 [55]. 3.3.6 Industry Recommendation - During the de - leveraging cycle, the stock - bond ratio favors equities to a limited extent, and value stocks are more likely to outperform. Dividend - type stocks should generally have three characteristics: no balance - sheet expansion, good earnings, and survival. - Based on these characteristics and the under - allocation situation in the public fund quarterly reports, the recommended A + H dividend portfolio includes 20 A + H stocks, and the A - share portfolio includes 20 A - share stocks, mainly concentrated in industries such as banks, telecommunications, petroleum and petrochemical, and transportation [9][59].

Report Investment Rating There is no mention of the industry investment rating in the provided content. Core Viewpoints - China remains in the process of marginal balance sheet contraction, with the debt growth rate of the real - sector expected to decline to around 8% by the end of the year, and the government - sector debt growth rate to around 12.5% [2][3] - The short - term liquidity relaxation since early June is difficult to sustain, and the peak of this round of liquidity is expected to occur between June 23 and July 4 [7] - The U.S. economic growth is expected to return to the trend level, and attention should be paid to whether and when the U.S. quarterly real GDP growth rate will fall below the trend level [7] - In the balance sheet contraction cycle, the cost - performance ratio of stocks and bonds tends to favor bonds, and the equity style tends to favor value. Currently, long - term bonds have a slightly better cost - performance ratio than value - type equity assets [7] Summary by Directory 1. National Balance Sheet Analysis - **Liability Side**: In May 2025, the debt growth rate of the real sector was 8.9%, down from 9.0% previously. It is expected to decline to around 8.8% in June and further to around 8% by the end of the year. The government debt increased by 6703 billion yuan last week, higher than the planned 5754 billion yuan. The government debt growth rate is expected to rise to 15.3% in June and then decline, reaching around 12.5% by the end of the year [2][3] - **Monetary Policy**: Last week, the average weekly trading volume of funds decreased, the price increased, and the term spread widened. The one - year Treasury yield closed at 1.35% on the weekend, with an estimated lower limit of about 1.3%. The term spread between the ten - year and one - year Treasuries widened to 30 basis points, and the estimated central value of the term spread was adjusted down to 40 basis points [3] - **Asset Side**: The physical volume data in May was weaker than in April. The annual real economic growth target for 2025 is around 5%, and the nominal economic growth target is around 4.9%. It is necessary to observe whether 5% will become the central target for China's nominal economic growth in the next 1 - 2 years [4][5] 2. Stock - Bond Cost - Performance and Stock - Bond Style - Last week, the liquidity was marginally relaxed, the risk appetite rebounded, stocks rose while bonds were flat, and the growth style was dominant. The ten - year Treasury yield rose by 1 basis point to 1.65%, the one - year Treasury yield fell by 1 basis point to 1.35%, and the 30 - year Treasury yield rose by 1 basis point to 1.85% [6] - The broad - based rotation strategy underperformed the CSI 300 index by - 1.58 pct last week but has outperformed the CSI 300 index by 4.73 pct since July, with a maximum drawdown of 12.1% [6] - In the balance sheet contraction cycle, the cost - performance ratio of stocks and bonds tends to favor bonds, and the equity style tends to favor value. Currently, long - term bonds have a slightly better cost - performance ratio than value - type equity assets. This week, the recommended assets are the dividend index (40% position), the SSE 50 index (40% position), and the 30 - year Treasury ETF (20% position) [7] 3. Industry Recommendation 3.1 Industry Performance Review - This week, A - shares rose with increased trading volume. The Shanghai Composite Index rose 1.91%, the Shenzhen Component Index rose 3.73%, and the ChiNext Index rose 5.69%. Among the Shenwan primary industries, computer, national defense and military industry, non - bank finance, communication, and power equipment had the largest increases, while petroleum and petrochemical, food and beverage, and transportation had the largest declines [28] 3.2 Industry Crowding and Trading Volume - As of June 27, the top five industries in terms of crowding were electronics, computer, power equipment, non - bank finance, and communication, while the bottom five were comprehensive, beauty care, building materials, coal, and steel [31] - The industries with the top five increases in crowding this week were non - bank finance, computer, national defense and military industry, non - ferrous metals, and automobile, while those with the top five decreases were pharmaceutical biology, mechanical equipment, media, food and beverage, and petroleum and petrochemical [31] - The average daily trading volume of the entire A - share market this week was 1.49 trillion yuan, up from 1.22 trillion yuan last week. Non - bank finance, national defense and military industry, bank, electronics, and computer had the highest year - on - year growth rates in trading volume [33] 3.3 Industry Valuation and Earnings - This week, among the Shenwan primary industries, computer, national defense and military industry, non - bank finance, communication, and power equipment had the largest increases in PE(TTM), while petroleum and petrochemical, food and beverage, transportation, public utilities, and coal had the largest declines [36] - As of June 27, 2025, industries with high full - year earnings forecasts in 2024 and relatively low current valuations compared to history include coal, petroleum and petrochemical, public utilities, transportation, pharmaceutical biology, and consumer electronics [37] 3.4 Industry Prosperity - **External Demand**: There were mixed trends. The global manufacturing PMI fell from 49.8 in May to 49.6, while most of the disclosed PMIs of major economies in May rebounded. The CCFI index rose 2% in the latest week, and the port cargo throughput increased. South Korea's export growth rate dropped to - 1.3% in May and rose to 8.3% in the first 20 days of June. Vietnam's export growth rate slightly decreased from 21% in April to 20.7% in May [40] - **Domestic Demand**: The second - hand housing price rose slightly this week, and the quantity indicators showed mixed trends. The highway truck traffic volume increased. The capacity utilization rate of ten industries decreased significantly in April 2025, rebounded slightly in May, and continued to rise in June. The automobile trading volume was at a relatively high level in the same period of history, new - house sales were at a historical low, and second - hand house sales were still at a high level relative to historical seasonality [40] 3.5 Public Fund Market Review - In the fourth week of June (June 23 - 27), most active public equity funds outperformed the CSI 300. The 10%, 20%, 30%, and 50% weekly returns were 4.9%, 4%, 3.5%, and 2.5% respectively, while the CSI 300 rose 2% [56] - As of June 27, the net asset value of active public equity funds was estimated to be 3.5 trillion yuan, slightly down from 3.66 trillion yuan in Q4 2024 [56] 3.6 Industry Recommendation - In the balance sheet contraction cycle, the cost - performance ratio of stocks and bonds favors stocks to a limited extent, and the value style is more likely to be dominant. Dividend - type stocks should generally have three characteristics: no balance sheet expansion, good earnings, and survival [8] - The recommended A + H dividend portfolio includes 20 A + H stocks, and the A - share portfolio includes 20 A - share stocks, mainly concentrated in industries such as banks, telecommunications, petroleum and petrochemical, and transportation [9]

1. Index Trends - On June 26, the Shanghai Composite Index fell by 0.22% to close at 3448.45 points, with a trading volume of 603.095 billion yuan; the Shenzhen Component Index fell by 0.48% to close at 10343.48 points, with a trading volume of 980.056 billion yuan [1]. - The CSI 1000 Index fell by 0.45%, with a trading volume of 343.746 billion yuan. The opening price was 6272.44, the closing price was 6247.79, the highest price was 6310.54, and the lowest price was 6244.78 [1]. - The CSI 500 Index fell by 0.41%, with a trading volume of 235.224 billion yuan. The opening price was 5868.29, the closing price was 5838.25, the highest price was 5885.25, and the lowest price was 5835.34 [1]. - The SSE 50 Index fell by 0.34%, with a trading volume of 87.101 billion yuan. The opening price was 2740.23, the closing price was 2738.47, the highest price was 2747.61, and the lowest price was 2734.95 [1]. 2. Impact of Sector Movements on Indexes - The CSI 1000 Index dropped 28.37 points from the previous closing price. Sectors such as automobiles, electronics, and pharmaceuticals significantly dragged down the index [2]. - The CSI 500 Index dropped 24.3 points from the previous closing price. The banking sector significantly boosted the index, while sectors such as power equipment, pharmaceuticals, and electronics significantly dragged it down [2]. - The SSE 300 Index dropped 14.05 points from the previous closing price. Sectors such as banking, communications, and food and beverages significantly boosted the index, while sectors such as power equipment, automobiles, and non - bank finance significantly dragged it down [2]. - The SSE 50 Index dropped 9.26 points from the previous closing price. Sectors such as banking, food and beverages, and public utilities significantly boosted the index, while sectors such as electronics, pharmaceuticals, and non - bank finance significantly dragged it down [2]. 3. Stock Index Futures Basis and Annualized Opening Costs - For IM contracts, IM00 had an average daily basis of - 45.13, IM01 had - 100.83, IM02 had - 162.62, and IM03 had - 331.27 [12]. - For IC contracts, IC00 had an average daily basis of - 35.8, IC01 had - 76.94, IC02 had - 119.69, and IC03 had - 235.25 [12]. - For IF contracts, IF00 had an average daily basis of - 26.42, IF01 had - 38.77, IF02 had - 43.57, and IF03 had - 74.93 [12]. - For IH contracts, IH00 had an average daily basis of - 24.19, IH01 had - 28.38, IH02 had - 27.35, and IH03 had - 26.96 [12]. 4. Stock Index Futures Roll - over Point Differences and Annualized Costs - For IM contracts, data on roll - over point differences and their annualized costs at different time points are provided, such as at 09:45, IM00 - 01 was - 53.1193, IM00 - 02 was - 158.791, etc. [22]. - For IC contracts, data on roll - over point differences and their annualized costs at different time points are provided, such as at 09:45, IC00 - 01 was - 26.1467, IC00 - 02 was - 90.0318, etc. [24]. - For IF contracts, data on roll - over point differences and their annualized costs at different time points are provided, such as at 09:45, IF00 - 01 was - 5.99267, IF00 - 02 was - 13.4098, etc. [29]. - For IH contracts, data on roll - over point differences and their annualized costs at different time points are provided, such as at 09:45, IH00 - 01 was - 1.29644, IH00 - 02 was 1.559889, etc. [28]

Group 1 - The development of index-based investment has accelerated in 2023, with the total scale of Shanghai Stock Exchange (SSE) index products exceeding 600 billion yuan, a growth of 11.5% since the beginning of the year [1] - The SSE benchmark market-making corporate bond index, Sci-Tech Innovation Index, Sci-Tech AI Index, and SSE 50 Index have been the main contributors to this growth [1] Group 2 - The four newly established SSE benchmark market-making corporate bond ETFs have seen explosive growth, contributing over 40 billion yuan to the market in just a few months [2] - These corporate bonds are primarily issued by AAA-rated enterprises, mainly state-owned enterprises, providing a low to medium risk investment option with an annualized return of 4.2% since the index's inception [2] Group 3 - The Sci-Tech Innovation Index and Sci-Tech AI Index provide a variety of investment tools in the "hard technology" sector, supporting investment demand in technology innovation [3] - The Sci-Tech Innovation Index has reached nearly 30 billion yuan in scale, while the Sci-Tech AI Index has grown by 6.2 billion yuan, focusing on 30 high-quality companies in the AI sector [3] Group 4 - The SSE 50 Index, representing 50 large-cap stocks with an average total market value exceeding 500 billion yuan, continues to serve as a "ballast" for the market [4] - The SSE 50 Index has a dividend yield of 3.59%, highlighting its investment value [4] Group 5 - Products tracking the SSE 50 Index have grown by nearly 10 billion yuan this year, reinforcing its role as a leading index [5] - The SSE is committed to promoting high-quality development in index-based investment and enhancing the market ecosystem for investment and financing [5]