Market Overview - The mainland's export growth in May decreased by 3.3 percentage points to 4.8%, slightly below market expectations due to a decline in April orders and high base effects from last year[5] - The U.S. stock market showed mixed results, with the Dow Jones down 0.0%, S&P 500 up 0.1%, and Nasdaq up 0.3% as investors await updates from U.S.-China trade talks[7] - The Hang Seng Index rose 1.63%, entering a technical bull market, with a 21% increase since April's low[10] Trade and Economic Indicators - The U.S. dollar index fell slightly, following a decrease in U.S. Treasury yields, while international oil prices continued to rise, with NY crude oil up 1.1% to $65.29 per barrel[23] - The consumer inflation expectations in the U.S. improved in May, indicating a potential easing of inflationary pressures[5] - The Asian bond market showed stability, with spreads narrowing by 2-5 basis points, driven by improved risk sentiment[27] Sector Performance - In the A-share market, healthcare stocks led the gains, with some innovative drug stocks hitting the 20% limit up[14] - The automotive sector is undergoing rapid consolidation, with electric vehicle sales growth expected to slow significantly from a 60% CAGR to 10% by 2030[12] - The technology sector in Hong Kong saw significant gains, with the Hang Seng Tech Index rising 2.78%[10] Key Developments - The U.S. is considering relaxing some export controls in exchange for China's easing of rare earth transport restrictions during ongoing trade negotiations[5] - The New York Fed's survey indicated a comprehensive improvement in consumer inflation expectations for May, suggesting a shift in market sentiment[5] - The automotive industry is expected to face a prolonged price war, impacting stock performance in the short term but potentially leading to a clearing of excess capacity by 2026[12]

Key Insights - The report highlights the positive impact of the recent US-China trade agreement, which includes the cancellation of 91% of additional tariffs and a 90-day suspension of 24% tariffs, creating a more stable environment for negotiations and potential cooperation [2][3] - The agreement is expected to reduce uncertainty in trade, improve investor sentiment, and enhance corporate profit expectations, particularly for industries heavily reliant on exports [3][4] - The report suggests that sectors previously affected by tariffs, such as electronics, consumer goods, and machinery, may see a recovery in market performance [3][4] Electronics Industry - The electronics sector is experiencing a structural recovery, with high growth in AI-related hardware and a stable performance in consumer electronics, supported by government subsidies [19][16] - Sub-sectors like semiconductors are witnessing a resurgence, with domestic replacements accelerating and a strong performance from leading companies [16][19] - The report notes a divergence in performance among companies within the consumer electronics space, with some benefiting from AI and global expansion while others face challenges from competition and demand weakness [17][19] Military Industry - The recent India-Pakistan conflict has highlighted China's military exports, with Pakistan being a significant customer for Chinese military equipment, which may enhance China's military trade reputation [22][23] - The report anticipates increased demand for military equipment due to the conflict and suggests that domestic military enterprises are less affected by US tariff wars, presenting a stable investment opportunity [24][22] - The long-term outlook for the military sector remains positive, with expectations of sustained high demand leading up to the centenary of the Chinese military in 2027 [24][22] Construction Materials - The construction materials sector is showing signs of recovery, with a notable improvement in profitability in Q1 2025 compared to the previous year, driven by stabilizing infrastructure investment and a gradual recovery in demand [27][30] - The report indicates that cement prices may see upward pressure due to improved demand and supply optimization, while glass fiber and other materials are also expected to benefit from emerging market demand [30][27] - The construction materials market is anticipated to continue its recovery, supported by favorable policies and a focus on renovation and upgrading existing properties [30][28] Banking Sector - The banking sector is benefiting from a series of financial policies aimed at optimizing credit structures and enhancing profitability, with a notable increase in bank stock performance [32][37] - The report emphasizes the importance of structural monetary policy tools and the potential for increased capital inflows into the banking sector, which may further enhance its valuation [33][37] - The outlook for the banking sector remains positive, with expectations of continued support from government policies and a focus on technological financial services [36][37]