Futures: Overnight, LME lead opened at $1,895.5/mt. After the opening, prices quickly fell to $1,885.5/mt, then fluctuate rangebound within the $1,888–1,896.5/mt range, with a balanced tug-of-war between longs and shorts and cautious market sentiment. After 0:00, prices rose further, breaking above the previous trading range and touching a high of $1,901/mt, before finally closing at $1,898.5/mt. A small bullish candlestick was recorded, up $0/mt, or 0.0%. Overnight, the most-traded SHFE lead 2605 contract opened at a low of 16,420 yuan/mt. In early trading, SHFE lead prices rose rapidly, then saw wide swings within the 16,440–16,481 yuan/mt range, with an evident tug-of-war between longs and shorts. Intraday volatility narrowed, and prices gradually stabilized around 16,455–16,465 yuan/mt, while trading volume pulled back simultaneously and market sentiment turned cautious. Late in the session, SHFE lead broke upward again, touching a high of 16,500 yuan/mt, then quickly pulled back to finally close at 16,470 yuan/mt. A small bullish candlestick was recorded, up 50 yuan/mt, or 0.3%. On the macro front: 1. Poll: Trump’s approval rating fell to its lowest level since returning to the White House. 2. US media: The US Department of Justice admitted it lacked evidence in its investigation into Powell. 3. Turkey considered using its $135 billion gold reserves to defend the lira. 4. Israeli media: The US intended to seek a one-month ceasefire to discuss a 15-point agreement with Iran. 5. Goldman Sachs maintained its overweight recommendation on Chinese equities (A-shares and Hong Kong stocks). Spot fundamentals: SHFE lead remained in the doldrums, while suppliers held prices firm on shipments. Quotations in Jiangsu, Zhejiang, Shanghai were raised slightly in spot premiums, while quotations for cargoes self-picked up from production site at primary lead plants changed little. Mainstream producing areas quoted premiums of 0-50 yuan/mt against the SMM #1 lead price, with a few quoting premiums of 100 yuan/mt ex-works. On the secondary lead side, some secondary lead enterprises had maintenance plans, and circulating cargoes in the spot market were limited. Secondary refined lead was quoted at premiums of 0-75 yuan/mt against the SMM #1 lead average price, ex-works. Downstream enterprises maintained purchasing as needed, but some engaged in more bargaining. In addition, as secondary lead prices inverted against primary lead, spot order purchases tilted toward primary lead. Inventory: As of March 24, LME lead inventory fell by 725 mt, or 0.26%, to 283,350 mt. As of March 23, SMM social inventory of lead ingot across five regions pulled back somewhat from previous inventory at high levels. Today’s Lead Price Forecast: Supply side, primary lead smelters held firm offers, and spot premiums in Jiangsu, Zhejiang, Shanghai were raised slightly, while quotations for cargoes self-picked up from production site at primary lead smelters changed little. Some secondary lead smelters had maintenance plans, and circulating cargoes in the spot market were limited. Demand side, downstream enterprises maintained purchasing as needed, but some engaged in more bargaining, and as secondary lead prices inverted against primary lead, spot order procurement tilted toward primary lead. According to SMM analysis, SHFE lead prices were likely to remain in the doldrums in the short term.

[SMM Morning Zinc Briefing: Stronger US Dollar Index Put LME Zinc Under Pressure and Slightly Lower]: Overnight, LME zinc opened at $3,095/mt. After the opening, LME zinc fluctuated downward along the daily average line, hitting an intraday high of $3,097/mt. Near the close, LME zinc fell to a low of $3,027/mt, and finally closed down at $3,038.5/mt, down $64.5/mt, a decline of 2.08%, while trading volume decreased to 11,298 lots...

The market declined rapidly in the afternoon session yesterday, with the ChiNext Index leading the losses. The combined turnover of the Shanghai and Shenzhen markets reached 142 million yuan for the day, up 129 billion yuan from the previous session. Sector-wise, port shipping, beauty and personal care, innovative drugs, and rare earth permanent magnets were among the top gainers, while Huawei Ascend, defense, semiconductors, and software development were among the biggest decliners. At yesterday's close, the Shanghai Composite Index fell 0.44%, the Shenzhen Component Index dropped 0.86%, and the ChiNext Index lost 1.17%. At today's brokerage morning meetings, Huatai Securities noted in its 2025 mid-year outlook that attention should be paid to the AI technological revolution as well as defense and self-sufficiency themes. China International Capital Corporation (CICC) believes the tungsten price center is expected to continue rising. Huaxi Securities suggested adopting a rotation strategy to play the tech rally. Huatai Securities 2025 Mid-Year Outlook: Focus on AI Tech Revolution, Defense, and Self-Sufficiency Themes Huatai Securities' 2025 mid-year outlook stated that the restructuring of global order is simultaneously altering asset pricing patterns. Multiple macro themes including tariff policies, global economic prospects, and geopolitical shifts are intertwined, leading to increased volatility across asset classes and weakened trends. In an uncertain environment, higher demands are placed on valuation, safety margins, odds, and ergodicity. The firm recommends responding through high odds and low correlation strategies. At the asset level, it advises maintaining operational flexibility, leveraging odds for left-side positioning during adjustments, and seeking structural opportunities in regional and industrial logic. With the US dollar trending weaker, non-US assets may show relative outperformance, European assets offer higher win rates, while emerging markets like Hong Kong stocks present better odds. Focus areas include the AI technological revolution, domestic demand sectors under fiscal expansion, as well as defense and self-sufficiency themes. CICC: Tungsten Price Center Expected to Continue Rising CICC noted that in the short term, the tightening supply-demand situation persists, coupled with the stimulative effect of overseas tungsten product premiums. The firm believes tungsten prices have entered a bull market channel and may continue breaking historical highs. Long-term, the supply-demand gap for tungsten is projected to expand from 18,300 mt in 2024 to 19,100 mt by 2028. The global tungsten supply-demand gap as a percentage of primary demand is estimated at -18.4%, -16.6%, -17.0%, -16.8%, and -17.4% from 2024 to 2028 respectively, with the tungsten price center expected to keep rising. Huaxi Securities: Play Tech Rally With Rotation Strategy Huaxi Securities pointed out that overall, expectations of easing China-US trade relations have boosted market risk appetite, with the tech sector continuing its rebound since late May. Notably, despite improving trade relations, international clues remain chaotic, indicating the "chaotic era" persists. Preparations should be made for potential reversals, avoiding excessive trading in single directions. Meanwhile, the main theme of the market remains unclear. Before the narrative of the technology sector is further strengthened, it is necessary to adopt a rotation strategy to participate in the technology market, "take profits when they are good" after achieving certain gains, and then look for sectors at low levels for appropriate positioning. If the technology market experiences a significant correction, it means that the STAR 50 Index will once again approach its position before the technology market rally in February. The expectation of market stabilization funds and substantive progress in the technology sector may provide solid support, offering a better opportunity to participate in the recovery of the technology market.

This week, the global precious metals market has witnessed a historic moment. Following gold's breakthrough above $3,400 per ounce, silver has taken the lead in the gains. Currently, silver prices have surged past the $36 per ounce mark. Note: Performance of COMEX silver Driven by the soaring silver prices, the precious metals sector in the Hong Kong stock market has strengthened once again. As of press time, China Silver Group (00815.HK) has risen by 20.55%, China Gold International Resources (02099.HK) by 3.30%, Zijin Mining (02899.HK) by 2.23%, and Zhaojin Mining (01818.HK) by 2.22%. Note: Performance of precious metals stocks in the Hong Kong stock market In terms of news, the Trump administration raised steel and aluminum tariffs from 25% to 50% in early June, sparking market concerns that key metals could become the next target for tariff increases. As a core industrial metal in the new energy sector, silver's strategic value is being re-evaluated. Analysts point out that if the US imposes tariffs on silver-related industry chains, it could further exacerbate supply chain tensions. Additionally, the US ISM Non-Manufacturing PMI for May fell below the 50 mark to 49.9, and the ADP employment data significantly missed expectations. Coupled with Minneapolis Fed President Neel Kashkari's dovish stance, market expectations for a September interest rate cut by the US Fed have surged to 97.5%. Historical data shows that silver's price elasticity during interest rate cut cycles is significantly higher than that of gold. During the interest rate cut cycles from 2001-2003 and 2020-2021, silver prices rose by more than 50% in both periods. Among the biggest beneficiaries of this silver rally is undoubtedly China Silver Group, a professional silver producer and comprehensive operator in China, with a business scope covering the entire industry chain of silver manufacturing, new jewelry retail, and silver trading. Institutions say silver may enter a "super cycle" Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that with the US dollar index falling to a two-year low and geopolitical risks reigniting, precious metals are experiencing a breakthrough rally. Given that silver's market size is only one-tenth that of gold, the same amount of capital inflows will trigger greater price volatility. Guosen Futures believes that silver, with its dual attributes of being a safe-haven asset and an industrial metal, has greater room for valuation repair amid escalating trade frictions. If the US Fed initiates an interest rate cut cycle, silver's target price could potentially reach $40-50 per ounce.

Today, the three major indices of Hong Kong stocks extended their gains. By the close, the Hang Seng Index rose 1.07% to close at 23,906.97 points; the Hang Seng Tech Index climbed 1.93% to close at 5,319.96 points; and the Hang Seng China Enterprises Index gained 1.26% to close at 8,684.73 points. Note: Performance of the Hang Seng Index Notably, the Hang Seng Index has risen for three consecutive days. The Hang Seng Tech Index has followed a similar trend over the same period. Today's Market In terms of market performance, individual stocks in the semiconductor and real estate sectors strengthened, while those in the pharmaceutical, tea beverage, and shipping sectors weakened. Semiconductor Stocks Lead the Market By the close, Hongguang Semiconductor (06908.HK), Hua Hong Semiconductor (01347.HK), and SMIC (00981.HK) rose 10.87%, 4.23%, and 4.19%, respectively. Note: Performance of semiconductor stocks In terms of news, the World Semiconductor Trade Statistics (WSTS) released a report stating that the global semiconductor market size will reach $700.9 billion in 2025, up 11.2% YoY. In terms of market segments, the growth in the semiconductor market this year will be led by increases in logic and memory: both markets are driven by sustained demand in areas such as AI, cloud infrastructure, and advanced consumer electronics, with double-digit YoY growth rates. Policies Continue to Stimulate Real Estate Stocks By the close, Midea Real Estate (03990.HK), China Resources Land (01109.HK), and China Overseas Land & Investment (00688.HK) rose 4.38%, 3.56%, and 1.69%, respectively. Note: Performance of real estate stocks China Index Academy stated in an article that the total bond financing of national real estate enterprises in May was 28.88 billion yuan, up 23.5% YoY. In terms of financing structure, corporate bond financing in the real estate sector was 11.17 billion yuan in May, up 5.8% YoY, accounting for 38.7%; ABS financing was 17.71 billion yuan, up 38.1% YoY, accounting for 61.3%. The average interest rate for bond financing was 2.35%, down 0.43 percentage points YoY and 0.41 percentage points MoM. China Galaxy Securities analyzed that the continuous optimization of the policy environment has driven the recovery of financing for real estate enterprises. The premium transactions of high-quality land plots in core cities indicate a restoration of market confidence, and there is significant room for valuation recovery for real estate enterprises with high-quality land reserves. Most Pharmaceutical Stocks Adjusted By the close, SinoMab BioScience (03681.HK), Harbour BioMed (02142.HK), and Giant Biogene Holding (02367.HK) fell 17.19%, 9.83%, and 8.70%, respectively. Note: Performance of pharmaceutical stocks In terms of news, this adjustment was mainly influenced by profit-taking. Taking SinoMab BioScience as an example, the stock has risen by more than 110% over the past four trading days. Soochow Securities has cautioned that after the rapid rise of the innovative drug sector, attention should be paid to the valuation match, and it is recommended to focus on enterprises with international BD capabilities and commercialization implementation. Tea beverage stocks retreat after hitting new highs By the close of trading, Gu Ming (01364.HK), Mixue Group (02097.HK), and Cha Baidao (02555.HK) fell by 7.97%, 7.72%, and 7.72%, respectively. Note: Performance of tea beverage stocks In terms of news, analysts from Everbright Securities International stated that the valuations of some consumer stocks have already factored in growth expectations, and it is necessary to pay attention to the validation of same-store sales data in Q2. It is recommended to differentiate and treat targets with the ability to continuously expand stores. Other new consumer stocks also weaken simultaneously Laopu Gold (06181.HK), Maogeping (01318.HK), and Blukoo (00325.HK), which are also new consumer stocks listed in Hong Kong, also experienced adjustments, falling by 9.05%, 6.67%, and 3.64%, respectively. Taking Laopu Gold as an example, the market is concerned about the liquidity pressure brought by the lifting of the 69.05 million share lock-up at the end of June. In addition, the stock has accumulated a gain of 212% year-to-date. Individual stock movements Dongfeng Motor's H-shares plummet over 14%; controlling shareholder clarifies no restructuring plans for now Dongfeng Motor Group (00489.HK) fell by 14.45% to close at HK$3.61. According to an announcement in the morning, the controlling shareholder stated that it is currently not involved in any business restructuring. Xindong Games surges over 8% during trading; "Etheria" international server launches today Xindong Games (02400.HK) rose by 8.25% to close at HK$40. In terms of news, the strategy turn-based RPG mobile game "Etheria" developed by Xindong Games will officially launch its international server on June 5. Kaiyuan Securities believes that following the impressive performances of "Muffin Adventure" and "Xindong Town," which were launched in 2024, the launch of "Etheria" may further drive Xindong Games' earnings growth. Citi previously pointed out that the company may have more catalysts in H2, namely the launch of "Etheria" in mid-year and the overseas version of "Xindong Town" in H2. JL MAG Rare-Earth's H-shares surge over 12%; China's rare earth export controls trigger sharp jump in overseas rare earth prices JL MAG Rare-Earth (06680.HK) rose by 12.13% to close at HK$18.86. In terms of news, affected by China's rare earth export controls, overseas medium-heavy rare earth prices jumped by 15% in a single week. Guotai Junan Securities expects that the widening price spread between domestic and overseas markets will drive profit improvements for rare earth permanent magnet enterprises, with enterprises possessing overseas channel advantages benefiting significantly.

SMM, June 3: ※Financial Market Performance During the Holiday Metal Market: Domestic Metal Market: The domestic metal market was closed during the Dragon Boat Festival holiday. A review of the market performance of domestic base metals on May 30 shows that most domestic metals fell: Domestic base metals generally declined, with SHFE nickel rising 1.14%, SHFE tin falling 2.87%, and SHFE copper, SHFE aluminum, SHFE lead, and SHFE zinc all falling less than 1%. The main alumina contract rose 0.27%. Most ferrous metals series declined on May 30: Iron ore fell 0.43%, rebar fell 0.34%, stainless steel rose 0.12%, and HRC fell 0.81%. In terms of coking coal and coke, coking coal fell 5.28%, and coke fell 2.13%. Overseas Metal Market: The London Metal Exchange (LME) mostly fell on May 30 and rose across the board on June 2. During the Dragon Boat Festival holiday, LME metals rose across the board, with LME zinc leading the gains with a 2.41% increase, LME copper rising 1.24%, LME aluminum rising 1%, LME tin and LME nickel both rising over 1%, and LME lead rising 0.87%. Precious Metals: During the Dragon Boat Festival holiday, COMEX precious metals all rose sharply. COMEX gold rose 2.82%, touching its highest level in over three weeks, as a weaker US dollar and economic uncertainty drove demand for safe-haven assets. COMEX silver rose 5.61%. Hong Kong Stocks: During the Dragon Boat Festival holiday, Hong Kong stocks weakened on June 2 as tariff issues once again drew market attention. As of the close on June 2, the Hang Seng Index fell 0.57%, the Hang Seng Tech Index fell 0.7%, and the Hang Seng China Enterprises Index fell 0.86%. US Stocks: During the Dragon Boat Festival holiday, the three major US stock indices closed mixed last Friday, with the Dow rising 0.12% and gaining 3.94% in May; the Nasdaq falling 0.32% but rising 9.56% in May; and the S&P 500 falling 0.01% but rising 6.15% in May. As of the close on June 2, the three major US stock indices all rose slightly, with the Dow Jones Industrial Average rising 0.08% to 42,305.48 points, the S&P 500 rising 0.41% to 5,935.94 points, and the Nasdaq rising 0.67% to 19,242.61 points. Metal and Crude Oil Contract Quotes as of 8:20 on June 3 》SMM Metal Spot Prices on May 30 Macro Aspects Domestic Aspects: [National Bureau of Statistics (NBS): PMI for May was 49.5%, up 0.5 percentage points MoM, indicating improved manufacturing sentiment] On May 31, the China Federation of Logistics and Purchasing and the Service Industry Survey Center of the NBS announced China's PMI for May. Among them, the manufacturing PMI rebounded MoM, indicating an improvement in the manufacturing sector's prosperity level and a stabilization in economic operations. In May, China's manufacturing PMI stood at 49.5%, up 0.5 percentage points MoM. Looking at the sub-indices, the production index was 50.7%, up 0.9 percentage points MoM, rising above the critical point, suggesting an acceleration in manufacturing production activities. On the demand side, the new orders index in May was 49.8%, up 0.6 percentage points MoM. 》Click to view details [This year's sales of consumer goods through trade-in policies have exceeded 1 trillion yuan] According to CCTV News reporters who learned from the Ministry of Commerce, as of now, this year's sales of consumer goods through trade-in policies have exceeded 1 trillion yuan. Since the beginning of this year, the trade-in policies for consumer goods have effectively driven a sustained rebound and improvement in consumption. Ministry of Commerce data shows that as of May 31, the five major categories of consumer goods under the trade-in policies have collectively driven sales of 1.1 trillion yuan, with approximately 175 million subsidies directly issued to consumers. Among them, there were 4.12 million applications for trade-in subsidies for automobiles; 49.863 million consumers purchased 77.618 million units of 12 major categories of home appliances; 53.529 million consumers purchased 56.629 million units of digital products such as mobile phones; 6.5 million e-bikes were traded in; and 57.626 million orders were placed for home renovation and kitchen and bathroom "upgrades". (CCTV News) [Various regions take multiple measures to strictly prevent the illegal outflow of strategic minerals] Multiple regions across the country have taken various measures and strengthened controls to strictly prevent the illegal outflow of strategic minerals. Among them, the "Overall Deployment for Strengthening the Full-Chain Management and Control of Strategic Mineral Exports" by the National Office for Coordination of Export Control Work was issued and implemented after approval in accordance with procedures. Guizhou will strictly adhere to the division of responsibilities outlined in the "Overall Deployment" to carry out relevant work. The relevant competent authorities in Hunan Province have stated that they will earnestly fulfill their local regulatory responsibilities, systematically investigate and establish ledgers for strategic mineral export enterprises in Hunan, guide enterprises in strengthening the construction of compliance systems, enhance enterprises' awareness and capabilities of compliance, and ensure the effective implementation of control measures. Guangxi, on the other hand, will continue to effectively supervise and manage the exploration and mining of national strategic minerals, increase efforts to investigate and punish illegal mining activities such as mining without licenses, mining beyond boundaries, and mining under the guise of exploration, and resolutely prevent the illegal outflow of strategically important minerals through illegal mining. Among them, Wuzhou City in Guangxi and Yunfu City in Guangdong have established a cross-regional cooperation mechanism to combat and rectify illegal activities related to mineral resources. In addition, relevant departments in Jiangxi and Yunnan have also stated that they will unwaveringly implement all tasks in accordance with their respective responsibilities. [MIIT: Intensify Efforts to Rectify "Cut-throat Competition" in the Automotive Industry] In response to the "Initiative on Maintaining Fair Competition Order and Promoting Healthy Industry Development" issued by the China Automobile Manufacturers Association (CAAM) on May 31, relevant officials from the Ministry of Industry and Information Technology (MIIT) stated that they would intensify efforts to rectify "cut-throat competition" in the automotive industry and resolutely maintain a fair and orderly market environment. [Opposing "Cut-throat Competition" CAAM Issues Important Initiative] CAAM issued the "Initiative on Maintaining Fair Competition Order and Promoting Healthy Industry Development." In recent years, China's new energy vehicle (NEV) industry has developed rapidly, with the proportion of new NEV sales exceeding 40%. Currently, the overall operation of the industry is showing a steady and improving trend, with market vitality continuing to be released. However, we have also observed that for some time, the industry's profitability has declined. "Cut-throat competition," primarily manifested as disorderly "price wars," is a significant factor contributing to the decline in industry benefits. Continuous investment is needed in product after-sales service guarantees and enterprise innovation and development, while "price wars" seriously affect the normal operations of enterprises, impact the security of the industry chain and supply chain, and drive the industry into a vicious cycle. US Dollar Aspect: During the Dragon Boat Festival holiday, the US dollar index fell by 0.75%, closing at 98.69 as of June 2. New US tariff threats have sparked market concerns about economic uncertainty, putting pressure on the US dollar. According to CCTV News, on May 30 local time, US President Trump stated at a rally in Pennsylvania that he would raise tariffs on imported steel from 25% to 50%. Subsequently, Trump posted on social media platforms that the decision would take effect from June 4. The latest data released by the US shows: The US core PCE price index in April rose 2.5% YoY, the lowest since March 2021, in line with market expectations of 2.5% and down from the previous value of 2.6%. The US core PCE price index in April rose 0.1% MoM, in line with the estimated increase of 0.1% and up from the previous value of 0%. The final S&P Global US Manufacturing PMI for May was 52, below the expected 52.3 and unchanged from the previous value of 52.3. The market is also closely monitoring the speeches of Fed Chairman Powell and other policymakers this week, seeking clues about the path of US interest rates. Other Currency Aspects: The European Central Bank's (ECB) 25 basis point interest rate cut has been fully priced in by the market and widely anticipated. The final manufacturing Purchasing Managers' Index (PMI) for the Eurozone was in line with expectations at 49.4, slightly below expectations in Germany at 48.3, and slightly above expectations in France at 49.8. This week, the focus of eurozone data will be on the preliminary Consumer Price Index (CPI) released on Tuesday, with overall and core inflation rates expected to fall to 2.0% and 2.4%, respectively. Thursday's European Central Bank (ECB) meeting is crucial as policymakers will release new forecasts and provide some insights into interest rate expectations. The market has fully priced in a 25-basis-point interest rate cut and expects at least another 25-basis-point cut by December. The risk lies in that a neutral or hawkish interest rate cut may signal the end of the current easing cycle. (Huitong Finance) Macro Aspects: This week will also see the release of data including Malaysia's manufacturing PMI for May, Australia's current account for Q1, China's Caixin manufacturing PMI for May, Switzerland's annual CPI rate for May, the eurozone's preliminary unadjusted annual harmonized CPI for May, the eurozone's unemployment rate for April, the revised monthly rate of US durable goods orders for April, the monthly rate of US factory orders for April, US JOLTs job openings for April, Australia's AIG manufacturing performance index for May, Australia's seasonally adjusted quarterly GDP growth rate for Q1, Australia's annual GDP growth rate for Q1, Russia's SPGI services PMI for May, the final UK SPGI services PMI for May, the change in US ADP employment for May, Canada's total reserve assets for May, Brazil's seasonally adjusted SPGI services PMI for May, the Bank of Canada's overnight lending rate on June 5, the US ISM non-manufacturing PMI for May, a Q&A session involving 2025 FOMC voter and Chicago Fed President Austan Goolsbee, 2027 FOMC voter and Atlanta Fed President Raphael Bostic, and Fed Governor Lisa Cook attending the "Fed Listens" event, the Bank of Canada's interest rate decision, the global annual ANZ commodity price index for May, Australia's goods and services trade balance for April, Australia's monthly export growth rate for April, Australia's monthly import growth rate for April, China's Caixin services PMI for May, Switzerland's unadjusted unemployment rate for May, the global leading indicator for turning points in the industrial production cycle for May (irregular), the number of job cuts announced by US Challenger companies for May, the ECB's main refinancing rate for June, the ECB's deposit facility rate for June, the ECB's marginal lending facility rate for June, the US trade balance for April, the number of initial jobless claims in the US for the week ending May 31, the number of continuing jobless claims in the US for the week ending May 31, Canada's trade balance for April, Canada's seasonally adjusted IVEY PMI for May, the global supply chain pressure index for May, Germany's seasonally adjusted monthly industrial output growth rate for April, France's trade balance for April, the final seasonally adjusted quarterly GDP growth rate for the eurozone in Q1, the monthly retail sales growth rate for the eurozone in April, the monthly leading indicator growth rate for Canada in May, the seasonally adjusted change in US non-farm payrolls for May, the annual growth rate of US average hourly earnings for May, the change in US non-farm payrolls in the private sector for May, the US labor force participation rate for May, the seasonally adjusted change in US manufacturing employment for May, the US unemployment rate for May, the change in Canadian employment for May, the Canadian unemployment rate for May, and China's foreign exchange reserves for May. Notably: South Korea held its presidential election on June 3, with the stock market closed for the day. The Zhengzhou Commodity Exchange designated 8:55-9:00 on June 3 as the call auction period for all futures and options contracts, with night session trading to resume that evening. Goolsbee, the 2025 FOMC voter and Chicago Fed Chairman, participated in a Q&A session. Fed Chairman Powell delivered opening remarks at an event. South Korea tentatively scheduled its presidential election for June 3. The Reserve Bank of Australia released the minutes of its June monetary policy meeting. Bank of Japan Governor Kazuo Ueda delivered a speech. South Korea held its general election. The Fed released the Beige Book on economic conditions. The European Central Bank (ECB) announced its interest rate decision. ECB President Christine Lagarde held a monetary policy press conference. Fed Governor Adriana Kugler delivered a speech at the Economic Club of New York. Harker, the 2026 FOMC voter and Philadelphia Fed Chairman, delivered a speech on the economic outlook. ECB President Christine Lagarde delivered a speech. In terms of crude oil: During the Dragon Boat Festival holiday, both WTI and Brent crude oil futures rose. WTI crude oil increased by 3.7%, while Brent crude oil rose by 4.01%. Despite the OPEC+ group's adherence to its plan to increase production, wildfires raging in oil-producing provinces in Canada threatened supplies, and new US tariff threats put pressure on the US dollar, both of which supported oil prices. As of Monday, wildfires in Alberta, a major oil-producing province in Canada, had affected approximately 7% of the country's total crude oil production. At least two thermal oil sands operators south of the industrial hub of Fort McMurray evacuated workers and halted production over the weekend. OPEC member countries agreed on Saturday to increase oil production by 411,000 barrels per day (bpd) in July, marking the third consecutive month of the same increase. The alliance aims to regain market share and penalize overproducing countries. Goldman Sachs analysts expect OPEC to implement a final 410,000 bpd increase in August. In a report, the bank stated, "Relatively tight spot oil market fundamentals, strong global manufacturing data, and seasonal support for oil demand during the summer suggest that the expected slowdown in demand is unlikely to be severe enough to prevent production increases when the August production level is decided on July 6." (Wenhua Comprehensive)

This week, Hong Kong stocks generally maintained their strong momentum, with the weekly performances of the three major indices varying. By the close of trading, the Hang Seng Index (HSI) had risen by 1.10% week-on-week to close at 23,601.26 points; the Hang Seng Tech Index had fallen by 0.65% week-on-week to close at 5,246.87 points; and the Hang Seng China Enterprises Index (HSCEI) had risen by 1.36% week-on-week to close at 8,583.86 points. Note: Weekly performance of the HSI since the beginning of the year Notably, the HSI has achieved seven consecutive weeks of gains. Medium and long-term optimism becomes consensus among institutions Huatai Securities pointed out that despite uncertainties surrounding tariff issues and potential short-term disruptions due to high US Treasury yields, the risk premium of Hong Kong stocks has significantly pulled back, and the easing of tail risks in the economy will drive up the market's center of gravity. Morgan Stanley recently raised its target for the HSI to 24,500 points by 2026, emphasizing the valuation reshaping opportunities brought about by structural improvements in the Chinese stock market. However, CICC cautioned about short-term risks, believing that current market sentiment has recovered to a cyclical high, and the marginal effect of policy efforts may weaken. 3SBIO leads the market gains this week In the list of weekly gainers, 3SBIO (01530.HK) led the market with a weekly gain of 57.38%. The pharmaceutical company's collaboration agreement with Pfizer on a PD-1/VEGF bispecific antibody drug set a new industry record, with an upfront payment plus milestone payments totaling up to $6 billion, creating a new benchmark for out-licensing of domestically developed innovative drugs. Another pharmaceutical stock that performed well was ImmuneOnco Biopharmaceuticals (01541.HK), which rose by over 36% week-on-week. The company recently announced clinical progress, including the successful enrollment of three patients in the Phase Ib clinical trial of its first dual-target large molecule drug for autoimmune diseases, Amurevup alpha (CD47xCD20, IMM0306), targeting neuromyelitis optica spectrum disorder (NMOSD), with all patients receiving the drug smoothly. In addition, Alibaba Pictures surged by over 50% this week. The company recently announced its renaming to "Damai Entertainment Holdings Limited," focusing on the layout of the offline entertainment ecosystem and enhancing its brand recognition in the overall entertainment market. Subsequently, Huatai Securities and Citi raised their target prices to HK$0.75 and HK$0.92, respectively. Both Datang Gold and Lingbao Gold benefited from the trend of international gold prices, rising by 28.13% and 27.44%, respectively. In terms of news, COMEX gold continued to strengthen after breaking through $3,300 this week and is currently trading near $3,353. Technical pullback and signs of capital rotation emerge in the market on Friday Despite maintaining the recent upward trend overall this week, today's performance was not ideal. By the close of trading on Friday, the HSI had risen by 0.24%, the Hang Seng Tech Index had fallen by 0.09%, and the HSCEI had risen by 0.31%. The futures market showed significant divergence, with the pharmaceutical and gold sectors bucking the trend to strengthen, while the real estate sector was weighed down by development and investment data, and tea beverage stocks saw a correction as investors took profits. Pharmaceutical stocks were boosted by multiple positive factors. By the close of trading, Hengrui Medicine (01276.HK), Luye Pharma (02186.HK), and Innovent Biologics (01801.HK) had risen by 25.20%, 5.74%, and 4.18%, respectively. Note: Performance of pharmaceutical stocks In terms of news, pharmaceutical stocks have recently been receiving a series of positive developments, including the aforementioned agreement between Pfizer and 3SBio, as well as the strong debut performance of Hengrui Medicine on its first day of trading in Hong Kong. Zhongtai Securities stated that since 2024, despite monthly fluctuations in overseas CPI data, there is an expectation of a gradual shift towards interest rate cuts, with an anticipated improvement in investment and financing conditions. It is expected that integrated CRO/CDMO companies primarily reliant on overseas revenue, as well as domestic preclinical CRO companies, will see opportunities for valuation recovery. The first-day performance of Hengrui Medicine's H shares attracted significant market attention, with the stock surging over 30% during intraday trading. The company received over 450 times oversubscription during its IPO phase, highlighting the global competitiveness of Chinese innovative pharmaceutical companies as international institutions scrambled to acquire shares. The safe-haven attribute of the gold sector became prominent. By the close of trading, Lingbao Gold (03330.HK), Chifeng Jilong Gold Mining (06693.HK), and Zijin Mining (01815.HK) had risen by 9.16%, 3.28%, and 2.63%, respectively. Note: Performance of gold stocks On the news front, spot gold prices continued to rise, currently standing above $3,350 per ounce. CITIC Futures pointed out that the passage of Trump's "Tax Cuts and Jobs Act" through the House of Representatives has increased the likelihood of large-scale tax cuts being implemented, with expectations rising for a continued climb in the US deficit rate. This aligns with Moody's downgrade of the US credit rating, as the disorderly expansion of debt leads to a gradual contraction in the US dollar's creditworthiness, providing solid support for the medium and long-term bullish outlook on gold. Louise Street, Senior Market Analyst at the World Gold Council, stated that the macroeconomic situation remains difficult to predict, and this uncertainty may bring further upside potential to gold prices. As the turbulent situation persists, the demand for gold as a safe-haven asset from institutional, individual, and official sectors may further increase in the coming months. Real estate stocks were weighed down by development and investment data. By the close of trading, Yuexiu Property (00123.HK), Ronshine China (03301.HK), and China Vanke (02202.HK) had fallen by 2.68%, 1.44%, and 0.79%, respectively. Note: Performance of real estate stocks In terms of news, data from the National Bureau of Statistics (NBS) showed that from January to April, national real estate development investment reached 2,773 billion yuan, a year-on-year decrease of 10.3%. Among this, residential investment was 2,117.9 billion yuan, down 9.6%. From January to April, the sales area of newly-built commercial housing reached 282.62 million m², down 2.8% YoY, with the decline narrowing by 0.2 percentage points compared to the January-March period. Tea beverage stocks weakened slightly By the close, Cha Panda (02555.HK), Tenfu (06868.HK), and Mixue Group (02097.HK) fell by 4.19%, 4.09%, and 1.40%, respectively. Note: Performance of tea beverage stocks In terms of news, most tea beverage stocks, including Cha Panda, weakened, which was related to profit-taking by some investors. Taking Mixue Group as an example, since its listing, the company's shares have risen by over 150% in total. Stocks with abnormal movements NetEase Cloud Music rises over 5%, with Q1 gross profit up nearly 14% QoQ NetEase Cloud Music (09899.HK) rose by 5.32% to close at HKD 217.60. In terms of news, NetEase Cloud Music's net revenue for the first quarter of this year was RMB 1.858 billion, with a gross profit of RMB 683 million, corresponding to a gross profit margin of 36.7%. Bilibili rises over 4%, with Q1 results exceeding expectations Bilibili-W (09626.HK) rose by 4.35% to close at HKD 146.40. CMB International released a research report stating that Bilibili announced its financial results for the first quarter of 2025, with total revenue increasing by 24% YoY to RMB 7 billion, in line with market consensus expectations. Adjusted net profit reached RMB 362 million, turning around from a net loss of RMB 456 million in the first quarter of 2024 and exceeding market expectations of RMB 248 million. For the second quarter of this year, CMB International expects Bilibili to maintain a 20% YoY revenue growth rate. Meanwhile, benefiting from the strong momentum of its advertising and mobile gaming businesses, its profit margin will further expand.

》[Live] Analysis of Macroeconomics, Power, Infrastructure, Real Estate, and PV Markets; Outlook for Copper and Aluminum Prices; Insights into Cable Technology Trends SMM, May 22: Metal Market: Overnight, most domestic base metals closed in the red, with SHFE tin down 0.36%, SHFE copper down 0.41%, SHFE nickel up 0.32%, SHFE lead down 0.33%, SHFE aluminum down 0.17%, and SHFE zinc down 0.75%. Additionally, the most-traded alumina futures rose 1.85%. Overnight, the ferrous metals series showed mixed performance, with iron ore up 0.48%, stainless steel slightly down, rebar up 0.16%, and HRC up 0.44%. For coking coal and coke: coking coal remained flat at 841.5 yuan/mt, while coke fell 0.18%. Overnight, overseas base metals generally closed lower, with LME copper down 0.34%, LME aluminum up 0.16%, LME lead down 0.1%, LME zinc down 0.96%, LME tin down 0.93%, and LME nickel up 0.72%. Overnight, precious metals: COMEX gold rose 0.97%, hitting a new high in over a week at $3,327.2/oz; COMEX silver rose 1.21%. Overnight, SHFE gold rose 0.92%, and SHFE silver rose 0.86%. As of 8:13 a.m. on May 22, overnight closing prices 》Click to view SMM Futures Data Dashboard Macro Front Domestic: [China Development Bank has issued over 50 billion yuan in special loans for technological upgrades and equipment renewal] According to the China Development Bank, as of the end of April this year, it has issued over 50 billion yuan in special loans for technological upgrades and equipment renewal. Going forward, the bank will strengthen innovation in product models and service mechanisms, and continue to increase financing support for technological upgrades and equipment renewal. [National passenger vehicle market retail sales increased 12% YoY and 18% MoM from May 1-18] Data released by the China Passenger Car Association (CPCA) showed that from May 1-18, nationwide passenger vehicle retail sales reached 932,000 units, up 12% YoY and 18% MoM. Cumulative retail sales for the year so far reached 7.804 million units, up 8% YoY. During the same period, nationwide new energy passenger vehicle retail sales reached 484,000 units, up 32% YoY and 15% MoM, with a retail penetration rate of 52% in the national new energy market. Cumulative retail sales for the year so far reached 3.808 million units, up 35% YoY. (Financial News Agency) [DCE Announces Trading Hours During the 2025 Dragon Boat Festival] The Dalian Commodity Exchange (DCE) announced trading hours during the 2025 Dragon Boat Festival. The market will be closed from May 31 (Saturday) to June 2 (Monday) and will resume normal trading on June 3 (Tuesday). There will be no night session trading on the evening of Friday, May 30. On Tuesday, June 3, the call auction period for all contracts will be from 08:55 to 09:00 AM. Night session trading will resume on the evening of Tuesday, June 3. [Ningxia Ruiyin Lead Resource Recycling Co., Ltd.: Bullish on China's Stock Market, Foreign Capital Inflows Expected to Be a Key Logic in the Coming Quarters] Wang Zonghao, Head of China Equity Strategy Research at UBS Investment Bank, stated on Wednesday that he is bullish on China's stock market, and that foreign capital inflows will be a significant trading logic in the coming quarters, with Hong Kong stocks slightly outperforming A-shares. At a media briefing, Wang Zonghao mentioned that the recent performance of Hong Kong IPOs reflects overseas investors' recognition and interest in China's core assets, indicating that more long-term funds will need to flow back into China's stock market. (Caijing) US Dollar: The US dollar index extended its decline from the previous two trading days overnight, falling by 0.4% to close at 99.61. The US dollar fell against multiple currencies on Wednesday, weighed down by concerns over the US tax cut and spending bill, as well as weak demand for the 20-year US Treasury bond auction, reinforcing the view that the market is shunning US assets. Major US stock indices on Wall Street declined, while US government bond yields rose. The market closely monitored key debates on US President Trump's tax cut bill, exacerbating concerns about the growing US debt. Disagreements persist within the US Republican Party over the details of the tax bill. US President Trump met with House Republicans on Tuesday but failed to convince hardliners within the party to support his comprehensive tax plan. US House Speaker Johnson stated that Republican hardliners still believe the bill does not cut spending enough. Surveys of economists indicate that despite a temporary easing of trade conflicts, the US economic outlook remains weak, with the debate over the country's fiscal health still unresolved. Other Currencies: UK inflation data was hot, but the British pound failed to receive a boost, with market bearish risks intensifying. Reuters reported that the UK's Consumer Price Index (CPI) data showed strong performance, particularly in the closely watched services inflation indicator. Services CPI rose from 4.7% to 5.4%, exceeding the Bank of England's expectations by 0.4 percentage points. This data triggered a repricing in the market, with the current market expectation for an interest rate cut in August at 50%. Previously, the market had a high expectation for downside risks to the British pound, and market reactions showed that the pound's brief rally following the data release quickly reversed. April CPI data often exceeds expectations due to one-off adjustments (such as annual increases in utility and service prices), so the market's reaction was relatively muted. Additionally, market expectations for interest rate cuts have nearly reached their upper limit, constraining the upside potential for the British pound. Currently, the market expects a 35 basis point interest rate cut before the end of the year, down from 40 basis points before the release of CPI data. Overall, the trend of the British pound following the inflation data release has further strengthened the case for a bearish outlook on the currency. (Huitong Finance) Macro Aspects: Today, the following data will be released: flash estimates of the SPGI Manufacturing PMI for France, Germany, and the Eurozone in May; the IFO Business Climate Index for Germany in May; flash estimates of the SPGI Services PMI and SPGI Manufacturing PMI for the UK in May; the CBI Industrial Trends Survey for the UK in May; the CFIB Business Barometer for Canada in May; initial jobless claims in the US for the week ending May 17; continuing jobless claims in the US for the week ending May 10; flash estimates of the SPGI Manufacturing PMI for the US in May; and the annualized total of existing home sales in the US in April. Additionally, notable events include: Thomas Barkin, the 2027 FOMC voter and president of the Federal Reserve Bank of Richmond, attending an event titled "Fed Listens"; the State Council Information Office holding a press conference with Qiu Yong, Vice Minister of Science and Technology, Zhu Hexin, Deputy Governor of the People's Bank of China and Director of the State Administration of Foreign Exchange, and relevant officials from the National Financial Regulatory Administration and the China Securities Regulatory Commission to introduce policies related to science and technology finance and answer questions from reporters; and the European Central Bank releasing the minutes of its April monetary policy meeting. Crude Oil Aspects: Both WTI and Brent crude oil futures rose slightly, with WTI down 1.11% and Brent down 0.4%. Oil prices came under pressure due to bearish US government data. The market is closely monitoring the supply situation in Iran, as well as an unexpected decline in US crude oil inventories. Industry sources said on Tuesday that Kazakhstan's oil production had increased by 2% in May, defying pressure from OPEC to cut production. Data released by the Joint Organizations Data Initiative (JODI) on Wednesday showed that Saudi Arabia's crude oil production rose to 8.96 million barrels per day (bpd) in March, up 0.11% MoM. According to the database, crude oil exports fell 12.11% MoM to 5.75 million bpd. The US Energy Information Administration (EIA) said on Wednesday that US crude oil, gasoline, and distillate fuel inventories all unexpectedly increased in the week ending May 16. US crude oil inventories rose by 1.3 million barrels to 443.2 million barrels in the week ending May 16. Gasoline inventories increased by 816,000 barrels to 225.5 million barrels, while distillate fuel inventories rose by 580,000 barrels to 104.1 million barrels. (Webstock Inc.)

Since the tariff reduction, multiple foreign institutions, including Goldman Sachs and Ningxia Ruiyin Lead Resource Recycling Co., Ltd., have expressed optimism about China's stock market. In a recent research report, Goldman Sachs raised its 12-month targets for the MSCI China Index and the CSI 300 Index to 84 and 4,600 points, respectively, implying potential upside of 11% and 17%. At the 2025 Global Investors Conference hosted by the Shenzhen Stock Exchange, Xing Ziqiang, Chief China Economist at Morgan Stanley, delivered a keynote speech titled "China's Economy Amidst Technological and Geopolitical Changes." In Xing's view, the US is experiencing an extremely rare "triple hit" in stocks, bonds, and currency, with the US dollar, as the global reserve currency, depreciating. This chain reaction has prompted the world to reconsider the long-held "US economic exceptionalism" and the absolute dominance of the US dollar over the past decades. Turning to Chinese assets, technological innovation has brought about a narrative shift. The cluster scale advantages of upstream and downstream industries in the industry chain, the demographic dividend, vast market demand, and the resilient spirit of private enterprises will all drive China to play an indispensable and important role in the next phase of the global technological revolution. During the on-site interview session at the conference, Shen Li, Managing Director and Head of China Onshore Equities at Morgan Stanley, stated that the progress of Sino-US trade negotiations has exceeded expectations, which is conducive to boosting international investors' risk appetite. At Morgan Stanley's China BEST Conference, over 80% of investors indicated that they are likely to increase their investment exposure to Chinese stocks in the near future. In a recent exclusive interview with Cailian Press, Wang Ying, Chief China Equity Strategist, expressed confidence in the market. She believes that the Hong Kong market is a crucial platform for global institutional investors to price Chinese assets. Currently, the pricing power of Hong Kong stocks has shown signs of gradually stabilizing, which is of great significance for rebuilding global investors' confidence in Chinese assets. Why are foreign investors bullish on Chinese assets? After a month of tariff frictions, a significant turning point has emerged. However, there may still be uncertainties in future tariffs, and the rise of trade protectionism globally cannot be ignored, as the global economic development still faces uncertainties. Xing Ziqiang stated that against this backdrop, China has ample room to maneuver in responding to shocks. There are four reasons: first, there is room for domestic policy stimulus to be intensified; second, the overall social livelihood still has the capacity to withstand pressures; third, the cluster advantages of the industry chain are difficult to replace in the short term; fourth, China has enormous potential for scientific and technological innovation in the next phase of the technological revolution. The intensification of policies has attracted particular market attention, especially in boosting domestic demand and consumption. Xing Ziqiang pointed out that the People's Bank of China has already taken the lead in introducing a package of monetary policies that will play a role in boosting confidence. During the Two Sessions held in March this year, stimulus policies were also formulated and announced for areas such as consumer goods subsidies, infrastructure, and technology. Since the beginning of the year, there has been active issuance of government bonds, which has strongly supported the overall growth of total social financing. It is expected that supplementary fiscal policies will be further introduced in the future. Xing Ziqiang also observed that China has expanded the opening-up of its service sector to many first- and second-tier cities, covering various fields such as healthcare, elderly care, and even culture. It has reduced entry barriers, allowing more private and foreign-funded enterprises to enter, which has also brought about new developments. A series of measures have been taken in the social security system since the beginning of the year, including gradually increasing the expenses for rural elderly care and medical insurance. The consolidation and reform of the crucial social security system are expected to gradually boost China's domestic consumption market. China's narrative on technological innovation has changed The emergence of DeepSeek has once again demonstrated China's advantages in the new round of global high-tech fields represented by artificial intelligence, which is also a focus of attention for foreign institutions. Recently, Morgan Stanley Research Department released a report elaborating on China's industrial advantages in artificial intelligence: Firstly, the "Report on China's Top 28 Frontier Industries" systematically sorts out 28 emerging enterprises in frontier industries ranging from intelligent driving, AI applications, to humanoid robots. These enterprises are expected to possess strong global competitiveness in the future. Secondly, according to Morgan Stanley's "China AI Hardware Self-Sufficiency Rate Index," it is projected that China will achieve a self-sufficiency rate of over 80% by 2027, including GPU chips. "The advantages of cluster scale in the upstream and downstream of the industry chain, the demographic dividend of talent, as well as the vast market demand and the resilient spirit of private enterprises are China's strengths in the technological field, which will drive China to play an indispensable and important role in the next phase of the global technological revolution," Xing Ziqiang pointed out. The talent advantage is particularly evident in the AI industry, stemming from China's years of demographic dividend of engineers. AI has always been supported by four main components, namely computing power, algorithms, data, and scenarios. Xing Ziqiang believes that China's current advantages in algorithms, data, and scenarios can compensate for its deficiencies in computing power—that is, by improving efficiency through algorithms, data, and scenarios, and accumulating more advantages in other aspects to make up for the lack of computing power. On the other hand, China has also made positive progress in computing power. For example, domestically produced chips and servers are being used for AI training. The current domestic self-sufficiency rate has reached 34%, and it is expected to rise to 82% by 2027. Xing Ziqiang believes that since last year, China's narrative logic in the global technological innovation landscape has undergone significant changes. Affected by the US technology containment policies, the development prospects of China's private enterprises experienced periodic fluctuations, and market confidence was once impacted. However, the industrial advantages and technological innovation capabilities in the next phase are inseparable from China, which has become a global consensus. Wang Ying is optimistic about the technology and internet sectors in Hong Kong stocks. She stated that for a long time, global investors' attention to China's technology and AI sectors has been relatively limited. The emergence of DeepSeek has made investors realize that China possesses a vast pool of engineering talent, data availability, and a well-established ecosystem in the social networking and e-commerce sectors, and may receive further government support to accelerate the application of AI. Now, global investors are beginning to reassess the investability of China in the technology and AI sectors. In addition, Wang Ying is also optimistic about China's new consumption sector, believing that it has the potential to gain more favour from investors in the global market's blue ocean. "Morgan Stanley released a report on the theme of Chinese enterprises going global in 2023. Since then, we have been paying close attention to companies related to the new consumption sector," Wang Ying said. Improved Confidence Among Foreign Investors Wang Ying observed that the talks with private entrepreneurs in mid-February this year further helped global investors understand the decision-making direction of the Chinese government, and foreign investors' confidence in China's investment environment has further improved. "The team has adjusted the index rating for Chinese stocks from underweight to neutral," Wang Ying further stated. Three major factors—clear policy signals turning positive, improvements in the geopolitical landscape, and renewed confidence shaped by technological breakthroughs—are propelling the Chinese market into a new phase, with the return on equity (ROE) of the MSCI China Index expected to continue improving. Wang Ying indicated that during the period from mid-January to April 2 this year, when reciprocal tariffs were implemented, nearly $8 billion in passive funds flowed into Chinese stocks. Although after April 2, due to the escalation of extreme tariffs, funds showed an outflow trend, this period was very short. Starting from late April, passive funds began to flow back into Chinese stocks. Wang Ying believes that with the stabilization of market sentiment, coupled with investors' rational analysis of the macro and capital market investment environment, foreign investors have reached a consensus that, in the context of global trade frictions, the investability, relative attractiveness, and the extent of impact on China's stock market are much smaller compared to other markets. From the perspective of global capital flow allocation, Wang Ying observed that global investors are actively changing their overweight positions in US dollar assets. As the world's second-largest stock market, China boasts unique advantages in terms of size and liquidity, and domestic policy support will further highlight its advantages in liquidity and economic cycle stability. What room is there for policy adjustments? Xing Ziqiang believes that despite certain progress in the Sino-US tariff dispute, China still needs to further leverage its fiscal power to boost domestic demand. Boosting domestic demand requires not only policy support but also reforms to the social security system. To achieve this goal, it is necessary to address the issue of funding support. He proposes three measures: First, increase the fiscal deficit, including issuing more government bonds. With the current dominance of US dollar assets being challenged, global capital is seeking new investment directions. If China increases the supply of RMB assets and expands the fiscal deficit, using the funds to stimulate consumption and improve social security and welfare, it will help break the cycle of low prices and enhance the yield of RMB assets. Second, advance the reform of state-owned enterprises (SOEs) and inject more dividends from state-owned assets into the social security system. This will not only provide strong support for the social security system but also promote the market-oriented operation of SOEs. Third, promote the transformation of overall fiscal expenditure, shifting from a fiscal model that previously focused on construction to one that emphasizes social welfare and social services. He further points out that, in the medium and long-term, China should seize the strategic opportunity period to enhance the attractiveness of RMB assets and strengthen the competitiveness of the Chinese market by deepening reforms and expanding opening-up. He recommends implementing the "2030 Major Strategy." Specifically, this means achieving two "three zeros" by 2030, focusing on the strategy of expanding domestic demand and significantly opening up to the outside world. By establishing a unified national market, consolidating the social security system, and advancing fiscal transformation reforms, China aims to achieve a 30% growth in its domestic consumption market over the next five years, and this 30% increase in the domestic consumption market will be open to countries around the world. During this process, China will gradually reduce external tariffs to "zero," lower market access thresholds for foreign-funded enterprises and Chinese private enterprises to "zero," and reduce subsidies to "zero" over the next five years.

"The joint statement significantly exceeded expectations! Both sides demonstrated a more pragmatic attitude, which will influence the market's judgment on the overall global economic and trade conflicts." On May 12, the Ministry of Commerce released the joint statement on the China-US economic and trade talks in Geneva, and a foreign investment banker shared his assessment immediately. The results of the "Joint Statement on the China-US Economic and Trade Talks in Geneva" released by China and the US show that: The US has reduced the additional tariffs of up to 125% imposed on China since April 2, retaining only a 10% tariff increase, with the remaining 24% tariff increase suspended for the initial 90-day period; In response, China has reduced the additional tariffs of up to 125% imposed on the US since April 4, also retaining only a 10% tariff increase, with the remaining 24% tariff increase suspended for the initial 90-day period. The magnitude of tariff adjustments in the first round of negotiations significantly exceeded market expectations, which is also the strongest consensus in the market. The joint statement was released after the A-share market closed, leading to significant fluctuations in major asset classes, with both stocks and foreign exchange markets rallying, while the bond market experienced a temporary setback. From the perspective of the stock market, the Hong Kong stock market surged rapidly, with the Hang Seng Index/Hang Seng Tech Index closing up 3.0%/5.2% respectively. The FTSE China A50 Index futures and MSCI China A50 Connect Index futures both rose by over 2%. The three major US stock index futures also rallied sharply, with the S&P 500 and Nasdaq 100 index futures rising by about 3%, and the Dow Jones futures rising by over 2%. From the perspective of the foreign exchange market, the offshore RMB strengthened by over 100 basis points against the US dollar in the short term, breaking through the 7.2 mark. From the perspective of safe-haven assets such as bonds and gold, the decline in Treasury futures widened, with the 30-year Treasury futures falling by over 1.3% and the 10-year Treasury futures slightly declining by 0.5%. COMEX gold fell sharply, with a decline of over 3.6% at one point. The joint statement has sparked a huge response. What are the next highlights? How will it affect the allocation of major asset classes in the market? Several public fund companies provided interpretations immediately. "Rare Consensus on Tone", Multiple Foreign-Invested Public Funds Bullish on Improved Risk Appetite in Equity Markets As early as the morning of May 12 before the market opened, news emerged that substantial progress had been made in the high-level economic and trade talks between China and the US. Song Yu, Chief China Economist at BlackRock, stated that the rare consensus on tone demonstrated by both China and the US reflects a high level of agreement between the two sides. Progress in China-US relations and increased support from domestic economic policies are important reasons for the recent improvement in the macroeconomic situation. It is expected that despite significant progress in China-US relations, economic policies will continue to be intensified to maintain the positive momentum achieved since the beginning of the year. This series of changes should alter the confidence of domestic and overseas investors in Chinese assets, benefiting the Chinese market. Following the release of the "China-US Joint Statement on Geneva Economic and Trade Talks" by China and the US after the afternoon market close, J.P. Morgan Asset Management summarized that the key points and impacts of this joint statement include the following: 1. The statement effectively cooled down the earlier trade disputes between China and the US, with both sides making certain concessions by reducing and suspending some of the previously imposed tariffs. This not only created a friendly environment for subsequent negotiations but also ended the earlier suspension of China-US trade due to excessively high tariffs, facilitating the orderly resumption of economic and trade activities between the two sides. 2. Both sides agreed to establish a regularized dialogue mechanism, which will facilitate timely communication, resolve differences, avoid unnecessary frictions, and enhance the stability of future negotiations. 3. The positive start to trade talks between China and the US, two major economies, will help alleviate concerns about global supply chain disruptions and economic recession. "The extent of tariff reductions this time exceeded expectations, reflecting that both China and the US recognize the economic reality that tariffs will hit global growth, and that dialogue and negotiation are better choices for mitigating risks," J.P. Morgan Asset Management said. The capital markets responded positively immediately, with major Hong Kong stock indices and US stock index futures rising in response, along with increases in US Treasury yields and the US dollar index. The 90-day tariff suspension period has bought both sides time to reach further consensus, but it still brings certain pressure to the negotiation process, and the progress of subsequent consultations between the two sides needs to be observed. It is expected that the overall risk sentiment in the capital markets may ease somewhat, and after the risk release and rebound, the markets may return more to economic and earnings fundamentals. Morgan Stanley Funds also expressed that the outcome of the talks far exceeded expectations. "Since the tariff hikes by both sides, there has been limited contact. From the initial statement last week to the current talks, the progress has been rapid, indicating that the current high tariffs are a lose-lose situation, and tariff reductions are in the interests of both China and the US," Morgan Stanley Funds further pointed out. For the market, we believe that the outcome of the talks will significantly enhance investors' risk appetite. If the future US tariff rates on China can be maintained at the reduced levels, the pressure on China's exports will significantly decrease, and expectations for the macroeconomic fundamentals will also be somewhat repaired. Therefore, subsequent market opportunities may further increase. How Will This Impact A-Shares and Hong Kong Stocks? Institutions Express "Optimism" Looking ahead, the unexpected adjustment of China-US tariff policies sends a positive signal, and many fund companies have expressed optimism about the market. Invesco Great Wall Fund pointed out that the extent of tariff reductions in this round of China-US negotiations far exceeded market expectations, possibly due to the US supply chain's reliance on China and the enhancement of China's comprehensive national strength, which will help boost short-term market risk appetite.After tariffs return to an acceptable level, the recovery of the domestic economy and corporate earnings is expected to return to normal, with fundamentals anticipated to improve. In the short term, it cannot be ruled out that some funds will take profits. However, both earnings and valuations are currently in a relatively favorable state. Going forward, attention needs to be paid to changes in tariff policies after the 90-day exemption period. In the medium term, the Chinese market boasts advantages such as strong policy support and a well-established institutional framework. Since the beginning of the year, there have been favorable developments in both technology and geopolitical narratives. Meanwhile, from a valuation perspective, the current valuation levels of major A-share indices are highly attractive in both horizontal and vertical comparisons. Combined with the expectation that economic fundamentals and corporate earnings will enter a cycle of improvement and recovery, we remain optimistic about the medium-term performance of the A-share market. At the allocation level, many fund companies have mentioned that in the short term, enterprises in the export and "go global" chains will directly benefit. Morgan Stanley Funds stated that export chains previously impacted by tariffs are expected to recover, with a concentration in the midstream manufacturing sector. Invesco Great Wall Fund further pointed out that in the short term, enterprises in the export and "go global" chains will directly benefit, and related sectors are expected to have relatively strong performance in stages. It is recommended to pay attention to export chain industries such as consumer electronics, components, machinery, and auto parts. The significant improvement in Sino-US trade negotiations has notably enhanced investors' risk appetite, and the dividend style may exhibit mediocre performance in the short term. In the medium term, after the impact of tariffs diminishes, attention can be focused on sectors experiencing a rebound in prosperity. Among them, the breakthrough by DeepSeek accelerates the development of the AI industry, with infrastructure and application segments within the AI industry chain remaining important medium-term investment themes. Ping An Funds also holds a positive view on the technology sector, believing that this unexpected joint statement can not only alleviate the economic tail risks brought about by global trade issues but also boost the previously sluggish sentiment of global risky assets in the short term. Therefore, for A-shares and Hong Kong stocks, growth stocks, which are more sensitive to the denominator, may benefit more in the short term. It is recommended to actively pay attention to sectors such as TMT, robotics, pharmaceuticals in A-shares, and the Hang Seng Tech Index in Hong Kong stocks. Bond market under short-term pressure, with appropriate attention to swing trading In the bond market, tariff negotiations significantly exceeded market expectations, causing bond prices to fall. The 10-year government bond yield rose by 5.55 basis points to 1.6775%, while the 30-year government bond yield increased by 6.15 basis points. Regarding the reasons, Invesco Great Wall Fund stated that the bond market, considering that tariff easing may enhance risk appetite and weaken the impact on fundamentals, anticipates that the next round of monetary easing may be more delayed, and has responded accordingly. Regarding the subsequent outlook for the bond market, Invesco Great Wall believes that bond market risks in May may be relatively controllable. With monetary policy returning to normalization, medium- and short-term bonds offer higher certainty after adjustments, while the long end may be more volatile. Appropriate attention can be paid to swing trading. Although there may be short-term pressures, institutions should not overlook the bond market. Another fund company stated that in the short term, with the improvement of economic growth expectations, an increase in risk appetite, and adjustments to expectations for monetary easing, there is a certain degree of adjustment pressure in the bond market. However, considering that the 7-day reverse repo rate was lowered by 10 basis points last week, the probability of the 10-year Treasury bond yield returning to 1.8% is relatively small. Therefore, it may be advisable to consider strategic positioning amidst these adjustments. The rationale for this judgment is that, looking ahead, as substantive progress is made in Sino-US economic and trade negotiations, bond market investors' expectations will be revised. Firstly, expectations for an economic downturn will be corrected, as the economy may perform better than previously anticipated, and the deterioration of the external trade environment may be limited. Secondly, expectations for monetary easing will decline in phases. Last week, at a press conference held by the State Council Information Office, it was announced that RRR cuts and interest rate cuts would be implemented. The market believes that as the pressure on the economic fundamentals gradually increases, there will be further opportunities for RRR cuts and interest rate cuts in the future. However, currently, the necessity for RRR cuts and interest rate cuts in the short term is decreasing.