Looking ahead at the A-share market, domestic demand constraints remain the primary challenge, yet new growth drivers continue to provide crucial support. In July, industrial value-added output grew 4.5% year-on-year, down 0.8 percentage points from June, while retail sales of consumer goods rose only 0.6%, a decline of 0.4 percentage points from the previous month. Fixed-asset investment fell 6.7% year-on-year over the January-July period, with real estate development investment plunging 19.2%.
From a structural perspective, traditional demand remains weak, with the property chain and auto consumption under sustained pressure. However, high-tech manufacturing, equipment investment, and technology-related consumption continue to exhibit notable resilience. On the production side, value-added output from high-tech manufacturing grew 13.8% year-on-year in the first seven months, while equipment manufacturing expanded 9.7%, both significantly outpacing overall industrial growth. Emerging sectors such as industrial robots and new energy vehicles continue to post rapid expansion.
On the consumption front, big-ticket items like automobiles, furniture, and building decoration remain the primary drags. Meanwhile, retail sales of communication equipment surged 20.4% year-on-year, supported by the new product cycle in AI hardware and replacement demand in consumer electronics. In terms of investment, real estate remains the largest negative contributor, but equipment and tool purchases grew 9.0% year-on-year. Investment in computer, communication, and other electronic equipment manufacturing, along with intellectual property product investment, maintained solid growth, indicating that capital expenditure continues to tilt toward technological innovation and industrial upgrading.
Looking ahead, the economy still faces short-term pressure from weak domestic demand and ongoing real estate adjustments. However, with accelerated fiscal spending and continued implementation of policies such as the "two major" and "two new" initiatives, infrastructure and manufacturing investment are expected to gradually improve. From an investment standpoint, attention should be directed toward policy-supported areas including new quality productive forces, AI, high-end manufacturing, and equipment upgrades, while remaining cautious about the potential drag on domestic demand recovery if property sector repair falls short of expectations.
Overseas, the U.S. August composite PMI flash reading unexpectedly climbed to a four-year high, with services sector expansion emerging as the primary driver of economic growth. The composite PMI rose to 56.0 in August, up 1.5 percentage points from July, marking the highest level since April 2022. The services PMI advanced from 54.6 to 56.8, the strongest reading since December 2024, while the manufacturing PMI slipped from 53.9 to 53.2, with manufacturing output falling to a 13-month low. Structurally, new orders and backlogs in the services sector improved, business expectations for future output reached their highest level since last November, and employment indicators rebounded noticeably, pointing to continued resilience in U.S. domestic demand and business confidence. Meanwhile, growth in both input costs and selling prices moderated, suggesting inflation pressures have not yet intensified further.
Looking forward, the August PMI data indicates the U.S. economy remains in expansion mode over the near term, with services resilience underpinning growth. However, manufacturing slowdown, supply chain disruptions, and tariff impacts could constrain subsequent recovery. For the Federal Reserve, current economic activity remains robust, reducing the urgency for rapid policy easing. The future policy trajectory will need further confirmation from employment and inflation data. At the asset level, improved economic expectations support risk appetite recovery, but strong economic data may dampen rate-cut expectations, leaving U.S. Treasury yields and high-valuation growth assets exposed to volatility risks.
Turning to investment strategy, despite significant near-term market volatility, we maintain a constructive outlook. First, U.S.-Iran negotiations have yet to yield substantive progress, with Washington pivoting to new economic and trade sanctions while military deterrence remains in place. The dispute over control of and sovereignty around the Strait of Hormuz continues to be a focal point of contention, and oil prices currently still reflect a geopolitical risk premium driven primarily by supply-side concerns.
Second, market expectations for Fed rate hikes have already cooled somewhat, and attention should be paid to any marginal impact on expectations from Warsh's remarks at the Jackson Hole central bank symposium. Third, at the index level, short-term fluctuations persist due to overseas volatility and chip-structure disruptions, with ongoing sector-level competition and rebalancing. Yet external shocks are better characterized as episodic disturbances; domestic policy signals and the underlying logic of industrial themes remain intact.
In terms of positioning, we continue to adhere to the "style rebalancing" approach adopted since late June. Investors may consider maintaining a certain position level, with the technology theme shifting toward leaders with "volume certainty." Within the AI hardware segment, preference should be given to leaders with strong demand certainty. On the non-technology front, we continue to tilt toward lithium batteries, innovative drugs, and the export supply chain.