EB SECURITIES: The market is expected to start a new phase of bullish trend in the second half of the year and may break through the cyclical high point of 2024.

EB SECURITIES stated in a research report that, driven by short-term expectation differences, the market in the second half of the year may impact new highs. Overall, the market trend since September last year has gradually shifted from policy-driven to fundamental and liquidity-driven, and the pace of future market trends may be similar to that of 2019. Looking ahead to the second half of the year, there are still some expectation differences in the market, such as the sustainability of short-term fundamental improvement, continued inflow of funds, and opportunities brought by the development of emerging industries. Therefore, CEB Securities believes that the market will start a new stage of upward trend in the second half of the year and is expected to surpass the phase high in the second half of 2024. Specific views of EB SECURITIES are as follows: Last week, A-shares closed higher. Last week, the main broad-based indexes of A-shares all closed higher, with the Shanghai Composite Index, the Wind Full A Index, and other indexes leading the gains, while the Growth Enterprise Index and the Sci-Tech 50 Index lagged behind in terms of gains. In terms of market style, the main style indexes all closed higher last week, with small-cap growth and small-cap value leading the gains, while large-cap growth and mid-cap growth lagged behind. Looking at the industry breakdown, most of the Shanghai industry sectors closed higher, with the defense industry, nonferrous metals, and machinery sectors leading the gains, and the pharmaceutical and biotech, computer, and retail industries leading the declines. Accumulation of internal and external positive factors, the domestic market is expected to continue to perform strongly The overall performance of the domestic market is good, and with the continued accumulation of internal and external positive factors, the domestic market is expected to continue to perform strongly. Externally, the weakness of the U.S. labor market, with July nonfarm payrolls below expectations and significant downward revisions to the previous two months' data, has raised concerns about the U.S. economy, significantly increasing market expectations for a Fed rate cut in September, with overseas liquidity expected to improve marginally. Internally, domestic policies are actively driving, fundamentals remain resilient, and are expected to provide support for domestic asset prices. Externally, after the release of the July U.S. nonfarm payrolls data, expectations for a Fed rate cut in September increased significantly, which may benefit Chinese assets. Hong Kong stocks, as an offshore market, are expected to benefit significantly. The U.S. added 73,000 new jobs in the nonfarm sector in July, with the unemployment rate rising slightly to 4.2%. At the same time, the new nonfarm employment figures for May and June were significantly revised downward. After the release of the July U.S. nonfarm payrolls data, expectations for a Fed rate cut in September increased significantly. If the Fed initiates the rate cut as scheduled in September, it may benefit Chinese assets. On the one hand, a Fed rate cut typically spurs overseas fund reallocation, and with current valuations of domestic assets still having a certain cost advantage, combined with domestic economic resilience, more overseas funds may be attracted, providing support for domestic asset prices. On the other hand, with the Fed initiating a rate cut, the external pressure on the yuan exchange rate and its constraints on domestic monetary policy are expected to weaken, making domestic monetary policy more proactive. Therefore, in the backdrop of an expected decline in the 10-year U.S. Treasury yield, A-share and Hong Kong stock valuations are expected to be boosted, with Hong Kong stocks, as an offshore market, being more sensitive to changes in overseas liquidity, potentially having a larger valuation repair space. Internally, domestic policies are still actively driving, fundamentals remain resilient, and are expected to support domestic asset prices. In terms of policies, current policies are still actively driving, with various policy measures gradually being implemented. From a fundamental perspective, exports in July grew by 7.2% year-on-year, demonstrating strong resilience in China's foreign trade in a complex international environment. In addition, the effects of expanding domestic demand are continuing to show, with the CPI in July rising by 0.4% from the previous month's decline of 0.1%, and the core CPI rising by 0.8% year-on-year for the third consecutive month, indicating that the domestic consumer market is gradually warming up. The market in the second half of the year may impact new highs, focusing on short-term and long-term themes At the industry level, in the short term, attention should be paid to sectors that have been lagging behind and those that are expected to benefit from marginal improvements in overseas liquidity, while in the long term, focus should be on the three main themes of consumption, technological self-reliance, and dividends. Sectors that have been lagging behind include machinery and electrical equipment industries, while sectors expected to benefit from marginal improvements in overseas liquidity include pharmaceutical and biotech, household appliances, and food and beverage industries. In terms of themes, the consumption theme focuses on policy subsidies, services, and new consumption directions; the technology theme focuses on AI, Siasun Robot & Automation, semiconductors, and defense; and the dividend theme focuses on some high-quality dividend stocks. Risk analysis: 1. Implementation of policies lagging behind expectations; 2. Significant decline in market sentiment; 3. Significantly lower economic growth than expected; 4. Sharp deterioration in Sino-U.S. relations.