EB SECURITIES: The market may continue to rebound in the short term. It is recommended to focus on three performance main lines.

EB SECURITIES released a research report stating that the market may continue to rebound in the short term, focusing on three main performance lines. In the near term, the A-share market may continue to rebound. On one hand, the U.S. non-farm payrolls unexpectedly decreased by 23,000 in July, which has cooled market expectations for an interest rate hike by the Federal Reserve in September, potentially increasing market risk appetite. On the other hand, recent foreign stock markets, especially the semiconductor sector, have gradually stabilized and rebounded, positively affecting the stabilization of the A-share technology sector. The intensive disclosure period for mid-year reports in August is expected to become a turning point for the market to shift from valuation digestion to earnings-driven growth, and the earnings season may present the best allocation window for the second half of the year. The current core concern of the market lies in the sustainability of overseas AI capital expenditures, but at least two similar debates since 2020 have ultimately been resolved by subsequent earnings data, with each debate accompanied by a 10%-20% correction in the sector, followed by a recovery in the market over the course of several months. Currently, both domestic and foreign technology earnings are maintaining high growth, while the overall earnings growth rate is continuing to rise driven by PPI, with the overall A-share non-financial mid-year report earnings growth expected to reach around 15%. Coupled with systematic support from policies, the gradual waning of disruptions from Longxins IPO, and the continuous decline in A-shares' sensitivity to overseas shocks, the mid-year report disclosure period in August is likely to become a turning point for the market to shift from valuation digestion to earnings-driven growth, making the earnings season potentially the best allocation window in the second half of the year. It is recommended to focus on three main performance lines for allocation. First is technology hardware (semiconductors/AI computing power/storage), which is the strongest sector for performance improvements this round; second is the price increase chain (non-ferrous metals/chemicals/coal), which directly benefits from the rebound in PPI and has high certainty of performance realization; the third main line is export manufacturing (energy storage/power equipment/automobiles), which benefits from global manufacturing inventory replenishment and supply chain advantages. In addition, sectors such as non-bank finance, pharmaceuticals/CRO (innovative drugs going abroad), and military industry (order turning point) also deserve attention for their mid-year report performance, overall presenting a pattern of multiple performance lines running in parallel. Risk analysis: Historical patterns may fail; significant decline in market sentiment; economic growth levels falling significantly short of expectations; ongoing escalation of the situation in the Middle East.