Schroders global article indicates that the recent policy relaxation in the Chinese mainland real estate market is likely the most noteworthy for the market. This policy change significantly increases the confidence of the financial market in the overall economy, with a general expectation that the domestic economy of China is gradually stabilizing. While the performance of the real estate industry has a significant impact on macroeconomic data, other industries are still showing strong development trends. In the past two years, as the mainland economy has been at a low point and many industries are experiencing supply and demand changes, many new development opportunities have emerged in the financial market: 1) manufacturing upgrades; 2) Chinese companies going global; 3) cyclic reversal; 4) artificial intelligence; 5) continued favoritism towards interest-bearing assets; 6) investment opportunities in experiential consumer goods and replacement consumer goods. Recently, the most significant market attention may be the relaxation of real estate policies in the Chinese mainland. This relaxation policy mainly targets core issues and proposes corresponding policy directions and specific measures from both the supply and demand aspects. In terms of supply, after about two years of adjustment, the current inventory level of the real estate market is close to the peak before the "shack renovation" policy was introduced in 2016. Real estate developers, banks, and local governments seem to need to restructure their balance sheets to address the various issues they are currently facing. Earlier press conferences mentioned a storage strategy proposed by the authorities, the main purpose of which is to restore the operational capability of the financial market in order to obtain sufficient returns and cash flow. In terms of demand, the threshold for purchasing a home has now decreased to historically low levels, with down payments lower than the 20% in 2008 and mortgage rates at historic lows. Adjusting the down payment ratio will increase the leverage of homebuyers, which historically has been an efficient way to generate quick housing demand. More importantly, this change in real estate policy signals a significant shift in policy direction, with its impact not inferior to the deleveraging policy in 2018, the carbon reduction in 2021, and the control measures in 2022. This reflects the determination of decision-makers to regulate economic risks and promote high-quality economic development. Although there are limitations to the space and capability for residents to increase leverage, looking at the global situation, the overall leverage level of Chinese residents is still lower than that of countries such as the United States, the United Kingdom, Japan, and South Korea, and objectively speaking, risks are still within a controllable range. Of course, the response of the domestic real estate market still needs time to observe, but the policy direction has greatly boosted the confidence of the financial market in economic development. Although the real estate market is still at a low point, its scale still accounts for a certain proportion of the total domestic economic demand in China. For example, real estate-related fixed asset investment accounts for about 22% of overall fixed asset investment, while housing loans account for about 25% of total loans. If the real estate market continues to decline, the impact on total demand and overall credit creation will be very evident. In this situation, it would be difficult to accelerate the improvement process of macroeconomic data. However, this policy change greatly increases the confidence of the financial market in the overall economy, with a general expectation that the domestic economy of China is gradually stabilizing. For the coming months and the third quarter of the stock market, the bank maintains a cautious optimistic attitude, on the one hand, expectations for a stable macroeconomic environment are increasing, laying the foundation for continued rebound in the financial market by 2024. On the other hand, the bank believes there may be a bias in the financial market, focusing too much on macroeconomic data and overlooking changes in industries and individual companies. Although the performance of the real estate industry has a significant impact on macroeconomic data, other industries are still showing strong development trends. In the past two years, as the mainland economy has been at a low point and many industries are experiencing supply and demand changes, many new development opportunities have emerged in the financial market: First, upgrading manufacturing is key to China's transition to a high-income country, aligning with current policy directions and bringing many positive changes at the micro level. The bank believes this sector is worth watching for the next 5 to 10 years and is expected to nurture many high-quality listed companies. Second, the trend of Chinese companies going global is rapidly and significantly developing in high-end manufacturing industries such as automotive, electronics, and machinery manufacturing, also worth focusing on for at least 5 to 10 years. Thirdly, from the perspective of cyclic reversal, there are more industries to focus on, including pig farming, new energy, the real estate industry chain, and non-banking finance. Fourth, artificial intelligence (AI) is one of the most important technological reforms of the modern era, and its impact on high-end manufacturing industries such as electronics should be monitored. Fifth, although the overall dividend yield in China has slightly declined, it is still attractive relative to government bonds, and interest-bearing assets will continue to be favored until the economy fully recovers. Sixth, pay attention to changes in consumer attitudes and explore investment opportunities in experiential consumer goods and replacement consumer goods. In the third quarter of 2024, the bank will continue to explore investment opportunities from stable, cyclical reversal, and growth perspectives.