Lydia Liu, Managing Director and Chief Asia and China Stock Strategist at JPMorgan, believes that although the business cycle remains weak, corporate profits have slightly improved. The earnings per share forecast for the MSCI China Index has increased by 1.2 percentage points since July. In addition, over the past 7 months, companies have spent $26 billion on stock buybacks. With the correct regulatory policies in place, these factors are favorable for the performance of Chinese stocks in the second half of the year. Liu suggests three main investment areas: (1) Defensive utility stocks such as electricity, telecommunications, and highways, with high free cash flow and dividend yields generally around 6 to 7%, along with reasonable valuations to withstand market fluctuations; (2) Industry leaders with pricing power and the ability to increase market share; (3) The artificial intelligence industry chain with structural growth potential. Liu acknowledges that foreign holdings in Chinese stocks are relatively low, but due to the yen carry trade, Chinese stocks have recently outperformed other emerging markets and Japanese stocks when measured in US dollars. Some funds have shifted from Japanese stocks to Chinese stocks, but the amount is not significant. She emphasizes adopting a bottom-up investment strategy in the Chinese and Hong Kong markets, focusing on stock selection.