Wang Zonghao, the research director of UBS China Stock Strategy, expects the MSCI China Index to have an upward space of about 10% in the next 3 to 6 months, of which 7% comes from profit growth. He explains that the high base effect that dragged down profit growth in the first half of the year is expected to weaken in the second half, and the fiscal expenditure is expected to accelerate in the second half of the year according to the initial budget of the Chinese government. In addition, the Fed is expected to cut interest rates by 75 to 100 basis points in the second half of the year, which will also help bring capital inflows to emerging markets including China. Wang Zonghao points out that the main driving force of the stock market is Return on Equity (ROE) rather than GDP growth, and economic transformation and increased shareholder return will help improve ROE. He admits that the ROE of China's new quality productivity industries is currently not high, but with the increase in research and development investment, industries such as new energy and medical care are expected to reach a turning point in ROE. At the same time, the Chinese regulatory authorities are promoting companies to increase dividend buybacks and even include ROE in the assessment of management personnel of state-owned enterprises, all of which are beneficial to ROE. In addition, some companies, such as consumer companies, have reduced costs and increased efficiency, and there have been mergers and acquisitions in industries such as new energy and brokerage, which are positive for improving ROE in these industries. UBS Securities China Stock Strategy Analyst, Meng Lei, pointed out that the style of the A-share market this year is completely dominated by incremental funds, namely ETFs and insurance companies. The scale of insurance funds flowing into the stock market this year is estimated to be between 400 billion and 500 billion yuan, with half in A-shares and half in Hong Kong stocks. He believes that these patient capital strengthens the allocation of high-dividend stocks in response to the low returns of the Chinese bond market. Therefore, value stocks and high-dividend stocks can still be bullish temporarily and can be core holdings for investors until there are policies that promote the shift of market style towards growth stocks. Meng Lei also believes that the SSE Composite Index needs to break free from the long-term hovering around 3000 points, and this requires solving the long-term undervaluation of state-owned enterprises. He explains that the profit growth rate of private enterprises and state-owned enterprises in the past 10 years is similar, but the valuation of private enterprises is twice as high as that of state-owned enterprises, mainly because investors have a negative impression of state-owned enterprises. Now that state-owned enterprises are promoting dividend buybacks, ROE and profit growth indicators have shown signs of improvement, but before more evidence is confirmed, it is believed that overseas investors will only select high-quality industries and individual stocks rather than fully participate in investment in state-owned enterprises.