UBS expects MSCI China Index earnings per share to grow by 7% for the whole year. Profit growth in the second half of the year is expected to accelerate significantly compared to the first half. Given the geopolitical uncertainties, UBS continues to recommend a core holding strategy focused on high dividends. Wang Zonghao, head of UBS's China stock strategy research, stated that MSCI China Index earnings per share are expected to increase by 7% for the whole year. This is due to slightly faster fiscal expenditure, the low base effect brought about by a 4% drop in earnings per share in the second half of last year, and some companies benefiting from policies to renew old equipment. He noted that capital expenditure control is a key highlight for Chinese companies, with non-financial companies in the MSCI China Index seeing a 4% year-on-year decline in capital expenditure in the first half of this year, marking the slowest growth since 2017, with the industrial and renewable energy sectors experiencing the largest declines. He pointed out that, similar to the past two quarters, improving capital returns seems to be a key feature, with more Chinese companies increasing their buyback efforts in the second quarter. Year-to-date, the cumulative buyback amount of stocks in the Hang Seng Index is equivalent to 1.1% of market capitalization. He recommends focusing on opportunities in the internet, real estate-related industries, education, and semiconductor equipment industries.