CITIC Construction Investment: Tariff impact resurfaces, domestic demand resilience provides support.

CITIC Securities research report states that trade tariff concerns are resurfacing, which may suppress market sentiment in the short term, but overall the market is gradually becoming less sensitive to tariffs. In April, industrial profits improved, the implementation of policies to stimulate "new economy" industries and consumption is going well, driving downstream consumption growth and supporting midstream equipment manufacturing. In May, the overall outlook for the manufacturing sector is improving, with a rebound in export orders, and strong performance seen in new growth drivers and consumer goods. The resilience of China's fundamentals will provide a bottom support for the market. Micro plate stock trading activity is increasing, with high overcrowding levels, so caution should be taken regarding crowded trading risks. In terms of allocation, we continue to favor the "new quality domestic demand growth" direction with characteristics of geopolitical isolation, domestic demand driving force, and growth elasticity. Currently, it is still preferable to focus on domestic circulation, focusing on service consumption, new consumption, and counter-tariff sectors. Key industries to watch include beauty care, agriculture, forestry, animal husbandry, fishery, defense and military industry, non-ferrous metals, pharmaceuticals, biotechnology, computers, social services, and retail trade.