Another tough session unfolded as global bond markets came under intense selling pressure. The US 10-year Treasury yield climbed 4 basis points to 5.02% on Tuesday, marking its highest level in nearly two decades. Japan's 30-year yield advanced 5.5 basis points to 4.12%, while Australia's 10-year yield surged 9 basis points to 5.42%. The ripple effects spread across Asia, with Japan's TOPIX sliding 0.7%, South Korea's KOSPI at one point dropping over 1.5%, and mainland A-shares also struggling with turnover shrinking to 1.6 trillion, matching the low seen on April 7. Hong Kong stocks weakened steadily through the session, closing 1% lower.

With the US midterm elections fast approaching, President Trump finds himself in a precarious position. The military strike against Iran yielded little success while leaving two straits effectively out of control. Middle East bases have suffered heavy damage, ammunition stocks are running low, and mounting casualties have fueled widespread discontent. His latest approval ratings have sunk to historic lows. Making matters worse, AI — his signature policy area — has become a hot-button political issue amid regulatory concerns. Recent NBC polling shows roughly two-thirds of Americans view AI as a high-risk proposition for society, with voters broadly opposing the rapid construction of AI data centers.

Democrats are swiftly capitalizing on this sentiment. In a rare alignment, veteran left-wing Senator Bernie Sanders and far-right activist Steve Bannon have joined forces to demand stricter controls on AI technology. The Republican camp is equally fractured — the House Speaker and Vice President Vance are publicly at odds, while Treasury Secretary Bessent and National Cyber Director Sean Cairncross lean toward supporting stronger protective measures. Trump responded urgently by phoning Jensen Huang, dismissing AI risks as a conspiracy akin to the "global warming hoax" and describing data centers as the "oil of the future." Clearly, Trump is feeling the heat. Huang echoed the sentiment, calling "AI doomism" a form of "unscientific grandstanding" and insisting that RSI is not "uncontrolled black magic."

Trump's call to Huang was well-targeted, as Nvidia shares the same urgency — without AI development, who would buy its chips? Trump also plans to hold dedicated talks with AI industry leaders, with arrangements currently underway though no specific timeline has been confirmed. With the most influential figures backing AI, the market naturally responded. South Korea's SK Hynix and Samsung both rallied, while Hong Kong-listed Montage Technology (06809), GigaDevice (03986), and Tianshu Zhixin (09903) each gained over 4%. US tech stocks are expected to bounce in tonight's trading session.

From an industry perspective, PCB remains the most certain high-growth sector. Nvidia's GeForce RTX 60 series built on the Rubin architecture is reportedly confirmed for launch in the first half of 2027. Given that the RTX 50 series already struggled to meet market demand at launch, similar supply constraints are expected for the next generation. This will drive continued PCB upgrades toward higher layer counts, high-speed materials, finer circuitry, and greater interconnect density. Rising process complexity boosts demand for exposure, drilling, plating, and inspection equipment. High-speed material capacity expansion has already kicked off, while high-end PCB capacity remains tight. Board makers' capital expenditure is expected to rise further, positioning PCB equipment suppliers as early beneficiaries of the next expansion cycle. Equipment leader CFMEE (09630) rose over 3%, Han's CNC (03200) and Topoint Technology (01377) each gained more than 4%, while upstream copper-clad laminate supplier Kingboard Laminates (01888) advanced over 3%.

The AI office software battle has officially begun. ByteDance has launched a major restructuring of its AI office segment, merging Doubao, Feishu, and Volcano Engine into one unified unit. Doubao will provide intelligence and Agent capabilities, Volcano Engine will supply models, computing power, and enterprise services, while Feishu will host enterprise collaboration and workflow environments. Currently leading this space is Tencent (00700)'s WorkBuddy, which according to AI product rankings reached 11.15 million monthly active users in July, topping the roughly 30-million-user AI office market. Tencent has also significantly stepped up its marketing spend — media estimates suggest WorkBuddy's offline advertising investment across Beijing, Shanghai, Guangzhou, and Shenzhen alone approaches 100 million yuan. Alibaba (09988), meanwhile, consolidated QoderWork, MuleRun, and Wukong into "Qianwen Office" last month, which has entered public beta with plans for full DingTalk integration. All three tech giants have now completed or nearly completed internal consolidation of their AI office operations. Tencent (00700), Alibaba (09988), and NetEase (09999) have shown signs of stabilizing over the past two days.

Active trading continues in the newly included Stock Connect names. Leading the charge is Haiqing Zhiyuan (01392), mentioned yesterday, which jumped nearly 12%. Another newly included name, BaiGe Online (02672), which offers AI risk-control MaaS large model services, saw its MaaS revenue surge 579.8% year-on-year in the first eight months. As a leader in third-party internet insurance distribution with a 3.1% market share, its shares rose over 5%.

The medical device and surgical robotics segment is attracting fresh attention. The 15th Five-Year Plan for medical insurance has designated surgical robots and brain-computer interfaces as key innovative technologies, encouraging domestic substitution in high-end medical devices and accelerating approval for innovative devices. ZhenHealth Medical (02697) saw revenue surge 31-fold with billion-yuan orders landing, marking the commercialization of its puncture robot — shares soared over 30%. Jinhai Medical Technology (02225), with first-half revenue up 134.16% to SG$34.021 million and minimally invasive surgical solutions accounting for 74.73% of total revenue, gained over 7%. Fourier (03625), which makes audio amplifier chips and haptic feedback chips used in humanoid robot dexterous hands and smart wearables, rose nearly 8%. Tianxing Medical (01609) recently received EU CE MDR certification as the first sports medicine manufacturer in China with full-line product certification, accelerating its surgical robotics commercialization — shares gained nearly 5%.

Norwegian consultancy Rystad Energy's latest analysis indicates that European offshore wind expansion faces structural supply constraints. Since 2020, offshore wind turbine selling prices (per MW) have risen 40%-45%, far outpacing the 20%-25% increase in manufacturing costs. This has fueled strong expectations for improved export margins among Chinese wind power core component and turbine manufacturers. Leading player Dajin Heavy Industry (01081), which specializes in monopiles, tower sections, and other offshore wind foundation structures with 500,000 tonnes of capacity, its own vessel fleet for DAP delivery, and SBTi international certification, held a 29.1% European market share in the first half of 2025 — its shares rose nearly 11%.

Section Focus: Coal

The US Environmental Protection Agency announced on the 14th that it will rescind greenhouse gas emission limits for coal and natural gas power plants, while planning additional measures to prevent future regulation. The backdrop is the surge in US AI computing power driving massive electricity demand. The administration believes strict carbon rules would constrain new coal and gas plant construction, hampering AI data center power supply — hence the loosening of fossil fuel generation constraints. Coal is the clearest beneficiary. Key Hong Kong-listed names include Yanzhou Coal (01171), Yancoal Australia (03668), Shougang Resources (00639), China Shenhua (01088), and China Coal Energy (01898).

Stock Spotlight: CFMEE (09630)

Capacity expansion is accelerating earnings growth with PCB equipment order deliveries remaining full. The company's Phase 2 facility, which began production in Q3 2025, enters its capacity ramp-up phase in H1 2026, with total design capacity exceeding double that of Phase 1. In its 2026 interim results, revenue reached 1.106 billion yuan, up 69.0% year-on-year; net profit attributable to shareholders was 281 million yuan, up 98.1%; non-GAAP net profit was 277 million yuan, up 104%; and operating cash flow was 292 million yuan, surging 377%. Gross margin has remained stable at 40%-42% with net margin steady above 20%.

Commentary: Accelerated AI PCB expansion is driving upstream LDI demand, and the company's high-end PCB equipment orders remain fully booked. First-half performance was notably strong with robust growth in both earnings and cash flow. CFMEE is the world's only direct-write lithography equipment manufacturer with commercial coverage across all four application scenarios — PCB, IC substrates, advanced packaging, and photomasks. In 2025, it held an 18.8% global market share in PCB direct-write equipment, ranking first worldwide ahead of Japan's ORC and Israel's Orbotech (KLA subsidiary). The company benefits from large-scale expansion of high-end PCB for AI servers (high-layer counts, mSAP processes), where traditional film exposure has hit process limits. LDI penetration continues to rise, high-end models are shipping in increasing volumes, and PCB gross margins remain stable above 40%.

The second growth curve lies in pan-semiconductor applications. The WLP2000 wafer-level direct-write lithography machine has passed TSMC's CoWoS-L process validation, making it a scarce domestic large-format advanced packaging lithography tool with a unit price of 15-20 million yuan and gross margins above 50%, higher than the PCB business. The company has entered IC substrate production lines at SCC and Shennan Circuits, accelerating domestic substitution for BT and ABF substrates. Most domestic competitors focus solely on PCB, with very few having developed volume-production advanced packaging tools — the competitive landscape is favorable with exceptionally high barriers to entry. The company operates the largest domestic production capacity at 1,500 units annually, with delivery speeds significantly outperforming overseas players. Domestic substitution continues to capture share from Japanese, European, and American manufacturers. Overseas orders are ramping up, marking the start of an international expansion cycle with rapidly growing orders from Thailand and Vietnam factories. The order book remains full with capacity utilization at elevated levels.

New orders in Q1 2026 surpassed 800 million yuan, a record high, with Q2 maintaining the same strong growth trajectory. PCB orders: major PCB manufacturers' expansion projects continue to land, with high-end LDI equipment orders remaining full. Advanced packaging orders: over 30 WLP2000 units are on hand, corresponding to order value exceeding 100 million yuan, with leading domestic OSAT companies continuing adoption. IC substrate equipment orders are steadily ramping up. Strong AI demand is intensifying supply tightness, driving both earnings growth and accelerated shipment of advanced packaging equipment. The WLP2000 wafer-level direct-write lithography machine has received repeat bulk orders. Capacity utilization remained at high levels throughout the first half. All-equipment order books are full, with Q1 2026 new orders exceeding 800 million yuan and Q2 sustaining elevated momentum, particularly in pan-semiconductor advanced packaging and high-end IC substrate equipment. As the domestic leader in direct-write lithography equipment with products widely used in PCB and optical communications, CFMEE is well-positioned to benefit from the industry's upward cycle. Full exercise of the H-share over-allotment option further boosts market confidence.