Market Strategy - The market is expected to experience a slight upward trend amidst a sideways movement, with a focus on mid-cap stocks while maintaining operational rhythm [2] - The index showed a pattern of initial decline followed by recovery in February, aligning with the expectation of a "sideways trend with slight strengthening" [2] - The improvement in domestic risk assessment is seen as a long-term confidence restoration rather than a catalyst for a strong market rally [2] Style Strategy - Mid-cap blue chips are trending positively, while technology growth stocks are expected to experience rotation [3] - Chemical and non-ferrous metals mid-cap blue chips have continued to lead the market in February, consistent with previous assessments since November [3] Industry Strategy - The transportation sector is witnessing high passenger flow and diversified demand, with significant inter-regional mobility becoming the norm [4] - As of now, railway passenger volume has increased by 4.1% year-on-year, while road mobility has risen by 5.1%, both lower than the 5.3% increase in civil aviation passenger volume [4] - The preference for self-driving travel remains high, with 86% of road mobility attributed to non-commercial vehicles, reflecting consumer demand for comfort and in-depth travel experiences [4] Thematic Strategy - The commercial aerospace sector presents rebound opportunities, particularly in inflation-related leading companies [5] - Despite lower-than-expected launch numbers in February, the commercial aerospace sector is anticipated to rebound due to ongoing domestic and international industry development [5] - Key developments in the commercial aerospace sector, including the potential for intensive verification of reusable rocket tests from March to June, are expected to catalyze growth [5]

Investment Rating - The report maintains a "Positive" investment rating for the real estate industry [7] Core Insights - The report highlights a divergence from market expectations regarding the recent stabilization in property prices and listing volumes in core cities, suggesting that further observation is necessary before concluding a cyclical turning point [2][3] - It emphasizes that the government's policy direction remains focused on risk prevention, safeguarding livelihoods, and reducing financialization in the real estate sector, despite market anticipations for a major policy shift [3] - The report identifies key events, particularly the strong performance of Hong Kong property stocks, driven by a bottoming out of the Hong Kong real estate market and supportive factors such as rental yields exceeding mortgage costs [4] Summary by Sections Market Performance - The Hong Kong property index has outperformed the Hang Seng Index, while the A-share real estate sector experienced a weekly decline of 0.69% [14][19] - Individual stock performance shows notable gains, with 京能置业 (Jingneng Real Estate) rising by 14.44% [20] Second-hand Housing Weekly Tracking - National listing prices in 85 cities have shown a slight week-on-week increase of 0.1%, with a recovery in the number of cities experiencing price rebounds [25] - The listing volume has decreased by 0.22% week-on-week, but the rate of decline has narrowed [29] - During the Spring Festival, the average daily transaction volume in 16 cities increased by 23% year-on-year, with significant growth in Beijing, Guangzhou, and Shenzhen [36] New Housing Weekly Tracking - The average daily transaction volume for new homes during the Spring Festival saw a year-on-year decline of 48.66%, with only 青岛 (Qingdao) and 济南 (Jinan) reporting increases of 148.17% and 9.84%, respectively [54] - The total inventory of new homes has slightly decreased, with a week-on-week decline of 0.1% [56]

Economic Overview - The Q4 2025 US GDP growth rate was +1.4%, significantly below the market expectation of 2.8% and the Q3 growth of 4.4%[4] - Government spending was a major drag, with Q4 government consumption and investment down by 5.1%, contributing a negative 0.9% to GDP growth[4] - Personal consumption expenditure growth was recorded at 2.4%, with service consumption at +3.4% and goods consumption at -0.1%[4] Inflation Insights - The January CPI year-on-year growth rate was 2.4%, lower than expected, while core CPI was at 2.5%[4] - Energy prices were the largest drag on inflation, decreasing by 1.5% month-on-month[4] - Core goods inflation dropped to 1.1% from 1.4% in December, with used car prices falling by 1.8%[4] Policy Implications - The US Supreme Court's rejection of Trump's tariff-related measures could lead to a potential refund of tariffs, estimated at up to $175 billion, which may increase the US deficit rate by 0.5-0.6 percentage points[6] - The average effective tariff rate in the US was 9.8% as of December 2025, with China facing the highest rate at 33.4%[6] Market Trends - Since the beginning of 2026, asset prices have shown a trend of old economy sectors catching up with new economy sectors, with energy up by approximately 22.7% and technology down by 4.6%[8] - Non-US markets have also been catching up, with Japan up by 12%, Korea by 38%, and emerging markets by 12%[8] Risk Factors - There is uncertainty regarding the economic fundamentals, particularly if employment and consumption deteriorate, which could lead to a hard landing for the US economy[9] - The risk of worsening US fiscal deficits could pressure bond supply and interest rates, negatively impacting global risk assets[9]

Group 1: Market Trends - Global risk appetite has increased, with major assets like gold and oil rising in tandem, while equity assets are recovering[10] - A-shares have shown a 2.85% increase year-to-date, with the CSI 300 index up 0.66%[11] - The CSI 500 index has risen by 11.17% year-to-date, indicating strong performance among mid-cap stocks[11] Group 2: Economic Indicators - In January 2026, social financing increased by CNY 165.4 billion year-on-year, a significant improvement from a decrease of CNY 646.2 billion in December 2025[21] - The unemployment rate in the U.S. decreased from 4.4% to 4.3%, with non-farm payrolls adding 130,000 jobs, exceeding expectations[16] - High-frequency data during the Spring Festival showed a 12.3% increase in cross-regional travel compared to the previous year, reaching a historical high of 35.3 million trips[20] Group 3: Geopolitical Risks - The probability of conflict between the U.S. and Iran has risen, with market expectations indicating a higher likelihood of escalation before March 2026[15] - U.S. tariff issues are causing uncertainty, with a recent Supreme Court ruling potentially halting many tariffs imposed by the previous administration[16] Group 4: Investment Outlook - Domestic demand remains stable post-Spring Festival, benefiting Chinese assets as risk evaluations improve[23] - The Federal Reserve's interest rate cut expectations have been postponed, leading to a likely period of consolidation for the U.S. dollar, U.S. Treasuries, and precious metals until employment data clarifies trends[23]

Core Insights - The report emphasizes a continued oscillating market pattern, suggesting that the index's upward movement driven by position recovery does not alter the overall oscillating trend [2] - It advocates for a strategic focus on mid-cap blue-chip stocks, particularly in the agricultural and chemical sectors, as they are expected to perform well in the current market environment [2][3] Market Strategy - The report notes that the index is currently at a midpoint of its oscillation range, recommending an active adjustment of portfolio structures to include mid-cap blue-chip stocks [2] - It highlights that the recovery of market positions post-holiday indicates a clear shift in fund allocation towards mid-cap blue-chip stocks, with cyclical manufacturing sectors showing stronger performance compared to technology growth sectors [2] Industry Strategy - In the agricultural sector, the report suggests that domestic companies must expand into international markets to overcome growth limitations, emphasizing the importance of product and technology exports, asset investments, and mergers/joint ventures [3] - Successful companies in this sector are characterized by strong core product advantages, comprehensive industry chain layouts, and effective local market integration [3] Thematic Strategy - The rare earth sector is projected to experience a dual boost in profitability and valuation, with expectations of rising rare earth prices due to sustained demand and supply-side improvements [4] - The report underscores the strategic value of rare earths in the context of increasing geopolitical uncertainties, suggesting that domestic rare earth companies may benefit from accelerated asset consolidation [4]

Group 1 - The report highlights three major global events during the Spring Festival that warrant attention: changes in the Iran situation, fluctuations in U.S. tariff issues, and weak U.S. economic data coupled with strong inflation, which increases uncertainty regarding future Federal Reserve interest rate cuts [4][10][11] - The market's reaction indicates that the current global focus remains on geopolitical issues, followed by the outlook for Federal Reserve rate cuts. The three potential impacts identified are: increased likelihood of geopolitical conflict due to U.S.-Iran tensions, downward revision of global demand expectations due to weak U.S. economic data, and downward revision of rate cut expectations due to rising U.S. inflation [4][11][12] - Asset price performance during the Spring Festival reflects these dynamics: the downward revision of rate cut expectations has led to a rise in the U.S. dollar index and U.S. Treasury yields, while oil prices have increased despite lower demand expectations, and both gold and oil prices have risen amid heightened geopolitical tensions [4][12] Group 2 - Domestic data during the Spring Festival showed mixed performance, with strong figures in dining and travel but weaker box office results. Notably, the average daily sales of key retail and dining enterprises increased by 8.6% compared to the same period in 2025, and cross-regional travel reached a historical high of 35.3 million trips, up 12.3% year-on-year [14] - The report notes that the Chinese yuan exchange rate remained stable, while Hong Kong stocks exhibited weaker performance during the same period [14]

Market Strategy - The market is currently in a volatile yet upward trend, driven by position recovery, maintaining a cautious optimism for February. The index is expected to oscillate around the high and low points of January, with a focus on mid-cap blue chips for investment opportunities [2][6] - The strategy suggests actively adjusting portfolios towards mid-cap blue chips, particularly in the chemical and livestock sectors, which are seen as having strong cyclical performance post-holiday [2][6] Industry Strategy - The agricultural sector is encouraged to expand into international markets to overcome growth limitations faced by domestic agricultural enterprises. Successful international ventures typically involve product and technology exports, asset investments, and mergers or joint operations, emphasizing the importance of core product advantages and complete industry chain layouts [3][6] - Key investment targets in the agricultural sector include Muyuan Foods (002714, buy) and Haida Group (002311, buy), with relevant ETFs being Agricultural ETF (159825/159827) and Grain ETF (159698) [3][6] Thematic Strategy - The rare earth sector is poised for a dual boost in profitability and valuation, with expectations of rising rare earth prices in 2026 due to sustained demand and supply-side improvements. The geopolitical landscape enhances the strategic value of rare earths, making it a key area for investment [4][6] - Notable investment targets in the rare earth sector include China Northern Rare Earth Group (600111, buy) and China Rare Earth Group (600259, not rated), with relevant ETFs being Rare Earth ETF (159713/516150) [4][6]

Report Industry Investment Rating - Not provided in the content Core Viewpoints of the Report - The impact of refinancing policies on the convertible bond market is limited, and the post - holiday market is promising. The current situation of supply - demand imbalance in the convertible bond market is difficult to resolve quickly in the short term. The market's expectation of a medium - to - long - term slow - bull market remains unchanged, and trading opportunities are better than allocation opportunities at present [6][9]. - The pre - holiday adjustment in the A - share market may be preparing for the entry of incremental funds after the holiday. In an environment of stable domestic and volatile foreign markets, foreign capital inflows are worth looking forward to, and the slow - bull pattern remains unchanged, with mid - cap blue - chip stocks becoming the mainstay in the future [6][10]. Summary by Relevant Catalogs 1. Convertible Bond Views: Limited Impact of Refinancing Policies, Promising Post - holiday Market - The new refinancing policies have two main impacts on the convertible bond market: allowing high - quality broken - issue enterprises to obtain financing qualifications and concentrating future new convertible bond supplies in high - quality science and technology enterprises such as those in artificial intelligence, semiconductors, and high - end manufacturing. After the new rules, Zhongke Shuguang announced plans to issue 8 billion yuan of convertible bonds. High - quality and scarce targets and new bonds will still be popular, while mediocre ones will be marginalized [6][9]. - The current trend of convertible bonds is mainly supported by the underlying stocks. Although the valuation of convertible bonds is high, the possibility of active valuation reduction in the short term is low. Trading opportunities are better than allocation opportunities at present. Attention should be paid to technical indicators, and when the overall market premium rate is too high, the importance of the remaining term of individual bonds becomes more prominent. It is recommended to focus on newly - issued bonds, bonds that waive redemption, and those with non - reduced shares by shareholders [6][9]. 2. Convertible Bond Review: Declining Convertible Bond Transactions, Volatile and Rising Valuations 2.1 Market Overall Performance: Most Equity Indexes Rose, but Trading Volume Declined - The equity market strengthened slightly and then declined. Technology stocks were stronger than heavy - weight stocks. The Science and Technology Innovation 50 Index rose 3.37%, the CSI 1000 Index rose 1.90%, the CSI 500 Index rose 1.88%, the Shenzhen Component Index rose 1.39%, the ChiNext Index rose 1.22%, the CSI 2000 Index rose 1.17%, the CSI Convertible Bond Index rose 1.08%, the Shanghai Composite Index rose 0.41%, the SSE 50 Index fell 0.12%, and the North Exchange 50 Index rose 0.58%. In terms of industries, the comprehensive, computer, and electronics sectors led the gains, while the textile and clothing, food and beverage, and beauty care sectors led the losses. The average daily trading volume decreased by 298.263 billion yuan to 2.1 trillion yuan [16]. - The top ten convertible bonds in terms of weekly gains were Yubang Convertible Bond, Yingliu Convertible Bond, Hengshuai Convertible Bond, etc. In terms of trading volume, Baichuan Convertible Bond 2, Shuangliang Convertible Bond, Fengyu Convertible Bond, etc. were relatively active [16]. 2.2 Declining Convertible Bond Transactions, Leading Gains of High - priced and Small - cap Convertible Bonds - This week, convertible bonds continued to rise significantly. The 100 - yuan premium rate reached a new high, and the average daily trading volume decreased to 75.505 billion yuan. The CSI Convertible Bond Index rose 1.08%, the median conversion parity decreased 1.2% to 107.5 yuan, and the median conversion premium rate increased 2.0% to 34.8%. In terms of style, high - priced and small - cap convertible bonds led the gains this week, while large - cap and dual - low convertible bonds performed weakly [6][21].

Group 1: Economic Transition - The shift from real estate economy to technology economy involves significant changes in industrial structure, development models, and institutional reforms, impacting key macroeconomic variables such as production, inflation, employment, fiscal policy, and monetary policy[2]. - By 2025, the contribution of new quality productivity industries to total output has surpassed that of the real estate construction chain, indicating a need for macroeconomic research to focus more on new quality productivity[11]. - The traditional development model driven by urbanization and population growth is transitioning to one focused on stock optimization and quality improvement due to slowing urbanization[8]. Group 2: Industrial Structure and Macroeconomic Features - The industrial structure has shifted from a real estate and construction-centric model to one centered around new quality productivity, which includes emerging manufacturing and certain service sectors[12]. - New quality productivity industries are expected to have a greater impact on total output than the real estate construction chain by 2025, reflecting their higher efficiency and growth potential[20]. - The inflation impact from new quality productivity industries is weaker compared to upstream factors like commodities and real estate, indicating a limited ability to drive PPI increases[25]. Group 3: Employment and Development Models - The labor compensation in new quality productivity sectors is lower than in traditional industries, which may create pressure on income and employment, necessitating a focus on developing service consumption to mitigate these effects[31]. - The transition from a cost advantage to a quality advantage in the labor force is evident, as the number of highly educated graduates continues to rise, supporting productivity growth in manufacturing[41]. Group 4: Institutional Mechanisms and Macro Control - The macro control mechanisms need to adapt to support the technology economy, moving away from real estate dependency and enhancing the role of direct financing systems[54]. - The fiscal and tax systems must evolve to accommodate new business models and support emerging industries, with a focus on expanding local tax sources and creating a tax system that aligns with new economic realities[56].

Investment Rating - The report maintains a "Positive" outlook for the lithium industry [5] Core Viewpoints - The lithium industry is expected to transition from a state of "realistic oversupply" to "future tightness," marking 2026 as a pivotal year for price recovery [19] - The financial attributes of lithium have strengthened, with market expectations likely to lead pricing ahead of fundamental improvements [20] - The absolute price heights may be difficult to replicate, but a gradual increase in the price floor is more certain [21] Summary by Sections 1. Overall Viewpoint Discussion - 2026 is anticipated to be a turning point for lithium prices, moving from a low base to a higher equilibrium due to limited supply elasticity and sustained demand growth [19] - The demand for lithium is projected to maintain a compound growth rate of over 20%, driven by the expansion of renewable energy installations and AI-related infrastructure [19] 2. 2025 Lithium Price Review - In Q1 2025, lithium prices experienced fluctuations due to supply constraints and strong demand expectations, with prices peaking at approximately 78,500 CNY/ton [22] - Q2 2025 saw a decline in prices due to a supply-demand imbalance, with prices dropping to around 60,400 CNY/ton by the end of June [29] - Q3 2025 marked a recovery in prices, driven by supply-side disruptions and seasonal demand increases, with prices reaching approximately 72,700 CNY/ton by September [36] 3. Demand Analysis - The demand for lithium batteries is expected to grow significantly, with energy storage becoming a core growth driver, potentially surpassing 30% of total lithium demand by 2026 [8] - The global electric vehicle market is projected to continue its growth trajectory, although at a slightly reduced pace [19] 4. Supply Analysis - Capital expenditures in the lithium sector have decreased significantly, leading to a structural delay in new project approvals and expansions [10] - The report anticipates limited new supply additions in the coming years, with a projected net increase of 448,000 tons of lithium carbonate equivalent (LCE) in 2026 [18] 5. Supply-Demand Balance Analysis - The report suggests that the lithium market may not require a complete supply clearing to reverse the current trends, as both supply and demand are expected to increase [38] - Inventory levels are seen as a lagging indicator rather than a decisive factor in price movements [39] 6. Investment Recommendations - Companies with expansion projects in the next three years are highlighted as potential investment opportunities, including Dazhong Mining, Guocheng Mining, and Shengxin Lithium Energy [12] - Companies with diversified business models that can stabilize profits amid lithium price fluctuations are also recommended, such as Zhongmin Resources and Yahua Group [12]