Economic Performance - In January-February 2026, retail sales growth improved to 2.8%, up from below 2%[4] - Retail sales of automobiles decreased by 7.3% year-on-year, significantly underperforming other retail categories which grew by 3.7%[4] - Essential consumption categories showed strong performance, with food and oil up 10.2%, beverages up 6%, and tobacco and alcohol up 19.1%[4] Investment Trends - Infrastructure investment grew by 11.0%, manufacturing by 4.3%, while real estate investment declined by 9.9%[4] - The investment recovery is supported by the "14th Five-Year Plan" projects, but potential policy-induced volatility should be monitored[4] - High-quality growth is expected to reshape investment structures in the medium to long term[4] Industrial Output - Industrial value-added returned to levels seen in the first half of the previous year, with mining, manufacturing, and high-tech industries showing growth rates of 6.1%, 6.6%, and 13.1% respectively[4] - High-tech industries experienced their largest growth in three years, driven by new industrial products[4] External Factors - Rising oil prices and global supply chain instability are emerging risks as of March 2026[4] - The potential for PPI to turn positive could impact the cost structure of the real economy[4] - Increased external risks may heighten the urgency for domestic energy conservation and carbon reduction efforts[4]

Group 1 - The report indicates that the short to medium-term credit valuation remains resilient despite market fluctuations, with a focus on short-term interest-bearing instruments due to a lack of clear opportunities in the medium to long-term [6][9][11] - The credit bond market is experiencing pressure from potential financial product rebalancing as the end of the first quarter approaches, which may weaken demand for medium to long-term bonds [6][9] - The report suggests a defensive strategy, recommending a focus on bonds with maturities within 3 years, anticipating that growth in financial product scales post-quarter will strengthen short-term demand [6][9] Group 2 - The weekly review shows that credit bond issuance remains high, with a net financing amount of 77.4 billion yuan, despite an increase in repayment amounts [16][17] - The average coupon rates for AAA and AA+ rated bonds decreased by 18 basis points and 19 basis points respectively, indicating a downward trend in financing costs [17][19] - The secondary market saw narrow fluctuations in credit bond valuations, with short-term credit spreads remaining stable while medium to long-term spreads widened [21][23] Group 3 - The report highlights that the average credit spread for local government bonds widened by 1 basis point, with Heilongjiang showing a significant increase of 2 basis points [27][29] - In the real estate sector, credit spreads widened by 8 basis points, indicating increased risk perception in this industry [29]

Group 1 - The report indicates that the overall commodity market is strong but shows differentiation in performance, with oil prices leading due to supply shocks, while non-ferrous metals are under pressure from stagflation expectations [7][10]. - The report highlights that the geopolitical situation in the Middle East is ongoing, leading to heightened stagflation expectations and a delayed interest rate cut by the Federal Reserve, with market pricing indicating a 25 basis point cut only in December 2026 [13][14]. - Domestic Producer Price Index (PPI) is expected to turn positive, driven by both geopolitical conflict-induced inflation and potential domestic supply-side policy adjustments, with expectations that price increases will continue at least until mid-Q2 2026 [15][19]. Group 2 - The report notes that the domestic economy has started the year steadily, with social financing showing a slight increase, indicating stable internal demand, and macro policy focus remaining on structural adjustments [19][21]. - The report emphasizes that the overall asset market is experiencing fluctuations without clear trend signals, with commodities and gold showing short-term upward volatility while A-shares, government bonds, and U.S. stocks maintain stable medium-term uncertainty [23][26]. - The report concludes that while global risk appetite is declining, domestic economic resilience supports the Chinese yuan, and Chinese assets remain relatively advantageous despite external uncertainties [22][33].

Group 1: Price Transmission Dynamics - The core issue is not whether prices will rise, but whether price increases can be transmitted from upstream to downstream[2] - The ability to transmit prices is strongest upstream, followed by midstream, and weakest downstream[8] - The supply-demand structure from 2023 to 2025 will have a greater negative impact on PPI than in 2014-2015[8] Group 2: PPI and Cost Transmission - The PPI's month-on-month changes align closely with the calculated model, indicating the model's effectiveness[16] - PPI year-on-year can be split into contributions from cost transmission and supply-demand structure, with the latter being more detrimental in 2023-2025[17] - The capacity utilization rate in the second half of 2025 is expected to weaken, impacting price transmission in the first half of 2026[20] Group 3: Oil Price Impact - A 1% increase in Brent crude oil prices leads to a 0.041% increase in PPI when considering limited transmission through the oil and chemical chain[22] - When accounting for substitution effects, the same 1% increase in oil prices can raise PPI by 0.071%[22] - In an ideal scenario where the supply-demand structure is fully restored, a 1% increase in oil prices could raise PPI by approximately 0.083%[23]

Investment Rating - The report maintains a "Positive" outlook for the real estate industry [6] Core Insights - The report emphasizes the importance of price performance over transaction volume during the current "small spring" season in the real estate market, suggesting that price trends are crucial for assessing the overall market trajectory [2][3] - The recent policy from the Ministry of Natural Resources, which focuses on "strict control of new land and revitalization of existing land," aligns with the government's long-standing approach and does not imply a halt in land supply [3][51][52] - The report highlights that while transaction volumes in major cities like Shanghai have shown significant increases, asset prices remain relatively stable, indicating a need for ongoing monitoring of price trends [2][4][31] Market Performance - The A-share real estate index experienced a weekly decline of 0.53%, underperforming compared to the CSI 300 index [10][11] - In the Hong Kong market, the index for Hong Kong property stocks fell by 2.65%, while the index for Hong Kong-funded property companies dropped by 5.88%, both underperforming against the Hang Seng Index [14][15] Secondary Housing Weekly Tracking - In the secondary housing market, Shanghai and Beijing saw week-on-week price increases, while the national average price declined by 0.1%, with a narrowing of the decline [21][25] - Transaction volumes in major cities have surged, with Shanghai recording a single-day transaction high of 1,472 units, marking a significant increase in activity [31][33] New Housing Weekly Tracking - The "small spring" trend continues in the new housing market, with a 73% week-on-week increase in transaction volumes in first-tier cities, particularly notable in Guangzhou and Shanghai [47][48] - The total inventory of new homes has slightly decreased, with first-tier cities showing a 1.0% week-on-week decline [49][50] Key Event Commentary - The Ministry of Natural Resources has clarified its development direction, emphasizing the need to balance new and existing land use, which is expected to influence future land acquisition strategies for real estate companies [3][51][52] Investment Recommendations - The report suggests focusing on national real estate companies or local state-owned enterprises that have rich experience in urban renewal projects, as future land acquisition will increasingly depend on revitalizing existing land [3][5]

Core Insights - The report highlights that geopolitical conflicts have escalated beyond expectations, creating opportunities for strategic investments in the market [2][3] - The focus on supply chain resilience is shifting from non-ferrous and chemical sectors to energy and agriculture, indicating a broader investment strategy towards safety and self-sufficiency [3] Market Strategy - The current market is experiencing a transition within the mid-cap blue-chip style, where supply chain resilience is becoming a key investment theme, particularly as it expands from non-ferrous and chemical sectors to energy and agriculture [3] - Relevant ETFs include Agricultural ETFs (159825/159827), Livestock ETFs (516760/159865/159867), and New Energy ETFs (159387/159122/159187) [3] Industry Strategy - The report notes that rising energy prices are positively impacting the agricultural sector, with specific commodities like live pigs and rubber already at the beginning of a price uptrend due to supply adjustments [4][9] - The agricultural sector is viewed as having high investment value due to price increase expectations and strategic safety considerations, with a continued positive outlook on pig farming, animal health, and planting chains [9] Thematic Strategy - The report suggests that rising oil prices will accelerate the global adoption of new energy vehicles, enhancing their cost advantages over traditional fuel vehicles [5][9] - Domestic car manufacturers, particularly independent brands, are expected to gain competitive advantages in the global new energy vehicle market, which will become a significant growth area for these companies [9]

Investment Rating - The report maintains a positive outlook on the non-ferrous metals industry [6] Core Viewpoints - Financial attributes are under pressure, returning to supply and demand support. The ongoing Iran-Israel conflict is prolonging, leading to significant oil price increases and raising concerns about persistent inflation. In the short term, the compression of interest rate cuts is suppressing overall financial attributes, but the rising inflation level indicates that precious metals and industrial metals are gaining momentum for the long term. The actual supply and demand of various metals may determine the price floor during the fluctuation period [3][9] Summary by Sections 1. Cycle Judgment: Financial Attributes Under Pressure, Returning to Supply and Demand Support - The Iran-Israel conflict is escalating, causing oil prices to rise sharply and triggering market concerns about uncontrollable inflation. The FedWatch indicates that the market is pricing in only a 25 basis point rate cut in December 2026. The core PCE in the U.S. rose by 3.1% year-on-year and 0.4% month-on-month in January. The overall financial attributes are under pressure due to the compressed rate cut space, but the elevated inflation level suggests that precious and industrial metals are building momentum for the future [9][13] 2. Industry and Individual Stock Performance - The non-ferrous metals sector saw a decline of 3.69% in the week ending March 13, ranking 26th among all industries [19][20] 3. Precious Metals: Deepening Stagflation Expectations, Gold Prices May Fluctuate and Accumulate - As of March 13, the SHFE gold price fell by 0.68% to 1,133.00 CNY per gram, while COMEX gold dropped by 2.27% to 5,021.00 USD per ounce. The inventory of SHFE gold increased by 0.38 tons to 105 tons, while COMEX gold inventory decreased by 15.03 tons to 923 tons. The net long position of non-commercial COMEX gold increased by 0.30 thousand contracts, and SPDR gold holdings decreased by 56,500 ounces [14][27] 4. Copper: Financial Attributes Under Pressure, Seasonal Demand Still to be Tested - As of March 13, the SHFE copper price fell by 0.73% to 100,310 CNY per ton, and LME copper decreased by 0.63% to 12,780.5 USD per ton. The domestic refined copper operating rate was 72.92%, up 10.45 percentage points from the previous week. Global visible copper inventory totaled approximately 1.5416 million tons, an increase of 15,100 tons from the previous week [16][24][77] 5. Aluminum: Supply Disturbance Premium Continues, Aluminum Prices Remain Supported - As of March 13, the SHFE aluminum price rose by 0.99% to 24,960 CNY per ton, while LME aluminum fell by 0.19% to 3,439.5 USD per ton. The domestic electrolytic aluminum operating capacity was stable at 44.325 million tons, with concerns about supply disturbances in the Middle East still present. The average profit for the aluminum industry was approximately 8,822.36 CNY per ton [16][85][87]

Report Industry Investment Rating - The report does not mention the industry investment rating. Core Viewpoints of the Report - The report proposes an active equity fund product research system for allocation - type funds, aiming to make product research configurable and practical. Allocation - type funds are defined as those that serve allocation goals, focus on controllable excess returns, and provide significant Stable beta + tool attributes [4][9]. - Aiming to beat the portfolio benchmark, an enhanced bottom - position fund pool for the all - market equity - oriented fund index is established, updated quarterly, to provide better risk - return ratio targets for portfolio bottom - position allocation [4][20]. - The bottom - position fund portfolio focuses on achieving a slight victory over the benchmark, with characteristics such as stable operation, style alignment with the benchmark, and high - win - rate to create excess returns [23]. Summary by Directory 1. Allocation - type Funds: Serving Allocation Goals and Providing Stable beta+ - **Product Research System Advancement**: The current fund product research has completed in - depth exploration and full - scale Alpha decomposition of fund products. However, the results often focus on label improvement, making it difficult to serve clear allocation goals. The report suggests advancing to the stage of productizing fund managers' capabilities, making products configurable and practical [8]. - **Providing Allocation Attributes and Serving Allocation Goals**: Any fund that meets allocation goals from the perspective of allocation attributes belongs to the category of allocation - type funds. Different allocation schemes can select different types of allocation - type funds, including those from risk - return, style, investment methodology, and asset - class perspectives. The goal is to select high - quality active equity products for investors' portfolio allocation [11][12]. - **Focusing on Controllable Excess Returns**: The rapid development of ETFs has challenged active equity funds in terms of scale, excess returns, and allocation. Active equity funds should focus on controllable, trackable, and sustainable excess returns, with stock - picking ability as the foundation. Regulatory policies also guide the industry to return to the origin of value creation [13][14][15]. - **Providing Stable beta + Tool Attributes**: Stable beta + funds are active equity products that leverage fund managers' stock - picking abilities and have stable allocation - attribute excess returns. They fill the gap between traditional passive investment and active management, providing better risk - adjusted returns and enhancing portfolio elasticity for institutional investors [16][17]. 2. Allocation - type Funds: Slight Victory over the Benchmark, Enhanced Bottom - position Fund Selection - **Building the Bottom - position around the Benchmark**: For portfolio investors, beating the portfolio benchmark is an important goal. The Wind All - Market Active Equity Fund Index 885001.WI is used as a performance comparison benchmark. The bottom - position fund portfolio aims for a slight victory over the benchmark while meeting the stability requirements [21][22]. - **Selection Method for Slight - Victory Benchmark, Enhanced Bottom - position Funds**: First, the funds need to meet basic conditions such as appropriate scale, long - term equity orientation, and stable fund managers. Then, through style constraints (correlation coefficient with the index ≥ 0.86 and better 1 - year cumulative return) and short - term win - rate selection (monthly win - rate over 60% in the past 6 months), the top 10 funds are selected as the active bottom - position. If there are less than 10 funds, all are included, and no more than 3 products managed by the same fund manager are selected in the same period [24][30]. 3. Results of Slight - Victory Benchmark, Enhanced Bottom - position Fund Selection - **Selection Results**: The latest selection results as of December 31, 2025, show that the fund targets in the portfolio have significant growth attributes, relatively dispersed allocation sectors, and no significant industry labels. The funds have good return indicators and significant excess returns compared to the benchmark [25][27]. - **Performance of the Portfolio**: In the back - testing period (2017/01/01–2026/02/28), the portfolio achieved continuous and stable excess returns, with an annualized return of 13.28% and a maximum drawdown of - 33.38%, significantly better than the benchmark. It has characteristics such as outstanding bear - market defense ability, stable performance in bull markets, and superior risk control. In the long - term, the annual positive - return probability is 70%, and the annual win - rate relative to the benchmark is 80% [33][34][35].

Core Viewpoints - The index is expected to continue in a fluctuating pattern, with the new energy manufacturing sector likely to lead the next phase of mid-cap blue-chip market performance [3][12]. Market Analysis - The ongoing geopolitical tensions, particularly in the Middle East, have limited direct impacts on the domestic market, maintaining a "chaotic external environment but stable internal conditions" scenario. The index is anticipated to face some short-term pullback pressure but is expected to remain within a defined fluctuation range [4][13]. Industry Comparison - Investment opportunities are shifting towards mid-cap blue-chip stocks, particularly in the manufacturing sector. The new energy industry in China, including photovoltaic, wind power, and power transmission, is identified as a core focus area due to its global competitive advantages. Attention is also directed towards machinery and military sectors. While maintaining views on previously recommended cyclical sectors, expectations for upward potential should be moderated as market anticipations become more fully priced [5][14]. Thematic Investment - The concept of energy sovereignty is emerging as a key investment theme. The global urgency for energy sovereignty is transforming into a rigid demand for energy infrastructure, elevating energy construction from an economic cycle issue to a strategic security concern. China's new energy manufacturing is positioned to meet this global security demand, with specific investment opportunities highlighted in photovoltaic, offshore wind, and power transmission sectors. Additionally, resource sovereignty remains a focus, with strategic resource assets being reassessed under the new geopolitical order, emphasizing the importance of pricing power in sectors like rare earths and other critical materials [6][15].

Investment Rating - The industry investment rating is maintained as "Positive" [6] Core Viewpoints - The supply and demand expectations for cobalt and lithium metals are both increasing, leading to price fluctuations. In the short term, lithium prices are expected to remain high due to upstream reluctance to sell and cautious downstream procurement, influenced by export restrictions in Zimbabwe. The cobalt market is supported by structural tightness in raw materials, with price resilience expected as downstream restocking demand gradually releases [4][9][13]. Summary by Sections 1. Cycle Assessment - The core targets in lithium and cobalt have clear investment value, suggesting active positioning. Lithium prices are experiencing fluctuations, with futures contracts showing a decline. The lithium concentrate price is reported at $2,210 per ton, up $55 from the previous week. The market is characterized by a standoff between upstream reluctance to sell and downstream purchasing at lower prices [9][13][14]. 2. Company and Industry Dynamics - Recent announcements include adjustments to trading fees for lithium futures contracts by the Guangxi Futures Exchange. Additionally, Ningde Times is accelerating the resumption and mining progress of lithium mines, which is expected to enhance supply chain resource security [16][17]. 3. Core Data on New Energy Materials - In February, domestic production of lithium carbonate and lithium hydroxide decreased by 15% month-on-month, while cobalt sulfate production fell by 10%. However, year-on-year comparisons show increases of 30% and 14%, respectively [19][23][29]. The inventory levels are undergoing structural adjustments, with lithium carbonate weekly production up by 3.70% and inventory down by 0.42% [51][59]. 4. Price Trends - The average price of battery-grade lithium carbonate decreased by 1.19%, while the price of battery-grade lithium hydroxide fell by 2.09%. In contrast, the average price of ternary materials increased by 1.25% [15][66][85]. 5. Inventory Changes - The inventory of phosphoric iron lithium increased by 5.22%, and the inventory of ternary materials rose by 1.17% [59][60]. In the cobalt segment, core product inventories generally decreased in February, with cobalt intermediate inventory down by 18.57% [61][64].