1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - 2026 Q1 may see an increase in convertible bond calls, but high - parity convertible bond valuations are at historical highs. High valuations do not guarantee post - call valuation maintenance, and the pressure on convertible bond prices before and after the call is relatively large. It is recommended to take profit before the call or stop loss in a timely manner after the call based on market conditions [3][7]. - The overall trend of convertible bond valuations is likely to be high - level oscillations, with a possibility of short - term foaming. In January 2026, institutional demand for configuration will support valuations, and if the equity market performs better than expected, valuations may foam [28]. - In December 2025, the convertible bond market oscillated upward, with both convertible bonds and underlying stocks performing strongly, and valuations oscillated and increased. The trading volume of the convertible bond and equity markets decreased, but margin trading funds showed a strengthening trend [48][56]. - The issuance of new convertible bonds slightly increased in December 2025, and the number of new issuance plans continued to rise. The overall scale of holders in the Shanghai and Shenzhen Stock Exchanges decreased, with obvious reductions by insurance funds [3][62]. 3. Summary According to Relevant Catalogs 3.1 Historical Facts and Changes before and after Convertible Bond Calls - **Before the Call Announcement** - High market valuations do not guarantee post - call valuation maintenance. After the call, the valuation compresses to near 0%, and the compression process is basically completed before the call announcement [3][8]. - The strength of the underlying stock before the call can partially offset the compression of convertible bond valuations, but when valuations are high, the pressure on convertible bond prices before the call is still relatively large [3]. - The decline before the call mainly occurs within T - 10 days, and the day of the highest price is advancing [3][16]. - **After the Call Announcement** - In most months, convertible bond prices continue to decline after the call announcement, but in some months with a strong equity market, prices rebound [3][20]. - There is generally a decline of varying degrees on T - day, and the months with price rebounds mainly show strength from T + 1 to T + 15 days [3][21]. - The stronger the equity market, the more delayed the appearance of the highest price [3][25]. 3.2 Valuation Outlook - The overall trend is high - level oscillations, with a possibility of short - term foaming. In December 2025, valuations oscillated upward. As of December 31, 2025, the 100 - yuan par - value fitted conversion premium rate was 34.04%, up 2.50 pct from the end of November, reaching the highest level since 2019 [28]. 3.3 Key Focused Convertible Bonds - From December 1 to December 31, 2025, the convertible bond portfolio rose 3.84%, outperforming the benchmark index by 1.70 pct. Huayi and Xingqiu had obvious increases [41]. - The "Huachuang Convertible Bond" January key - focused portfolio is adjusted to include Xingqiu, Mingli, Yirui, Huachen, Huayi, Yifeng, Ziyin, Qingnong, Zhongyin, and Xingye [43]. 3.4 Market Review - **Market Performance** - In December 2025, the convertible bond market oscillated upward, with a strong performance in the second half of the month. Most sectors of the convertible bond market rose, and technology - related concepts declined. The science and technology and manufacturing sectors showed significant increases, and the cyclical sector also performed well [48][50]. - **Fund Performance** - The trading volume of the convertible bond and equity markets decreased slightly. From December 1 to December 31, 2025, the average daily trading volume of CSI Convertible Bonds was 63.803 billion yuan, a 1.27% decrease from November, and the average daily trading volume of Wind All - A was 1.880842 trillion yuan, a 1.76% decrease from November [56]. - Margin trading funds oscillated and strengthened. As of December 31, 2025, the balance of margin trading in the Shanghai and Shenzhen Stock Exchanges was approximately 2.53 trillion yuan, an increase of 66.664 billion yuan from the end of November. Most industries received net margin purchases [60]. 3.5 Supply and Demand Situation - **New Bond Issuance and Listing** - In December 2025, 7 convertible bonds were issued, with a total scale of 5.494 billion yuan, and 5 new convertible bonds were listed, with a total scale of 3.005 billion yuan. The online new - bond issuance subscription scale increased, with an average effective subscription amount of 8.85 trillion yuan, a 2.61% increase month - on - month [62]. - **Expected Issuance Scale and New Plans** - The total expected issuance scale is approximately 122.663 billion yuan. As of December 31, 2025, 7 listed companies obtained convertible bond issuance approvals, with a planned issuance scale of 8.583 billion yuan; 6 companies' convertible bond issuances passed the review committee, waiting for approvals, with a total scale of 3.361 billion yuan. In December, 6 new board plans were added, with a total scale of approximately 77.9 billion yuan [65]. - **Holder Scale Changes** - The overall scale of holders in the Shanghai and Shenzhen Stock Exchanges decreased. In December 2025, the total par value of convertible bonds held by the two exchanges was 552.692 billion yuan, a decrease of 6.144 billion yuan from November, a 1.10% decline. The scale of public funds increased, while the scale of enterprise annuities decreased [83][87].

Report Industry Investment Rating - Not provided in the report Core Viewpoints of the Report - **Funding liquidity**: Both the supply and demand sides have contracted. On the supply side, the new issuance scale of equity - focused public funds has declined, margin trading funds and stock - type ETFs have shown a significant contraction and turned into net outflows, and the repurchase amount remains at a historical low. On the demand side, equity financing and net industrial capital reduction have contracted to historical median levels, and south - bound funds have turned into net outflows [2][6] - **Trading congestion**: Using the ratio of the trading volume in the past four weeks to the market value (compared to the whole A - share market) as an indicator, the trading heat percentile of central state - owned enterprises, home appliances, and photovoltaic industries has increased, while that of machinery, banking, and medical services has decreased [2] - **Investor sentiment thermometer**: The market rebounded last week with the Shanghai Composite Index achieving an 11 - day consecutive increase and a moderate increase in trading volume. Affected by holidays, the self - media search popularity of A - shares decreased. The trend of public fund clustering has weakened, with a preference for value - style and financial and consumer industries. The net inflow of retail funds in the Shanghai and Shenzhen A - share markets has decreased [2] Summary by Relevant Catalogs 1. Funding liquidity 1.1 Public equity new issuance scale - The newly established share of public equity funds last week was 57.9 billion shares, a decrease from the previous value of 94.4 billion shares. Among them, actively managed funds issued 13.9 billion shares, and passive index funds issued 44.0 billion shares [8] 1.2 Margin trading funds - **Overall situation**: The latest margin trading balance decreased, with the balance accounting for 2.58% of the market value of tradable shares, at the 96% percentile in the past three years. The net inflow of margin trading funds last week was about - 19.7 billion yuan, a significant decrease from the previous value, at the 35% percentile in the past three years. The trading volume accounted for 10.6% of the total A - share trading volume, a 0.5 - percentage - point decrease from the previous value, with the participation rate at the 88% percentile in the past three years. The turnover rate of margin trading decreased, while the number of individual investors participating in margin trading increased [12][13] - **Industry situation**: The net inflow was mainly in the military industry (51.8 billion yuan), home appliances (12.3 billion yuan), and public utilities (12.2 billion yuan), while the net outflow was in electronics (- 29.1 billion yuan), non - banking finance (- 23.4 billion yuan), and power equipment (- 15.6 billion yuan) [16][17] 1.3 Stock - type ETFs - The net inflow of stock - type ETFs last week was - 39.5 billion yuan, a decrease from the previous value, at the 31.1% percentile in the past three years [18] 1.4 Listed company repurchases - The repurchase amount of listed companies last week was 5.2 billion yuan, a decrease from the previous value, at the 6% percentile in the past three years [21] 1.5 Equity financing - The equity financing amount last week was 143.1 billion yuan, at the 63% percentile in the past three years, including 64.5 billion yuan from IPOs and 78.6 billion yuan from refinancing [23] 1.6 Industrial capital - **Overall situation**: The net reduction of industrial capital last week was - 49.4 billion yuan, a decrease in scale compared to the previous value, at the 59% percentile in the past three years [25] - **Industry situation**: The net increase was mainly in the petrochemical (2.6 billion yuan) and food and beverage (0.1 billion yuan) industries, while the net reduction was in the military industry (- 9.1 billion yuan), electronics (- 7.3 billion yuan), and machinery (- 7.1 billion yuan) industries [28][29] 1.7 Restricted - share lifting - The market value of restricted shares lifted last week was 571.7 billion yuan, a decrease from the previous value, at the 53% percentile in the past three years. The expected market value of restricted shares to be lifted this week is 1632.8 billion yuan [31] 1.8 South - bound and north - bound funds - The net inflow of south - bound funds last week was - 34.3 billion yuan, a decrease from the previous week, at the 5% percentile in the past three years. The trading volume of north - bound funds accounted for 6.0% of the Shanghai and Shenzhen A - share trading volume, a 3.0 - percentage - point increase from the previous value affected by seasonality, with the participation rate at the 14% percentile in the past three years [34][37] 2. Trading congestion 2.1 Growth - themed industries - The trading heat percentile of the medical service industry decreased by 6 percentage points to 32% [42] 2.2 Value - themed industries - The trading heat percentile of central state - owned enterprises increased by 18 percentage points to 57%, and that of the home appliance industry increased by 7 percentage points to 52% [47] 2.3 Cyclical - themed industries - The trading heat percentile of the non - ferrous metals industry increased by 4 percentage points to 27%, while that of the machinery industry decreased by 10 percentage points to 7% [52][55] 2.4 TMT - themed industries - The trading heat percentile of the media industry decreased by 5 percentage points to 31%, and that of the electronics industry decreased by 4 percentage points to 40% [60] 3. Investor sentiment thermometer 3.1 Self - media - Affected by holidays, the self - media search popularity of A - shares decreased despite the market's rebound and the Shanghai Composite Index's 11 - day consecutive increase [65] 3.2 Douyin users - The proportion of users in high - level cities watching "A - share" content on Douyin decreased, while the proportion of young people under 23 years old increased [67] 3.3 Kuaishou - The number of "A - share" works on Kuaishou decreased by 89, the playback volume increased by 44,000 times, and the interaction volume decreased by 10,000 times compared to the previous period [71] 3.4 Weibo sentiment - The overall sentiment on Weibo was stable last week. The 11 - day consecutive increase of the Shanghai Composite Index led to a significant increase in positive and surprised emotions [73] 3.5 Fund style - The clustering trend of public funds weakened last week, with a preference for value - style and financial and consumer industries [76] 3.6 Retail funds - The net inflow of retail funds in the Shanghai and Shenzhen A - share markets was 91.61 billion yuan, a decrease of 11.82 billion yuan from the previous value, at the 42.3% percentile in the past five years [82] 3.7 Retail entry channels - The cumulative download volume of Flush reached 168,000 times, an increase of 34,000 times from the previous value, while the download volume of Eastmoney was 74,000 times, a decrease of 4,000 times from the previous value. The number of five - star reviews of Flush decreased by 1,510 times [84]

Investment Rating - The report maintains a "Recommended" investment rating for the consumer services industry, indicating an expectation of exceeding the benchmark index by 10%-20% over the next six months [1]. Core Insights - The core focus of the report is on the strong performance of the travel market during the New Year holiday, with significant recovery in both domestic and international travel. The Ministry of Culture and Tourism estimates that 142 million domestic trips were made during the three-day holiday, with total spending reaching 84.789 billion yuan, reflecting a 19.4% increase compared to 2023 and a 1.1% increase compared to 2024 [4][5]. - The report highlights the dual advantages of time and space for travel during the 2026 New Year holiday, as some travelers could extend their holiday to eight days by taking three days off work. This has led to notable growth in outbound travel, nearby trips, winter sports tourism, duty-free shopping, and hotel bookings [4]. - The report expresses optimism for the performance of service consumption-related sectors in 2026, citing specific companies in various segments such as hotels, human resources services, duty-free shops, gaming, internet platforms, catering, tourism, and sports [4]. Summary by Sections Industry Basic Data - The consumer services industry comprises 55 listed companies with a total market capitalization of 498.804 billion yuan and a circulating market capitalization of 457.081 billion yuan [1]. Relative Index Performance - The consumer services sector experienced a decline of 0.72% this week, while the overall A-share market fell by 0.33%, and the CSI 300 index decreased by 0.59% [7]. Important Announcements - Key announcements include leadership changes at companies like 科锐国际 and 天立国际控股, as well as financial performance updates from various firms [32]. Upcoming Shareholder Meetings - Several companies, including 西安旅游 and 凯撒旅业, have scheduled shareholder meetings in January 2026 [34]. Industry News - The report covers various industry developments, including the surge in domestic travel bookings and the launch of new services by companies like 京东 and 拼多多, indicating a vibrant market environment [35][36].

Investment Rating - The report maintains a "Recommendation" rating for the liquor industry, indicating an expectation that the industry index will outperform the benchmark index by more than 5% in the next 3-6 months [21]. Core Insights - The report highlights that the demand for liquor is showing weak recovery, with a year-on-year decline of over 20% during the New Year period, although there is a slight month-on-month improvement from November and December [4]. - The report notes that the high-end liquor prices are under pressure, with a decline of over 10% for high-end products and 5-10% for mid-range products, while the mass consumption segment remains resilient [4]. - The report anticipates a narrowing of the decline in demand for the upcoming Spring Festival, with expectations of a double-digit decline but less severe than during the New Year [4]. - The report emphasizes that the pricing for high-end liquor will remain under pressure, with expectations of continued marginal declines in prices [4]. Industry Overview - The liquor industry consists of 20 listed companies with a total market capitalization of 288.22 billion yuan and a circulating market value of 288.18 billion yuan [1]. - The report provides a comparative performance analysis, indicating absolute performance declines of -6.0% over one month, -1.4% over six months, and -9.9% over twelve months [2]. Company Feedback and Strategies - Moutai is focusing on market-oriented transformation and has introduced a digital platform to stimulate consumer demand [5]. - Wuliangye is emphasizing sales growth and market order maintenance, with a strategy to enhance market share in the 800 yuan price range [5]. - Luzhou Laojiao plans to increase subsidies and rebates to ensure consumer affordability while maintaining its brand position [5]. - Shanxi Fenjiu is focusing on key markets and maintaining growth momentum for its premium products [5]. - Yanghe is adjusting its sales strategies based on terminal orders and distributor inventory, with a focus on maintaining reasonable inventory levels [5]. - Jinsiyuan is experiencing growth in its mass price segment, which is expected to continue contributing to overall growth [5]. Investment Recommendations - The report suggests that pessimistic factors have been priced in, and as the Spring Festival approaches, demand is expected to recover, particularly for Moutai and Gujing [4]. - The report recommends focusing on Moutai for its high certainty and dividend yield, while also highlighting Gujing as a key player in the mass price segment [4].

Investment Rating - The industry investment rating is "Recommended," indicating an expected increase in the industry index by more than 5% over the next 3-6 months compared to the benchmark index [19]. Core Insights - The insurance sector has significantly outperformed the market over the past 25 years, with insurance capital's stake acquisitions reaching a ten-year high [1]. - In 2025, there were a total of 31 stake acquisitions by insurance capital, marking a resurgence in activity, second only to 2015, and surpassing the 28 acquisitions in 2020 [3]. - The preference for H-shares among insurance capital is evident, with 26 out of 31 acquisitions targeting H-shares, likely due to favorable dividend yields [3]. - The main sectors attracting insurance capital include banking (7 acquisitions) and public utilities (6 acquisitions), reflecting a preference for dividend-yielding assets [3]. - The report anticipates that the trend of stake acquisitions will continue into 2026, driven by two main motivations: seeking stable dividend cash flows and targeting mature, monopolistic enterprises with solid ROE [3]. Summary by Sections Weekly Updates - China Pacific Insurance appointed Liu Long as the Chief Investment Officer [2]. - Great Wall Life successfully issued its first perpetual bond with a scale of 1 billion yuan and a rating of AAA [2]. - Great Wall Life increased its holdings in New Tian Green Energy and Datang New Energy, raising its shareholding percentages to 11.04% and 17.39%, respectively [2]. Stake Acquisition Overview - In 2025, insurance capital's stake acquisitions totaled 31 times, with a minimum of 38 times when accounting for repeated acquisitions [3]. - The report highlights a shift in acquisition activity towards larger insurance companies, with Ping An leading with 7 acquisitions, followed by Great Wall Life (5) and others [3]. Investment Recommendations - The insurance sector saw a general increase in December, driven by expectations of rising long-term interest rates and favorable sales performance [3]. - Despite anticipated pressure from high investment baselines, the report suggests that the sector's valuation may continue to recover due to stabilizing interest rates and declining liability costs [3]. - Companies recommended for investment include China Ping An and China Pacific Insurance, which are expected to manage liability costs effectively [3]. Valuation Metrics - The report provides PEV valuations for major life insurance companies, with China Life at 0.87x, Ping An at 0.82x, and China Pacific at 0.68x for A-shares [4]. - For H-shares, Ping An is valued at 0.75x, while China Life is at 0.51x [4]. - The report recommends a ranking of investment opportunities: China Ping An, China Pacific Insurance, China Life H, and China Property Insurance [4].

Consumption Policy Changes - The first batch of funds for the "Two New" subsidy program has been set at 62.5 billion yuan for this year, with a planned 81 billion yuan for 2025[2] - Subsidies for home appliances will focus on six product categories, with a 15% subsidy on the selling price for energy-efficient products, capped at 1,500 yuan per item[2] - The digital product subsidy has been expanded to include smartphones, tablets, smartwatches, smart glasses, and smart home products[3] Automotive Subsidy Adjustments - For scrapping and replacing vehicles, subsidies for new energy vehicles will be 12% of the sales price, with a maximum of 20,000 yuan, while for fuel vehicles, it will be 10% with a cap of 15,000 yuan[3] - The replacement subsidy for new energy vehicles will be 8% of the sales price, capped at 15,000 yuan, and for fuel vehicles, it will be 6% with a cap of 13,000 yuan[3] Investment Initiatives - The National Development and Reform Commission has announced an early release of investment plans totaling approximately 295 billion yuan, aimed at accelerating fund allocation and usage[4] - Major infrastructure projects approved or authorized have a total investment exceeding 400 billion yuan, including transportation and water resource projects[4] Risk Considerations - There are risks associated with the timely update of policies, which could affect the implementation of the subsidy programs[5]

Group 1 - The report emphasizes the importance of annual coupon layout, indicating that January may serve as a key window for economic activity due to the late timing of the Spring Festival in February [2][6] - The central bank's stance is described as cautious, with a focus on quantity operations and a relatively stable liquidity environment, suggesting limited conditions for significant liquidity withdrawal [3][6] - The supply-demand structure in the bond market is expected to be relatively balanced, with government bond net financing projected at approximately 3.6 trillion yuan in the first quarter, peaking in January and March [3][6] Group 2 - The report highlights the impact of new fund rate regulations, which are expected to ease market sentiment and favor coupon strategies, with a potential slight decline in yields anticipated [6][7] - The 10-year government bond yield is projected to return to the central bank's focus range of 1.75%-1.85%, while the 30-10 year yield spread is expected to maintain around 40 basis points [7][8] - The report suggests that institutional behavior may create structural opportunities, particularly in the context of the "opening red" effect from banks and insurance companies [4][6]

Employment - Initial jobless claims in the U.S. decreased to 199,000, better than the expected 218,000, with the previous value revised from 214,000 to 215,000[6] - Continuing claims fell from 1.913 million to 1.866 million, against an expectation of 1.902 million[6] Economic Activity - The U.S. Weekly Economic Index (WEI) was stable at 2.23% for the week ending December 27, 2025, with a four-week moving average of 2.26%[13] - The German Weekly Activity Index (WAI) rose to 0.14% for the week ending December 21, 2025, compared to 0.1% the previous week[13] Retail and Mortgage Rates - The U.S. Redbook retail sales year-on-year growth increased to 7.6%, with a four-week moving average of 6.7%[17] - The 30-year mortgage rate in the U.S. slightly decreased to 6.15% from 6.18% the previous week[20] Financial Conditions - Financial conditions in the U.S. and Eurozone marginally tightened, with the Bloomberg Financial Conditions Index for the U.S. at 0.795, down from 0.807[38] - Offshore dollar liquidity showed a slight easing, with the three-month swap basis for the yen against the dollar improving from -24.125 pips to -21.5 pips[43] Commodity Prices - The RJ/CRB commodity price index decreased by 0.9% week-on-week, following a 1.8% increase the previous week[34] - U.S. gasoline prices continued to decline, averaging $2.69 per gallon, down 1.1% from the previous week[34] Federal Spending - U.S. federal spending for the calendar year 2025 is projected to be approximately $7.765 trillion, reflecting a year-on-year growth of 5.8%[54]

Group 1: Demographics and Geography - Venezuela has a land area of 916,400 square kilometers and an estimated population of approximately 28.4 million in 2024[2] - It shares borders with Guyana to the east, Brazil to the south, and Colombia to the west, with the Caribbean Sea to the north[2] - Major ports include Cabello, La Guaira, and Maracaibo, with José and Maracaibo being key for oil exports[2] Group 2: Political and Military Overview - Venezuela operates under a presidential system with a six-year term for the president, who is also the commander-in-chief of the armed forces[3] - The country has approximately 200,000 active military personnel and around 8 million militia reserves[3] Group 3: Natural Resources - Venezuela holds the world's largest proven oil reserves at about 300 billion barrels, accounting for approximately 17% of global reserves[4] - The country ranks eighth globally in proven natural gas reserves, with about 201 trillion cubic feet, representing around 2.9% of the world's total[4] - Gold reserves are reported to be around 53 tons, with an additional 31 tons frozen in the Bank of England since 2018[4] - Iron ore resources are estimated at 1.468 billion tons, with proven reserves of 363 million tons, constituting about 1-2% of global reserves[5] Group 4: Export Overview - In 2023, Venezuela's total export value was approximately $7.63 billion, with the U.S., China, and Spain being the primary destinations, accounting for about 50%, 10%, and 9% of exports respectively[6] - Oil and its products constitute about 60% of total exports, followed by basic metals (8%), and nitrogen fertilizers (3.7%)[6] - Venezuela's oil production is projected to be around 934,000 barrels per day by November 2025, with an estimated export volume of 656,000 barrels per day in 2024[6]

Investment Rating - The report maintains a "Recommended" rating for the banking sector, emphasizing continued high growth potential [1]. Core Insights - The banking sector is undergoing a "reduction and quality improvement" process, particularly among small and medium-sized banks, with over 400 banks having been approved for mergers, dissolutions, or cancellations in 2025 alone, surpassing the total from the previous three years [2][7]. - The insurance capital market is expected to see a significant influx of funds, with estimates suggesting an increase of around 1 trillion yuan in 2026, driven by a favorable investment environment and ongoing reforms in public funds [7]. - The investment logic for bank stocks is shifting from a focus on dividends to a dual focus on dividends and growth, with expectations of a recovery in bank valuations in 2026 [7]. Monthly Market Performance - In December 2025, the banking sector experienced a decline of 1.98%, underperforming the CSI 300 index by 4.3 percentage points, ranking 27th among 31 sectors [11][12]. - The valuation of state-owned banks decreased from a price-to-book (PB) ratio of 0.78 to approximately 0.75, while city commercial banks also saw a decline in their PB ratios [13][15]. - Notable stock performances in December included Shanghai Pudong Development Bank (+8.36%) and Xiamen Bank (+4.63%), while Qingdao Bank (-7.44%) and Minsheng Bank (-6.36%) faced significant declines [15][16]. Banking Fundamentals Tracking - The report highlights the ongoing trend of small and medium-sized banks undergoing consolidation and restructuring, with significant regulatory support aimed at enhancing financial stability [2][6]. - The insurance capital allocation is shifting, with a notable increase in the proportion of funds directed towards stocks and mutual funds, indicating a growing confidence in the equity market [2][7]. Investment Recommendations - The report suggests focusing on three main investment themes for 2026: 1. State-owned banks and leading commercial banks as the foundation of credit and dividends. 2. Quality joint-stock banks and city commercial banks that are expected to benefit from improved interest margins and credit cost reductions. 3. City commercial banks that are likely to benefit from regional policies and have significant performance upside [7].