Core Insights - The report emphasizes a long-term bullish outlook for the market, suggesting that the current phase is a "slow bull market" with potential for further upward movement, particularly in the spring of 2026 [4][22] - It highlights the importance of "running horse assets," which are leading companies with global competitiveness, as key investment opportunities [4][6] - The report indicates that the market has shown signs of recovery, with trading volumes stabilizing around 2 trillion yuan, reflecting improved investor sentiment [5][10] Long-term Strategy - The report suggests that the Chinese government's supportive policies and a shift towards market empowerment will enhance economic vitality, contributing to a more robust market environment [4][6] - It anticipates a recovery in public fund issuance and an increase in insurance capital inflows, which could further support market growth [4][6] Mid-term Analysis - The report predicts a potential "spring opening red" scenario, where market sentiment improves and leads to a rally starting from late December [5][22] - It notes that the current market valuation is not at an excessively high level, indicating room for growth as economic recovery progresses [5][23] Short-term Focus - The report identifies key sectors for investment, including high-end manufacturing, technology, and consumer goods, which are expected to benefit from the economic transition and easing of U.S.-China tensions [6][10] - It highlights the importance of monitoring trading volumes and market sentiment as indicators for entry points into the market [5][10] Macro Economic Overview - The report discusses the downward trend in U.S. Treasury yields and the influx of global capital into equity and bond markets, which is expected to positively impact the Chinese market [7][10] - It notes that the Chinese economy is showing signs of stabilization, with improvements in CPI data and a strong performance in high-frequency economic indicators compared to the previous year [7][10] Investment Portfolio Recommendations - The report recommends a "barbell strategy" focusing on both cyclical sectors and high-end manufacturing, as well as electric new energy sectors for January [8][10] - It emphasizes the importance of sector rotation and suggests that small-cap stocks may outperform large-cap stocks in the current market environment [10][22]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints of the Report - In 2025, convertible bonds performed excellently, with equity characteristics contributing the main revenue. The convertible bond market's performance was the third - highest in terms of revenue since 2010 and the best since 2021. The contribution ratio of the underlying stocks and valuation to the rise and fall was about 7:4, similar to 2021. Compared with mainstream stock indices, the convertible bond index showed the property of "attack when the market rises and defend when the market falls", with Sharpe ratio and Calmar ratio second only to micro - cap stocks [2][6]. - In 2025, the supply of convertible bonds was in the ascendant. Over 230 billion yuan of convertible bonds were delisted, reaching the highest scale since 2018, with banks having the largest delisting scale. The primary market issuance process accelerated in the second half of the year, but the issuance of large - scale convertible bonds remained cautious. Listed companies were more inclined to issue private placements [2]. - In 2025, the demand for convertible bonds was differentiated, and the ETF share reached a new high. The logic of the "fixed - income asset shortage" continued, and the demand structure of institutions for convertible bonds changed significantly. The direct holding scale of convertible bonds by institutions such as insurance and annuities was at a historically low level, while the holding scale of convertible bonds by funds, especially ETFs, reached a historical high [2]. - In 2025, the game of convertible bond terms was characterized by "high return and high risk". The probabilities of downward revision and non - call of convertible bonds were at historically low levels, but the number of times of triggering call/downward revision was relatively high since 2019, indicating an increase in the intensity of the game. The odds of the downward revision game were at a historical high, with photovoltaic convertible bonds and near - maturity convertible bonds being the highlights of the whole year. The profit - loss ratio of the call game deteriorated compared with the previous year but was still at a historical high [2]. - In 2025, the risks of convertible bonds were better than expected, and the impact of ratings decreased. Only Zhongzhuangzhuan 2 in the Shanghai and Shenzhen stock markets triggered the substantial default risk, and the risk performance was better than investors' expectations. Although there were still many convertible bonds with rating adjustments, the impact on pricing was significantly weakened, and the market was generally "desensitized" to ratings [2]. Summary According to the Directory 2025, How Did the Convertible Bond Market Perform? 2021 - 2025: The Best - Performing Year Since 2021, with Equity Income as the Main Contributor - Vertically, the convertible bond holding experience in 2025 could rank among the top four years since 2010. As of December 30, 2025, the CSI Convertible Bond Index closed at 491.83 points, up 18.6% from the end of 2024. It was the third - highest revenue - earning year since 2010 and the best since 2021. The maximum drawdown was about 6%, the annualized volatility was less than 10%, and the Sharpe ratio was 1.92, the Calmar ratio was 3.01, achieving high returns with low drawdown and medium - low volatility [6]. - In terms of revenue decomposition, the contribution ratio of the underlying stocks and valuation to the rise and fall in 2025 was about 7:4. The change in the underlying stocks contributed 14 percentage points to the index return, and the change in valuation contributed about 8 percentage points, similar to 2021 [9]. - Horizontally, the return performance of the convertible bond index was slightly weaker, but the cost - performance was prominent. Compared with the stock indices in the same period, its return was only stronger than that of the Shanghai Composite Index, Juchao Large - cap Index, and Guozheng Value Index, but significantly weaker than that of the micro - cap and ChiNext Index. However, in terms of Sharpe ratio and Calmar ratio, it was only slightly weaker than the Wind Micro - cap Index, showing the property of "attack when the market rises and defend when the market falls" [13]. The Convertible Bond Market Rose Volatility Throughout the Year, and the Year - End Increase Converged - **First stage (Early 2025 - March 2025)**: Driven by the spring rally and supported by AI + robot innovation and low initial valuations, the convertible bond market had a dual - wheel - driven market of valuation and the underlying stocks, with a maximum index increase of 6.15% by the end of February. Low - price convertible bonds performed strongly, and the concern about credit risk events was reversed [19]. - **Second stage (March 2025 - Early April 2025)**: After the Two Sessions, the spring rally ended, and the market returned to the trading of annual report expectations. Market sentiment cooled down, and the convertible bond valuation peaked and declined. The intensification of Sino - US trade disputes led to a stock market correction on the first trading day after the Tomb - Sweeping Festival, and the CSI Convertible Bond Index fell 4.05%, with the automotive, communication, and computer industries leading the decline [19]. - **Third stage (Early April 2025 - Mid - June 2025)**: After the market correction on April 7, state funds such as Central Huijin entered the market, providing liquidity support. The Sino - US tariff issue was in a "tug - of - war", and the market expectation improved. The valuations of the overseas and export sectors rebounded, but concerns about the ratings of the photovoltaic and other sectors with weak performance emerged [20]. - **Fourth stage (End of June 2025 - End of August 2025)**: After the release of all rating results at the end of June, institutional funds increased their allocation of convertible bonds, and the convertible bond ETF share increased significantly. The anti - involution policy in the photovoltaic industry was implemented, and the photovoltaic convertible bonds rebounded. The A - share market was booming, driving the convertible bond market to its main uptrend. The convertible bond price and valuation reached new highs, and the market capacity decreased [20]. - **Fifth stage (End of August 2025 - Present)**: At the end of August, institutions' profit - taking demand led to a decline in the convertible bond market. The positions of insurance and annuity institutions in convertible bonds decreased significantly. The supply of convertible bonds improved in September, but it was difficult to offset the shrinkage caused by conversion. The convertible bond valuation stabilized and rebounded after the adjustment at the end of August and reached a high level again in December [21][22]. In 2025, the Supply of the Convertible Bond Market was in the Ascendant The Market Capacity Declined to Around 500 Billion Yuan, and the Delisting Scale Reached a Historical High - In 2025, the number of delisted convertible bonds reached a historical high, and the market capacity decreased rapidly. By December 30, 2025, a total of 163 convertible bonds were delisted, with a total delisting scale of over 230 billion yuan, the peak since 2018. The banking industry had the largest delisting scale of 101.323 billion yuan, followed by non - ferrous metals, basic chemicals, and power equipment and new energy [23]. The Primary Issuance Had Mixed Results, with Small - Ticket Issuance Accelerating and Large - Ticket Issuance Still Difficult - The good aspect was that the primary market issuance process accelerated in the second half of 2025. In the fourth quarter of 2025, the average time from the announcement of the convertible bond plan to listing was about 320 days, the lowest since 2023 [25]. - The regulatory authorities were still relatively cautious about the issuance of medium - and large - scale convertible bonds. As of now, no convertible bonds with a scale of over 2 billion yuan announced in 2025 have been listed, while 8 convertible bonds with a scale of less than 2 billion yuan have been listed [28]. Subjectively, the Trend of Listed Companies Preferring Private Placements was More Prominent - The ratio of the number of convertible bond plans to private placement plans has been declining sharply since the refinancing new regulations in 2023. In 2025, 53 listed companies announced private placement plans, while only 9 announced convertible bond plans, with a ratio of 16.98%, far lower than the average level before 2023 [29]. In 2025, the Demand for Convertible Bonds was Differentiated, and the ETF Share Reached a New High - In 2025, the logic of the "fixed - income asset shortage" continued, but the demand structure of institutions for convertible bonds changed significantly. As of November 2025, the direct holding of convertible bonds by insurance and annuity institutions was at a historically low level since 2021, while the holding of convertible bonds by funds, especially ETFs, reached a historical high [32]. In 2025, the Game of Convertible Bond Terms was Characterized by "High Return and High Risk" The Overall Probability of Downward Revision and Non - call of Convertible Bonds in 2025 was at a Historical Low - In 2025, it was a "big year" for call, and the call probability increased. There were 131 call announcements and 149 non - call announcements, and the call: non - call ratio was 88%, the highest since 2020. - The intensity of the downward revision of convertible bonds in 2025 was second only to 2024, but the downward revision probability decreased. There were 68 downward revision proposal announcements and 510 non - downward revision announcements, and the downward revision: non - downward revision ratio was 13%, at a historically low level [36]. Downward Revision: There were Odds, and Photovoltaic Convertible Bonds and Near - Maturity Convertible Bonds were the Highlights of the Whole Year - In terms of odds, the return performance of the convertible bond downward revision game in 2025 was at a relatively high level in history. The average return after a downward revision proposal was 2.02%, the best since 2023, and the average return after an actual downward revision was 0.63%, at a relatively high level since 2019 [41]. - In terms of influencing factors, the downward revision probability of near - maturity convertible bonds was significantly higher. The downward revision probability was highly correlated with the remaining term, showing obvious monotonicity. The new energy industry had the most downward revisions, and although some convertible bonds did not succeed in conversion by the end of 2025, they achieved good returns, and the downward revision increased the possibility of future call [42]. Call: The Profit - Loss Ratio of the Game Deteriorated Compared with the Previous Year but was Still at a Historical High - In 2025, the call game fluctuated greatly, and the non - call return was higher than the historical average. The average return on the first day after the non - call announcement of convertible bonds was 2.29%, higher than the historical average since 2019. The average return on the first day after the call announcement was - 2.54%, and the profit - loss ratio was about 0.9, which deteriorated significantly compared with 2024 but was still at a historical high [48]. In 2025, the Risks of Convertible Bonds were Better than Expected, and the Impact of Ratings Decreased - In 2025, there were no serious default events in the convertible bond market, which was significantly better than investors' expectations. Although Zhongzhuangzhuan 2 triggered default risk in the fourth quarter, its underlying stock had been ST before the restructuring, and its convertible bond rating had also fallen below the investment grade [48]. - In terms of ratings, although there were still many convertible bonds with rating adjustments, the impact on pricing decreased significantly. By December 30, 2025, 42 convertible bonds had their ratings downgraded and 40 were put on the rating watch list. However, the average decline of convertible bonds on the first trading day after the rating downgrade was only 0.01%, indicating that the market was generally "desensitized" to rating changes and the pricing was smoother [51].

Investment Rating - The report assigns an "Accumulate" rating for the company for the first time [2][62] Core Views - The company is positioned as a core asset in the Greater Bay Area, focusing on toll roads and environmental protection sectors, with a total of 16 toll road projects and a toll mileage of 613 kilometers as of H1 2025 [8][15] - The toll road business is showing positive trends, with a daily traffic increase of 5.4% year-on-year in H1 2025, driven by network changes in the Shenzhen area [8][32] - The environmental protection segment is stabilizing, with expectations that impairment provisions have reached their end, allowing for a focus on high-quality projects [8][51] - The company emphasizes shareholder returns, with a dividend payout ratio expected to reach 54% in 2024, and cumulative dividends of 7.04 billion yuan from 2018 to 2024 [8][59] Summary by Sections Company Overview - The company, established in 1996, is the first listed enterprise in both Hong Kong and Shanghai from Shenzhen, with Shenzhen International as the controlling shareholder [12][15] - The main business includes toll roads and environmental protection, with a focus on solid waste resource processing and clean energy generation [15][22] Toll Road Business - The toll road business remains the core revenue and gross profit source, consistently contributing over 50% of total revenue and over 80% of gross profit [26][29] - The company is actively expanding its toll road assets through new constructions and upgrades, including the Outer Ring Road and the Jihe Expressway [38][41] Environmental Protection Business - The environmental protection segment includes solid waste processing and clean energy generation, with a focus on organic waste treatment and wind and solar power projects [22][24] - The company has processed over 1,045.6 thousand tons of organic waste in the first nine months of 2025, generating operational revenue of 550 million yuan [22][24] Financial Performance - Revenue projections for 2025-2027 are estimated at 10.245 billion yuan, 10.501 billion yuan, and 11.270 billion yuan, with corresponding net profits of 1.763 billion yuan, 1.809 billion yuan, and 1.892 billion yuan [7][62] - The company’s financial costs have decreased significantly, with the comprehensive borrowing cost dropping from 4.7% in 2017 to 2.6% in H1 2025 [57][58]

Core Insights - The report maintains a positive outlook on the home appliance sector, particularly focusing on the cost reduction potential of aluminum replacing copper in air conditioning systems [2][5] - The adoption of aluminum-copper technology is seen as a significant step towards reducing production costs amid rising copper prices and resource scarcity [10][15] Group 1: Aluminum-Copper Technology Impact - The use of aluminum instead of copper in air conditioning units can lead to substantial cost savings, with estimates suggesting a reduction of 208 to 277 RMB per unit when replacing 50% of copper, and up to 416 to 554 RMB when replacing 100% [11][12] - Copper currently constitutes about 26% to 33% of the cost in standard air conditioning units, with high-end models reaching over 40% [11][12] - The global market has seen significant adoption of aluminum-copper products, particularly in Japan where approximately 40% to 50% of air conditioners use aluminum heat exchangers [15][16] Group 2: Domestic Market Challenges - Despite the cost advantages, the domestic promotion of aluminum-copper air conditioners faces challenges, including inferior thermal conductivity and corrosion resistance compared to copper [19][20] - Consumer perception is a major barrier, as negative opinions about aluminum's reliability persist, complicating market acceptance [19][20] - The first domestic aluminum-copper air conditioner was launched by Wanbao in collaboration with JD.com, targeting the mid-to-low-end market, which may help accelerate industry-wide material transitions [16][17] Group 3: Industry Performance and Trends - The home appliance sector has shown mixed performance, with the overall index increasing by 0.44%, while specific segments like white goods and black goods experienced varied changes [21][22] - Recent data indicates a decline in domestic sales growth for air conditioners, refrigerators, and washing machines, reflecting broader market challenges [33][47] - The report highlights the importance of monitoring raw material prices, with copper and aluminum prices showing significant fluctuations that could impact production costs [29][31]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - 2025 is an atypical volatile bond market. From the perspective of fund product net value and interest - rate bond yield changes, it is a bear market, while from the perspective of credit bonds, it is a bull market [3][6]. - There are four direct reasons for the poor experience in the bond market in 2025: the overdraft effect at the end of last year, less - than - expected monetary easing, intensified supervision, and increased risk appetite [3][9]. - There are four underlying macro - logical reasons: the after - effect of the "924" policy and broad fiscal support for economic stability, repeated Sino - US trade frictions but resilient exports, the continuation of Fed rate cuts and de - dollarization along with policies boosting the risk appetite of the stock and commodity markets, and profound changes in institutional behavior in a low - interest - rate environment [3][14]. - The bond market in 2025 is divided into four stages, with different driving factors and yield changes in each stage [3]. Summary According to the Directory 1. Four Direct Reasons and Macro - logical Reasons for the Atypical Volatile Market Direct Reasons - **Overdraft effect at the end of last year**: At the end of 2025, the expectation of broad monetary policy and the pre - emptive allocation before the New Year led to a "fast - bull" market. In late November 2025, the market's expectation of a reserve requirement ratio cut increased, and the bond yield dropped rapidly after the Politburo meeting and the Central Economic Work Conference [9]. - **Less - than - expected monetary easing**: The market expected significant interest rate cuts and reserve requirement ratio cuts at the beginning of the year, but only one round of cuts occurred in May, and other tools were used to maintain liquidity [9][10]. - **Intensified supervision**: In early August, the government announced the resumption of VAT on new government and financial bonds, and in September, a draft of new regulations on public funds was released, increasing the redemption fee and causing concerns in the market [10]. - **Increased risk appetite and the stock - bond seesaw**: After the reciprocal tariffs, expectations of domestic policy stimulus, tariff cuts, a weakening US dollar, and other factors led to an increase in risk assets. The implementation of anti - involution policies also boosted the commodity market [10]. Macro - logical Reasons - **Policy support for economic stability**: The "924" policy in 2024 and broad fiscal measures supported economic stability, with the GDP in the first half of 2025 growing by 5.3% year - on - year [14]. - **Resilient exports despite trade frictions**: Sino - US trade frictions had two unexpected turns, but China's exports remained resilient, and the bond market's reaction to trade frictions gradually became dull [14]. - **Boosted risk appetite**: Fed rate cuts, de - dollarization, and domestic policies such as the anti - involution policy and the development of the AI industry increased the risk appetite in the stock and commodity markets [19]. - **Changed institutional behavior**: In a low - interest - rate environment, the enthusiasm of institutional investors for bond investment decreased, and the market's cautious attitude restricted the downward space for interest rates [22]. 2. Four - stage Review of the 2025 Bond Market Stage One (January 1 - March 17) - The 10 - year Treasury yield rose from 1.6% to 1.9%. The market mainly traded around the correction of the broad - money expectation, with many negative factors such as Sino - US trade issues, a tech boom, and tightened liquidity [28]. Stage Two (March 18 - June 30) - The 10 - year Treasury yield first dropped significantly and then fluctuated, ranging from 1.6% to 1.9%. The market focused on the loosening of liquidity and Sino - US trade frictions, and the impact of trade frictions gradually weakened [34]. Stage Three (July 1 - September 30) - The 10 - year Treasury yield rose from 1.6% to around 1.9%. The market was mainly affected by the anti - involution policy, a booming equity market, and strict regulations [42]. Stage Four (October 1 - Present) - The 10 - year Treasury yield fluctuated weakly in the range of 1.8% - 1.85%. The bond market was insensitive to trade frictions, and the expectation of monetary easing was not strong [48].

Report Investment Rating There is no information about the industry investment rating in the provided content. Core Viewpoints - The 2025 China Financial Stability Report presents a satisfactory outcome. The future prudential management system will continue to play a role. The central bank aims to keep interest rates stable and increase the stock market volume, which reduces the expectation of future interest rate cuts. However, from a macro perspective, a stable low - interest - rate environment remains the most widely accepted option during the phase of government leveraging up, household de - leveraging, and enterprise stable leveraging [3]. - The report positively evaluates the current operation of China's financial industry, and the key tasks of the previous year have achieved phased results. The next - stage focus is on improving the comprehensive macro - prudential management system, with the three key tasks being debt resolution, reform and risk mitigation of small and medium - sized financial institutions, and macro - prudential management of real - estate finance [4]. - Attention should be paid to the risk - resistance ability of the banking industry. Although the capital adequacy ratio seems to have increased, the pressure test results show a steeper decline in capital adequacy ratio and a steeper increase in non - performing loan ratio. The key to future macro - economy is to boost the leveraging willingness of enterprises and households [5]. Section Summaries 1. Evaluation more positive, focus on the construction and coordination of risk - prevention system - The 2025 report positively evaluates the operation of the financial industry, deletes the issue of insufficient demand mentioned in the previous two years, and focuses on the coordinated construction of the risk - prevention system. The three key tasks remain the same, but the macro - prudential management of real - estate finance is placed last [9]. - The high - level is satisfied with the 2024 financial risk - prevention results. The key tasks of the previous year have achieved phased results. The 2025 report's structure is basically the same as that of 2024, with a reduced number of columns and adjusted themes [10]. - The report emphasizes the coordination between risk prevention and other fields, and expands the central bank's macro - prudential and financial stability functions [11]. 2. "Shape can be formed, adjustable", interest rates to be stable - The central bank aims to keep interest rates stable, focusing on implementing existing policies and reducing the expectation of future interest rate cuts. The goal of "liberalization" in interest - rate market reform has been basically achieved, but "shape formation" and "adjustability" still face challenges [13]. - In 2024, the central bank implemented a series of measures to strengthen interest - rate policy implementation. Currently, the pressure on the net interest margin of banks continues to rise, especially for small and medium - sized banks [14]. - Insurance industry reform focuses on reducing liability - side costs, business expenses, and disposing of high - risk institutions. The solvency of the insurance industry is declining [18]. 3. The stock market needs to increase volume - The 2025 report pays more attention to the equity market. The core of market - value management is to guide listed companies to focus on their investment value and increase investor returns. The next - stage work focuses on four areas [21]. - Increasing the stock market volume is beneficial for cultivating a long - bull market environment. The government promotes the entry of long - term funds into the market, and the central bank coordinates macro - policy regulation [24]. 4. Areas that need key attention 4.1 The risk - resistance ability of banks has decreased - In 2024, the capital adequacy, asset quality, risk - compensation ability, and liquidity of commercial banks improved marginally. However, the pressure test results show that the risk - resistance ability of 23 participating banks has declined [26][30]. - Compared with the 2024 report, the 2025 report continues and develops the key points of banking reform, with more specific directions and additional measures [36]. 4.2 The macro - leverage ratios of different sectors are diverging - In 2024, China's macro - leverage ratio increased, but the leverage ratio structure continued to optimize. The government sector became the main leverager, the non - financial enterprise sector's leveraging speed slowed down, and the household sector's leverage ratio decreased slightly [39]. - Historically, the economic recovery requires the cooperation of household and enterprise leveraging. Currently, boosting the leveraging willingness of enterprises and households is crucial for economic recovery [39].

Report Industry Investment Rating No information provided in the content. Core Viewpoints - Important news: The scale of ETFs exceeded 6 trillion yuan for the first time; the number of fund issuances this year reached the second - highest in history; the IPO financing amount of Hong Kong stocks ranked first globally [2]. - Market review: From December 22 to December 26, 2025, the major broad - based indices in the A - share market showed an upward trend. The Shanghai Composite Index closed at 3963.68, up 1.88%; the CSI 300 Index closed at 4657.24, up 1.95%; most overseas indices also rose [2][14]. - Fund market review: Most active equity funds achieved positive returns this week, with a median interval return of 2.40%. Manufacturing and technology - themed funds performed outstandingly [2]. - ETF fund statistics: The top three ETF categories in terms of performance this week were manufacturing (5.01%), cyclical (3.72%), and commodity futures (3.41%) theme ETFs. There were 336 ETFs with net capital inflows and 703 with net outflows [2]. - Fund market dynamics: This week, 54 public funds had new fund managers, 65 new public funds were established, with a combined issuance share of 278.94 billion shares, and 35 public funds entered the issuance stage for the first time. As of December 28, 2025, there were 38 public funds waiting to be issued [2]. - Equity fund issuance tracking: From December 22 to December 28, 2025, the issuance scale of equity funds reached 11.864 billion yuan, an increase of 5.014 billion yuan compared with last week. There were still 229 newly - issued funds in the position - building period, and it is estimated that 72.691 billion yuan of funds have not been invested yet [2]. Summary by Directory 1. Important News 1.1 Market Dynamics - International silver futures prices approached $80 per ounce, and the prices of various precious metal futures reached new highs. Gold prices soared by over 70% this year, and silver prices rose by over 170%. Platinum futures prices also reached a record high, and New York copper prices continued to rise [6]. - In 2025, public REITs developed rapidly. By mid - December, nearly 80 products had been issued, with a total market value exceeding 220 billion yuan, covering ten major fields. The secondary - market performance showed a "first - rising - then - falling" trend [6][7]. - On December 23, 2025, E Fund's sales subsidiary, E Fund Wealth, officially started operations. Huatai - PineBridge Fund and GF Fund also had relevant developments in their subsidiaries [7]. - On December 26, 2025, the national venture capital guidance fund was officially launched, using over - long - term special treasury bonds, with 100 billion yuan of fiscal investment at the national level, aiming to leverage a trillion - yuan capital scale [8]. 1.2 Product Highlights - On December 23, 2025, the net subscription amount of bond ETFs was close to 20 billion yuan, and science - and - technology innovation bond ETFs were the main targets for capital addition [8]. - As of December 26, 2025, the total number of ETFs in the market reached 1391, with a total scale of 6.03 trillion yuan, officially exceeding the 6 - trillion - yuan mark [9]. - As of December 25, 2025, the number of fund issuances this year reached 1498, the second - highest in history. Index funds and FOF products were popular [10][11]. 1.3 Overseas/Overseas Markets - On December 29, 2025, China Asset Management's two flagship ETFs will be listed on the Stock Exchange of Thailand through DRs, which is an important step in the cooperation between Chinese and Thai capital markets [12]. - In 2025, the IPO financing amount of Hong Kong stocks ranked first globally. From January to November, the average daily trading volume of the spot market increased by 43% year - on - year. As of December 19, 106 companies were listed, with a total financing of 274.6 billion Hong Kong dollars [13]. 2. Market Review - From December 22 to December 26, 2025, major broad - based indices in the A - share market rose. Overseas, most indices also showed an upward trend [2][14]. - This week, the non - ferrous metals and national defense and military industries led the gains, while the commercial retail, coal, and banking industries were among the top decliners [16]. 3. Fund Market Review 3.1 Active Equity Fund Performance - In the short - term, manufacturing and technology - themed funds performed well; in the medium - term, cyclical and manufacturing - themed funds were in the forefront; in the long - term, technology and manufacturing - themed funds were outstanding [18]. - This week, most active equity funds achieved positive returns, and the median interval return was 2.40%. Manufacturing and technology - themed funds had the highest median interval returns [20][21]. 3.2 Top - Performing Fund Performance Statistics - This week, the top - performing active equity fund was the Qianhai Kaiyuan Shanghai - Hong Kong - Shenzhen Strong Country Industry Fund, with an interval return of 15.69% [23][24]. 4. ETF Fund Statistics 4.1 ETF Fund Performance - This week, the top three ETF categories in terms of interval return were manufacturing, cyclical, and commodity futures theme ETFs [25]. - In the past month, the top three were also cyclical, manufacturing, and commodity futures theme ETFs [25]. 4.2 ETF Capital Flow Statistics - This week, the top categories with net capital inflows were bonds, A - share broad - based, and commodity futures ETFs, while manufacturing ETFs had the largest net outflows [29]. - In the past month, A - share broad - based, bonds, and technology ETFs had the largest net inflows, while manufacturing ETFs had the largest net outflows [29]. - This week, 336 ETFs had net capital inflows, and 703 had net outflows. The top three in terms of net inflows were the Yin Hua CSI AAA Science and Technology Innovation Corporate Bond ETF, etc., and the top three in terms of net outflows were the HFT CSI Short - Term Financing Bond ETF, etc. [31]. 4.3 ETF Fund Premium and Discount Statistics - For non - QDII ETFs, as of December 26, 2025, the top three in terms of premium rate were the GF Hang Seng Index Hong Kong Stock Connect ETF, etc., and the top three in terms of discount rate were the Founder Fubon CSI 500 ETF, etc. [33][34]. - For QDII ETFs, as of December 25, 2025, the top three in terms of premium rate were the Invesco Great Wall NASDAQ Technology Market Value - Weighted ETF, etc., and the top three in terms of discount rate were the China Merchants Li An Emerging Asia Select ETF, etc. [34][35]. 5. Fund Market Dynamics 5.1 Fund Manager Changes - This week, 54 public funds had new fund managers, involving 50 fund managers from 31 fund management companies. The top two fund management companies with the most new fund manager appointments were Penghua Fund and GF Fund [36]. - This week, 77 public funds had fund manager departures, involving 57 fund managers from 33 fund management companies. The top three fund management companies with the most departures were Penghua Fund, E Fund, and Chuangjin Hexin Fund [37]. 5.2 Newly Established Funds This Week - This week, 65 new public funds were established, with a combined issuance share of 278.94 billion shares. The most common types were partial - stock hybrid and secondary bond funds. GF Fund had the largest combined issuance share [39]. 5.3 Funds First Issued This Week - This week, 35 public funds entered the issuance stage for the first time. GF Fund had the most newly issued funds, and the most common type was partial - stock hybrid funds [41][42]. 5.4 Funds to Be Issued - As of December 28, 2025, there were 38 public funds waiting to be issued, including 13 partial - stock hybrid, 10 passive index, 7 hybrid FOF, etc. GF Fund had the most funds to be issued [45]. 5.5 Equity Fund Issuance Tracking - This week, the issuance scale of equity funds reached 11.864 billion yuan, an increase of 5.014 billion yuan compared with last week [47]. - Currently, there are 229 newly - issued funds in the position - building period, 46.29% of which have a position - building ratio of less than 5%, and it is estimated that 72.691 billion yuan of funds have not been invested yet [50]. - After the establishment and position - building of these funds, the top three industries with the largest capital increments are electronics, power equipment and new energy, and machinery [53]. - For the funds that have completed the fundraising, the top three industries with the largest capital increments are electronics, food and beverage, and machinery [55].

Profit Trends - In November, the profit of industrial enterprises decreased by 13.1% year-on-year, a significant drop from the previous value of -5.5%[5] - The profit margin for industrial enterprises in November was approximately 5.7%, which is significantly lower than seasonal levels[12] - The total profit for industrial enterprises in November was 676.6 billion yuan, marking the lowest level for the same period since 2021[12] Price and Cost Dynamics - The Producer Price Index (PPI) in November fell by 2.2% year-on-year, widening from a decline of 2.1% in October[9] - The cost per 100 yuan of revenue for industrial enterprises increased to 85.5 yuan, up by 0.16 yuan year-on-year[29] - The unit revenue expense for the first eleven months was 8.39 yuan, a slight decrease of 0.01 yuan year-on-year[32] Inventory Insights - As of the end of November, the inventory of finished products for industrial enterprises increased by 4.6% year-on-year, with a 0.9 percentage point rise from October[33] - The actual inventory growth rate, excluding PPI effects, was 6.8%, slightly up from 5.8% in October[33] - The PMI data indicated a divergence, showing a decrease in inventory while actual inventory levels were still rising, suggesting unclear signals regarding destocking[33] Sector Performance - The upstream mining sector showed significant improvement with revenue growth of 5.3% and profit growth of 24.4% in November[23] - The midstream intermediate goods manufacturing sector faced challenges, with revenue and profit growth rates of -10.7% and -21.2%, respectively[26] - The downstream consumer goods manufacturing sector reported a profit margin of 11.7%, but revenue and profit growth were both negative at -12.2% and -22.6%[27]

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - Although the central bank is gradually downplaying quantitative targets and transitioning towards price - based tools, social financing and M2 are not decoupled from the bond market. The transformation takes time, and the central bank does not completely abandon quantitative targets. A decline in social financing is inherently favorable for the bond market. In 2026, the growth rate of social financing is expected to decline in a volatile manner, with the first and fourth quarters being relatively stable and the second and third quarters facing greater downward pressure. In particular, the disturbance of social financing to the bond market will significantly bottom out in the first quarter, so the bond market can be somewhat optimistic [2]. - The predicted growth rate of social financing in 2026 is 7.6%, corresponding to a new social financing of around 33.5 trillion yuan. The growth rate of M2 is expected to be around 7.1% [3]. 3. Summary According to Relevant Catalogs 3.1 Total Perspective on Social Financing and M2 in 2026 3.1.1 How to View the Growth Rates of Social Financing and M2 with the Downplaying of Quantity and Optimization of Intermediate Variables? - In November 2025, the central bank proposed to optimize intermediate variables of monetary policy and gradually downplay the focus on quantitative targets. This sets the tone for the adjustment of the intermediate target of monetary policy in 2026. The growth rate of financial aggregates will decline naturally due to the large base and the shift from high - speed to high - quality economic growth [10][13]. - Downplaying quantitative targets does not mean having no requirements for social financing and M2. The transformation of the intermediate target of monetary policy takes time, and in the short term, the central bank still adheres to the "basic matching" principle [15]. 3.1.2 What Changes are There in the "Basic Matching" Principle? - Reasons for setting the "basic matching" principle: It is conducive to cross - cycle policy design, stabilizing the monetary aggregate in the long term, providing a scientific "anchor" for macro - policies, guiding market expectations, and stabilizing the macro - leverage ratio [15]. - Understanding of "basic matching": It does not mean "exactly equal"; it requires comprehensive consideration of nominal economic growth, potential output, and economic growth targets; and it is a medium - to - long - term concept, not a short - term one [19]. - By taking annual data as an example, the years when the growth rates of social financing and M2 were mentioned as "basically matching" with the nominal GDP growth rate are 2018, 2019, and 2021. The annual intervals for the "basic matching" of the growth rate differences between social financing and nominal GDP and between M2 and nominal GDP are [- 0.2%, 3.2%] and [- 2.4%, 1.2%] respectively. When refined to quarters, the time periods when the central bank quantitatively mentioned "basic matching" cover the third quarter of 2018 to early 2020, 2021 - 2023 (related to the economic cycle), and 2024 (switched to "economic expected targets") [20][22][23]. 3.2 Forecast of Social Financing and M2 in 2026 3.2.1 Total Forecast - Based on the predicted nominal GDP growth rate of about 4.5% in 2026, referring to the "basic matching" principle, the predicted growth rate of social financing is around 7.6%, corresponding to a new social financing of around 33.5 trillion yuan. Considering the strong base effect of M2 in 2026, the growth rate of M2 is expected to be around 7.1% [26][27]. 3.2.2 Sub - item Analysis of Social Financing in 2026 - **Credit**: The new credit in 2026 is expected to be around 15.2 trillion yuan, with a growth rate of around 5.6%. The rhythm is expected to be high in the front and low in the back, and the structure will continue to focus on the "Five Major Articles" [30][31]. - **Government Bonds**: The net financing of government bonds in 2026 is expected to be around 15.5 trillion yuan. The issuance rhythm is expected to be balanced and front - loaded, with the possibility of an increase in the fourth quarter [34][35]. - **Corporate Bonds**: The net financing of corporate bonds in 2026 is expected to be around 1.7 trillion yuan, with a rhythm of low in the front and high in the back [40]. - **Other Items**: The net financing of off - balance - sheet items is expected to be around 0 trillion yuan, and the total of stock financing, credit write - offs, ABS, and foreign currency loans is expected to be around 1.1 trillion yuan, with a rhythm of low in the front and high in the back [41]. 3.2.3 Forecast of the Rhythm within the Year - The overall new social financing is 33.5 trillion yuan, corresponding to a stock growth rate of 7.6%. The rhythm of social financing and M2 is expected to be high in the front, low in the middle, and stable in the back. The predicted credit growth rates/ social financing growth rates/M2 growth rates for Q1/Q2/Q3/Q4 are (6.3%/5.7%/5.8%/5.6%)/(8.1%/7.8%/7.6%/7.6%)/(7.6%/7.2%/6.8%/7.1%) [4][5]. 3.3 How to View Interest Rates When Social Financing is at a Low Level and Credit is Declining? - Currently, policies are downplaying the focus on financial aggregates, and the intermediate variables of monetary policy are shifting from quantitative to price - based tools [45]. - However, the relationship between social financing, M2, and interest rates does not change with monetary policy. A downward trend in social financing growth allows for moderate optimism in the bond market. The bond market is under less pressure in the first quarter [46].

Group 1: Retail and Service Industry Insights - The report highlights a recovery in the hotel and duty-free sectors, suggesting that the hotel prices have gradually increased since the second half of this year, with a recommendation to focus on hotel stocks such as Huazhu Group, Jinjiang Hotels, and ShouLai Hotels [6][12][17] - Duty-free sales are showing signs of bottoming out, with new policies implemented to expand the range of duty-free products and eligible consumers, leading to a significant increase in sales figures [12][15][16] - The report emphasizes the importance of service consumption policies, particularly in the context of the ice and snow economy, silver-haired economy, and sports events, recommending investments in companies like Changbai Mountain and Sanchuan Tourism [26][28][29] Group 2: AI Applications in Various Industries - The report discusses the acceleration of AI applications in the education and human resources sectors, with companies like Keri International and Beijing Renli leveraging AI to enhance recruitment efficiency [39][44] - AI's integration into 3D printing and e-commerce is highlighted, with a focus on companies like Huina Technology and Xiaogoods City, which are expected to benefit from cost reductions through full-chain penetration [6][39] - The report notes that AI applications are driving significant changes in operational efficiency and commercial opportunities across various sectors, particularly in human resources [39][44] Group 3: Beauty and Personal Care Sector - The beauty and personal care industry is experiencing a mild recovery, with domestic brands showing strong performance during the Double Eleven shopping festival, indicating a shift in competitive dynamics [6][32] - The report identifies key players in the beauty sector, recommending brands like Mao Ge Ping and Shanghai Jahwa, while also suggesting a focus on high-growth segments within the industry [6][32] - The medical beauty sector is under pressure but is seeing consolidation and innovation, with recommendations for companies like Jinbo Biological and Kedi-B [6][32] Group 4: Jewelry and Precious Metals - The jewelry sector is undergoing a transformation, with a focus on overseas expansion as a second growth curve, recommending companies like Laopu Gold and Chaohongji [6][32] - The report emphasizes the importance of high-value jewelry products and the impact of new tax regulations on the market dynamics [6][32] Group 5: Food and Beverage Industry - The food and beverage sector is witnessing a shift, with a focus on leading brands expanding their store counts and product categories, particularly in the tea and dining segments [32][38] - The report highlights the competitive landscape in the restaurant industry, noting the resilience of Western fast food and the growth of Chinese casual dining brands [32][38]