Market Performance - The construction materials sector saw a decline of 7.56% last week, while the Shanghai Composite Index fell by 2.19%[5] - Fiberglass experienced the most significant drop at -11.02%[5] Company Ratings - Key companies such as Qibin Group, Dongfang Yuhong, and China National Building Material are rated as "Buy" with respective PE ratios of 47.10, 325.71, and 37.09 for 2024A[4] - China National Building Material has the highest market capitalization at ¥906.71 billion[4] Investment Strategy - The report maintains a "Positive" investment rating, anticipating improvements in domestic demand and a potential recovery in construction investment in March and April[3] - Recommended stocks include Qibin Group, Conch Cement, and China National Building Material, which are expected to benefit from cost pass-through and demand recovery[5][29] Risks - Potential risks include macroeconomic downturns, unexpected declines in the real estate market, and rising raw material prices, which could negatively impact company performance[32]

Market Performance - As of March 20, 2026, the Shanghai Composite Index fell by 3.38%, the Shenzhen Component Index decreased by 2.90%, and the CSI 300 dropped by 2.19%[5] - The ChiNext Index showed significant resilience during the market adjustment, with a weekly gain of 1.26%[9] - The average daily trading volume for the CSI 300 was 572.96 billion CNY, while the Shanghai Composite Index had a volume of 952.98 billion CNY[9] Enhanced Index Fund Performance - For the CSI 300 enhanced index fund, the minimum excess return was -1.77%, the median was -0.08%, and the maximum was 0.90% for the week[12] - The CSI 500 enhanced index fund had a minimum excess return of -0.49%, a median of 0.43%, and a maximum of 3.36%[12] - Year-to-date, the CSI 300 index is down 1.4%, while the enhanced index portfolio is down only 0.1%, resulting in an excess return of 1.2%[20] Risk Factors - There are risks associated with factor failure, model failure, and changes in market style that could impact the effectiveness of the investment strategies[4][44] - The reliance on historical data for modeling introduces potential future risks that could affect performance[44]

Core Insights - The report emphasizes that the Russia-Ukraine conflict has significantly impacted global inflation and economic conditions, extending the duration of high inflation rather than initiating a new round of global reflation [5] - The liquidity environment has tightened due to the conflict, increasing pressure on monetary policy across major economies, which has affected asset pricing through interest rates and stock market performance [5] - The report suggests a "HALO PLUS" strategy for asset allocation, focusing on defensive cash flow and offensive low-crowding growth sectors, particularly in coal, utilities, and construction for defense, while targeting commercial aerospace, batteries, and military themes for growth [6] Group 1: Impact of the Russia-Ukraine Conflict - The conflict has pushed inflation in Europe and the U.S. from around 6% to approximately 10% over six months, maintaining a high inflation rate of over 3% for nearly two years [19][20] - Japan's inflation, initially low, has risen due to energy price shocks, with CPI remaining above 2% for an extended period, indicating a different inflationary dynamic compared to the U.S. and Europe [20] - China's CPI has been less affected, primarily driven by structural price disturbances rather than a sustained inflationary trend [20] Group 2: Historical Inflation Experiences - Historical periods of stagflation in China, such as from June 2007 to February 2008 and January 2010 to July 2011, show that early stagflation phases are characterized by high commodity prices and resilient growth, with a shift to valuation and earnings certainty logic as tightening occurs [11][14] - In the 2007-2008 period, upstream cyclical sectors significantly outperformed, with coal prices rising by 49%, chemicals by 46%, and non-ferrous metals by 44%, reflecting strong demand and price increases [15][16] - The 2010-2011 period saw a market shift where defensive consumption sectors and small-cap growth stocks outperformed as inflationary pressures peaked and monetary tightening began [17][18]

Investment Rating - The investment rating for the construction materials industry is optimistic (maintained) [1] Core Insights - The construction materials industry is significantly impacted by the recent geopolitical conflicts in the Middle East, leading to rising oil prices which affect the cost structure of various construction material segments. The industry is highly sensitive to fluctuations in oil prices due to its reliance on petroleum-derived raw materials [5][10] - Different segments within the construction materials industry experience varying degrees of cost impact from oil price changes. Key segments include waterproofing materials, coatings, pipes, insulation boards, and water-reducing agents, all of which have a high proportion of petroleum-related raw materials in their cost structures [5][10] Summary by Relevant Sections 1. Impact of Rising Oil Prices - The construction materials industry is a resource-processing sector with a significant dependency on the petrochemical industry. Recent geopolitical tensions have led to increased international oil prices, which are transmitted through cost mechanisms to various segments of the construction materials industry [5][10] 2. Cost Impact by Segment 2.1 Waterproofing Industry - The waterproofing industry is closely linked to oil prices, with key raw materials like asphalt being directly affected. For instance, the cost of SBS modified asphalt waterproofing membranes has increased by 14%, necessitating a price increase of 10% to cover costs [5][17] - PVC polymer waterproofing membranes have seen a cost increase of 15%, requiring a price increase of 11% to maintain profitability [5][19] 2.2 Coatings Industry - The coatings segment, particularly products like JS polymer cement waterproof coatings and acrylic waterproof coatings, has experienced cost increases of 30%, requiring price hikes of 19% and 21% respectively to offset these costs [5][25][23] - The cost of exterior wall coatings (true stone paint) has risen by 14%, necessitating a price increase of 10% [5][33] 2.3 Pipe Industry - PVC pipes have seen a cost increase of 13%, with a required price increase of 11% to cover the rising costs [5][37] - PPR pipes have experienced a more modest cost increase of 5%, requiring a price increase of 3% [5][41] 2.4 Insulation Board Industry - EPS insulation boards have faced a significant cost increase of 33%, necessitating a price increase of 28% to maintain margins [5][46] 2.5 Water-Reducing Agent Industry - Water-reducing agents have seen costs rise by 34%, requiring a price increase of 24% to cover these increases [5][49] 3. Overall Summary - The overall impact of rising oil prices on the construction materials industry is significant, with various segments experiencing different levels of cost increases. Companies currently have some inventory of raw materials, and the actual impact on profit margins will depend on the effectiveness of price transmission in the market. Recent price increase notices from companies like Yuhong and Sankeshu indicate that if these price hikes are successfully implemented, the impact of oil prices on profitability may be limited [5][50]

Report Industry Investment Rating - The report does not provide a specific industry investment rating. Core Views - The report analyzes various financial products, including bonds, stock indices, and commodities, and provides model - based views on their trends. The views are classified as "看多" (bullish), "调整" (adjustment), and "震荡" (sideways). Bullish products include 3 - year AAA medium - short - term notes, 2 - year treasury bonds, and the Wind Micro - cap Index. Products in adjustment include 30 - year treasury bonds, 10 - year treasury bonds, the Wind All - A Index, the CSI Dividend Total Return Index, the Hang Seng Tech Index, the STAR 50 Index, and the China Securities 2000 Index. Sideways products include COMEX gold and IPE Brent crude oil [2][3][6]. Summary by Related Content Bond Analysis - **30 - year Treasury Bond**: The original signal is 72.23%, MA5 is 71.18%, the model view is "调整" (adjustment), and the signal has lasted for 6 trading days [2][6][7]. - **3 - year AAA Medium - short - term Note**: The original signal is 93.88%, MA5 is 27.75%, the model view is "看多" (bullish), and the signal has lasted for 4 trading days [2][6][7]. - **10 - year Treasury Bond**: The original signal is 77.63%, MA5 is 66.70%, the model view is "调整" (adjustment), and the signal has lasted for 3 trading days [2][6][7]. - **2 - year Treasury Bond**: The original signal is 5.82%, MA5 is 27.35%, the model view is "看多" (bullish), and the signal has lasted for over 10 trading days [2][6][7]. Stock Index Analysis - **Wind All - A Index**: The original signal is 82.26%, MA5 is 60.51%, the model view has changed from "震荡" (sideways) to "调整" (adjustment), and the signal has lasted for 1 trading day [2][6][7]. - **CSI Dividend Total Return Index**: The original signal is 46.79%, MA5 is 61.58%, the model view has changed from "震荡" (sideways) to "调整" (adjustment), and the signal has lasted for 1 trading day [2][6][7]. - **Hang Seng Tech Index**: The original signal is 87.97%, MA5 is 71.03%, the model view is "调整" (adjustment), and the signal has lasted for 2 trading days [2][6][7]. - **STAR 50 Index**: The original signal is 77.75%, MA5 is 73.52%, the model view is "调整" (adjustment), and the signal has lasted for over 10 trading days [2][6][7]. - **Wind Micro - cap Index**: The original signal is 60.71%, MA5 is 30.48%, the model view is "看多" (bullish), and the signal has lasted for 7 trading days [2][6][7]. - **China Securities 2000 Index**: The original signal is 62.11%, MA5 is 61.27%, the model view is "调整" (adjustment), and the signal has lasted for 4 trading days [2][6][7]. Commodity Analysis - **COMEX Gold**: The original signal is 53.33%, MA5 is 58.47%, the model view is "震荡" (sideways), and the signal has lasted for 2 trading days (not yet closed, postponed by one trading day) [2][6][7]. - **IPE Brent Crude Oil**: The original signal is 28.07%, MA5 is 41.07%, the model view is "震荡" (sideways), and the signal has lasted for 4 trading days (not yet closed, postponed by one trading day) [2][6][7].

Group 1: Economic Context - The 1970s experienced stagflation characterized by high inflation and economic stagnation, with CPI exceeding 10% and oil consumption nearing 2017 levels[2] - The "Great Society" programs initiated in the 1960s significantly increased total demand, contributing to inflationary pressures in the 1970s[12] - The U.S. transitioned from a net exporter to a net importer around 1965, exacerbating inflation due to increased reliance on foreign goods[16] Group 2: Policy Responses - The Federal Reserve's policies during the 1970s, including significant monetary expansion, failed to control inflation and were often influenced by political pressures[6] - Presidents Nixon, Ford, and Carter implemented fiscal policies aimed at stimulating the economy, often prioritizing employment over inflation control[55] - The introduction of price controls in 1971 by Nixon aimed to curb inflation but led to shortages and did not address underlying economic issues[39] Group 3: Market Dynamics - Gold emerged as the only major asset with positive real returns during the 1970s, while stocks and bonds faced significant adjustments due to high inflation[2] - The performance of various sectors was influenced by inflation cycles, with inflation-sensitive sectors outperforming during periods of rising prices[3] - The 1970s saw a shift in market valuation preferences, favoring high ROE companies during economic upturns and low PB companies during downturns[4] Group 4: Historical Lessons - The analysis draws parallels between the 1970s stagflation and current economic conditions, highlighting the importance of understanding historical policy mistakes[6] - The experiences of Japan during the 1970s, where it achieved significant economic growth through industrial transformation, provide insights for current economic strategies[4]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company achieved a revenue of 49.1 billion RMB in 2025, representing a year-on-year growth of 10.9%, with a net profit of 9.1 billion RMB, up 3.0% year-on-year [7] - The company is expected to benefit from a recovery in single-ticket profitability and product optimization, enhancing long-term competitiveness [7] - The forecasted revenues for 2026-2028 are 55.75 billion RMB, 62.20 billion RMB, and 68.79 billion RMB respectively, with net profits of 10.81 billion RMB, 12.46 billion RMB, and 14.30 billion RMB [7] Financial Performance - Revenue growth rates are projected at 15.26% for 2024, 10.88% for 2025, 13.54% for 2026, 11.58% for 2027, and 10.60% for 2028 [6] - The company's earnings per share (EPS) are expected to increase from 10.95 RMB in 2024 to 18.57 RMB in 2028 [6] - The price-to-earnings (PE) ratio is projected to decrease from 12.15 in 2024 to 9.30 in 2028, indicating potential valuation improvement [6] Market Performance - The company’s stock price closed at 196.40 HKD on March 18, 2026 [2] - The company has shown a market performance of -21% over the last 12 months compared to the Hang Seng Index [4]

Investment Rating - The investment rating for Tencent Music is maintained at "Buy" [2][7]. Core Views - The company reported a total revenue of 32.9 billion RMB for 2025, representing a year-on-year growth of 15.8%. The net profit attributable to shareholders was 11.06 billion RMB, a significant increase of 66.4%, which included a gain of 2.37 billion RMB from the disposal of Universal Music shares [7]. - The number of super members exceeded 20 million, with an average revenue per user (ARPU) of 11.9 RMB, reflecting a year-on-year increase of 7.2%. The company has successfully implemented a multi-tier membership system [7]. - The acceleration of IP monetization and the empowerment of AI are opening new opportunities. The company has renewed contracts with major music labels and upgraded classic Chinese songs to Dolby Atmos, enhancing the value of its music library [7]. - The company is expected to achieve revenues of 35.48 billion RMB, 40.72 billion RMB, and 45.65 billion RMB for the years 2026, 2027, and 2028, respectively, with net profits of 9.76 billion RMB, 10.86 billion RMB, and 12.06 billion RMB for the same years [7]. Financial Performance - For 2024, the projected revenue is 28.4 billion RMB, with a growth rate of 2.34%. The net profit is expected to be 6.64 billion RMB, with a growth rate of 35.04% [6]. - The earnings per share (EPS) for 2026 is estimated at 3.15 RMB, with a price-to-earnings (PE) ratio of 13.06 [6]. - The return on equity (ROE) is projected to be 11.12% for 2026, with a price-to-book (PB) ratio of 1.45 [6].

1. Report Industry Investment Rating There is no information provided in the report regarding the industry investment rating. 2. Core Views - FOMC resolution landed as expected, keeping the interest rate unchanged with reduced divergence. The Fed announced to maintain the federal funds rate, with a neutral tone in the resolution statement and uncertainty about the impact of the Middle - East situation on the US economy. Only one voting member opposed the resolution [3]. - The market reaction was mild within 15 minutes after the resolution release as the market had almost fully priced in the unchanged interest rate. The S&P 500 index fell 0.10%, 2 - year US Treasury yield declined 0.01 basis points to 3.703%, 10 - year US Treasury yield dropped 0.08 basis points to 4.214%, spot gold fell 0.08% to $4890.64 per ounce, and the US dollar index rose 0.14% to 99.86 [3][7]. - The dot - plot shows one rate cut in 2026 and 2027 respectively. Powell's speech was hawkish, emphasizing inflation expectations. The latest economic forecast significantly raised the economic growth rate and inflation expectations. The market priced in the hawkish remarks, with the S&P 500 falling 0.39%, 2 - year US Treasury yield dropping 5.1 basis points to 3.567%, 10 - year US Treasury yield rising 4.3 basis points to 4.257%, spot gold falling 0.67%, and the US dollar index rising 0.28% to 100.09 [3]. - The short - term US Treasury yield curve may show a bear - steepening trend, and the US dollar will maintain a relatively strong oscillation. The short - term Treasury interest rate will continue to reverse the previous rate - cut expectations, and the long - term Treasury interest rate will rise due to higher inflation and economic expectations. The 2 - year US Treasury interest rate may oscillate between 3.44% - 3.8%, and the 10 - year US Treasury interest rate may oscillate between 4% - 4.4%. The US dollar index is expected to oscillate strongly in the range of 97 - 101. Chinese bond interest rates are mainly determined by domestic factors and are less affected by overseas factors [3][21]. 3. Summary by Directory 3.1 Fed Interest - Rate Meeting Focus 3.1.1 FOMC Resolution Keeps Interest Rate Unchanged - The 2026 March FOMC resolution had three points of concern compared to January: new description of stable unemployment rate, uncertainty about the impact of the Middle - East situation on the US economy, and reduced divergence with only one opposing vote [6]. - The market had almost fully priced in the unchanged interest rate before the meeting, so the immediate market reaction was mild [7]. 3.1.2 Dot - Plot Shows One Rate Cut in 2026 and 2027 Respectively - The Fed's economic forecast in March 2026 shows that economic growth is still guaranteed, and inflation is a more concerning issue. GDP growth rate forecasts for 2026 - 2028 were raised, unemployment rate forecast for 2027 was raised, and inflation expectations were also increased [11]. - The median of the federal funds rate for 2026 - 2027 is 3.4% and 3.1% respectively, with one rate cut expected each year. The dot - plot divergence has reduced, and the rate - cut幅度 of dovish voting members has generally decreased [11][12]. 3.1.3 Press Conference Speech is Hawkish - Powell's speech was hawkish, with the "employment - inflation" focus shifting slightly towards inflation, especially emphasizing inflation expectations [15]. - Regarding employment, he believes the labor market is balanced, but the zero net employment creation in the private sector implies risks. Regarding inflation, he is cautious, emphasizing the need to focus on the transmission of tariff inflation and the stickiness of non - housing service inflation. He avoids directly answering whether to ignore oil inflation [15][16]. - The current interest rate level is appropriate, between the boundaries of tight and non - tight. The market priced in the hawkish remarks clearly [16][17]. 3.2 How to View the Market - In the short term, the US Treasury yield curve may show a bear - steepening trend. The 2 - year US Treasury interest rate may oscillate between 3.44% - 3.8%, and the 10 - year US Treasury interest rate may oscillate between 4% - 4.4% [21]. - The US dollar index is expected to maintain a relatively strong oscillation in the range of 97 - 101 due to reduced rate - cut expectations and the US dollar's safe - haven and liquidity advantages [21]. - Chinese bond interest rates are mainly determined by domestic factors and are less affected by overseas factors, but attention should be paid to the depreciation pressure on the RMB caused by the strong US dollar [21].

- The report includes a quantitative timing model that outputs probabilities for short-term movements in bond yields or stock indices. The model uses historical data to estimate probabilities and provides multi-directional views (bullish, bearish, or neutral) based on thresholds of 40% and 60% for probabilities. Probabilities above 60% indicate bullish sentiment, below 40% indicate bearish sentiment, and between 40%-60% indicate neutral sentiment [5][6]. - The model's specific construction involves calculating daily timing signals and a 5-day moving average (MA5) of these signals. The timing signals represent the probability of upward or downward movements in the target asset. For example, the 30-year government bond signal is calculated as 76.88% for the day, with an MA5 of 67.56%, indicating an "adjustment" view. Similarly, the 2-year government bond signal is 7.40%, with an MA5 of 30.40%, indicating a "bullish" view [5][6]. - The model evaluates multiple assets, including government bonds (2-year, 10-year, 30-year), corporate bonds (3-year AAA medium-term notes), stock indices (e.g., CSI All A Index, CSI Dividend Total Return Index, Hang Seng Technology Index, STAR 50 Index, Wind Micro Index, and CNI 2000 Index), and commodities (COMEX Gold and IPE Brent Oil). Each asset is assigned a daily signal, MA5, and a directional view (bullish, bearish, or neutral) [5][6]. - The model's performance is assessed through the persistence of signals over multiple trading days. For example, the bullish signal for COMEX Gold has persisted for over 10 trading days, while the adjustment signal for the CSI All A Index has persisted for 4 trading days. This persistence is used to validate the model's reliability in predicting short-term movements [5][6]. - The report provides detailed backtesting results for each asset, including daily timing signals, MA5 values, and directional views. For instance, the CSI Dividend Total Return Index has a daily signal of 65.65% and an MA5 of 55.78%, indicating a "neutral" view. Similarly, the STAR 50 Index has a daily signal of 86.91% and an MA5 of 77.16%, indicating an "adjustment" view [5][6]. - The model is qualitatively evaluated as a useful tool for short-term market timing, providing actionable insights for various asset classes. However, the report highlights potential risks, such as model failure due to changing market conditions, factor failure, and data quality issues [5][6][7]. - Backtesting results for the quantitative timing model: - 30-year government bond: daily signal 76.88%, MA5 67.56%, view "adjustment" [5][6] - 3-year AAA medium-term notes: daily signal 17.77%, MA5 26.20%, view "bullish" [5][6] - 10-year government bond: daily signal 74.05%, MA5 60.92%, view "adjustment" [5][6] - 2-year government bond: daily signal 7.40%, MA5 30.40%, view "bullish" [5][6] - CSI All A Index: daily signal 35.32%, MA5 64.67%, view "adjustment" [5][6] - CSI Dividend Total Return Index: daily signal 65.65%, MA5 55.78%, view "neutral" [5][6] - Hang Seng Technology Index: daily signal 62.49%, MA5 59.50%, view "neutral" [5][6] - STAR 50 Index: daily signal 86.91%, MA5 77.16%, view "adjustment" [5][6] - Wind Micro Index: daily signal 22.76%, MA5 16.86%, view "bullish" [5][6] - CNI 2000 Index: daily signal 49.34%, MA5 66.20%, view "adjustment" [5][6] - COMEX Gold: daily signal 74.78%, MA5 38.96%, view "bullish" [5][6] - IPE Brent Oil: daily signal 60.69%, MA5 49.96%, view "neutral" [5][6]