Core Viewpoint - The article highlights the ongoing economic instability in Russia, emphasizing the lack of trust in the financial system and the adverse effects of political decisions on foreign investments and local businesses [3][5][7]. Group 1: Economic Instability - The simultaneous failure of ATMs in Moscow and the plummeting value of the ruble illustrate the immediate financial distress faced by investors and analysts [1]. - Historical context shows that Russia has experienced significant economic upheavals, such as the currency reset in the late 1990s and the impact of sanctions following the Crimea incident in 2014, leading to a drastic decline in foreign investment [3][5]. - In 2022, over 1,200 foreign companies announced their exit from Russia, resulting in a net foreign direct investment inflow of less than $4 billion, the lowest in 20 years [3]. Group 2: Trust and Investment Climate - The article discusses the erosion of trust in the Russian market, where contracts are often disregarded, and arbitration is viewed as ineffective, making investments seem risky and uncertain [7][9]. - Domestic capital is also fleeing, with wealthy individuals investing abroad and local talent seeking opportunities outside Russia, indicating a lack of confidence in the local economy [5][7]. - The article suggests that without a stable and predictable regulatory environment, even abundant resources cannot foster economic growth, as investors require assurance that the rules will remain consistent [9][10].

Market Performance - The Sci-Tech 50 Index decreased by 1.10% over the last five trading days, while the ChiNext Index increased by 1.38%. The large-cap value and growth indices rose by 1.45% and 1.60%, respectively. The Shanghai 50 Index rose by 1.22%, and the small-cap index represented by the CSI 2000 increased by 0.16%. The beauty and personal care sector, along with non-bank financials, performed well, while the computer and defense industries lagged behind [1]. Risk Premium Analysis - The static PE of the CSI All Index minus the yield of 10-year government bonds indicates a risk premium. Historical extreme bottoms have shown this data at two standard deviations above the mean, with notable instances in 2012, 2018, and 2020. As of April 26, 2022, the risk premium reached 4.17%, and on October 28, 2022, it was 4.08%. The latest reading on January 19, 2024, was 4.11%, marking the fifth instance since 2016 exceeding 4%. As of May 16, 2025, the indicator was at 3.86%, with the two standard deviation boundary at 4.76% [1]. Valuation Levels - As of May 16, 2025, the CSI All Index's PETTM percentile is at 52%. The Shanghai 50 and CSI 300 indices are at 62% and 50%, respectively, while the ChiNext Index is close to 11%. The CSI 500 and CSI 1000 indices are at 31% and 33%, indicating that the ChiNext Index's valuation is relatively low compared to historical levels [2]. Long-term Market Trends - The technical analysis of the Deep 100 Index shows a pattern of bear markets occurring every three years, followed by bull markets. The last bear market began in Q1 2021, with previous declines ranging from 40% to 45%. The current adjustment appears to have sufficient time and space, suggesting a potential upward cycle from the bottom [2]. Fund Flow and Trading Activity - In the last five trading days, ETF funds experienced an outflow of 34.1 billion yuan, while margin financing decreased by approximately 600 million yuan. The average daily trading volume across the two markets was 1.2317 trillion yuan [3]. AI and Machine Learning Applications - The report discusses the use of convolutional neural networks (CNN) to model price and volume data, aiming to predict future prices. The learned features are mapped to industry themes, with a current focus on banking [6].

Group 1 - The core viewpoint of the articles indicates a shift towards a more optimistic market outlook following breakthroughs in US-China trade negotiations, leading analysts to revise their annual forecasts positively [1][3] - Analysts from Goldman Sachs, Barclays, and JPMorgan are observing a rapid increase in risk assets, which has driven up corporate bond valuations and attracted a significant influx of borrowers into the market [1][3] - Barclays strategists believe that the recent easing of trade tensions represents a significant and lasting change in the economic backdrop, predicting a further narrowing of spreads in the short term [1][3] Group 2 - Investment-grade bond spreads are projected to narrow to a lower limit of 95 basis points by year-end, a reduction of 25 basis points from March forecasts [3] - For high-yield bonds, Barclays anticipates spreads will narrow to 325 basis points by the end of 2025, a decrease of 75 basis points from previous estimates [3] - Goldman Sachs expects the risk premium for US investment-grade bonds to narrow by about 20 basis points by year-end, while high-yield bonds are expected to narrow by approximately 100 basis points, with both figures remaining relatively stable compared to current levels [3] Group 3 - Recent trading days have seen investment-grade bond spreads narrow by 8 basis points, marking the largest two-day decline since March 2023; junk bond spreads also experienced significant declines, the largest since November 2020 [4]

Group 1: Trade Negotiation Outcomes - The US will retain 10% of the 20% tariff on fentanyl and suspend 90% of the remaining 24% tariffs for 90 days, while canceling all tariffs imposed on April 8 and 9[1] - China will suspend the implementation of the 24% tariffs on US goods for the initial 90 days, retaining 10% on these products and canceling other subsequent tariffs[1] - The tariff reductions exceed previous investor expectations, potentially raising the volatility center of the domestic equity market[1] Group 2: Market Reactions and Predictions - A-shares opened higher and closed up, with significant gains in sectors like power equipment, machinery, and electronics, confirming the positive outlook[2] - The market's risk appetite is expected to increase further due to the positive signals from the US-China negotiations, with potential recovery in the export chain[2] - The current A-share risk premium is influenced by domestic credit cycles and the US dollar cycle, with a reasonable P/E ratio estimated at 21x compared to the current 19x[4] Group 3: Investment Strategies - Short-term recommendations include increasing allocations to technology and export sectors, while maintaining a cautious stance on industries with high US exposure[5] - Mid-term strategies should focus on sectors benefiting from internal certainty, such as public funds and industries with improved earnings forecasts[5] - The Hong Kong market is expected to show relative returns, with recommendations to increase allocations in technology and consumer sectors[6]

1. Report Information - Report Title: Big Asset Morning Report - Research Team: Macroeconomic Team of the Research Center - Report Date: May 12, 2025 [2] 2. Global Asset Market Performance 2.1 10 - Year Treasury Yields of Major Economies - On May 9, 2025, the 10 - year Treasury yields of the US, UK, France, etc. were 4.380, 4.566, 3.264 respectively. The latest changes, weekly changes, monthly changes, and annual changes varied across different economies. For example, the US had a 0.000 latest change, 0.206 weekly change, 0.085 monthly change, and - 0.285 annual change [3]. 2.2 2 - Year Treasury Yields of Major Economies - On May 9, 2025, the 2 - year Treasury yields of the US, UK, Germany, etc. were 3.780, 3.902, 1.781 respectively. The latest, weekly, monthly, and annual changes also differed. For instance, the US had a 0.000 latest change, 0.040 weekly change, and - 1.110 annual change [3]. 2.3 Dollar - to - Major Emerging Economies Currency Exchange Rates - On May 9, 2025, the exchange rates of the dollar against the Brazilian real, Russian ruble, South African rand, etc. were presented. The latest, weekly, monthly, and annual changes were provided. For example, the dollar - to - Brazilian real exchange rate had a - 0.16% latest change, 0.59% weekly change, - 5.95% monthly change, and 10.51% annual change [3]. 2.4 Stock Indexes of Major Economies - On May 9, 2025, the closing prices of major stock indexes such as the S&P 500, Dow Jones Industrial Average, and NASDAQ were 5659.910, 41249.380, 17928.920 respectively. The latest, weekly, monthly, and annual changes were different. For example, the S&P 500 had a - 0.07% latest change, 1.78% weekly change, 13.59% monthly change, and 10.98% annual change [3]. 2.5 Credit Bond Indexes - The latest, weekly, monthly, and annual changes of credit bond indexes including US investment - grade, euro - zone investment - grade, and emerging - economies investment - grade were given. For example, the US investment - grade credit bond index had a 0.06% latest change, - 1.02% weekly change, 1.09% monthly change, and 6.74% annual change [3][4] 3. Stock Index Futures Trading Data 3.1 Index Performance - The closing prices of A - shares, CSI 300, SSE 50, ChiNext, and CSI 500 were 3342.00, 3846.16, 2684.01, 2011.77, 5721.72 respectively, with corresponding percentage changes of - 0.30%, - 0.17%, 0.17%, - 0.87%, - 0.90% [5]. 3.2 Valuation - The PE (TTM) of CSI 300, SSE 50, CSI 500, S&P 500, and German DAX were 12.44, 10.84, 28.80, 24.21, 18.87 respectively, with corresponding环比 changes of - 0.01, 0.03, - 0.24, - 0.02, 0.12 [5]. 3.3 Risk Premium - The risk premium (1/PE - 10 - year interest rate) of S&P 500 and German DAX were - 0.25 and 2.74 respectively, with环比 changes of 0.00 and - 0.06 [5]. 3.4 Fund Flows - The latest values and 5 - day average values of fund flows for A - shares, main board, small - and - medium - sized enterprise board, ChiNext, and CSI 300 were presented. For example, the latest fund flow of A - shares was - 1156.52, and the 5 - day average was - 265.74 [5]. 3.5 Trading Volume - The latest trading volumes and环比 changes of the Shanghai and Shenzhen stock markets, CSI 300, SSE 50, small - and - medium - sized board, and ChiNext were given. For example, the latest trading volume of the Shanghai and Shenzhen stock markets was 11920.10, with a环比 change of - 1013.67 [5]. 3.6 Main Contract Premium or Discount - The basis and percentage changes of IF, IH, and IC were - 37.56 (- 0.98%), - 17.81 (- 0.66%), - 116.92 (- 2.04%) respectively [5] 4. Treasury Futures Trading Data - The closing prices and percentage changes of Treasury futures T00, TF00, T01, TF01 were 109.060 (0.19%), 106.095 (0.17%), 109.215 (0.18%), 106.435 (0.16%) respectively. The money market rates R001, R007, SHIBOR - 3M were 1.5221%, 1.5805%, 1.6960% respectively, with daily changes of - 13.00BP, - 7.00BP, - 2.00BP [6]

Market Performance - The recent 5 trading days saw the Sci-Tech 50 Index increase by 0.24%, the ChiNext Index rise by 4.13%, large-cap value stocks up by 1.55%, large-cap growth stocks up by 2.05%, the SSE 50 Index up by 1.46%, and the small-cap represented by the CSI 2000 up by 3.77% [1] - The defense and military industry, as well as the communication sector, performed well, while steel and retail sectors lagged behind [1] Risk Premium Analysis - The static PE of the CSI All Index minus the yield of 10-year government bonds indicates a risk premium, which has historically reached extreme levels at two standard deviations above the mean during significant market bottoms, such as in 2012, 2018, and 2020 [1] - As of April 26, 2022, the risk premium reached 4.17%, and on October 28, 2022, it was 4.08%, with a recent reading of 4.11% on January 19, 2024, marking the fifth occurrence since 2016 of exceeding 4% [1] Valuation Levels - As of May 9, 2025, the CSI All Index's PETTM is at the 50th percentile, with the SSE 50 and CSI 300 at 61% and 47% respectively, while the ChiNext Index is close to 11% [2] - The ChiNext Index's valuation is relatively low compared to historical averages [2] Long-term Market Trends - The technical analysis of the Deep 100 Index indicates a pattern of bear markets every three years followed by bull markets, with previous declines ranging from 40% to 45% [2] - The current adjustment cycle began in Q1 2021, suggesting a potential for upward movement from the bottom [2] Fund Flow and Trading Activity - In the last 5 trading days, ETF funds saw an outflow of 17.9 billion yuan, while margin trading increased by approximately 4.4 billion yuan [2] - The average daily trading volume across both markets was 1.2918 trillion yuan [2] AI and Machine Learning Insights - A convolutional neural network (CNN) was utilized to model price and volume data, mapping learned features to industry themes, with a current focus on banking [2][7] Market Sentiment - The proportion of stocks above the 200-day moving average is being tracked to gauge market sentiment [9] Equity and Bond Risk Preference - Ongoing monitoring of risk preferences between equity and bond assets is being conducted [11]

Core Viewpoint - The conflict between India and Pakistan has escalated significantly, marking the most intense confrontation in 50 years, with military actions and retaliations intensifying between the two nuclear-armed nations [1][2]. Group 1: Military Actions - On May 10, Pakistan launched a military operation named "Copper Wall" in retaliation for India's provocations [2][11]. - Pakistan's military claims to have destroyed 77 Indian drones since the initiation of India's "Red Sand" operation [9]. - Pakistan's air force conducted airstrikes on multiple Indian airbases, including live broadcasts of missile launches [12]. Group 2: Financial Market Impact - Following the escalation, the Indian financial market experienced panic, with the SENSEX index dropping by 1.1% as of May 9 [2]. - Foreign banks sold a record amount of Indian government bonds, with net sales reaching 106.3 billion rupees (approximately 9 billion yuan) on May 8 [4][5]. Group 3: Casualties and Damage - The conflict has resulted in significant casualties, with reports indicating 33 deaths and 62 injuries on the Pakistani side due to Indian actions [8]. - An Indian government official was reported dead, and two staff members were injured during the attacks [14]. Group 4: International Reactions - The G7 foreign ministers issued a statement condemning the recent attacks and urged both nations to exercise maximum restraint, emphasizing the threat to regional stability [18]. - China's foreign ministry called for calm and restraint from both India and Pakistan in response to the escalating situation [18].

Core Viewpoint - Foreign banks have sold a record amount of Indian government bonds due to escalating tensions between India and Pakistan, impacting investor sentiment and leading to declines in both the Indian stock and bond markets [1][2]. Group 1: Foreign Asset Sell-off - On May 8, foreign banks net sold 106.3 billion rupees (approximately 9 billion yuan) of Indian government bonds, marking the highest level since 2006 according to Indian clearing company data [2]. - The Indian SENSEX30 index dropped 1.7% at one point on May 9, closing down 1.1%, following a previous decline of 0.51% [2]. - The yield on India's 10-year government bonds rose to 6.54%, reversing recent gains driven by central bank interventions [2]. Group 2: Escalating Conflict - On May 8, the Indian armed forces launched attacks on multiple Pakistani air defense systems, while Pakistan reported shooting down several Indian drones [5]. - The conflict has resulted in civilian casualties, with reports indicating that Indian drone incursions have led to deaths and injuries in Pakistan [5][6]. - Indian Prime Minister Modi emphasized the government's commitment to national security and operational readiness amid the ongoing tensions [6]. Group 3: International Reactions - U.S. Vice President Kamala Harris stated that the conflict between India and Pakistan is fundamentally not a U.S. issue, advocating for de-escalation [7]. - Pakistan's Prime Minister Shahbaz Sharif condemned India's military actions, which he claimed resulted in significant civilian casualties [8]. - U.S. Secretary of State Marco Rubio expressed concern over the situation and highlighted the need for cooperation between India and Pakistan to ease tensions [9][10].

Core Viewpoint - Foreign banks sold a record amount of Indian government bonds due to escalating tensions between India and Pakistan, impacting investor sentiment and leading to declines in both the Indian stock and bond markets [1][3][5]. Group 1: Market Impact - On May 8, foreign banks net sold 106.3 billion rupees (approximately 9 billion yuan) of Indian government bonds, marking the highest level of selling since 2006 [3]. - The Indian SENSEX30 index dropped by 1.7% at one point on May 9, closing with a decline of 1.21% after a previous drop of 0.51% [3][5]. - The yield on India's 10-year government bonds rose to 6.54%, reversing recent gains driven by central bank interventions [5]. Group 2: Economic Outlook - Analysts suggest that the ongoing conflict may increase risk premiums, although they do not expect the situation to spiral out of control. The Reserve Bank of India is anticipated to intervene to stabilize the market [7]. - Despite favorable macroeconomic fundamentals for Indian government bonds, short-term market sentiment will largely depend on developments in the India-Pakistan situation [3][7]. Group 3: Military Developments - On May 8, the Indian armed forces launched attacks on multiple Pakistani air defense systems, while Pakistan reported shooting down several Indian drones [9][10]. - The conflict has escalated following a recent attack in Indian-administered Kashmir, which resulted in significant casualties and heightened tensions between the two nations [11].

Core Viewpoint - The article emphasizes the two fundamental logic of investment: taking on risk to earn risk premiums and capturing market mispricing, with a focus on factor investing as a primary strategy for the "Tianxingjian" fund portfolio [2]. Factor Investment Summary 1. Size Factor: The "Comeback" of Small Companies - The size factor focuses on smaller companies, which may offer excess returns due to their higher risk profile and potential undervaluation by larger institutions [4]. 2. Value Factor: The Wisdom of Buying "Cheap Goods" - The value factor targets companies with low valuations, where the risk premium arises from potential financial troubles and market overreactions to bad news, leading to mispricing [5][6]. 3. Quality Factor: The "Reward" for Good Companies - The quality factor emphasizes financially healthy companies, where excess returns may stem from investor short-sightedness and the undervaluation of stable firms [7]. 4. Dividend Factor: The "Charm" of Cash Cows - The dividend factor focuses on companies with stable and high dividend payouts, where the risk premium may relate to growth uncertainties or interest rate sensitivities, leading to systematic undervaluation [8]. 5. Low Volatility Factor: Steady Happiness - The low volatility factor targets companies with lower stock price fluctuations, where excess returns may arise from market biases favoring high-risk stocks, resulting in undervaluation of low-volatility stocks [9]. Conclusion - Each factor that consistently outperforms the market is influenced by both risk premiums and market mispricing, with understanding these dynamics aiding in the effectiveness of factor investing [10].