Core Viewpoint - The government work report sets a 2026 economic growth target of 4.5% to 5%, which is seen as reasonable but challenging to achieve due to current economic pressures such as weak consumption and real estate drag [3][5][6]. Economic Growth Target - The target of 4.5%-5% is considered rational and not conservative, with expectations that China's GDP growth will enter the "4 era" [6]. - The slowdown in GDP growth is viewed as a structural and long-term trend, with a relatively mild decline compared to other major economies [6][7]. Investment Expansion - The government plans to issue 800 billion yuan in new policy financial instruments, increasing from 500 billion yuan last year, which is expected to leverage an additional 2 trillion to 3 trillion yuan in funding [9][10][11]. - The total investment from these instruments, combined with other financial tools, could reach 1.3 trillion yuan, enhancing project capital and supporting local government investments [10][11]. Export Performance - China's exports saw a significant increase of 21.8% year-on-year in January and February, while imports rose by 19.8%, although this high growth rate may not be sustainable [7][8]. Consumption and Real Estate - "Boosting consumption" remains a top priority, with plans to implement a 1,000 billion yuan fund to support consumer loans and financing guarantees [14]. - The real estate market is expected to take time to recover, with policies likely to be implemented on a city-by-city basis [15][16]. Capital Market Insights - The role of the stock market in driving economic growth is acknowledged but considered limited; it cannot fully replace fiscal and monetary policies [16].

Group 1: Economic Growth - The economic growth target for 2026 is set in the range of 4.5%-5%, marking the first time it has fallen below 5% since the reform and opening up, allowing for structural reforms and risk management [8][9] - Historically, growth targets are often set close to the lower limit, indicating a "bottom line" approach, with 4.5% as the minimum and 5% as the aspirational target for 2026 [9][11] - The nominal GDP growth rate is expected to correlate with a long-term government bond yield of around 2%, given the historical relationship between nominal GDP growth and bond yields [12][11] Group 2: Fiscal Policy - The fiscal policy for 2026 is characterized by a stable overall approach with structural optimization, maintaining a narrow deficit rate of around 4% while slightly reducing the broad deficit rate [21][22] - The total deficit is projected at 5.89 trillion yuan, with a central deficit increase of 230 billion yuan, while local deficits remain unchanged at 800 billion yuan [22][25] - The focus of fiscal policy is shifting from total expansion to improving fund efficiency and controlling the pace of spending, emphasizing support for major projects and resolving local debt issues [22][26] Group 3: Monetary Policy - The monetary policy for 2026 continues to maintain a moderately loose stance, with a dual focus on stabilizing growth and promoting reasonable price recovery [37][38] - The approach to monetary tools is expected to be more flexible and efficient, with potential for one interest rate cut and 1-2 reserve requirement ratio reductions throughout the year [38][39] - The support for key sectors has shifted from asset price stabilization to enhancing demand in the real economy, particularly focusing on expanding domestic demand, technological innovation, and support for small and medium enterprises [41][39] Group 4: Bond Market Insights - Recent trends in the bond market indicate a warming, with yields generally declining, particularly in the short term, while the curve steepens [48][50] - The bond market's performance is influenced by geopolitical tensions and economic growth targets, with a notable reaction to the government's work report [48][49] - The current yield levels suggest a cautious approach to investment, as the attractiveness of yields below 1.8% may not be sufficient given the expectations of future economic conditions [51][49]

Loan and Financing Data - In February 2026, new RMB loans amounted to 900 billion, a year-on-year decrease of 110 billion[1] - New social financing in February was 2.38 trillion, an increase of 146.9 billion year-on-year[7] - Corporate loans increased significantly by 450 billion, driven by investment policies and high export growth[5] Monetary Supply and Growth Rates - As of the end of February, M2 growth rate was 9.0%, remaining at a high level compared to the past two years[8] - M1 growth rate rose to 5.9%, an increase of 1.0 percentage points from the previous month[9] - The increase in M2 was supported by a significant rise in fiscal spending, with fiscal deposits decreasing by approximately 1.6 trillion[8] Economic Policy and Outlook - The government work report emphasizes the continuation of a moderately loose monetary policy, with expected interest rate cuts of 0.2 to 0.3 percentage points throughout the year[2] - The central bank is expected to implement a reserve requirement ratio cut of 0.5 percentage points, alongside other liquidity injection measures[11] - Overall, inflation is projected to remain low in 2026, allowing for sufficient adjustment space in monetary policy[12]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The report analyzes the performance of major asset classes in the week from March 9th to March 13th, 2026, including the equity market, convertible bond market, fixed - income market, and commodity market, and explains the reasons for the market trends [5][10][11]. 3. Summary by Directory 3.1 This Week's Major Asset Performance - The equity market adjusted. The Shanghai Composite Index fell 0.7%, the Shenzhen Component Index rose 0.76%, and the ChiNext Index rose 2.51%. The trading volume of the Shanghai and Shenzhen stock markets decreased slightly. The Hang Seng Index fell 1.13%, and the Hang Seng Tech Index rose 0.62% [5][10]. - The convertible bond market weakened. The CSI Convertible Bond Index fell 1.1% in a week and 3.38% in a month, and the Shanghai Convertible Bond Index fell 1.52% in a week and 4.02% in a month [5][10]. - The bond market weakened, with short - end adjustment. The 1 - year Treasury bond yield declined by 0.9bp, while the yields of 3 - year, 5 - year, 7 - year, 10 - year, and 30 - year Treasury bonds rose [5][10]. - Commodity futures showed mixed performance, with strong performance in crude oil. COMEX gold fell 3.05%, COMEX silver fell 4.78%, LME copper fell 1.04%, LME aluminum rose 0.23%, WTI crude oil rose 8.59%, SHFE rebar rose 1.75%, CBOT soybeans rose 1.83%, and CBOT corn rose 1.36% [5][11]. 3.2 Equity Market Performance - Stocks - The equity market fluctuated downward this week. The Shanghai Composite Index oscillated and recovered at the beginning of the week, continued to rise in the middle of the week, and fell on Friday [13]. - In terms of industries, most industries rose. The construction and coal sectors led the gains, while the national defense and military industry, non - ferrous metals, and petroleum and petrochemical sectors led the losses. The national defense and military industry fell 5.3%, non - ferrous metals fell 5.07%, and petroleum and petrochemicals fell 4.22%. The construction sector rose 7.7%, coal rose 5.85%, and agriculture, forestry, animal husbandry, and fishery rose 5.43% [13]. - The market rotation was still active. The market style switched again. Affected by the Two Sessions and geopolitical risks, the construction and energy sectors led the gains, the consumer sector adjusted, and the technology - growth sectors such as semiconductors and chips were relatively weak [13]. 3.3 Equity Market Performance - Convertible Bonds - The convertible bond market followed the stock market down this week. As of March 13, 2026, the CSI Convertible Bond Index fell 1.1%, and the Shanghai Convertible Bond Index fell 1.52%. In the past month, the CSI Convertible Bond Index fell 3.38%, and the Shanghai Convertible Bond Index fell 4.02%. The trading volume of convertible bonds decreased, while the trading volume of underlying stocks recovered [17]. - The convertible bond market was weak this week, following the stock market adjustment. Affected by the Iran situation, the decline narrowed compared with last week. Funds switched from sectors with high previous gains such as military, technology, and non - ferrous metals to low - valuation and policy - favored sectors such as construction and coal [17]. 3.4 Fixed - Income Market Performance - Bond yields mostly rose this week, with the 1 - year Treasury bond yield slightly declining. The 1 - year Treasury bond yield declined by 0.9bp, while the yields of 3 - year, 5 - year, 7 - year, 10 - year, and 30 - year Treasury bonds rose [21]. - On March 12, the central bank governor emphasized the "moderately loose" monetary policy, and the Ministry of Finance refined the use of 1.3 trillion ultra - long - term special Treasury bonds, alleviating market concerns about long - term interest rate supply. Attention should be paid to the implementation rhythm of fiscal tools and the actual performance of inflation data [21]. - In terms of the capital side, the central bank had net withdrawals this week, mainly due to the continuous withdrawal of cash after the Spring Festival and the high level of bank system liquidity. It is expected that the central bank will maintain reasonable and sufficient liquidity [22]. 3.5 Commodity Market Performance - The Nanhua Commodity Index mostly strengthened this week, with strong performance in energy and chemicals and weak performance in precious metals. The comprehensive index rose 5.18%, energy and chemicals rose 9.76%, metals rose 1.11%, precious metals fell 1.52%, industrial products rose 6.29%, and agricultural products rose 2.72% [32]. - The gold price showed a trend of rising first and then falling. Geopolitical conflicts between the US, Israel, and Iran led to a rise in international oil prices, and many countries released strategic oil reserves. The uncertainty of the US - Iran conflict still exists, and the hedging value of precious metals is still prominent. It is expected that precious metals will maintain high - level volatility in the short term [33][35].

1. Report Industry Investment Rating - No investment rating for the industry is provided in the report. 2. Core Viewpoints of the Report - In the short - term, there is a risk of a rebound in CD interest rates [1]. - It is most appropriate to use the 7D OMO interest rate as the benchmark for CD interest rates, while the marginal winning bid rates of repurchase and MLF can only be used as auxiliary evidence [4]. 3. Summary by Relevant Catalogs CD Interest Rate Rebound Risk - On February 6, 2026, the 6M and 1Y AAA - grade CD interest rates were 1.58% and 1.59% respectively, and as of March 13, they had decreased by 7.0bp and 5.3bp respectively. Currently, there is a short - term risk of a rebound in CD interest rates [1]. - From a valuation perspective, CD is currently overpriced relative to the policy rate. The spreads between 6M and 1Y AAA - grade CDs and 7D OMO are at their lowest levels in the past year and at the 5% and 3% percentile levels since early 2024 respectively. Even considering the policy rate cut expectation, the spreads are still only at the 34% and 28% percentile levels since early 2024 [2]. - From a narrative perspective, the market may start to hype up topics such as the reduction of outright repurchase volume and quarter - end liquidity fluctuations in the short - term. The central bank will conduct a 500 billion yuan outright repurchase operation on March 16, with a net withdrawal of 100 billion yuan of base money on that day [2]. - From a trading perspective, when interest rates have declined significantly and the market is obviously optimistic, investors should be cautious rather than continue to chase the rise, especially in a volatile market this year [2]. CD Interest Rate Benchmark - Some investors believe that the marginal winning bid rates of outright repurchase and MLF should be used as the valuation benchmark for CD interest rates, but this method is not advisable. The central bank affects the medium - term liquidity level of the banking system through the volume of outright repurchase and MLF operations to regulate CD and other money market interest rates. The marginal winning bid rates of outright repurchase and MLF are the result of market - based bidding and are indirectly affected by CD interest rates. Using them as a benchmark may cause trouble for investors [3]. - The current market - oriented interest rate transmission chain in China is from the central bank's policy rate to the market benchmark rate and then to various financial market interest rates. CD interest rates have the attribute of a money market benchmark rate to some extent, so it is most appropriate to use the central bank's policy rate (7D OMO interest rate) as the benchmark, and the marginal winning bid rates of outright repurchase and MLF can only be used as auxiliary evidence. Broadly speaking, it is also appropriate to use the 7D OMO interest rate as the benchmark for the entire interest rate system [4]. - The medium - to long - term trend of CD interest rates can be regarded as the "micro - expression" of monetary policy, which is different from monetary policy signals. Monetary policy signals are actively released by the central bank, while "micro - expressions" are signs formed during the implementation of monetary policy but not necessarily intended by the central bank to be released [4].

1. Report Industry Investment Rating No information provided in the content. 2. Core Views of the Report - Inflation rising does not necessarily lead to an upward - moving interest rate center. Since the 21st century, there have been 6 obvious inflation - rising periods in China, which can be divided into demand - pull inflation, cost - push inflation, and structural inflation. Demand - type inflation often drives the interest rate center up significantly, while cost - type and structural inflation do not necessarily do so [1][9]. - Inflation rising does not necessarily result in tightened monetary policy. The fundamental reasons for the upward - moving interest rate center are the recovery of the fundamentals and tightened monetary policy. During demand - pull inflation, the central bank often stops easing or tightens monetary policy, driving up interest rates. In 2019 and 2021, mainly cost - push inflation occurred, and the monetary policy focused on maintaining economic growth and might be further relaxed, leading to a decline in interest rates [1][10]. - After the bond market adjustment, the allocation value has increased, and allocation investors are actively participating. With the decline in broad - spectrum interest rates, the liability costs of banks and insurance institutions have decreased, and bank liabilities are more stable than expected. As a result, allocation funds are sufficient [2][14]. - The cost - performance of bonds has increased. It is difficult for the 10Y Treasury bond interest rate to break through the previous high and may maintain a volatile trend. It is advisable to moderately participate in long - term bonds during the adjustment. With the continuous relaxation of the capital market, the short - end has higher certainty, and attention should be paid to the opportunities of spread reduction [2][18]. 3. Summaries According to Relevant Catalogs 3.1 Review Summary and Bond Market Outlook - This week, inflation shocks and inter - bank news alternately disturbed the bond market, causing intensified fluctuations. The long - end performed weaker than the short - end. The yields of 10Y and 30Y Treasury bonds rose by 3bp and 9bp respectively [8]. - The current inflation recovery is mainly driven by the cost side. However, the 2026 government work report clearly states "continue to implement a moderately loose monetary policy", so the probability of tightened monetary policy is low [10]. 3.2 Bond Market Quotation Review 3.2.1 Capital Situation: The central bank had a net withdrawal, and capital interest rates rose - This week, the central bank's open - market operations had a net withdrawal of 251.1 billion yuan. From March 9th to 13th, R001 and DR001 rose by 0.3bp and 0.2bp respectively compared with March 6th. The 3M certificate of deposit (CD) issuance rate fluctuated within a range, and the FR007 - 1Y swap rate first rose and then fell. As of March 13th, the 3M national - share bank draft discount price was 1.48%, up 10bp from March 6th [26][28]. 3.2.2 Secondary Market Trends: Fluctuations intensified - This week, the yield fluctuations intensified, and the long - end performed weaker than the short - end. Except for the 1 - year, the Treasury bond interest rates of other key tenors rose. Except for the 10Y - 7Y, the term spreads of other key tenors widened. As of March 13th, the yields of 10Y and 30Y Treasury bonds rose by 3bp and 9bp respectively compared with March 6th [32]. 3.2.3 Bond Market Sentiment: The 30Y - 10Y Treasury bond spread widened significantly - As of March 13th, the weekly turnover rate of 30Y Treasury bonds rebounded to 40%, the 50Y - 30Y Treasury bond spread widened by 1bp compared with March 6th, and the 30Y - 10Y Treasury bond spread widened by 5.2bp to 55bp, reaching a new high this year. The inter - bank leverage ratio dropped to 107.5%, and the exchange leverage ratio slightly dropped to 121.9%. The median duration of medium - and long - term pure - bond funds decreased by 0.01 years to 2.55 years, and the divergence degree slightly decreased. The implied tax rate of 10 - year China Development Bank bonds narrowed [40]. 3.2.4 Bond Supply: This week, the CD issuance rate dropped to 1.55%, and the government bond issuance scale will increase next week - This week, the net financing of interest - rate bonds increased. From March 9th to 13th, the net financing of interest - rate bonds was 255.2 billion yuan. Treasury bonds and policy - financial bonds turned to net financing, while the net financing of local government bonds decreased. Next week, the government bond issuance scale will increase, and the local government bond issuance scale is expected to reach 342.2 billion yuan, an increase of 206.7 billion yuan compared with this week [49][53]. 3.3 Economic Data: Freight rate indices and industrial production continued to improve marginally - In February, inflation readings exceeded expectations. The CPI同比 was 1.3%, the core CPI同比 was 1.8%, and the PPI同比 was - 0.9%. From January to February, foreign trade growth returned to double - digits. In February, the total national import and export volume was 508.78 billion US dollars, with a year - on - year increase of 27.7%. The total import and export volume from January to February was 1.09954 trillion US dollars, with a year - on - year increase of 21.0% [56]. - In February, social financing growth remained stable, and the year - on - year growth rate of M1 rebounded. Since March, freight rate indices and industrial production have continued to improve marginally. In terms of real estate, the transaction area of commercial housing in 30 cities and the land transaction area in 100 cities declined month - on - month. In terms of consumption, movie consumption continued to weaken, while subway travel was stronger than the Spring Festival seasonality. In terms of exports, port cargo throughput decreased month - on - month, while container throughput increased month - on - month. Industrial production continued to improve marginally [59]. 3.4 Overseas Bond Markets: US GDP data was significantly revised down, and Chinese bonds outperformed US and European bonds - US GDP data was significantly revised down. The annualized quarter - on - quarter growth rate of the US real GDP in the fourth quarter of 2025 was revised down from the initial value of 1.4% to 0.7%. The market's expectation of the Fed's interest - rate cuts has cooled. US and European bonds fell, and the emerging - market bond market generally declined [64][66]. 3.5 Major Asset Classes: Crude oil prices continued to rise, and the US dollar index exceeded 100 - This week, the CSI 300 index rose slightly, the Nanhua Crude Oil Index rose significantly by 17%, and the US dollar index rose and exceeded 100 again. Shanghai copper and gold both fell slightly. The performance of major asset classes this week was: crude oil > rebar > US dollar > CSI 300 > live pigs > Chinese bonds > convertible bonds > CSI 1000 > Chinese - funded US dollar bonds > Shanghai gold > Shanghai copper [69]. 3.6 Bond Market Calendar - From March 16th to 20th, there will be liquidity injections and expirations, government bond supplies, and the release of fundamental data. There are also many important domestic and international events to watch, such as central - bank interest - rate decisions and economic data releases in different countries [74].

Investment Rating - The industry investment rating is "Market Weight" indicating that the industry index is expected to perform within -10% to 10% relative to the CSI 300 index over the next six months [25]. Core Insights - The report highlights that the growth of social financing and M2 remains robust, with social financing stock growing by 8.2% year-on-year as of February 2026, and M2 increasing by 9.0% [5]. - Corporate financing is showing positive signs, with new social financing of 2.38 trillion yuan in February, which is an increase of 146.1 billion yuan year-on-year, driven by structural policy tools and a favorable interest rate environment [5]. - The report emphasizes that while corporate financing is strong, household credit remains weak, and government financing is advancing ahead of schedule [5]. - The focus of credit is shifting towards structural optimization, with expectations that future credit growth will align with supportive fiscal and industrial policies [5]. - The monetary policy remains supportive, with stable loan rates and reduced pressure on bank interest margins anticipated [6]. Summary by Sections Social Financing and M2 Growth - As of February 2026, social financing stock increased by 8.2% year-on-year, with M2 and M1 growing by 9.0% and 5.9% respectively [5]. - New corporate loans showed significant growth, with medium and long-term loans increasing by 890 billion yuan and short-term loans by 600 billion yuan [5]. Corporate Financing - The report indicates that corporate financing is performing well, supported by structural policy tools and a rise in liquidity needs before the Spring Festival [5]. - The demand for medium to long-term loans is driven by projects in manufacturing, new energy, and high-end equipment sectors [5]. Household and Government Financing - Household loans are reported to be weak, with both medium and short-term loans decreasing significantly [5]. - Government financing has increased by 1.4 trillion yuan, reflecting a proactive fiscal approach [5]. Credit Structure and Monetary Policy - The report notes a shift towards optimizing credit structures, with a focus on small and medium enterprises, technology innovation, and green financing [5]. - The central bank's policies are aimed at maintaining low social financing costs, with expectations of reduced pressure on bank interest margins in 2026 [6]. Investment Recommendations - The report suggests that the current monetary policy and interest rate environment are favorable for bank margins, and the banking sector remains attractive for long-term investment, particularly in state-owned large banks and leading small and medium banks [6].

Financing Demand - In February, new social financing (社融) reached 2.38 trillion yuan, an increase of 146.1 billion yuan year-on-year, exceeding the consensus expectation of 1.84 trillion yuan[3] - New RMB loans amounted to 848.4 billion yuan, up 195.6 billion yuan from the previous year, but down 4.05 trillion yuan from January[3] - The government bond financing was weak, with a net increase of only 1.4 trillion yuan in February[3] Monetary Supply - M2 growth was 9.0% year-on-year, consistent with January's growth rate, while M1 increased by 5.9%, up 1.0 percentage points from January[3] - M0 saw a significant increase of 14.1% year-on-year, rising by 11.4 percentage points from January[3] - The central bank injected 779.5 billion yuan into the market in February[3] Deposit Trends - February saw a total of 1.17 trillion yuan in new deposits, down 3.25 trillion yuan year-on-year[3] - The increase in deposits was primarily driven by a rise in household deposits, which increased by 2.5 trillion yuan year-on-year[3] - Corporate deposits decreased by 2.65 trillion yuan compared to the previous year[3] Loan Dynamics - Financial institutions issued 900 billion yuan in new loans in February, with corporate loans accounting for 1.49 trillion yuan, indicating strong demand[3] - However, household loans were weak, with a decrease of 650.7 billion yuan in new household loans compared to the previous year[3] - The government aims to maintain a moderately loose monetary policy to support economic growth and stabilize prices[3]

Group 1: Monetary Market Overview - The central bank's OMO net withdrawal this week totaled 101.1 billion, with a significant decrease in the scale of OMO maturities, maintaining liquidity support despite government bond repayments [2][16] - The average daily transaction volume of pledged repos slightly decreased to 8.57 trillion, while the overall scale remained above 12 trillion [3][23] - The tightening of interbank liquidity self-discipline has led to a significant decline in short-term interest rates, with the DR001 maintaining around 1.32% [4][28] Group 2: Interbank Certificates of Deposit - The 1-year Shibor rate decreased by 0.88 basis points to 1.576%, while the 1-year AAA-rated interbank certificate of deposit rate fell by 1.75 basis points to 1.5325% [10] - The issuance of interbank certificates of deposit turned into a net repayment of 146.1 billion, indicating a decrease in financing from state-owned banks [10][23] - The supply-demand index for certificates of deposit showed an upward trend, with an increase in willingness to invest in secondary markets [10][29] Group 3: Government Bonds and Financing - The net repayment of government bonds this week was -132.1 billion, with upcoming issuances of 3Y, 5Y, and 10Y bonds totaling approximately 585 billion [5][39] - The average issuance term of local government bonds decreased from 17.2 years in February to 15.0 years in March, indicating a shift in financing strategies [5][39] - The estimated net financing for government bonds in March is approximately 1.07 trillion, which is lower than the same period last year [9][39] Group 4: Market Sentiment and Future Outlook - The central bank's recent statements indicate a reluctance to signal further easing of monetary policy, reflecting concerns over inflation and external pressures [37][38] - The expected net repayment of government bonds will increase to 306.3 billion next week, with significant repayments concentrated in the latter half of the week [5][39] - The overall liquidity environment is expected to remain accommodative, with DR001 likely to stay within the 1.3%-1.35% range [38]

Group 1: Credit and Social Financing Overview - In February 2026, new RMB loans amounted to 900 billion, slightly above the market expectation of 841.6 billion but significantly lower than the seasonal average of 1.42 trillion[1][5] - New social financing (社融) reached 2.38 trillion, exceeding the expected 1.84 trillion and slightly better than the seasonal average of 2.3 trillion[1][7] - The stock social financing growth rate remained stable at 8.2%, unchanged from the previous month[1][7] Group 2: Structural Analysis - The structure of credit expansion shows significant divergence, with corporate and government sectors exhibiting strong credit growth, while the household sector remains weak[2][5] - Short-term loans for households decreased by 650.7 billion, reflecting a year-on-year decline of 261.6 billion, indicating weak consumer performance[5][6] - Corporate short-term loans reached a near six-year high, increasing by 600 billion, suggesting heightened cash flow pressures[6][7] Group 3: Economic Outlook - The current economic environment is characterized by strong expectations but weak realities, necessitating further policy support to stabilize real estate and boost consumption[3][4] - The upcoming policy adjustments are expected to focus on structural easing rather than broad interest rate cuts, with credit expansion being a key area of focus moving forward[3][4] - Short-term attention should be given to the sustainability of economic and financial data following the "opening red" in Q1, as well as the effectiveness of fiscal and monetary policies[3][4]