Investment Rating - The report maintains a "Market Perform" rating for the brokerage sector, indicating a synchronized performance with the market [1]. Core Insights - The brokerage index attempted to strengthen in January but ultimately failed, resulting in a decline of 1.49%, underperforming the CSI 300 index, which rose by 1.65% [5][8]. - The brokerage sector experienced increased differentiation, with a notable number of stocks outperforming the brokerage index, reflecting a growing divergence within the sector [11][13]. - Key market factors influencing the performance of listed brokerages include a rebound in fixed income markets, record-high trading volumes, and significant growth in margin financing balances [7][30][31]. Summary by Sections January Brokerage Market Review - The brokerage index's performance was weak, with a decline of 1.49% compared to the CSI 300 index's increase of 1.65%, ranking 28th among 30 industry indices [5][8]. - The average P/B ratio for the brokerage sector fluctuated between 1.426 and 1.541, indicating a slight increase in valuation metrics [14]. Key Market Factors Affecting January Performance - The equity market faced resistance after an initial rise, while the fixed income market showed signs of recovery, contributing to a rebound in proprietary trading [18][23]. - The average daily trading volume reached a historical high of 3.05 trillion yuan, with total trading volume for the month at 60.90 trillion yuan, marking significant increases year-on-year [26][29]. - The margin financing balance reached 27.153 billion yuan, reflecting a 6.9% month-on-month increase and a 53.1% year-on-year increase [30]. February Performance Outlook - The brokerage sector is expected to see a decline in proprietary trading due to a cooling equity market and a seasonal drop in trading volumes [7][40]. - The brokerage index is anticipated to experience continued weakness, with a potential drop in valuations to 1.3x P/B presenting a re-entry opportunity for investors [7][40]. - The overall operating performance of listed brokerages is projected to decline to relative lows not seen in the past 12 months, influenced by seasonal factors [7][40].

Investment Rating - The report maintains a "Market Perform" rating for the brokerage sector, indicating a synchronized performance with the market [1]. Core Insights - The brokerage index attempted to strengthen in January 2026 but ultimately failed, resulting in a decline of 1.49%, underperforming the CSI 300 index, which rose by 1.65% [5][8]. - The brokerage sector experienced increased differentiation, with a notable number of stocks outperforming the brokerage index, leading to a higher average P/B ratio fluctuating between 1.426 and 1.541 times [5][11][14]. - The overall market conditions for January 2026 were characterized by a significant increase in trading volumes and a record high in margin financing balances, indicating a robust trading environment despite the sector's overall weakness [7][30]. Summary by Sections 1. January 2026 Brokerage Market Review - The brokerage index's performance was weak, with a 1.49% decline, ranking 28th among 30 industry indices [5][8]. - The average P/B ratio for the brokerage sector fluctuated between 1.426 and 1.541 times, reflecting a slight increase in valuation [14]. - A total trading volume of 1.03 trillion yuan was recorded, marking a 40.1% increase month-on-month [9]. 2. Key Market Factors Impacting January 2026 Performance - The equity market faced resistance after an initial rise, while the fixed income market showed signs of mild recovery, contributing to a rebound in proprietary trading [7][18]. - The average daily trading volume reached a historical high of 3.05 trillion yuan, with a total monthly trading volume of 60.90 trillion yuan, indicating a strong recovery in brokerage activity [26]. - Margin financing balances reached 27,153 billion yuan, reflecting a 6.9% month-on-month increase and a 53.1% year-on-year increase [30]. 3. February 2026 Performance Outlook for Listed Brokerages - Proprietary trading is expected to decline due to a cooling equity market, while brokerage activity may experience a seasonal drop in performance [7][40]. - The brokerage index is anticipated to face continued weakness, with a potential drop in overall monthly performance expected to return to relative lows seen in the previous 12 months [7][45]. - The report suggests that if the brokerage sector's valuation drops to 1.3x P/B, it may present a good opportunity for re-entry, particularly for leading firms with strong wealth management capabilities [7].

Group 1 - The basis between the 5-year National Development Bonds and the same-term FR007 interest rate swap is 20 basis points (BP), which has increased by 17 BP compared to the end of 2024 [1] - In 2025, the overall basis between cash bonds and swaps is expected to rise, with the 1-year National Development Bonds and FR007 interest rate swap basis at 5 BP, up 31 BP from the end of 2024, and the 5-year basis at 20 BP, up 17 BP [1] - At the beginning of 2025, due to rising funding rates, interest rate swaps lead cash bonds, causing the basis to drop to a low of -20 BP for the 1-year National Development Bonds and 3 BP for the 5-year basis [1] Group 2 - Since February, the rise in the equity market has led to some capital diversion, impacting cash bonds and causing yields to rise, which has gradually expanded the basis between cash bonds and interest rate swaps [1] - In the second quarter, as the cash bond market recovered, yields fell, leading to a narrowing of the basis between cash bonds and interest rate swaps [1] - In the second half of the year, the cash bond market faced multiple disruptions from VAT collection, institutional behavior, and new rate regulations, resulting in a greater increase in yields and a subsequent expansion of the basis [1]

Core Viewpoint - The article discusses the investment strategies and outlook for convertible bond funds in 2026, highlighting the advantages of these funds in volatile markets and the expected performance of the convertible bond market amid changing economic conditions [1][4]. Group 1: Investment Strategy - The South China Xi Yuan Convertible Bond Fund focuses on flexible allocation of "stable base assets," "balanced convexity assets," and "high-growth stocks" to enhance absolute returns [2][5]. - The fund employs stock position timing and structured layout to achieve absolute return enhancement [2][5]. Group 2: Market Performance - In 2025, the convertible bond market performed strongly with the China Convertible Bond Index rising by 18.66%, while the overall bond market faced pressure [2][5]. - The South China Xi Yuan Convertible Bond A fund achieved a net value growth rate of 79.27% since inception, outperforming its benchmark by 34.61 percentage points [2][5]. Group 3: Future Outlook - The convertible bond market is expected to maintain a high valuation level in 2026, driven by positive expectations for the equity market and a mismatch in supply and demand for convertible bonds [1][4]. - The market will shift from "high elasticity" to "steady enhancement" in return expectations, emphasizing detailed tracking and differentiated analysis of individual bonds [1][4][6]. - The fund aims to utilize active enhancement and quantitative support to achieve stable excess returns in a high valuation environment [3][6].

Core Viewpoint - The report from Guotai Junan indicates that the low interest rate environment and the profitability of the equity market are driving residents to gradually increase their investments in equities, benefiting brokerage firms across various business lines [1] Group 1: Market Trends - By December 2025, the asset allocation of residents is expected to primarily focus on deposits, with a marginal increase in equity investments. The total market for wealth management products available to residents is projected to reach 352.5 trillion yuan, reflecting a quarter-on-quarter increase of 1.05% and a year-on-year increase of 10.4% [2] - The equity market is performing well, with rising returns on equity assets, while fixed income asset yields are experiencing volatility. The 10-year government bond yield has increased by 0.61 basis points, and the CSI All Bond Index has decreased by 0.07 [2] - Major indices in the equity market have shown positive performance, with stock fund indices, mixed fund indices, bond fund indices, and money market fund indices increasing by 2.12%, 3.28%, 0.17%, and 0.11% respectively [2] Group 2: Fund Performance - The total market size of public funds reached 37.7 trillion yuan by the end of December, with a quarter-on-quarter increase of 1.88%. The sizes of stock funds, mixed funds, bond funds, and QDII have increased by 4.39%, 2.13%, 3.92%, and 1.64% respectively [3] - New fund issuance in December amounted to 113.22 billion units, reflecting a quarter-on-quarter increase of 19.72%. However, the issuance of equity funds decreased by 10.73%, while bond fund issuance increased by 136.82% [3] - The private fund market has seen a significant increase in new registrations, with the total size of private funds reaching 22.2 trillion yuan, a quarter-on-quarter growth of 0.27%. The new registration scale for private funds was 98.9 billion yuan, reflecting a quarter-on-quarter change of 38.6% [3] Group 3: Banking and Insurance - In December, the total amount of bank wealth management products decreased by 235.61 billion yuan, with a quarter-on-quarter decline of 0.81%. The changes in equity, fixed income, and cash management categories were -1.74 billion, -188.54 billion, and +1.88 billion yuan respectively [4] - Insurance companies reported premium income of 400.7 billion yuan, with a year-on-year increase of 7.2%. Life insurance premiums increased by 8.8%, while property insurance premiums rose by 4.4% [4] - The total amount of household deposits in RMB reached 165.89 trillion yuan, reflecting a quarter-on-quarter increase of 1.58% [4]

Core Viewpoint - By December 2025, residents' asset allocation is primarily focused on deposits, with a marginal increase in equity investments. Securities firms will benefit multidimensionally as residents' funds enter the market [1]. Group 1: Asset Allocation - As of December 2025, the total market stock of wealth management products available for residents reached 352.5 trillion yuan, with a quarter-on-quarter change of +1.05% and a year-on-year change of +10.4%. The net increase in value was 3.7 trillion yuan, with a quarter-on-quarter change of +364.2% [1]. - The incremental growth of various wealth management products includes public funds (+695.7 billion yuan), private funds (+59.3 billion yuan), private asset management (-206.2 billion yuan), bank wealth management (-122.3 billion yuan), and deposits (+2.585 trillion yuan), contributing 19%, 2%, -6%, -3%, and +70% respectively [1]. Group 2: Market Performance - The equity market showed strong performance, with major indices rising as residents' risk appetite increased, leading to a shift from deposits to higher-yield assets. The stock fund index, mixed fund index, bond fund index, and money market fund index saw changes of +2.12%, +3.28%, +0.17%, and +0.11% respectively [2]. - By the end of December, the total market size of public funds reached 37.7 trillion yuan, with a quarter-on-quarter change of +1.88%. The sizes of stock funds, mixed funds, bond funds, and QDII saw quarter-on-quarter changes of +4.39%, +2.13%, +3.92%, and +1.64% respectively [2]. - New fund issuance in December totaled 113.22 billion units, with a quarter-on-quarter change of +19.72%. Equity fund issuance decreased by -10.73%, while bond fund issuance increased by +136.82% [2]. Group 3: Private Funds and Asset Management - The stock of private funds reached 22.2 trillion yuan by the end of December, with a quarter-on-quarter growth of +0.27%. The newly registered private fund scale was 98.9 billion yuan, with a quarter-on-quarter change of +38.6% [3]. - The stock of private asset management reached 12.3 trillion yuan, with a quarter-on-quarter change of -1.65%. The year-on-year changes for equity, fixed income, commodity and financial derivatives, and mixed categories were -2.35%, -4.11%, +73.61%, and +38.69% respectively [3]. Group 4: Investment Recommendations - The low interest rate environment and the profit effect from the equity market are driving residents' funds into the market steadily. Securities firms are expected to benefit from the influx of incremental funds. It is anticipated that firms adapting to the transition from vertical to public flow will perform better [4]. - The combination of fixed income and equity is expected to be a core strategy for this round of residents' incremental market entry, with a focus on firms that balance both capabilities [4].

Group 1 - The core viewpoint is that despite recent adjustments in the technology sector due to external sentiment, internal structural differentiation, and high valuation digestion, the AI-driven technological revolution continues to deepen [1] - The upcoming fund, Invesco Great Wall Xin You Growth, will focus on a wide range of technology sectors, emphasizing the importance of selecting "big technology" fund managers with strong investment capabilities [1] - Fund manager Nong Bingli emphasizes the technology sector as a long-term core theme in the market, with a focus on diversified investments across low-correlation industries to manage portfolio risk and reduce drawdowns [1] Group 2 - The fund will allocate 60%-95% of its assets to stock investments, covering A-shares and Hong Kong stocks, with a maximum of 50% in Hong Kong Stock Connect stocks [2] - A floating management fee mechanism linked to fund performance is set to encourage the fund manager and team to enhance their ability to generate excess returns and promote long-term holding by investors [2] - Nong Bingli maintains an optimistic outlook for the equity market through 2026, focusing on sectors such as computing power, semiconductors, the internet, innovative pharmaceuticals, and consumer electronics [2]

Group 1 - The issuance of public funds is actively continuing ahead of the Spring Festival, with 29 funds set to be launched in the next three weeks, including 10 equity mixed funds and 8 passive index funds [1] - 21 out of the 29 funds belong to equity categories, indicating that equity funds are leading the issuance trend before and after the Spring Festival [1] - The reasons for the active layout of equity funds include attractive market valuations, seasonal inflow of resident funds, and regulatory encouragement for long-term capital to enter the market [1] Group 2 - The equity market in February is expected to continue a rotation pattern, with a potential for upward movement despite a lack of clear catalysts before the Spring Festival [2] - The focus on technology sectors, particularly overseas computing-related areas, is seen as a favorable strategy, with expectations for the "AI+" sector to become more active [2] - The issuance of funds during the Spring Festival has both advantages and disadvantages, with increased investor attention during the holiday but potential delays in the fundraising process due to market closures [3] Group 3 - The public fund industry is projected to develop towards higher quality, tool-oriented, and long-term investment strategies by 2026, with equity products remaining mainstream [3] - The total issuance of fund products is expected to steadily increase, with a continued optimization of structure and a balanced development of actively managed funds and index investment tools [3] - The market share of leading institutions is likely to expand, focusing on new productivity and dividend themes [3]

Core Insights - Public fund institutions have shown a significant preference for equity funds, with a total net subscription amount of 4.74 billion yuan, of which equity funds accounted for 3.78 billion yuan, representing 79.75% of the total [1] - The trend since 2026 indicates a steady growth in total subscriptions with a highly concentrated structure, particularly in mixed funds and stock funds [1][2] - The focus on domestic core assets is evident, as QDII funds had the lowest net subscription amount of only 0.08 billion yuan, or 1.69% of the total [1] Equity Fund Preferences - Within the mixed fund category, all net subscriptions were directed towards equity-mixed funds, totaling 2.58 billion yuan, which is 54.43% of the total subscriptions [2] - Passive index funds have become particularly popular among stock funds, with a net subscription of 0.80 billion yuan, making up 16.88% of the total self-purchase amount [2] - The structure indicates a preference for lower-fee, market-aligned, and more liquid passive index products over traditional stock funds [2] Bond Fund Characteristics - Bond funds exhibited a gradient configuration, with mixed bond type I funds net subscriptions at 0.28 billion yuan, accounting for 5.91% of the total market fund subscriptions [2] - Mixed bond type II funds had a net subscription of 0.20 billion yuan, while long-term pure bond funds had a net subscription of 0.10 billion yuan, reflecting a diversified approach to bond investments [2] Institutional Insights - The concentrated self-purchase of equity funds by public institutions is driven by three core logics: regulatory policies promoting alignment of interests, favorable market valuations for long-term investments, and the need for institutions to demonstrate research capabilities [3] - This trend signals optimism regarding the long-term outlook of the A-share market and indicates a shift in the public fund industry from a focus on scale to prioritizing quality and long-term performance [3]

1. Report Industry Investment Rating - No industry investment rating is provided in the report. 2. Core Viewpoints of the Report - The sustainability of the polarized valuation depends on the direction of the equity market. The report makes three conjectures about the possible trends of the equity market and formulates corresponding convertible bond response plans [2][20]. - In the case of convertible bond prices and valuation indicators approaching the historical 100% quantile, if the spring rally continues, the Shanghai Composite Index breaks through 4200, and the market style shifts from small - cap to large - cap stocks, it is recommended to select individual convertible bonds in the growth technology sector [2][20]. - If the broad - based index continues the January shock trend and the small - cap style remains dominant, it is advisable to focus on core targets in popular sectors [2][20]. - If the equity market turns down, it is recommended to reduce positions first and then pay attention to defensive sectors [2][20]. 3. Summary by Relevant Catalogs Market Trends (2026/1/26 - 2026/1/30) Stock Market - The daily trading volume of the market remained high last week, with rapid rotation among sectors. The precious metals sector led the gains but had a large decline on Friday. Affected by the potential conflict risk between the US and Iran, the oil price soared, driving the performance of the A - share oil and gas sectors. The previous popular sectors such as commercial aerospace and space photovoltaics had significant corrections [8]. - Most of the Shenwan primary industries declined last week. The top - performing sectors were petroleum and petrochemicals (7.95%), communication (5.83%), coal (3.68%), non - ferrous metals (3.37%), and agriculture, forestry, animal husbandry, and fishery (1.82%); the bottom - performing sectors were national defense and military industry (-7.69%), power equipment (-5.10%), automobiles (-5.08%), and computers (-4.77%) [9]. Bond Market - The central bank's open - market operations were mainly net injections last week, and the capital market changed from tight to loose. The bond market sentiment was generally strong due to the intensified volatility of the equity market, frequent positive signals from the monetary policy, and rumors about new monetary policy tools. The 10 - year Treasury bond yield closed at 1.81% on Friday, down 1.86bp from the previous week [9]. Convertible Bond Market - Most convertible bond issues declined last week. The CSI Convertible Bond Index fell 2.61% for the whole week, the median price dropped 2.22%, and the calculated arithmetic average parity decreased 3.70% for the whole week. The overall market conversion premium rate increased 1.12% compared with the previous week [1][9]. - Most industries in the convertible bond market declined last week. The top - performing sectors were coal (0.57%), banks (-0.84%), agriculture, forestry, animal husbandry, and fishery (-0.87%), and building materials (-1.07%); the bottom - performing sectors were social services (-8.65%), national defense and military industry (-6.45%), computers (-5.51%), and electronics (-4.88%) [13]. - At the individual bond level, Tianzhun (machine vision), Baichuan Zhuan 2 (fine chemicals), Outong (data center power supply), Haomei (aluminum profiles), and Yunji (transportation machinery) led the gains; Xinzhi (AI application), Hangyu (commercial aerospace), Dongshi (driver training), Guanzhong (ecological restoration), and Huicheng (waste catalyst treatment) convertible bonds led the losses [1][14]. - The total trading volume of the convertible bond market last week was 422.855 billion yuan, with an average daily trading volume of 84.571 billion yuan, a slight decrease from the previous week [18]. Valuation Overview - As of January 30, 2026, for equity - biased convertible bonds, the average conversion premium rates for bonds with a parity in the ranges of 80 - 90 yuan, 90 - 100 yuan, 100 - 110 yuan, 110 - 120 yuan, 120 - 130 yuan, and above 130 yuan were 61.11%, 40.98%, 36.66%, 26.78%, 20.18%, and 20.8% respectively, at the 100%/100%, 98%/99%, 99%/100%, 98%/99%, 96%/99%, and 99%/99% quantiles since 2010/2021 [21]. - For bond - biased convertible bonds, the average YTM of bonds with a parity below 70 yuan was -4.65%, at the 1%/3% quantiles since 2010/2021 [21]. - The average implied volatility of all convertible bonds was 49.75%, at the 95%/99% quantiles since 2010/2021. The difference between the convertible bond implied volatility and the long - term actual volatility of the underlying stock was 8.36%, at the 96%/98% quantiles since 2010/2021 [21]. Primary - Market Tracking - No convertible bonds were announced for issuance last week (2026/1/26 - 2026/1/30). Lianrui Convertible Bond and Naipu Zhuan 02 were listed [28]. - Lianrui Convertible Bond (118064.SH): The underlying stock is Lianrui New Materials (688300.SH), belonging to the basic chemical industry. As of January 30, its market value was 16.128 billion yuan. The issued convertible bond scale is 695 million yuan, with a credit rating of AA. The funds after deducting issuance fees are planned for specific projects [28]. - Naipu Zhuan 02 (123265.SZ): The underlying stock is Naipu Mining Machinery (300818.SZ), belonging to the machinery equipment industry. As of January 30, its market value was 8.368 billion yuan. The issued convertible bond scale is 450 million yuan, with a credit rating of A+. The funds after deducting issuance fees are used for a project in Peru and to supplement working capital [29]. - As of the announcement on January 30, there are no convertible bonds announced for issuance or listing in the next week (2026/2/2 - 2026/2/6). Last week (2026/1/19 - 2026/1/23), 4 companies' applications were newly accepted by the exchange, 4 companies' plans passed the general meeting of shareholders, and 3 companies announced board plans. As of now, there are 100 convertible bonds awaiting issuance, with a total scale of 155.9 billion yuan, among which 8 have been approved for registration, with a total scale of 6.16 billion yuan [30][31].