Core Viewpoint - The article emphasizes that the most challenging aspect of investing is not predicting the market but controlling one's emotions, highlighting that greed and fear are the biggest enemies of investors, while discipline and patience are the best tools [1]. Financial Market Overview - The interbank funding market is experiencing a balanced and slightly loose liquidity environment, with the central bank conducting a 245 billion yuan reverse repurchase operation, resulting in a net injection of 15 billion yuan after 230 billion yuan of reverse repos matured [3]. - The overnight funding rates have slightly decreased, with DR001 around 1.33% and DR007 around 1.47% [3]. - The stock market has seen a slight decline, influenced by ongoing geopolitical conflicts and news of a potential reduction in interbank deposit rates, which has led to some deposit rates hitting historical lows [5]. Bond Market Insights - The 10-year government bond yield opened at 1.814% and fluctuated, eventually settling at 1.807% [5]. - The bond market sentiment remained stable in the morning, with a slight decrease in yields following the news of lower deposit rates [5]. - Recent fundamental data has broken a year-long period of stagnation, with inflation data and high oil prices contributing to short-term inflation expectations remaining unproven [5]. Market Data Summary - The weighted rates for various repo codes are as follows: R001 at 1.40%, R007 at 1.51%, and R014 at 1.53%, with respective changes of -1 bp, 0 bp, and -1 bp [4]. - The trading volume for R001 was 77,204.47 million yuan, while R007 had a volume of 6,803.47 million yuan, indicating a decrease of 522.82 million yuan [4].

Group 1 - The article emphasizes the importance of cutting losses and letting profits run, contrasting with the common behavior of traders who tend to cut profits and let losses accumulate [1] Group 2 - The market is currently observing geopolitical situations, with stock markets showing slight fluctuations and bond market rates experiencing a minor increase [5] - The issuance of 300 billion savings bonds was successful, with yields of 1.63% for 3-year bonds and 1.7% for 5-year bonds, attracting significant sales [6] - A report from Goldman Sachs indicates that a small number of vessels are navigating the Strait of Hormuz, with the current traffic being less than one-fifth of pre-conflict levels [8]

Fund Flows Overview - Last week, retail investors experienced a net outflow of 230 billion CNY, with inflows into sectors like non-ferrous metals, utilities, and banks, while sectors such as machinery, basic chemicals, and computers saw outflows[10] - Margin financing saw a net outflow of 242 billion CNY, with trading activity dropping to 9.17%[19] - The average collateral ratio for margin financing slightly decreased to 290.24%[19] Market Dynamics - The A-share market experienced significant fluctuations due to geopolitical tensions, with trading funds briefly returning post-holiday before flowing out again[6] - The market's collateral value to cash ratio fell from 26% to 20% after a decline in the latter half of the week, indicating a clearing of market positions[2] - Despite the volatility, there was a notable ability for funds to absorb market fluctuations, as evidenced by a net subscription of 1.7 billion units in broad-based ETFs and a net inflow of 3.9 billion CNY on Friday[3] Institutional Activity - Public funds saw a slight increase in equity positions, with ordinary stock funds rising from 86.7% to 87.8%[3] - New issuance of equity funds reached 2.7 billion units, indicating a rebound in fundraising activity[32] - The number of private fund registrations decreased, reflecting a cautious approach among institutional investors[52] Foreign Investment Trends - Northbound trading volume increased to 344.2 billion CNY, with a net inflow of 8.02 billion CNY from foreign investors during the period from February 25 to March 4[61] - Active foreign investment saw a net inflow of 1.15 billion CNY, while passive investments accounted for 6.87 billion CNY of the inflow[61]

1. Report Industry Investment Rating There is no information about the industry investment rating in the provided content. 2. Core Viewpoints of the Report - The general deficit scale in 2026 has a limited increase. The supply of interest - rate bonds is not the core contradiction in the bond market, and it is difficult to change the long - term interest rate's oscillating pattern. However, it is beneficial for short - term bond varieties that closely follow the capital market [6][9]. - Although the overall deficit and the corresponding net supply of government bonds have a limited increase, it is difficult to bring much positive impact on bond market interest rates, especially long - term interest rates. The positive impact on the bond market, especially long - term interest rates, is relatively limited after the deficit scale is announced [6][10]. - Under the current deficit level, the supply pressure in the first half of the year is weak, and the resulting capital pressure is controllable, which is beneficial for short - term varieties. The supply peak is expected to be in the third quarter [6][11]. 3. Summary by Relevant Catalogs 3.1 Bond Market Weekly Viewpoint - The general deficit scale in 2026 has a limited increase. The supply of interest - rate bonds is not the core contradiction in the bond market, and it is difficult to change the long - term interest rate's oscillating pattern, but it is beneficial for short - term varieties [6][9]. - In 2026, the deficit rate and the new quota of special bonds are the same as last year, and the scale of special treasury bonds has a slight decline. The general deficit scale has an extremely limited increase. The general deficit scale is 11.89 trillion yuan, only 30 billion yuan more than last year, and the increase is the lowest since 2023, significantly lower than the average increase of 1.6 trillion yuan in the past three years. The net supply of government bonds is expected to be around 13.89 trillion yuan, with an increase of 30 billion yuan compared to 2025 [6][10]. - The supply pressure in the first half of the year is weak, and the capital pressure is controllable, which is beneficial for short - term varieties. The net financing in the first and second quarters is expected to be 3.53 trillion and 3.47 trillion yuan respectively, with changes of - 570.9 billion and - 222.8 billion yuan compared to the same period last year. The supply peak is expected to be in the third quarter, with the net financing of government bonds expected to be around 4.3 trillion yuan, an increase of about 530 billion yuan compared to the same period last year [6][11]. 3.2 This Week's Focus in the Fixed - Income Market - This week, China will release February CPI, PPI, and January - February export data. The United States will release February CPI and other data [15][16]. - The issuance of interest - rate bonds this week is expected to be around 757.5 billion yuan, at a high level compared to the same period [16]. - Treasury bonds: 2 coupon - bearing general treasury bonds with maturities of 1 and 2 years and scales of 175 billion and 155 billion yuan respectively; 1 general ultra - long - term treasury bond with a maturity of 50 years and a scale of 32 billion yuan; 1 discount treasury bond with a maturity of 91 days; 2 savings treasury bonds with maturities of 3 and 5 years. The total issuance scale is expected to be 442 billion yuan [18]. - Local bonds: 35 local bonds are planned to be issued, with a scale of 135.5 billion yuan, including 5 new general bonds (19.4 billion yuan), 10 new special bonds (17.7 billion yuan), 8 refinancing general bonds (55.3 billion yuan), and 12 refinancing special bonds (43.2 billion yuan) [18]. - Policy - financial bonds: The issuance scale is expected to be around 180 billion yuan [18]. 3.3 Review and Outlook of Interest - Rate Bonds 3.3.1 Last Week's Reverse Repurchase Delivery Fell to a Low Level - Last week, the net reverse repurchase withdrawal was 1.0944 trillion yuan. After the Spring Festival, the reverse repurchase delivery returned to a low level, with a total of 161.6 billion yuan. Considering the 1.256 trillion yuan due, the net withdrawal was about 1 trillion yuan [22][24]. - The capital market volume increased and the price decreased. The repurchase trading volume recovered after the Spring Festival, with the highest reaching 9.2 trillion yuan during the week, and the weekly average rose to 8.8 trillion yuan. The overnight proportion's weekly average rose to 91%. The capital price mostly declined. DR001 fluctuated around 1.3% and rose to 1.32% on Friday; DR007 gradually fell to around 1.41% compared to the previous week [24]. - The issuance of certificates of deposit increased, the proportion of long - term certificates of deposit increased significantly, and the price broke through downward. From March 2nd to March 8th, the issuance scale was 717.2 billion yuan (an increase of 263.3 billion yuan compared to the previous week), the maturity scale was 588 billion yuan (a decrease of 78.8 billion yuan compared to the previous week), and the net financing was 129.2 billion yuan (an increase of 342 billion yuan compared to the previous week) [30]. 3.3.2 The Decline of Short - and Medium - Term Interest Rates was Relatively Large - After the geopolitical conflict last week, the market's risk - aversion sentiment was strong, the stock market adjusted, and the bond market strengthened. In the second half of the week, the Two Sessions' report was basically in line with expectations. Although the bond market's expectation of further monetary easing was disappointed, the central bank stated that future easing operations were still expected. And the limited increase in the deficit strengthened the expectation of capital loosening, which was beneficial for the bond market, and bond market interest rates mostly declined [39]. - Finally, the 10 - year treasury bond and the active state - owned development bond changed by - 0.2bp and - 1.4bp respectively compared to last week, reaching 1.79% and 1.92%. In terms of yields, the 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year ChinaBond treasury bond yields changed by - 3.1bp, - 1.5bp, - 0.8bp, - 0.5bp, and 0.6bp respectively compared to the previous week, reaching 1.29%, 1.36%, 1.53%, 1.66%, and 1.78%. The yields of interest - rate bonds of various maturities mostly declined, and the 1 - year state - owned development bond yield declined the most, about 6.4bp [39]. 3.4 High - Frequency Data - Production end: Most of the operating rates increased. The blast furnace operating rate decreased from 80.2% to 77.7%, the semi - steel tire operating rate increased from 34.56% to 74%, the PTA operating rate increased from 73.7% to 79.5%, and the asphalt operating rate increased from 21.4% to 23.3%. The year - on - year decline in the average daily crude steel output in late February was still large, with a reading of - 12.9% [46]. - Demand end: The year - on - year growth rates of passenger car manufacturers' wholesale and retail sales were at a high level. In the week of February 8th, the year - on - year change in passenger car manufacturers' wholesale was 46%, and the year - on - year change in retail was 54%. In the week of March 1st, the land transaction area in 100 large - and medium - sized cities recovered to 8.18 million square meters but was still lower than the same period, and the commercial housing sales area in 30 large - and medium - sized cities increased to around 1.42 million square meters, also significantly lower than the same period. In terms of export indices, the SCFI and CCFI composite indices changed by 11.7% and 0.9% respectively [46]. - Price end: The crude oil price soared. The upstream Brent futures crude oil price and WTI futures crude oil price changed by 27.9% and 35.6% respectively; the copper and aluminum prices diverged, with LME copper and LME aluminum changing by - 4.7% and 7.2% respectively; the coal price diverged, the thermal coal active contract futures settlement price was the same as last week, and the coking coal active contract futures settlement price changed by 2.3%. In the middle - stream, the building materials composite price index was basically flat, the cement index changed by - 0.3%, and the glass index changed by 2.4%. The output of rebar increased, the inventory accumulation speed was fast, and the current inventory was 6.38 million tons, and the futures price changed by 0.7%. In the downstream consumption end, the prices of vegetables, fruits, and pork changed by - 2.9%, 1%, and - 3% respectively [47].

Report Summary 1. Report Industry Investment Rating No information provided. 2. Core Viewpoints - At the beginning of the month, the liquidity in the capital market spontaneously eased, and the short - end yields of interest - rate bonds declined. The central levels of DR001 and DR007 both decreased. Domestic stock markets are under pressure, and the downward trend continues. The bond market benefits from the risk - aversion sentiment in the short term, but there is a risk of a logical switch due to potential inflation caused by rising oil prices. Overseas, stock markets in Japan and South Korea have fallen significantly, oil prices have soared, and the US dollar index has risen [1][5]. 3. Summary by Related Content Interest - rate Bond Yields - **Treasury Bonds**: The 1 - year yield decreased by 3bp, the 3 - year by 2bp, the 5 - year by 1bp, while the 7 - year and 10 - year yields remained unchanged. The current levels of 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year yields are 1.29%, 1.36%, 1.53%, 1.66%, and 1.78% respectively [1][2][3]. - **China Development Bank Bonds**: The 1 - year yield decreased by 6bp, the 3 - year by 4bp, the 5 - year by 2bp, the 7 - year by 2bp, and the 10 - year yield remained unchanged. The current levels of 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year yields are 1.51%, 1.63%, 1.73%, 1.84%, and 1.96% respectively [2][3]. Term Spreads - On March 6, the 10 - 1Y term spread of treasury bonds was 49.52bp, and that of China Development Bank bonds was 45.39bp. Compared with February 28, they widened by 3.67bp and 6.08bp respectively [4]. Market Conditions - Due to the continuous deterioration of the Middle - East conflict and the unrelieved obstruction of the Strait of Hormuz, global risk appetite has declined again. Domestic stock markets are under pressure, and the bond market benefits from risk - aversion sentiment in the short term. Overseas, stock markets in Japan and South Korea have fallen significantly, oil prices (WTI and Brent) have both exceeded $100, rising nearly 20% compared to Friday, and the US dollar index is likely to reach a recent high [5].

Report Industry Investment Rating - Not provided in the document Core Viewpoints - From March 2 - 6, 2026, the central bank net - withdrew 136.34 billion yuan through short - term reverse repurchases and conducted an 80 - billion - yuan 3M outright reverse repurchase operation on March 6. From March 2 - 8, 2026, the net payment scale of government bonds increased, most of the maturity yields of inter - bank certificates of deposit (CDs) declined, the net financing of inter - bank CDs turned positive, and the average leverage ratio of the inter - bank bond market rose slightly. From March 9 - 15, 2026, the expected net payment scale of government bonds is - 20.21 billion yuan, and the maturity scale of inter - bank CDs is about 100.82 billion yuan. On March 6, 2026, the median durations of medium - long - term and short - term interest - rate style pure bond funds increased by 0.12 years and decreased by 0.06 years week - on - week respectively [2]. Summary by Related Catalogs Funds - **Central bank's open - market operations**: From March 2 - 6, 2026, the central bank's short - term reverse repurchase investment was 16.16 billion yuan, and the withdrawal was 152.5 billion yuan, achieving a net withdrawal of 136.34 billion yuan. On March 6, an 80 - billion - yuan 3M outright reverse repurchase operation was carried out, with a maturity volume of 100 billion yuan this month and a net withdrawal of 20 billion yuan. From March 9 - 13, 2026, 27.76 billion yuan of open - market reverse repurchases and 15 billion yuan of treasury cash fixed - term deposits will mature [6]. - **Funding rates**: From March 2 - 6, 2026, the average values of DR001 and R001 were 1.29% and 1.36% respectively, down 6.9 and 4.8 basis points compared with February 24 - 28, 2026. The average values of DR007 and R007 were 1.43% and 1.51% respectively, down 7.2 and 5.4 basis points compared with February 24 - 28, 2026. The weighted average rate of DR001 first decreased and then increased from March 2 - 6. The initial increase in the banking system's fund lending ability at the beginning of the month promoted a stable and loose funding situation, while the net withdrawal of 20 billion yuan from the 3M outright reverse repurchase in March and the central bank's withdrawal of short - term reverse repurchases at the beginning of the month caused market concerns about the marginal tightening of the funding situation [7]. - **Government bond net financing**: From March 2 - 8, 2026, the net financing of government bonds was about 28.2 billion yuan, an increase of about 9.16 billion yuan compared with February 23 - March 1, 2026. Among them, the net financing of treasury bonds was about - 3.5 billion yuan, and that of local government bonds was about 31.7 billion yuan. From March 9 - 15, 2026, the expected net financing of government bonds is about - 20.21 billion yuan, with treasury bonds having a net financing of about - 33.29 billion yuan and local government bonds about 13.08 billion yuan [8]. Inter - bank Certificates of Deposit - **Maturity yields**: As of March 6, 2026, the maturity yields of 1M and 3M inter - bank CDs were 1.4916% and 1.5050% respectively, up 1.7 and down 4.8 basis points compared with February 28, 2026. The 1Y inter - bank CD maturity yield was 1.5500%, down 2.5 basis points compared with February 28, 2026. The decline in inter - bank CD rates was driven by the loose funding situation and the pricing of the expected tightening of inter - bank deposit management [9]. - **Net financing**: From March 2 - 8, 2026, the net financing of inter - bank CDs was about 12.92 billion yuan. From March 9 - 15, 2026, the expected maturity repayment volume of inter - bank CDs is 100.82 billion yuan, up from 58.8 billion yuan in the previous week, increasing the pressure of maturity renewal [9]. Institutional Behavior - **Leverage ratio**: From March 2 - 6, 2026, the average leverage ratio of the inter - bank bond market was 107.62%, up from 107.39% in February 24 - 28, 2026. On March 6 and February 28, 2026, the estimated leverage ratios of the inter - bank bond market were about 107.61% and 106.99% respectively [10]. - **Duration of bond funds**: On March 6, 2026, the median duration (MA5) of medium - long - term interest - rate style pure bond funds was 4.62 years, up 0.12 years compared with February 28, 2026, at the 87.0% quantile since the beginning of 2022. The median duration (MA5) of short - term interest - rate style pure bond funds was 2.03 years, down 0.06 years compared with February 28, 2026, at the 79.0% quantile since the beginning of 2022 [10].

Market Overview - The central bank conducted a 7-day reverse repurchase operation of 40.5 billion yuan at a fixed rate of 1.40% on March 4, with a net withdrawal of 369 billion yuan for the day due to 409.5 billion yuan in reverse repos maturing [3][4] - The interbank market remains loose, with the weighted average rate of DR001 slightly rising to 1.26%, while DR007 decreased by over 3 basis points [5][7] - The latest transaction for one-year interbank certificates of deposit is around 1.557%, down less than 1 basis point from the previous day [8] Bond Market - The closing prices for government bond futures showed a slight decline for the 30-year contract by 0.03%, while the 10-year, 5-year, and 2-year contracts increased by 0.05%, 0.08%, and 0.05% respectively [14] Key Events - The Fourth Session of the 14th National People's Congress will open on March 5 and close on March 12, with a total of 11 agenda items including the review of the government work report and the examination of the 15th Five-Year Plan draft [15] - The State Council Information Office will hold a press conference on March 5 to interpret the government work report [15] - China's official manufacturing PMI for February is reported at 49.0%, a decrease of 0.3 percentage points, while the non-manufacturing PMI is at 49.5%, an increase of 0.1 percentage points [16] Global Macro - South Korea's financial regulatory agency plans to implement a market stabilization plan of 100 trillion won if market volatility escalates [18] - The Iranian Supreme Leader election may be postponed, with high-level security measures in place for the upcoming meeting [18] Bond Events - The China Development Bank will auction up to 12 billion yuan of 3-year green financial bonds on March 5 [20] - The Shenzhen real estate market shows signs of recovery, with the average transaction price of second-hand homes stabilizing for three consecutive months [20]

Group 1 - The core viewpoint of the article emphasizes the importance of not getting lost in details while trying to seize short-term opportunities, suggesting that a broader perspective is essential for effective decision-making [1] Group 2 - The official manufacturing PMI for February is reported at 49, a decrease of 0.3 percentage points from the previous month, indicating a weak manufacturing sector [5] - The stock market has seen a decline of nearly 1%, while the 10-year government bond yield fluctuated down to 1.7875% [5] - The interbank funding environment is described as balanced and slightly loose, with the DR001 rate around 1.27% and DR007 at approximately 1.42% [3]

Summary of Conference Call Notes Company/Industry Involved - The discussion revolves around the Hong Kong stock market and a specific company referred to as "恒科" (Hengke). Core Points and Arguments - The underperformance of 恒科 is not surprising as the overall growth potential has been limited [1] - The decline in the Hong Kong stock market is not solely due to geopolitical shocks; short-term disturbances are understandable and align with market patterns [1] - If the market decline is merely a reaction to geopolitical events, it could present a good buying opportunity unless the geopolitical situation escalates significantly [2] - The primary reason for the market's performance is the slowdown in the overall credit cycle, leading to a focus on sectors still experiencing expansion [2] - If specific sectors are temporarily "disliked" by the market, combined with adverse funding conditions, their performance becomes easier to understand [2] Important but Possibly Overlooked Content - Looking ahead to 2026, it is anticipated that the funding environment for the Hong Kong stock market will likely be more challenging than in 2025, with supply estimated at 0.8-1 trillion HKD, closely matching the demand of 1.1 trillion HKD [2] - The tight balance of funding, along with structural expansion in the credit cycle, suggests that the market may become more structured compared to 2025, necessitating investment strategies to align with credit expansion trends [2] - For the Hong Kong stock market to outperform, three conditions must be met: an increase in expectations for Federal Reserve easing, a return of focus on unique structures within the Hong Kong market, and weakness in the A-share market prompting capital inflow from the south [2]

Group 1: Internal Factors - The basic economic situation is expected to maintain a slow recovery, with February PPI projected to grow by 0.1% month-on-month and -1.2% year-on-year, indicating limited impact on the bond market[2] - Government bond net financing in March is estimated to be between 1.15 trillion and 1.39 trillion yuan, lower than February's 1.42 trillion yuan, suggesting limited pressure on liquidity[3] - Trading behavior is crucial for interest rate trends, with funds shifting from selling to buying in February, but a sudden profit-taking at the end of the month raised long-term rates[3] Group 2: External Factors - The Two Sessions provide significant incremental information, with market expectations for GDP growth targets between 4.5% and 5.0%, and inflation targets around 2%[4] - The escalation of the US-Iran conflict may introduce volatility, but historically, such geopolitical factors have had limited direct impact on the domestic bond market[4] - The bond market may experience fluctuations due to the uncertainty surrounding the Two Sessions and external geopolitical tensions, which could create both risks and opportunities[4]