Industry Investment Rating - There is no information about the industry investment rating in the provided content. Core Views - The bond market performed poorly in Q3 due to multiple factors, including policy - induced macro - narrative reversals, a decline in the bond market's profit - making effect, and regulatory - induced redemptions of bond funds. As Q4 approaches, historical experience shows that interest rates are more likely to decline in Q4. The report explores possible paths for bond market sentiment repair [6][9]. - The market has reached a consensus on a weak present but improving future for the fundamentals and continuous loosening of the capital market. Thus, poor Q4 fundamental data and loose capital cannot significantly drive down bond market interest rates [6][12]. - Central bank actions are still crucial. The deviation between the capital market and bond market interest rates is due to large government bond issuances. If the supply of interest - rate bonds increases in Q4, the central bank is expected to strengthen monetary policy. Observing changes in central bank monetary policy or a downward - guiding of inter - bank interest rates may be a path for bond market sentiment repair [6][13][16]. - Attention should be paid to the end of the withdrawal of trading funds. The bond market adjustment caused by regulatory policies on funds is more of a frictional effect. In the long run, funds are likely to return to the bond market. Monitoring regulatory rhythms, institutional responses, and the profit - taking progress of Q3 short - sellers in Q4 is advisable [6][17]. Summary by Directory 1. Bond Market Weekly View: Possible Paths for Bond Market Sentiment Repair - Q3 bond market performance was poor, affected by policies, the equity market, and regulatory factors. Institutions' behaviors changed, with insurance institutions not eager to allocate and funds having a bad experience in "bottom - fishing". Entering Q4, the report explores paths for bond market sentiment repair [9]. 2. This Week's Focus in the Fixed - Income Market: September PMI Data to be Released 2.1 Domestic PMI Data Release - This week, China will release September PMI data, and the US will release September ADP employment figures and other data [18]. 2.2 This Week's Decline in Interest - Rate Bond Issuance - The issuance scale of interest - rate bonds this week has seasonally declined to a low level, with a planned total issuance of 107.2 billion. There are no plans to issue treasury bonds and policy - financial bonds this week. 33 local bonds are planned to be issued, with a scale of 107.2 billion [21][22][23]. 3. Interest - Rate Bond Review and Outlook: High Bond Market Volatility 3.1 14 - Day Reverse Repurchase at the End of the Quarter - Near the end of the quarter, the central bank carried out 14 - day reverse repurchases. After a 30 - billion - yuan injection on Monday and no further operations in the middle of the week, a 60 - billion - yuan injection on Friday eased capital fluctuations. The net injection of open - market operations totaled 88.06 billion. Capital prices first rose and then fell. Repurchase trading volume also rose and then fell, with an average of about 7.27 trillion per week. Overnight ratios decreased. DR001 and DR007 first rose and then fell. The issuance of negotiable certificates of deposit remained at a relatively high level, with high prices. The net financing was - 17.83 billion. The 9 - month and 1 - year maturities accounted for about 44%. Secondary selling pressure was high, and last week's CD interest rates rose to a high level [27][29][35]. 3.2 Continued High Bond Market Volatility - The bond market continued to be highly volatile. At the beginning of the week, the expectation of increased monetary easing was disappointed, and multiple negative factors led to a large - scale bond market adjustment. In the second half of the week, the central bank increased the injection of medium - and long - term liquidity and 14 - day reverse repurchases, easing capital pressure and leading to bond market repair. The yields of 10Y treasury bonds and CDB active bonds changed by 0.4bp and 2bp to 1.8% and 1.96% respectively compared to last week. The yields of interest - rate bonds of various maturities mainly rose, especially those of policy - financial bonds. The 5Y Export - Import Bank bond had the largest increase, rising 4.8bp [48]. 4. High - Frequency Data: Improvement in Automobile Sales and Commodity Housing Transaction Data - On the production side, the operating rates were divided. The daily average crude steel production in early September had a year - on - year growth rate of 1.6%, turning positive from negative. - On the demand side, the year - on - year growth rates of passenger car manufacturers' wholesale and retail sales improved. The year - on - year growth rate of the commodity housing transaction area turned positive. The SCFI and CCFI composite indices changed by - 7% and - 2.9% respectively. - On the price side, crude oil prices rose, copper and aluminum prices diverged, and the settlement price of the coking coal active contract futures changed by - 0.1%. In the mid - stream, the building materials composite price index changed by 0.5%, the cement index by 2.4%, and the glass index by 3%. The output of rebar was basically flat, the inventory decreased to 4.72 million tons, and the futures price changed by - 0.6%. In the downstream consumer sector, vegetable, fruit, and pork prices changed by 2%, 1.6%, and - 0.3% respectively [55][56].

1. Report Industry Investment Rating - No information provided 2. Core View of the Report - A-share major indices closed generally higher with performance divergence, large-cap blue-chip stocks outperformed small and mid-cap stocks. The market is in a random walk state this week with less macro data and fewer disturbances from domestic and overseas news. With the approaching of the National Day and Mid-Autumn Festival holidays, market trading is relatively dull. The previously announced economic data shows that the economy in August was still under pressure, and the real estate had an obvious drag on fixed investment. The marginal weakening of the "trade-in" policy also put pressure on social retail sales. It is necessary to wait for further policy efforts. Although Powell's hawkish remarks put short-term pressure on the RMB, the dot plot shows that there will be two more interest rate cuts this year, and the subsequent depreciation pressure on the RMB is expected to ease, which will also provide space for domestic policy easing. The market is expected to remain volatile before the policy is implemented. It is recommended to wait and see for now [2] 3. Summary by Relevant Catalogs 3.1 Futures Disk - IF main contract (2512) was at 4562.2, up 39.6; IF sub-main contract (2510) was at 4585.0, up 37.8. IH main contract (2512) was at 2953.6, up 15.4; IH sub-main contract (2510) was at 2953.8, up 14.6. IC main contract (2512) was at 7166.6, up 30.8; IC sub-main contract (2510) was at 7293.2, up 32.8. IM main contract (2512) was at 7281.8, down 6.6; IM sub-main contract (2510) was at 7444.6, down 10.2. There were also changes in various spreads and differences between different quarters and the current month [2] 3.2 Futures Positions - IF's top 20 net positions were -28,681.00, down 261.0; IH's top 20 net positions were -17,213.00, up 845.0. IC's top 20 net positions were -25,724.00, down 719.0; IM's top 20 net positions were -40,023.00, down 1530.0 [2] 3.3 Spot Prices - The Shanghai and Shenzhen 300 was at 4593.49, up 27.4; the Shanghai Stock Exchange 50 was at 2952.7, up 13.2. The CSI 500 was at 7341.3, up 17.6; the CSI 1000 was at 7506.5, down 27.7. There were also corresponding changes in the basis of each main contract [2] 3.4 Market Sentiment - A-share trading volume (daily, billion yuan) was 23,917.71, up 446.16; margin trading balance (previous trading day, billion yuan) was 24,311.05, up 143.17. Northbound trading volume (previous trading day, billion yuan) was 2861.33, down 384.30. There were also changes in reverse repurchase, main funds, MLF, the proportion of rising stocks, Shibor, option prices and implied volatilities, and various ratios [2] 3.5 Wind Market Strength and Weakness Analysis - All A-shares were at 4.40, down 3.40; the technical aspect was at 2.70, down 5.50. The capital aspect was at 6.00, down 1.40 [2] 3.6 Industry News - On September 22, the loan prime rate (LPR) was announced, with the 1-year LPR at 3.0% and the 5-year and above LPR at 3.5%. At the press conference, the CSRC Chairman Wu Qing introduced that the "science" content of the capital market has been further improved, and the market value of the A-share technology sector currently accounts for more than 1/4. As of the end of August, various medium and long-term funds held about 21.4 trillion yuan of the A-share floating market value, a 32% increase compared to the end of the "13th Five-Year Plan", and foreign investors held 3.4 trillion yuan of A-share market value [2]

Group 1 - The recent rise in A-shares indicates a recovery in investor confidence, but a long-term bull market requires strong fundamental support [1] - As of September 2025, approximately 63.1% of surveyed investors believe A-shares will rise, an increase of 1.6 percentage points from April 2025 and 15.6 percentage points from July 2024 [1] - The expected return rate for A-shares is around 1.6%, up 1 percentage point from April 2025 and 5.6 percentage points from July 2024 [1] Group 2 - The valuation recovery of A-shares is driven by three main factors: monetary policy, fiscal policy, and technological advancements [1][2] - The central bank has released liquidity through multiple measures, including a total of approximately 2 trillion yuan from two reserve requirement ratio cuts [1] - Public investment in infrastructure, supported by high fiscal deficits, is expected to boost economic growth and improve corporate fundamentals [2] Group 3 - China's technological enterprises have made significant breakthroughs, with companies like Yushun Robotics and DJI gaining international attention, leading to strong performance in related sectors [2] - By August, sectors such as semiconductors and automation equipment saw stock price increases of over 60% year-on-year [2] Group 4 - Strategic responses to US-China trade tensions have bolstered market confidence in China's economic and technological self-reliance [4] - The proportion of China's exports to the US has decreased from 19.3% in 2018 to 11.8% in the first half of 2025 [4] - Efforts to reduce reliance on US high-end AI chips and promote domestic chip development have strengthened China's negotiating position [4] Group 5 - Despite improved market sentiment and strong performance from tech companies, overall earnings growth for non-financial A-share companies remains low [4] - The current rise in A-shares is primarily driven by valuation rather than fundamental improvements, raising concerns about sustainability [4] Group 6 - China's economy grew by 5.3% year-on-year in the first half of the year, aligning with the growth target of around 5% [5] - The inflation rate was nearly zero in the first half, which is unfavorable for corporate profitability [5][6] - Transitioning the economic structure from investment to consumption, along with promoting innovation and upgrading industries, are critical for fundamental development [6]

Group 1 - The Hong Kong stock market showed strong performance in the week of September 8-12, with the Hang Seng Index rising by 3.8% and the Hang Seng Tech Index increasing by 5.3% [3] - A significant inflow of capital was observed, with net purchases from mainland investors through the "Hong Kong Stock Connect" reaching 60.8 billion HKD, nearly double the previous week [3] - The expectation of a potential interest rate cut by the Federal Reserve, driven by a rise in initial jobless claims to 263,000, has led to increased liquidity in the market, making Hong Kong stocks an attractive investment target [3][6] Group 2 - The rise in the Hong Kong market is attributed to three main factors: external liquidity easing, recovery of the Chinese mainland economy, and supportive local policies in Hong Kong [7] - The core Consumer Price Index (CPI) in mainland China rose to 0.9% year-on-year in August, indicating a revival of domestic consumption and supporting the earnings outlook for Chinese companies listed in Hong Kong [6] Group 3 - In Southeast Asia, currency markets displayed a mixed performance, with the Thai Baht strengthening due to rising gold prices, while the Philippine Peso depreciated due to inflationary pressures from rising oil prices [9] - The differing currency movements among Southeast Asian nations highlight the impact of each country's economic structure and fundamentals, rather than solely the influence of the US dollar [11] Group 4 - Gold and oil prices have become focal points in the market, with gold representing a safe-haven asset amid recession fears, while oil prices indicate inflationary pressures [13] - The market's expectation of a Federal Reserve interest rate cut has reduced the opportunity cost of holding gold, benefiting its price, while also raising concerns about inflation that support oil prices [13][15] Group 5 - The interplay of geopolitical uncertainties, such as US-China tariff negotiations, has heightened market demand for safe-haven assets and concerns over supply chain disruptions [15] - The performance of the Hong Kong stock market is influenced by global liquidity, the economic fundamentals of China, and supportive policies in Hong Kong, while the divergence in Southeast Asian currencies reveals the underlying economic strengths of each country [15]

1. Report Title and Industry - Title: "The Pricing Power of the Economic Fundamentals on the Bond Market is Increasing Marginally - Commentary on August Economic Data" [1][5] - Industry: Fixed Income 2. Report Key Points - **Overall Economic Situation in August 2025**: The economic data in August 2025 was generally weak. The year - on - year growth rates of industrial added value, social retail sales, and fixed - asset investment declined. The slowdown in production was mainly due to the drag from exports and downstream consumption [2][5]. - **Production End**: Affected by the decline in exports and downstream consumption, the year - on - year growth rate of the added value of large - scale industries in August decreased by 0.5 pct to 5.2%. The year - on - year growth rates of sub - items in electricity, heat, gas, and water, and manufacturing decreased by 0.9 and 0.5 pct to 2.4% and 5.7% respectively. The year - on - year growth rate of the service production index continued to decline by 0.2 pct to 5.6%, and the year - on - year growth rate of export delivery value turned negative to - 0.4% [5][7]. - **Investment End**: The year - on - year growth rates of fixed - asset investment and private investment continued to decline. The estimated year - on - year growth rate of the completed fixed - asset investment in August decreased by 1.1 pct to - 6.3%. The investment growth rates in the three major fields all slowed down. The year - on - year growth rates of manufacturing, infrastructure, and real estate sub - items in August decreased by 1.0, 4.5, and 2.4 pct to - 1.3%, - 6.4%, and - 19.4% respectively [7]. - **Real Estate**: There were differences among financing, investment, and sales. The year - on - year decline in the funds available to real estate development enterprises narrowed by 2.8 pct to - 12.5%, but the year - on - year declines in development investment, commercial housing sales volume, and sales area widened. The year - on - year growth rates of commercial housing sales area and sales volume decreased by 2.6 and 0.7 pct to - 11.0% and - 14.8% respectively. The situation of selling commercial housing by sacrificing price for volume may still continue [7]. - **Manufacturing**: The investment growth rates of most equipment manufacturing industries declined significantly. Among them, the year - on - year growth rates of transportation equipment, special equipment, and automobiles decreased by 36, 13, and 8 pct to 9%, - 16%, and 11% respectively. The year - on - year declines in investment in industries such as chemicals, non - ferrous metals, and pharmaceuticals narrowed but were still in negative growth [7]. - **Consumption End**: Consumption was lower than expected, mainly affected by the decline in durable goods consumption. Urban consumption was weaker than rural consumption. The year - on - year growth rates of total social retail sales and social retail sales of units above the designated size decreased by 0.3 and 0.4 pct to 3.4% and 2.4% respectively. The year - on - year growth rates of commodity retail sales and commodity retail sales of units above the designated size both decreased by 0.4 pct to 3.6% and 2.6% respectively. Catering revenue and catering revenue of units above the designated size recovered under the boost of summer cultural and tourism [7]. - **Bond Market**: The bond market had a repair market around the release of economic data on September 15. The yield of the active 10 - year treasury bond once dropped to 1.785%. The supply and demand sides of the economic fundamentals in August were under pressure. Considering the high base in the fourth quarter of last year, the year - on - year economic readings in the fourth quarter of this year are expected to face pressure, and the pricing power of the economic fundamentals on the bond market is increasing marginally [7]. 3. Core View The economic data in August 2025 was generally weak, with production, investment, and consumption all under pressure. The bond market had a repair market around the release of economic data. Considering the high base in the fourth quarter of last year, the year - on - year economic readings in the fourth quarter of this year are expected to face pressure, and the pricing power of the economic fundamentals on the bond market is increasing marginally [2][7].

Group 1: Core Views - The growth of the Chinese capital market is seen as a significant turning point, with the long-term bull market being recognized as a national will and officially included in macroeconomic regulation [1][2] - The long-term bull market requires a supportive economic fundamental and monetary liquidity environment, as well as a conducive regulatory and social perception environment [1][3] Group 2: Economic Fundamentals for the Bull Market - A bull market cannot be solely based on high GDP growth; it must also ensure that the growth translates into returns for investors [2][3] - The technological revolution, particularly in artificial intelligence, is expected to drive economic growth and support a long-term bull market, with significant investments needed to close the gap in computing power between China and the US [2][3] Group 3: Interaction Between Capital Market and Real Economy - A long-term bull market must interact positively with the real economy, enhancing valuations for innovative companies and facilitating the exit of sunset industries [3][4] Group 4: Monetary Liquidity Conditions - Continuous deflationary pressures necessitate a loose monetary policy, which will support the bull market and help combat deflation [4][5] - The improvement in monetary liquidity since the central economic work conference has been notable, with M1 growth indicating potential stock market performance [4][5] Group 5: Interest Rate Policies - Significant interest rate cuts can alleviate the financial burden on households, businesses, and the government, potentially leading to increased consumption and investment [5][6] - The current interest rate levels in China still have room for significant reductions, which could further stimulate the economy and the stock market [5][6] Group 6: Strategic Planning for Capital Market Development - A strategic vision is essential for the capital market to thrive during the "15th Five-Year Plan," with a target for market capitalization to GDP ratio reaching international averages [7][8] - The shift in asset allocation from real estate to stocks and funds, along with the increase in long-term funds, could lead to substantial inflows into the stock market, significantly increasing market capitalization [7][8]

Core Viewpoint - The article discusses the current trends and potential future movements of the RMB exchange rate, highlighting the similarities and differences with the 2018-2019 period, and emphasizes the importance of economic fundamentals in determining the exchange rate trajectory [4][5][9]. Historical Comparison - The current macroeconomic backdrop for RMB appreciation shares similarities with the period from November 2018 to June 2019, particularly in terms of improved expectations for US-China relations and the performance of RMB assets despite a lack of clear economic recovery signals [5]. - From November 2018 to June 2019, the RMB appreciated from 6.97 to around 6.7, while the current appreciation from the peak of 7.35 on April 9, 2025, has reached the 7.11-7.12 range, indicating a comparable magnitude of appreciation [5]. Current Special Factors - There is a significant backlog of unconverted foreign exchange, estimated at approximately $700-800 billion, which could amplify exchange rate fluctuations and create short-term market movements [7]. - The backlog is concentrated in two key exchange rate ranges: $400-500 billion in the 7.2-7.5 range and $200-300 billion in the 6.9-7.2 range, which may trigger a surge in conversions if the RMB appreciates beyond these levels [7][8]. Future Outlook - The article suggests that a trend of sustained RMB appreciation is unlikely without clear economic signals, as historical trends in 2017 and 2020 were supported by significant improvements in economic fundamentals, particularly PMI and corporate conversion rates [9][10]. - Even if the economic fundamentals improve, the initial stages of appreciation may be moderated by policy measures to prevent excessive volatility and capital inflows, which could complicate cross-border capital management [10][14]. - The current global trade environment necessitates a balanced approach to maintain stable trade relations with the US while expanding non-US trade, suggesting that a stable exchange rate may be the optimal strategy [14].

Core Viewpoint - The overall performance of A-shares in the first half of the year shows slight improvement, with net profit growth slowing down compared to the previous quarter [1][3]. Group 1: Financial Performance - The total net profit of the Wind All A Index reached 3.21 trillion yuan, with a year-on-year growth rate of 2.96%, down 0.51 percentage points from the previous quarter [1]. - Excluding the financial and oil & petrochemical sectors, the net profit was 1.64 trillion yuan, with a year-on-year growth rate of 3.66%, a decrease of 1.61 percentage points from the previous quarter [1]. - The return on equity (ROE) for the Wind All A Index was 7.73% in the first half, slightly down from 7.75% in the previous quarter [1]. Group 2: Sector Performance - The agriculture, forestry, animal husbandry, and fishery, steel, building materials, non-ferrous metals, and electronics sectors had net profit growth rates exceeding 30%, although all showed a slowdown compared to the first quarter [2]. - The power equipment and defense industries improved their net profit growth rates compared to the first quarter, while coal, light manufacturing, retail, and oil & petrochemical sectors saw declines exceeding 10% [2]. - The ROE for food and beverage, home appliances, agriculture, non-ferrous metals, and non-bank financial sectors exceeded 10%, indicating strong performance among blue-chip stocks [2]. Group 3: Market Outlook - The low profit base from the same period last year, along with ongoing policy efforts to eliminate outdated capacity and curb disorderly competition, is expected to lead to marginal recovery in PPI and further slight improvement in A-share profitability [3]. - The market index performance is primarily driven by valuation expansion rather than significant profit improvement, with expectations of gradual bottoming out of A-share profits and a positive economic outlook enhancing market dynamics in the second half [3].

Core Viewpoint - The stock market is experiencing significant growth, with the Shanghai Composite Index up 12.8% and the ChiNext Index up 22% in 2025, while the bond market is facing challenges, with a 30-year government bond ETF down over 2% year-to-date and a further decline of 4% since June [1][2] Group 1: Market Dynamics - The "see-saw effect" between stocks and bonds reflects a shift in market risk appetite, where funds flow into equities during bullish phases and retreat to bonds during bearish phases [1][2] - The primary determinants of bond market trends are economic fundamentals, including macroeconomic conditions, inflation, and monetary policy, rather than stock market performance [2][3] Group 2: Economic Indicators - Recent economic data indicates a weakening trend, with July's new loans showing negative growth for the first time since 2005 and a decline in social financing year-on-year [2][3] - Despite these indicators suggesting support for the bond market, the bond market continues to decline due to strong stock performance and policy disruptions, indicating a temporary disconnection from economic data [2][3] Group 3: Investment Strategies - In a bullish stock market, the bond market may not present high value, but there are opportunities for tactical trading, suggesting a strategy of buying low and selling high [4][5] - Monitoring the 10-year and 30-year government bond yields is crucial, as bond prices and yields move inversely; rising yields lead to falling bond prices and vice versa [4][5] Group 4: Historical Context - Over the past decade, the long-term trend in China's bond market has been a decline in yields, with the 10-year government bond yield currently around 1.76% and the 30-year yield at 2.06% [5][6] - Historical data shows that current yields are at a low point, but there is potential for further declines, indicating a long-term downward trend in interest rates [6][7] Group 5: Tactical Approaches - For short-term trading, flexibility is key; if yields rise, it presents buying opportunities, while falling yields may prompt profit-taking [6][7] - For long-term investments, considerations include duration selection, risk-return trade-offs, and alignment with market conditions, emphasizing the importance of rational decision-making [7]

Core Viewpoint - The stock and bond markets are experiencing contrasting trends, with the A-share market reaching a historic high while the bond market is facing significant declines [1][2]. Group 1: Stock Market Performance - On August 18, the A-share market continued its upward trend, with the total market capitalization surpassing 100 trillion yuan for the first time [1]. - The Shanghai Composite Index closed at 3728 points, marking a nearly ten-year high, with over 4000 stocks in the two markets showing gains [2]. - The trading volume in the A-share market exceeded 2.8 trillion yuan, setting a new annual high and the third highest in history [3]. Group 2: Bond Market Performance - The bond market saw a significant downturn, with the 30-year government bond futures experiencing their largest drop in over five months, down 1.33% to 116.09 yuan [2]. - The yields on various government bonds rose sharply, with the 30-year bond yield surpassing 2% for the first time in over four months [2][3]. - The yields on 10-year and 30-year government bonds were reported at 1.77% and 2.037%, respectively, reflecting increases of 2.5 basis points and 4.3 basis points from the previous day [3]. Group 3: Market Sentiment and Future Outlook - Despite the current downturn in the bond market, many institutions maintain an optimistic outlook, citing factors such as a weak economic fundamental and expectations of a loose monetary policy [4][5]. - The Ministry of Finance announced operations to support the liquidity of government bonds, which may have limited short-term impact on the overall bond market [4]. - Analysts suggest that the bond market may have entered a "wrongly priced" state, with future movements dependent on monetary policy adjustments and market risk preferences [6].