Core Viewpoint - The recent strengthening of the RMB against the USD has raised market concerns regarding the future trajectory of the RMB exchange rate and its impact on the Chinese stock market [1][2][4] Group 1: RMB Exchange Rate Trends - The onshore RMB to USD exchange rate has shown a significant upward trend since early April, recovering the "7.2" level by the end of May, with a 1.01% increase in May alone and a total increase of 1.48% since the beginning of the year [1] - The offshore RMB has mirrored this trend, rising 2.03% year-to-date as of May 28 [1] - The USD index has declined over 8% since the beginning of the year, falling from a high of 109 to below 100 [1] Group 2: Factors Influencing RMB Strength - The recent appreciation of the RMB is primarily driven by two factors: the depreciation of the USD and proactive domestic macroeconomic policies that enhance economic resilience [2] - The People's Bank of China has implemented a series of financial policies, including interest rate cuts and accelerated fiscal spending, which have provided internal support for the RMB exchange rate [2] Group 3: Impact on Chinese Stock Market - The strengthening of the RMB is expected to attract more foreign capital into the Chinese stock market, with Goldman Sachs projecting a potential 3% appreciation of the RMB against the USD over the next 12 months [4] - Historical data suggests that when the RMB appreciates, the Chinese stock market tends to perform well, aligning with trading patterns observed in other Asian emerging markets [4] - A 1% appreciation of the RMB against the USD could lead to an approximate 3% increase in returns for the Chinese stock market, assuming other conditions remain constant [4]

Core Viewpoint - The article discusses the recent strengthening of the Renminbi (RMB) against the US dollar, attributing it to various factors including positive developments in US-China trade talks and a general depreciation of the US dollar [1][2]. Group 1: RMB Exchange Rate Trends - On May 26, both onshore and offshore RMB exchange rates surpassed 7.17, marking the highest level since November 2024, with the onshore rate closing at 7.1843, up 52 points from the previous trading day [1]. - The RMB's midpoint rate against the US dollar was significantly raised to 7.1833, an increase of 86 points, the largest adjustment since January of the same year [1][2]. - In May, the onshore RMB appreciated by 906 basis points, while the offshore RMB rose by over 1,000 points [1]. Group 2: Factors Influencing RMB Strength - The depreciation of the US dollar has been a key driver for the appreciation of non-USD currencies, including the RMB, with the dollar index dropping by 0.84% in May [2]. - Concerns over the US fiscal health and the potential for increased government debt have contributed to the dollar's decline, particularly following the passage of Trump's fiscal bill [2]. - Domestic macroeconomic policies, such as interest rate cuts and increased fiscal spending, have bolstered the RMB's resilience against external fluctuations [2][3]. Group 3: Implications of RMB Appreciation - The appreciation of the RMB can enhance its attractiveness and reflect market confidence in the Chinese economy, potentially benefiting the stock market [3]. - However, a stronger RMB may reduce the competitiveness of Chinese exports, which could negatively impact domestic employment [3]. - It is suggested that maintaining a stable RMB exchange rate is crucial while expanding domestic demand and reducing reliance on exports [3]. Group 4: Future Outlook for RMB - Future RMB movements will largely depend on the progress of US-China trade negotiations and the trajectory of the US dollar [4]. - The article indicates that the most significant pressure for RMB depreciation may have passed, with expectations of a more stable RMB compared to other major currencies [4].

Report Date - The report is dated May 6, 2025 [1] Industry Investment Ratings - Not provided in the report Core Views - Global risk appetite has increased due to strong US non - farm employment data, while the Fed's rate - cut expectation has been postponed from June to July. China has released signals of evaluation and relaxation regarding Sino - US economic and trade consultations, which is beneficial for boosting domestic risk appetite and the RMB exchange rate in the short term [2] - Different asset classes have different trends: stocks may rebound in the short term; bonds may fluctuate at a high level; commodities show different trends in different sectors [2] Summary by Category Macro - finance - **Overseas**: US Q1 GDP was - 0.3% quarter - on - quarter, far below expectations. However, non - farm employment was strong, and the ISM non - manufacturing PMI rose from 50.8 in March to 51.6 in April. The Fed's rate - cut expectation was postponed from June to July, and the US dollar and Treasury yields rebounded [2] - **Domestic**: During the May Day holiday, the Ministry of Commerce responded to Sino - US economic and trade consultations. The US has actively sent signals to China, and China is evaluating. This is beneficial for boosting domestic risk appetite and the RMB exchange rate in the short term [2] - **Asset Allocation**: Stocks may rebound in the short term, and short - term cautious long positions are recommended; bonds may fluctuate at a high level, and cautious long positions are recommended; for commodities, black metals may be weak in the short term, non - ferrous metals may rebound, energy and chemicals may fluctuate, and precious metals may be at a high - level oscillation [2] Stock Index - Domestic stocks declined slightly due to the drag of insurance, banking, and power sectors. The signal of Sino - US economic and trade relaxation is beneficial for boosting domestic risk appetite and the RMB exchange rate in the short term. Short - term cautious long positions are recommended [3] Precious Metals - The precious metals market had a high - level correction this week, with London gold falling 2.4% to $3240 per ounce. The relaxation of trade tensions and the rise of the US dollar and real Treasury yields suppressed precious metals. Gold still has long - term allocation value, and long - term positions can be built using ratio spread structures if it corrects to the next integer level [3][4] Black Metals - **Steel**: Before the holiday, steel prices and trading volumes declined. During the holiday, trade tensions showed signs of relaxation, and the macro - environment was favorable. The inventory and consumption data in late April were good, but the demand is at the turning point between peak and off - peak seasons, and supply is at a high level. The steel market may continue to fluctuate in the short term [5] - **Iron Ore**: Before the holiday, iron ore prices declined, but the Singapore iron ore swap rebounded during the holiday. Iron ore supply is expected to increase in the future, and demand may not be able to support high - level iron production. Short - term range - bound trading is recommended, and short positions can be considered at high levels in the medium term [5] - **Silicon Manganese/Silicon Iron**: Before the holiday, prices declined slightly. Demand is okay, but supply is decreasing. Short - term range - bound trading is recommended [7] Energy and Chemicals - **Crude Oil**: OPEC has increased production more than expected, and the long - term downward trend is more certain. However, short - term supply may be reduced due to the poor progress of the Iran nuclear talks [8] - **Other Chemicals**: Each chemical product has different supply - demand situations and price trends. For example, asphalt, PX, PTA, etc., most of them are expected to fluctuate in the short term [8][9] Non - ferrous Metals - **Copper**: US economic data is mixed, and the manufacturing PMI has declined. The supply of copper concentrate is tight, but domestic smelting production is high. Demand is about to enter the off - peak season. Short - term range - bound and weak trading is expected [13] - **Aluminum**: Domestic production is high, and demand is strong. Overseas consumption in Europe is still weak. It is recommended to close long positions in batches as the price rebounds [14] - **Tin**: The resumption of production in Myanmar is progressing, and imports are expected to remain high in May. Demand is about to enter the off - peak season. Short - term price fluctuations are expected [15] Agricultural Products - **Soybean and Rapeseed Meal**: US wheat weather premiums have increased, and domestic downstream feed enterprises are expected to replenish stocks after the holiday. Bean meal prices may rebound, while rapeseed meal is expected to be pessimistic and generally follow the soybean meal market [16] - **Soybean and Rapeseed Oil**: International prices support oils, but domestic oils face weak fundamentals. After the holiday, oil prices may decline, and the soybean - palm oil price spread will continue to widen [16] - **Palm Oil**: BMD crude palm oil has fallen for five consecutive days. Malaysian palm oil inventory is expected to increase, and production may increase significantly in the second half of the year [17] - **Pigs**: The price was stable during the May Day holiday. Supply is stable in May, and short - term selling pressure is not expected to be high [18][19] - **Corn**: Wheat prices will dominate the grain market after the holiday. Corn inventory at ports is high, and there is a risk of futures - spot price convergence [19]

Group 1: Global Asset Performance - During the "May Day" holiday, global markets showed a positive trend with most major assets rising, particularly natural gas which saw a significant increase of over 10% [2] - European and Asian stock markets also performed well, with indices such as the German DAX, Nasdaq, and Nikkei 225 rising by more than 2% [2] - In contrast, oil prices fell, with NYMEX WTI crude oil decreasing by 1.68%, marking it as the worst performer among major assets during the holiday [2] Group 2: Renminbi Strength - On May 2, the offshore Renminbi surged nearly 1%, reaching a high of 7.1843, the strongest level in nearly six months [5] - The maximum increase over two trading days exceeded 900 points, indicating strong market momentum [5] Group 3: Economic Indicators - The "May Day" holiday saw record-high travel data, with nationwide railway passenger volume exceeding 23.11 million on May 1, a historical peak [7] - The Chinese Ministry of Commerce noted ongoing discussions with the U.S. regarding tariff negotiations, suggesting potential easing of trade tensions [7] - Foreign investment in Renminbi-denominated bonds increased significantly, with net purchases reaching $33.2 billion from April 1 to 18, driven by China's stable macroeconomic environment [7] Group 4: U.S. Job Market - The number of initial jobless claims in the U.S. rose to 241,000, surpassing expectations and indicating potential layoffs due to tariffs impacting the economy [8] - This data comes ahead of the Federal Reserve's upcoming meeting, where it is widely anticipated that interest rates will remain unchanged [8] Group 5: Oil Production Increase - On May 5, international crude oil prices fell sharply as OPEC announced plans to increase production by 411,000 barrels per day starting in June, marking the second consecutive month of higher-than-expected output [11] Group 6: Berkshire Hathaway Shareholder Meeting - The annual Berkshire Hathaway shareholder meeting featured discussions on the current state of the U.S. economy, trade wars, and overseas investment opportunities, with insights from Chairman Warren Buffett [13] Group 7: Apple Product Launch - Reports suggest that Apple plans to adjust its iPhone release schedule, potentially introducing its first foldable iPhone alongside the iPhone 18 Pro series in 2026 [15]

Group 1 - The offshore RMB to USD exchange rate surpassed the 7.20 mark, reaching a new high since December 2024, supported by stable macroeconomic conditions and policy measures to prevent excessive exchange rate fluctuations [1] - The onshore RMB is expected to experience a rebound following the recent trends in the offshore market, with predictions of a potential increase in the exchange rate [1] - The recent decline in the US dollar index, which fell below 100, indicates a weakening of the dollar, further supporting the RMB's strength [1] Group 2 - Experts believe that the foundation for maintaining a stable RMB exchange rate remains solid, driven by domestic economic recovery, increased confidence, and effective governance mechanisms [2] - The Chinese economy's large market size, complete industrial system, and rich human resources contribute positively to the stability of the RMB [2] - The pressure for RMB depreciation may have peaked, with expectations of a dual-directional fluctuation process in the exchange rate, albeit with smaller amplitude [3] Group 3 - The resilience of China's foreign exchange market has improved, enhancing its ability to withstand external shocks, with ongoing monitoring and management of foreign exchange conditions [3] - Authorities are expected to continue strengthening foreign exchange monitoring and maintain exchange rate flexibility while enriching macro-prudential management tools for cross-border capital flows [3]

Group 1 - The offshore RMB to USD exchange rate has appreciated, breaking the 7.19 mark for the first time since November last year, driven by multiple factors including the US-China trade dialogue and strong consumption during the May Day holiday [1][2] - On May 2, the offshore RMB to USD exchange rate saw a significant increase, with a single-day rise exceeding 600 basis points, and on May 5, it continued to rise, touching 7.18940 with an intraday increase of over 130 basis points [2] - Analysts attribute the RMB appreciation to several factors, including positive signals from the US regarding tariff negotiations, strong domestic consumption during the holiday, and increased foreign investment in RMB-denominated bonds amid heightened global market volatility [2] Group 2 - Looking ahead, the RMB exchange rate is expected to remain stable with a solid foundation, fluctuating around a reasonable equilibrium level [3] - The domestic economic fundamentals have improved since late last year, with factors such as economic recovery, confidence boosting, risk mitigation, and technological empowerment contributing to the stability of the RMB [3] - The People's Bank of China emphasizes a managed floating exchange rate system based on market supply and demand, aiming to enhance market resilience and stabilize expectations while preventing excessive fluctuations in the exchange rate [3]

Core Viewpoint - The Chinese Ministry of Commerce emphasizes that any negotiations with the U.S. regarding tariffs must be based on the U.S. correcting its unilateral tariff measures and demonstrating genuine intent to engage in dialogue [1]. Group 1: U.S.-China Trade Dialogue - The Chinese side has noted the U.S. expressing willingness to negotiate on tariff issues and has received multiple communications from the U.S. seeking to initiate talks [1]. - The Chinese stance remains consistent: if the U.S. wishes to negotiate, it must show sincerity by addressing the unilateral tariff increases and correcting its previous actions [1]. - The Chinese government warns that any dialogue without the U.S. correcting its tariff measures would indicate a lack of sincerity and could further damage mutual trust between the two nations [1].

Core Viewpoint - The Chinese Ministry of Commerce emphasizes its readiness for dialogue with the U.S. regarding trade issues, while also insisting that the U.S. must show sincerity by correcting its unilateral tariff measures [1] Group 1: U.S.-China Trade Negotiations - The U.S. has expressed willingness to negotiate with China on tariff issues, indicating a potential for dialogue [1] - China is currently evaluating the U.S. proposals and communications regarding trade negotiations [1] - The Chinese stance remains firm: if the U.S. does not correct its unilateral tariff actions, it demonstrates a lack of sincerity in negotiations [1] Group 2: Tariff and Trade War Context - The trade war and tariff conflict were initiated unilaterally by the U.S., and China is prepared to respond accordingly [1] - China highlights that any dialogue must be based on the U.S. taking concrete actions to rectify its previous mistakes, particularly the imposition of additional tariffs [1] - The Chinese government warns against the U.S. using negotiations as a facade for coercion or intimidation [1]