Summary of Conference Call Records Industry Overview - The conference call primarily discusses the bond market, equity market, and convertible bonds, providing insights into current market conditions and strategies for investment. Key Points and Arguments Bond Market Strategies - Small investors are advised to attempt bottom-fishing for small wave operations, while long-term or large funds should reduce portfolio duration and wait for a clear downward turn in interest rates before re-entering [1][4] - The current bond market adjustment is characterized as atypical and not directly related to funding tightness, suggesting that it will not trigger widespread redemptions or credit declines [1][7] - A right-side trading strategy is recommended, focusing on the process of forming a top rather than a sharp peak, with attention to macroeconomic narratives cooling down [1][10] Funding Conditions - The funding outlook for Q3 and Q4 is optimistic, with expectations of continued looseness in the funding environment due to reduced government bond supply pressure and weak loan demand [1][5] - Current funding tightness is viewed as a result of the bond market's decline rather than a cause, indicating that the funding environment will likely remain loose even without significant monetary policy changes [1][5] Equity Market and Convertible Bonds - The upward trend in the equity market is expected to continue, with convertible bonds remaining attractive in a rising stock market context [1][6] - The probability of a significant decline in the equity market is low, as the current rise is driven by liquidity rather than fundamental factors [1][14] Market Reactions and Investor Behavior - Recent adjustments in the bond market are attributed to market sentiment rather than clear negative factors, with institutions adopting strategies of waiting for better entry points or engaging in wave trading [1][3][17] - Personal investors' experiences with fixed-income asset management products have remained stable, with a shift towards more stable products like insurance asset management or bank deposits rather than equities [1][9] Price Trends and Inflation - PPI is expected to rebound from -4 to around -2, but the momentum for sustained increases is limited, which may affect CPI and the bond market's response [2][11] - The current market's reaction differs from historical patterns, with strong expectations leading to more immediate responses rather than waiting for downstream price increases [1][12] Long-term Investment Considerations - Caution is advised regarding investments in ultra-long credit bonds in the current market environment, as these are more attractive in a bull market [1][19] - The second round of the Sci-Tech Innovation ETF issuance is not expected to trigger significant speculative buying, as the first round has already shown strong demand [1][21] Impact of New Stock Issuance - The impact of new stock issuance on the funding environment is noted, with significant amounts of capital being frozen during subscription periods, leading to short-term funding tightness [1][22] Bottom-Fishing Opportunities - The current market is seen as a potential bottom-fishing opportunity, but the experience may not be favorable due to widespread bullish sentiment without corresponding action [1][23] Other Important Insights - The negative feedback mechanism in the securities market is considered easily disrupted due to strategic adjustments and the current low leverage environment among traditional institutions [1][8] - The government's increased focus on healthy real estate development may lead to further monetary policy stimulation, impacting overall economic trends [1][18]

Core Viewpoint - The recent adjustment in the bond market is primarily driven by changes in market sentiment, with a notable "stock-bond seesaw" effect observed as the stock market rises while the bond market experiences significant declines [1][2][3]. Market Dynamics - Since early July, the yield on 10-year government bonds has risen to 1.78%, an increase of 8.2%, while the yield on 30-year bonds has reached 2.08%, up 11.46% [3]. - The bond market's decline is attributed to multiple factors, including changes in macroeconomic expectations, a stable short-term monetary policy, and a shift in risk appetite due to a strong stock market [1][5][6]. Investor Behavior - Despite some redemption pressure on bond funds, the overall situation remains manageable, with no large-scale redemptions reported [7][9]. - The sentiment in the bond market is weak due to expectations of a bull market in equities, leading to significant redemptions on days when bond prices fall [7][10]. Future Outlook - Industry experts suggest that the bond market will not experience a significant downturn, as fundamental and monetary policy factors are expected to provide support [9][10]. - The bond market is likely to exhibit a "grinding top" pattern in the short term, with a focus on mid-to-short duration assets for better yield [9][11]. - There is a potential for increased monetary policy easing in the fourth quarter if economic data continues to show weakness, which could lead to a slight decrease in bond yields [10].

Core Viewpoint - The bond market has experienced adjustments due to rising bond yields influenced by "anti-involution" policies and increasing commodity prices, while the A-share market has shown signs of recovery, leading to a "see-saw" effect between stocks and bonds [1][3]. Group 1: Market Adjustments - Since July 21, bond market interest rates have risen sharply, with the 10-year government bond yield increasing from 1.66% to 1.75%, and the 30-year yield surpassing 1.99% [3]. - The adjustment in the bond market is attributed to multiple factors, including the introduction of "anti-involution" policies and rising expectations for industrial commodity prices, which have led to a passive adjustment in the bond market [3][4]. - As of August 1, the 10-year government bond yield has retreated to around 1.69%, and the 30-year yield has decreased to approximately 1.95% [3]. Group 2: Fund Performance - According to Wind statistics, from July 21 to August 1, the average return of pure bond funds, including medium- and short-term bond funds and bond index funds, was -0.12%, with nearly 80% of bond funds reporting negative returns [5][6]. - Nine funds experienced a decline of over 1%, with notable losses in funds such as Debon Ruiyu Rate Bond A (-1.37%), Huatai Baoxing Zunyi Rate Bond 6-Month Holding A (-1.30%), and others [5][6]. - The year-to-date returns for several funds have turned negative, with specific funds like Huatai Fenghe Pure Bond A and Guotai Huifeng Pure Bond A showing returns of -0.93% and -0.73%, respectively [6]. Group 3: Future Outlook - As market concerns ease, several institutions view the current bond market adjustment as a potential opportunity for reallocation [7]. - According to Fangzheng Securities, the bond market outlook remains optimistic, with expectations for a stable upward trend in August following the adjustment [7]. - Longcheng Securities suggests that the bond market will return to rationality with clearer policies, and the 10-year government bond yield is expected to stabilize around 1.7% [7].

Core Viewpoint - The new tax regulation on interest income from newly issued government bonds, local government bonds, and financial bonds starting from August 8, 2025, has triggered a surge in demand for existing bonds, leading to a strong performance in both the stock and bond markets [1][5][6]. Summary by Sections Tax Regulation Impact - The Ministry of Finance and the State Administration of Taxation announced that interest income from newly issued bonds will be subject to value-added tax (VAT) starting August 8, 2025, while existing bonds will remain exempt until maturity [1][6]. - This change has led to a "buying spree" for existing bonds, as institutions seek to avoid the new tax burden [2][5]. Market Reactions - Following the announcement, the yield on 10-year government bonds initially rose but then fell back, indicating a preference for existing tax-exempt bonds [2][5]. - The yields for 10-year and 30-year government bonds were reported at 1.6975% and 1.919%, respectively, down from recent highs [2][5]. Investment Shifts - Institutions expect that the new regulation will favor credit bonds and certificates of deposit, as they remain unaffected by the new tax [3][4]. - Public funds are anticipated to benefit from the tax advantages over proprietary accounts, as public funds are exempt from both income tax and VAT [3][4]. Long-term Market Outlook - Many institutions believe that the new regulation will not alter the long-term trajectory of the bond market, which is expected to remain stable despite short-term fluctuations [5][6]. - The policy aims to redirect some funds from the bond market to the stock market and credit bond market, aligning with broader economic goals [5][6]. Fiscal Implications - The restoration of VAT on bond interest is projected to increase fiscal revenue, with estimates suggesting an additional 4 billion RMB in tax revenue this year and 25 billion RMB by 2026 [6][7]. - However, some foreign institutions argue that the overall contribution to tax revenue will be minimal compared to the total tax revenue scale [7].

Summary of Conference Call Notes Industry Overview - The discussion primarily revolves around the bond market and its recent adjustments, influenced by macroeconomic policies and market dynamics [1][2][3]. Key Points and Arguments 1. **Market Adjustment Factors**: The recent market adjustment is attributed to multiple factors, including a shift in risk appetite following the initiation of the Yarlung Tsangpo River hydropower station project, which boosted equity and commodity markets, thereby exerting pressure on the bond market [2]. 2. **Liquidity Conditions**: After a period of relative liquidity in June, July saw increased volatility and signs of tightening liquidity, which placed significant pressure on bullish positions in the bond market [2][3]. 3. **Redemption Pressures**: Weak institutional earnings have led to redemption pressures, causing a shift in holdings between trading and allocation positions [2][3]. 4. **"Anti-Internal Competition" Policy**: This policy aims to elevate prices to lower the actual interest rates for enterprises, thereby improving profitability. The effectiveness of this policy will be assessed by monitoring CPI and PPI in the fourth quarter [1][4]. 5. **Asset Allocation Trends**: The adjustment in asset allocation is primarily occurring at the institutional level, with a notable increase in the allocation to equity assets, particularly high-dividend stocks and Hong Kong stocks, as a response to declining deposit rates [5][6]. 6. **Bond Supply and Demand**: Convertible bonds are in high demand due to their scarcity, while credit bonds have stable net supply but increased demand due to the growth of wealth management products. Conversely, the supply of interest rate bonds is rising, but demand is weakening [7]. 7. **Future Market Variables**: Key variables to monitor include central bank operations, potential tightening of liquidity, and the impact of government bond issuance on market dynamics. The necessity for interest rate cuts may decrease if the focus shifts to lowering actual interest rates [8][9]. 8. **Macroeconomic Trends**: The macroeconomic trend is shifting from relying on rate cuts to using price increases to lower actual rates. This could pose mid-term risks to the bond market if nominal growth and price levels rise [10]. Other Important but Overlooked Content - The discussion highlights a lack of significant retail investor movement towards equities, indicating that the rebalancing of assets is more pronounced among institutional investors [5][6]. - The potential for a rebound in the third quarter is noted, contingent on fiscal issuance and central bank liquidity measures, while caution is advised for the fourth quarter due to possible risks [8][9].

Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - The bond market has recently undergone significant adjustments, and the adjustment may not be over yet. The market generally expects the yield of the 10 - year active bond to operate between 1.7% - 1.8% in the next month, with the yield top at 1.8% and the bottom at 1.6% in the second half of the year. The report maintains the mid - term strategy of 1.6% - 1.9% for the 10 - year treasury bond [3][8]. - The market generally expects the yield curve to steepen, with a higher probability of a bear steepening. Making the curve steeper remains a relatively high - probability strategy [11]. - The expected returns of bond funds have been significantly downgraded, and bonds are currently the least favored major asset class. The market expects the yield of medium - and long - term bond funds to be below 2% for over 80% of the time, and below 1.5% for 40% of the time this year [3][15]. - The bond market may experience some oversold rebounds, but the upside is limited due to insufficient internal positive factors. It is recommended to be cautious with duration, lower annual return expectations, maintain a low - volatility portfolio, and seize short - term trading opportunities [3][17]. 3. Summary by Related Catalogs Reasons for the Bond Market Adjustment - The rise of commodities and equities is considered the main reason. The stock and commodity markets have strengthened this week, with the duration and amplitude exceeding market expectations, which has weakened the sentiment in the bond market. The low interest rate level is a secondary reason, as the low cost - effectiveness of bond assets and limited downward space for interest rates lead to significant adjustments when there are negative factors [3][5]. Bond Market Stabilization - Most views believe that the bond market has not yet stabilized, but small - scale entry is possible. Some also think that sentiment has reversed and short - term stabilization is difficult, while few believe the adjustment has ended. The bond market has been affected by risk assets in the past few days, and yesterday's sharp decline was also due to the tightening of funds in July and the lower - than - expected MLF roll - over at the end of the session [3][5]. Yield Point Estimation - 1.8% is generally considered the upper limit of this round of adjustment. Most think the 10 - year active bond will operate between 1.7% - 1.8% in the next month, with the yield top at 1.8% and the bottom at 1.6% in the second half of the year. The report believes that there may be some repair around 1.8%, and oversold rebound operations can be carried out in the range of 1.75% - 1.8%, but the interest rate adjustment may not be over in the whole - year dimension [3][8]. Yield Curve Expectation - The market generally expects the yield curve to steepen, with a higher probability of a bear steepening. Since July, funds have been relatively loose, so the short - end adjustment has been significantly smaller than the long - end. The market generally expects funds to maintain the current level, while the long - end is more affected by other factors. Making the curve steeper remains a relatively high - probability strategy [11]. Risks and Opportunities in the Bond Market - The mainstream expectations for bond market opportunities are central bank bond purchases, A - share and commodity market corrections, while the attention to real estate and tariffs has weakened. Risk factors are more diverse, including A - share rises, institutional redemption pressure, central bank tightening of liquidity, and inflation increases. Although the decline in this round is less than that in the first quarter, the redemption of bond funds is stronger, and the secondary impact of redemptions needs to be vigilant [3][13]. Bond Fund Return Expectation - The expected returns of bond funds have been significantly downgraded, and bonds are currently the least favored major asset class. As of July 22, the year - to - date returns of the money market fund index and the long - term pure bond fund index are 0.77% and 0.70% respectively. Over 80% of the market expects the yield of medium - and long - term bond funds to be below 2% this year, and 40% expect it to be below 1.5%, indicating that the market expects the second - half returns to be difficult to exceed the first - half returns [3][15].

Core Viewpoint - The Japanese Ministry of Finance plans to significantly reduce the issuance of super-long-term government bonds due to unprecedented fluctuations in yields, exceeding earlier media reports [1][2] Group 1: Issuance Reduction Details - The total issuance of 20-year, 30-year, and 40-year bonds will be reduced by 3.2 trillion yen (approximately 22 billion USD) for the fiscal year ending March 2026, surpassing the previously expected reduction of 2.3 trillion yen [1][2] - Specifically, the issuance of 20-year bonds will decrease by 1.8 trillion yen to 10.2 trillion yen, which is double the amount reported earlier [2] - The issuance of 30-year bonds will be reduced by 900 billion yen to 8.7 trillion yen, and the issuance of 40-year bonds will decrease by 500 billion yen to 2.5 trillion yen [2] Group 2: Short-term Debt Adjustments - To compensate for the reduction in long-term debt issuance, the Ministry of Finance is considering increasing the issuance of short-term debt, particularly six-month bonds [1] - The overall issuance of Japanese government bonds for the fiscal year will see a slight decrease of 500 billion yen, totaling 171.8 trillion yen [1] - The issuance of 2-year bonds will increase by 600 billion yen to 31.8 trillion yen, and the issuance of 1-year bonds will rise by 300 billion yen to 38.7 trillion yen [2] - The issuance of six-month bonds will see a significant increase of 1.8 trillion yen to 4.2 trillion yen [2] Group 3: Market Context - The adjustments come amid severe volatility in the Japanese bond market, with rising yields causing global market reactions [1] - Recent concerns regarding Japan's fiscal situation have intensified selling pressure, particularly after weak auction demand led to a spike in yields for 30-year and 40-year bonds [1]

Report Industry Investment Rating - No relevant content provided Core Viewpoints - In Q1 2025, the number of short - term pure bond funds was 358, accounting for 2.84% of the entire fund market, and the issuance in Q1 decreased compared to the same period last year. The total assets and net assets of short - term pure bond funds decreased, and the average scale also declined. The average leverage ratio dropped by 0.02, and the single - quarter average net value growth rate was 0.15%, a significant decline from the previous quarter. In terms of asset allocation, bonds accounted for 97.4% of the total assets, with an increase of 0.8% from the previous quarter, and the proportion of other assets changed slightly. In terms of specific bond types, interest - rate bonds, financial bonds, and corporate - issued bonds were the main holdings, and the proportion of corporate bonds and interest - rate bonds increased [1][44]. Summary by Directory 2025 Q1 Short - term Pure Bond Fund Basic Situation - **Number of Bond Funds**: As of the end of Q1 2025, there were 358 short - term pure bond funds, accounting for 2.84% of the entire fund market. In Q1, 4 short - term pure bond funds were issued, a decrease compared to the same period last year [1][10]. - **Bond Fund Scale**: As of the end of Q1 2025, the total assets and net assets of short - term pure bond funds were 10,343 billion yuan and 9,234 billion yuan respectively, a decrease of 2,480 billion yuan and 2,011 billion yuan from the end of the previous quarter. The average total assets and net assets were 31 billion yuan and 27 billion yuan respectively, a decline of 7.8 billion yuan and 6.4 billion yuan from the end of the previous quarter. Among the 337 old short - term pure bond funds, 61 had a positive net asset scale growth, and 276 had a decline. The net assets of Puyin Andaxin 60 - day Rolling Holding increased by 4.52 billion yuan [1][11]. - **Leverage Ratio**: At the end of Q1 2025, the average leverage ratio of short - term pure bond funds was 1.12 under both the overall method and the average method, a decrease of 0.02 from the end of the previous quarter [1][17]. - **Net Value Growth Rate**: In Q1 2025, the bond market adjusted, and interest rates rose. The single - quarter average net value growth rate of short - term pure bonds was 0.15%, a significant decline from the previous quarter. Among the 337 funds, 276 had a positive net value growth rate, accounting for 82.0%, and the net value growth rate was mainly distributed between (-1,0) and (0,1] [20][23]. 2025 Q1 Short - term Pure Bond Fund Asset Allocation - **Large - scale Asset Allocation**: As of the end of Q1 2025, the total assets of short - term pure bond funds were 10,343 billion yuan. Bonds accounted for 97.4% of the total assets, an increase of 0.8% from the previous quarter; bought - back assets accounted for 1.3%, a decrease of 0.2% from the previous quarter; bank deposits and other assets accounted for 0.7% and 0.6% respectively, with changes of - 0.2% and - 0.4% from the previous quarter [2][28]. - **Bond Type Allocation**: As of the end of Q1 2025, the main bond types held by short - term pure bond funds were interest - rate bonds, financial bonds (excluding policy - based financial bonds), and corporate - issued bonds, accounting for 13.0%, 15.3%, and 67.6% of the total bond assets respectively. The proportions of inter - bank certificates of deposit, asset - backed securities, and other bonds were 3.4%, 0.3%, and 0.3% respectively. Compared with the end of the previous quarter, the proportions of interest - rate bonds, financial bonds, and corporate - issued bonds changed by 0.4%, - 0.9%, and 1.2% respectively, and the proportions of inter - bank certificates of deposit and other bonds changed by - 0.6% and - 0.1% respectively, while the proportion of asset - backed securities remained basically the same. Among specific bond types, medium - term notes, short - term financing bills, financial bonds, and policy - based financial bonds had relatively high proportions, and the proportions of corporate bonds and interest - rate bonds increased, while most other bond types decreased slightly [30][35].

Core Viewpoint - The bond market is experiencing adjustments, yet the new fund issuance market continues to see "explosive" offerings, with several bond funds reaching their fundraising limits and closing early [2][4][6]. Group 1: Fundraising Performance - Multiple bond funds have recently closed early due to reaching their fundraising caps, including Dachen Jing Su interest rate bond fund and Hongli Yue Li interest rate bond fund, both nearing 6 billion RMB in size, making them the largest new funds in March [2][7]. - The Dachen Yuan Hong Jin interest rate bond fund, initially set to raise funds from March 12 to March 27, 2025, also closed early on March 26, 2025, after reaching its 6 billion RMB cap [4][6]. Group 2: Market Trends and Analysis - Despite significant fluctuations in the bond market leading to negative returns for some funds, the new issuance market remains robust, indicating a potential recovery in value [3][4]. - Industry experts believe that the long-term trend in the bond market has not reversed, but the adjustments have improved the cost-performance ratio, suggesting a period of accumulation and stabilization [3][8]. - The current economic indicators suggest that the bond market is in a process of bottoming out, with some institutions increasing their buying power, which may stabilize the market [8][9].