Group 1 - The report highlights that the convertible bond strategy for April 2026 focuses on stability and defensiveness, emphasizing valuation cost-effectiveness and performance certainty, particularly in the chemical, new energy, and cyclical sectors [2][11][17] - Since late February, external uncertainties have increased, leading to a simultaneous adjustment in the A-share and convertible bond markets, with geopolitical conflicts in the Middle East significantly boosting global risk aversion and impacting market dynamics [11][12][14] - The convertible bond market has seen a notable release of price and valuation pressure, with the median price dropping from 143 yuan to around 134 yuan, and the premium rate compressing from 35% to 32%, indicating a significant adjustment [15][18] Group 2 - The report suggests focusing on two aspects for bond selection: bonds with relatively low prices and stable credit ratings for down protection, and equity-type targets with clear underlying logic and no short-term redemption pressure, which are expected to recover first as market sentiment improves [16][19] - The top ten convertible bonds for April 2026 are recommended based on their performance in the context of rising oil prices and inflation expectations, with specific recommendations including HeBang, WanKai, and NengHua bonds in the chemical sector, and ZhuoBang, JingNeng, and JieNeng bonds in the new energy sector [17][19] - The cyclical sector is highlighted for its potential for profit elasticity and valuation recovery, with recommendations for DongNan, YaKe, and KeShun bonds as the economy shows signs of recovery and growth policies take effect [17][19]

Market Overview - The A-share market is expected to experience fluctuations in Q2, with a focus on dividend and new energy sectors[1] - The ongoing Middle East conflict raises concerns about high oil prices and potential global stagflation, with a 39% probability of a ceasefire before April 30[7] Economic Indicators - The overall A-share market PE ratio is 22.55, down 0.13 from the previous week[6] - Market sentiment has decreased, with average daily trading volume at 21,115.58 billion, a drop of 995.59 billion from last week[6] Sector Performance - The energy supply shock may accelerate the global energy transition, presenting opportunities for China's renewable energy sector[24] - The dividend and new energy sectors are recommended for attention in the upcoming quarter[24] Political and Economic Risks - The U.S. midterm elections are influencing market dynamics, with Trump's approval rating dropping to 36%, impacting his management of oil prices[8] - Inflation concerns are rising, leading to a decrease in the expected pace of Fed rate cuts, with the probability of no cuts rising to 88.2%[10] Investment Recommendations - The report suggests a cautious but slightly optimistic approach to the market, indicating that any adjustments in Q2 should be met with a proactive stance[24] - Risks include potential delays in domestic policy implementation and geopolitical events exceeding expectations[25]

Summary of Key Points from the Conference Call Industry and Company Focus - The conference primarily discusses the impact of the Middle East conflict on global asset allocation and China's policy responses, with a focus on various sectors including energy, technology, and consumer goods [1][2][3]. Core Insights and Arguments 1. **Global Asset Reassessment**: The macro team has downgraded ratings across major asset classes due to the ongoing Middle East conflict, affecting stocks, bonds, and commodities [1]. 2. **China's Inflation Outlook**: Recent inflation in China has prompted a new forecast for re-inflation paths, highlighting the potential for either healthy or unhealthy inflation driven by rising commodity prices [2][17]. 3. **Impact on Internet Sector**: Major Chinese internet companies reported weak earnings, reflecting a lack of confidence in the domestic market amid internal competition and low consumer demand [3][19]. 4. **Energy Security Concerns**: The conflict has heightened the focus on energy security, with potential implications for China's market share in green technology and energy-related equipment [3][5]. 5. **Oil Price Projections**: Various scenarios for oil prices were discussed, with estimates ranging from $80 to $180 per barrel depending on geopolitical developments and production capacity recovery [7][39]. 6. **Central Bank Responses**: Central banks face challenges in responding to high oil prices, with potential for delayed interest rate cuts or even increases to combat inflation [8][9][10]. 7. **Asian Market Vulnerability**: Countries in Asia, particularly those heavily reliant on oil imports, are experiencing significant economic stress, with governments scrambling to manage rising fuel costs [11][12]. 8. **China's Economic Resilience**: Despite high oil import dependency, China's relative economic resilience is attributed to its strategic oil reserves and diverse energy supply [35][36]. 9. **Investment Strategy Adjustments**: The macro team has shifted its investment strategy, recommending a cautious approach with a focus on cash and government bonds, while downgrading equities due to increased geopolitical risks [30][33][34]. 10. **Consumer Demand and Structural Issues**: The current inflation is characterized as supply-driven rather than demand-driven, indicating that consumer demand remains weak and may not support a robust economic recovery [54][55]. Other Important but Potentially Overlooked Content 1. **Social Security Reforms**: The need for reforms in social security to boost consumer spending was emphasized, with current measures seen as insufficient [25][28]. 2. **Long-term Economic Projections**: Predictions indicate that China's global export market share could rise to 17% by 2030, reflecting ongoing competitiveness in manufacturing and technology [22]. 3. **Sector-Specific Performance**: Historical data suggests that certain sectors, such as materials and IT, may outperform during inflationary periods, while real estate and traditional consumer sectors are likely to underperform [48][49]. 4. **Market Sentiment and Risk Perception**: There is a noted shift in market sentiment, with investors becoming more risk-averse in light of geopolitical tensions and economic uncertainties [30][31]. This summary encapsulates the key points discussed in the conference call, providing insights into the implications of the Middle East conflict on global markets and China's economic landscape.

Market Outlook - The A-share market is expected to experience fluctuations in Q2, with a focus on dividend and new energy sectors[4] - High oil prices will likely remain a key trading theme in the coming months, influenced by ongoing Middle East conflicts[8] - The current market sentiment is cautious, with a conservative risk appetite anticipated in Q2[9] Economic Indicators - As of March 25, the probability of the Federal Reserve cutting interest rates in Q2 dropped from 45.7% to 0%, while the probability of maintaining rates increased from 54.3% to 88.2%[11] - The correlation between stock prices and earnings is at its highest in April, indicating a focus on sectors with strong fundamental performance[6] Sector Analysis - The new energy sector is poised to benefit significantly from the global energy transition, with China leading in renewable energy systems[16] - Industries such as fiberglass, batteries, computer equipment, software development, agricultural processing, cement, and energy metals are expected to show improved earnings in Q3 2025 and continued positive forecasts for 2026[6] Investment Recommendations - Investors are advised to focus on sectors with solid earnings support, particularly in the dividend and new energy sectors[4] - The commercial aerospace sector is gaining attention due to SpaceX's potential IPO, which could reshape valuation standards in the industry[24]

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - The focus of the bond market remains on domestic factors, with fundamentals and liquidity being the primary principles. External changes will ultimately affect the judgment through the framework [1][14] - With the desensitization of various assets, market trends are returning to their own logics, and the volatility of financial assets has converged [15] - Stagflation concerns will not be the biggest negative factor for the bond market this year, and it depends on whether it affects monetary policy decisions [17] - The economic data at the beginning of the year exceeded expectations, but some were related to the Spring Festival shift, and there are still structural problems. More data is needed to confirm a trend improvement [17] - In the short - term, the bond market is expected to remain volatile, with the 10 - year treasury bond yield oscillating between 1.76% - 1.88%, and the T main contract between 108 - 108.4. The key time window is advanced to around May, and the stabilization of the external situation may be the trigger for the narrative to shift from "inflation" to "stagflation" [2][17] 3. Summaries According to the Directory 3.1 Market Review 3.1.1 Before the Spring Festival: Price Recovery and Surge - From the beginning of the year to nearly two months after the Spring Festival, the bond market had a smooth recovery. It was not driven by a single pre - foreseeable major positive factor but by the gradual accumulation of surrounding positives [6] - After the New Year's Day holiday, the market sentiment was not good. The "redemption new rule" did not bring significant gains, and the bond market dived due to the lower - than - expected central bank bond - buying scale in December. Subsequently, the A - share market's overheating was suppressed by regulatory measures, which benefited the bond market. However, it was difficult to break through the upper limit of the T main contract's shock range of 108.15, and the 10Y yield remained around 1.83% [6] - The breakthrough came when risk assets collectively dived. The nomination of Warsh as the new Fed Chairman candidate with a hawkish policy stance impacted most major asset classes. The bond market, with its domestic - oriented pricing, completed the breakthrough of key points [7] 3.1.2 March: From Safe - Haven to Inflation Concerns - The Middle East conflict broke the previous narrative of the bond market. The market's dominant logic shifted from simple safe - haven considerations to more complex inflation and subsequent liquidity crisis narratives [13] - After the conflict, most assets except the US dollar and oil prices fell. The continuous high oil prices raised the inflation center and affected liquidity expectations, such as the continuous decline in the probability of the Fed's interest rate cut in June [13] 3.2 Summary and Outlook - The bond market is highly sensitive to the macro - environment, indicating the importance of the traditional framework [14] - Future bond market focus remains on domestic factors. It is more important to adhere to the framework of fundamentals and liquidity rather than tracking geopolitical situations [14] - Stagflation concerns will not be the biggest negative for the bond market this year, and it depends on whether it affects monetary policy decisions [17] - The economic data at the beginning of the year exceeded expectations, but more data is needed to confirm a trend improvement [17] - The bond market is expected to remain volatile in the short - term, with the 10 - year treasury bond yield in the range of 1.76% - 1.88% and the T main contract in the range of 108 - 108.4. The key time window is advanced to around May, and the stabilization of the external situation may be the trigger for the narrative shift [17] 3.3 Stagflation: Does It Necessarily Destroy Everything? 3.3.1 2021: A Different Stagflation Cycle - In 2021, due to the low - base effect of the previous year's economic data and overseas fiscal stimulus, it was a stagflation year. However, the bond market did not face significant pressure, and the 10 - year treasury bond yield showed a downward trend [19][20] - The inflation in 2021 was not a result of systematic supply - demand mismatch, so the monetary policy favored stable growth. The bond market was more likely to remain volatile until the inflation problem was resolved [22] 3.3.2 How to View the Current Inflation Pressure? - The current inflation pressure is different from that in 2011. The current supply - demand contradiction is on both sides, and the monetary policy will not be tightened systematically as in 2011 [24] - The current approach to inflation is similar to that in 2021. In 2021, administrative intervention was used to control commodity prices, and the spill - over effect on the equity market was limited [24][25] 3.3.3 Current Inflation Repair - Due to the low - base effect in the first half of 2025, the pressure for prices to turn positive is not high. The Middle East conflict may advance the inflation inflection point to April. After the inflection point, it is necessary to consider whether the demand side can provide support and the possibility of PPI - CPI divergence [28] - The current price recovery is not mainly due to the improvement of domestic demand. The improvement in inflation data is limited, and the price increase in PPI is mainly concentrated in the mid - upstream, with insufficient downstream transmission [30] 3.4 Pay Attention to the Opportunity of Reserve Requirement Ratio Cut in the Second Quarter 3.4.1 Sufficient and Stable Liquidity in the First Quarter - In the first quarter, the central bank formed a medium - and long - term liquidity injection system, and the money market maintained stable and sufficient liquidity without the implementation of total - volume tools, which supported the bond market [32] 3.4.2 Key Policy Statements in Q1 - At the beginning of the year, structural tools were implemented, including adjusting the interest rates of structural tools, merging and increasing the amount of existing tools, and expanding the scope of support. The central bank also clarified the factors affecting bond trading operations [34] - The central bank's report on the fourth - quarter monetary policy in 2025 addressed the issue of deposit transfer. It pointed out that the overall liquidity remained stable, and the impact on a single asset market was limited, but some banks might face liability - side pressure [35] 3.4.3 Opportunity of Reserve Requirement Ratio Cut in the Second Quarter - The central bank is more concerned about the demand - side pressure. The current inflation is mainly due to the base effect and external shocks, and the economic data lacks trend support. Historically, non - demand - driven inflation does not lead to a change in the direction of monetary policy [36] - Although the reserve requirement ratio is approaching the 5% lower limit, it may not be a problem. With the improvement of the macro - prudential assessment system, the importance of the 5% lower limit is decreasing [47] - The net回笼 of funds through repurchase in March may lead to the expectation of using reserve requirement ratio cuts to inject long - term liquidity. Reserve requirement ratio cuts have advantages in terms of cost, signal effect, and saving interest - rate cut space [51]

Domestic Macro - Demand Side - Domestic data supports moderate "re-inflation" with a demand growth rate of 2.93%[2] - The consumer price index (CPI) shows a decline in pork and vegetable prices, with a decrease of 1.77%[3] - The Producer Price Index (PPI) indicates a continued rise in crude oil prices, increasing by 3.22%[3] Domestic Macro - Production Side - The production sector is still in a recovery phase, with a notable structural differentiation, showing a production growth rate of 1.25%[2] - The high furnace operating rate is reported at 81.05%[3] - The PTA production rate is at 79.9%, indicating strong performance in the sector[3] Price Performance - CPI shows a year-on-year increase of 2.01%[2] - PPI reflects a year-on-year increase of 6.15%[3] Fiscal and Monetary Policy - The national debt yield curve has shifted downwards, indicating a change in market expectations[3] - The MLF (Medium-term Lending Facility) rate is reported at 1.428%[3] Overseas Macro - Concerns over the potential escalation of the Iran conflict are affecting market sentiment, with a decrease in risk appetite observed[2] - Trump's short-term market credibility is declining, impacting investor confidence[2]

1. Report Industry Investment Rating - No relevant information provided 2. Core View of the Report - Today, precious metals tumbled overall. After last week's interest - rate meetings of the Fed and the ECB sent hawkish signals, the market anticipates that the Fed may not cut rates this year. The threat of war and high oil prices have intensified inflation concerns. Before the war shows obvious signs of easing, precious metals may remain weak, with the gold price testing the support at $4000 per ounce [1]. - The market trading logic has shifted from "re - inflation" to "weak demand in recession", causing funds to shift from precious metals and non - ferrous metals to the energy and chemical sectors. Macro, capital, and fundamentals fail to provide effective bullish factors, leading to a gap - down decline in the precious metals market. Due to the strong cost support of platinum and palladium, the first support below the market can refer to the high - cost line of mines [2]. 3. Summary by Related Content Market Conditions - Precious metals dropped significantly today. International gold and silver prices broke through key levels and declined [1]. - Gold and silver prices plunged from high levels, the financial premium of platinum and palladium shrank substantially, and the market pricing gradually moved closer to that of industrial metals [2]. Factors Affecting the Market - Central bank policies: The Fed maintained interest rates unchanged. The median forecast of the dot - plot shows that the committee still expects one rate cut each in 2026 and 2027, but the number of officials supporting larger - scale rate cuts has decreased, indicating a more conservative policy path. Powell mentioned that the Fed won't consider rate cuts until seeing further progress on inflation, and the possibility of rate hikes has been discussed internally. After the meeting, the market expects the Fed may not cut rates this year [1]. - Geopolitical factors: The Iranian Islamic Revolutionary Guard warned that if Trump's threat to attack Iranian power plants is carried out, Iran will take a series of measures, including completely closing the Strait of Hormuz. High oil prices have intensified inflation concerns, causing a fall in assets such as stocks and putting pressure on precious metals. The Iranian Foreign Ministry stated that the Strait of Hormuz is not blocked, and non - hostile ships can pass through after coordinating with Iranian authorities [1][3]. - Market logic shift: Market trading logic has changed from "re - inflation" to "weak demand in recession", and funds are flowing from precious metals and non - ferrous metals to the energy and chemical sectors [2]. - Fundamental factors: The consumer - side narrative of large - scale application of hydrogen energy needs time to materialize, and the substitution of electric vehicles for traditional fuel vehicles continues, resulting in insufficient support for platinum and palladium prices from the consumer side [2]. Support Levels - The gold price is testing the support at $4000 per ounce [1]. - For platinum and palladium, the first support below the market can refer to the high - cost line of mines. The current mining cost of platinum and palladium in South African deep - well mines is generally above $1150 per ounce (about 254 yuan per gram, converted at an exchange rate of 6.87) [2].

Group 1 - The market sentiment has shifted from focusing on inflation to concerns about stagnation, influenced by rising oil prices and geopolitical conflicts [2][11][5] - Short-term interest rates have fluctuated, reflecting changes in market risk appetite and inflation expectations, with a notable decline after March 13 [8][2][3] - The current macroeconomic scenario indicates that domestic inflation remains unstable, and the central bank is likely to maintain a stable liquidity environment to support growth and financial stability [3][13][16] Group 2 - The market is currently in a validation phase between inflation and stagnation scenarios, with short-term trends leaning towards weak fluctuations [5][28] - There are signs of potential risks in the liquidity environment, particularly regarding the reliability of the assumption that funding conditions will remain stable [20][4] - The possibility of a "re-inflation" narrative emerging if oil prices stabilize at moderate levels is a key area to monitor [4][21] Group 3 - The performance of the real estate sector has contributed to market discrepancies, with recent data indicating a weakening in demand expectations [11][21] - The recovery of the Producer Price Index (PPI) is crucial for improving corporate expectations and potentially stimulating broader economic activity [21][28] - The current pricing scenario reflects a cautious approach, with market participants favoring defensive strategies amid geopolitical uncertainties [16][5]

Domestic Macro - Production - The production sector is experiencing a comprehensive recovery, with a production index of 78.36% and a growth rate of 5.28%[2] - The PPI shows a significant increase in crude oil prices, rising by 17.2%[2] Price Performance - CPI indicates a downward trend in pork and vegetable prices, with a decrease of 2.74% and 1.02% respectively[2] - The overall CPI is reported at 2.35%[2] Domestic Macro - Demand - Consumer activity is improving, with a 11.7% increase in movie box office revenue compared to the same period last year[3] - The BDI index shows a slight decline of 1.2%, while the overall port cargo and container throughput has decreased slightly[3] Fiscal Policy - The pace of bond issuance has accelerated, with a year-on-year increase of 21.6%[6] - Various measures are being implemented to support the "14th Five-Year Plan"[6] Global Macro - Market Trends - The ongoing geopolitical conflicts are influencing market expectations for long-term re-inflation, with oil prices remaining high[5] - WTI crude oil prices have increased by 20% recently, impacting all risk assets negatively[5]

1. Report Industry Investment Rating - The industry rating is "Overweight", expecting a gain of over 10% relative to the benchmark index in the next 6 - 12 months [38] 2. Core Viewpoints of the Report - The bond market decline was significant this week, with Monday contributing a large drop. Due to the escalation of the Iranian war and a sharp rise in oil prices, stocks and bonds both showed signs of "stagflation." The bond - bear logic of re - inflation has been strengthened, but there may still be an "expected difference" in interest rate decline in the bond market [7][8] - Considering factors such as the source of bond market repair, individual bond trading strategies, and the pricing of inflation in the 30Y - 10Y spread, the report maintains the judgment that the 10 - year bond yield will reach 1.75% and the 30 - year bond yield will reach 2.15% during this bond market repair [4] 3. Summary by Relevant Catalogs 3.1 Reasons for the Bond Market Decline - Oil price increase can advance the time for PPI to turn positive, strengthening the bond - bear logic of re - inflation [8] - The performance of "Fixed - income +" and secondary bond funds is mediocre, lacking incremental funds [8] - The issuance of 50 - year treasury bonds was average, and some institutions increased their short - selling of bonds [8] 3.2 Sources of Bond Market Repair - Big banks increased bond purchases due to insufficient credit at the beginning of the year. From mid - January, big banks significantly increased their purchases of 7 - 10 - year treasury bonds, with a cumulative net purchase of about 250 billion yuan as of March 13 [11] - The relatively loose funds. Local bond supply in February was lower than the same period last year, and the central bank's net monetary injection alleviated supply concerns. The deposit pressure on banks' liability side was not high, resulting in low - level operation of capital interest rates around the Two Sessions and a significant decline in certificate of deposit (CD) interest rates [13] 3.3 Market Concerns after the Festival - Regarding whether big banks selling OCI old bonds to realize floating profits at the end of the quarter will affect bond allocation, although big banks sold 7 - 10Y treasury bond old bonds last year, they stabilized on March 19. This year, the slope of net purchases has slowed down after the festival, and there is no need to worry too much [15] - Regarding whether the "patch" on inter - bank self - discipline after the meeting will impact the capital market, there may be some disturbances in March, but the banks' asset - liability gap pressure is not high, and the central bank's attitude of injecting medium - and long - term funds remains unchanged, so there may not be much risk of an increase in CD prices [17] 3.4 Individual Bond Trading Strategies - **10Y China Development Bank new and old bond spread widening**: The spread between 250220 and 250215 widened after the festival. Funds have insufficient purchases of 10 - year China Development Bank bonds recently, while increasing their holdings of 3 - 5Y bonds. Since early March, the borrowing concentration of 250220 has accelerated, with small and medium - sized banks being the main borrowers [19] - **15 - year treasury bonds showing resistance to decline**: In the recent bond market correction, the decline of 15Y treasury bonds was significantly lower than that of 30Y bonds. This is because the 15 - year term is an extension of the 10 - year variety, and 15 - year bonds are within the upper limit of the insurance product allocation period [21] - **Gambling on the spread convergence between Special Bond 6 and old bonds**: The spread between Special Bond 6 and other bonds has widened. Market trading may involve short - selling or a "neutral strategy" based on the spread. However, there are uncertainties in bond issuance and replacement, and the cost of short - selling is not low. Attention should be paid to short - covering after the borrowing concentration reaches a high level [23][25] - **Other term bond varieties**: 30 - year local bonds are in a low - volatility state, and the insurance allocation scale is acceptable. The 50 - year treasury bonds had a slight "issuance overshoot" this week, and the term spread is at a historical high [30][31] 3.5 Pricing of Re - inflation in the 30Y - 10Y Spread - The current inflation narrative is different from before, mainly a geopolitical + oil - price - driven imported inflation narrative. Imported or supply - side inflation may not necessarily lead to bond market adjustments [34] - Considering factors such as the chip structure, the imperfection of short - selling basis, and the decline in multi - asset linkage, the report believes that the spread has room to converge, with the 30 - year interest rate expected to repair [35]