Report Industry Investment Rating - The report does not provide an industry investment rating [1] Core Viewpoints - After the New Year, the market has high expectations for a good start in the 15th Five - Year Plan, with strong profit - taking sentiment. Under the stimulus of the "Shanghai Seven Measures", the bond market fell continuously until it stopped falling on Friday. The medium - and long - term credit strategies had obvious pullbacks, while the short - end sinking strategy's net value remained stable. Looking forward, with factors such as loose capital and the opening of amortized bond funds remaining unchanged, credit bonds are still an asset that combines offense and defense. Currently, the cost - effectiveness of chasing up in the bond market has decreased, and the market is likely to fluctuate in March. There is limited room for exploration within 3Y of credit bonds, with a stronger defensive nature. It is recommended to do more sinking to build a bottom - position. There is a thickening of term spreads for many entities in the 3 - 4Y range, presenting riding opportunities. Long - term bonds over 5Y have certain attractiveness in terms of absolute returns, and institutions with strong liability - side stability can make layouts. There is a convex point around 4Y for Tier 2 and perpetual bonds, with expected considerable riding returns, combining both offense and defense [6][10] Summary by Directory 1. Credit Bond Weekly Viewpoint: Grasping Bonds with Strong Convexity in the 3 - 4Y Range - After the New Year, due to high expectations for the 15th Five - Year Plan's good start and strong profit - taking sentiment, the bond market declined under the "Shanghai Seven Measures" until Friday. Medium - and long - term credit strategies pulled back, while short - end sinking strategies' net values were stable. In the future, with favorable factors like loose funds and the opening of amortized bond funds, credit bonds are still offensive and defensive. The cost - effectiveness of chasing up in the bond market is low, and March is likely to see fluctuations. There is limited exploration space within 3Y of credit bonds, with a stronger defensive property; 3 - 4Y has riding opportunities due to thickened term spreads; 5Y+ long - term bonds are attractive for institutions with stable liabilities. Tier 2 and perpetual bonds around 4Y have convex points and expected riding returns [6][10] 2. Credit Bond Weekly Review: Overall Stable Performance of Short - and Medium - Term Credit 2.1 Negative Information Monitoring - There were no bond defaults or overdue cases, no downgrades of corporate main body ratings or outlooks, no downgrades of bond ratings, and no overseas rating downgrades from February 23 to March 1, 2026. However, there were some significant negative events for companies such as Fanhai Holdings, Sunshine City Group, and others [15][16][17] 2.2 Primary Issuance: Significantly Lower New Bond Issuance Costs - After the holiday, the new issuance of credit bonds was slow, with a large - scale net financing outflow. From February 23 to March 1, 2026, the primary issuance of credit bonds was 92.7 billion yuan, lower than the previous week before the holiday. The total repayment amount was 184.4 billion yuan, a peak in maturity in the past month, resulting in a net financing outflow of 91.7 billion yuan. No bonds were cancelled or postponed for issuance last week. The average coupon rates of AAA and AA+ grades were 1.92% and 1.97% respectively, down 11bp and 23bp week - on - week. The frequency of new AA/AA - grade bond issuance remained low [17][18] 2.3 Secondary Trading: Narrowing of Spreads for Low - Grade and Long - Term Bonds - Last week, the valuations of credit bonds of all grades and terms fluctuated slightly within ±1bp. The risk - free interest rate rose slightly, and the credit spreads narrowed by an average of 1bp, with more narrowing for low - grade and long - term bonds. The 3Y - 1Y term spreads of each grade mostly widened by 1bp, and the 5Y - 1Y AA - grade spread narrowed significantly by 4bp. The AA - AAA grade spreads narrowed across the board, with a maximum narrowing of 5bp for the 5Y spread. In terms of urban investment bond credit spreads, most provincial credit spreads narrowed slightly by 2bp last week, with Qinghai narrowing the most by 7bp. In terms of industrial bond credit spreads, most industry spreads narrowed slightly by 1bp last week, slightly underperforming urban investment bonds, and only the real estate spread widened by 5bp. Affected by the holiday, the weekly turnover rate decreased by 0.82pct to 0.97%. The real - estate companies with the largest spread widening were Times Holdings, Rongqiao, Greenland, and Xinyuan [20][26][28][29]

Group 1: Credit Strategy - The report emphasizes a focus on high convexity coupon products across different maturities, suggesting a strategic allocation from short to long durations [11][19] - The credit bond market has seen a general decline in yields, with a divergence in credit spreads, indicating a mixed performance among different bond types [11][6] - The current market conditions present an important window for coupon allocation, particularly in the 3.5-4y, 5.5-6y, and 7.5-8y segments [19][32] Group 2: Market Overview - The yield for 1-year short-term bonds is currently in the range of 1.70%-1.80%, which is approximately 7-9 basis points higher than similar maturity certificates of deposit, indicating a favorable comparison [25][30] - For 2-3 year bonds, the yields are between 1.80%-2.15%, with spreads expected to remain low, making them attractive for investment [26][30] - The 4-5 year bonds show high convexity, with a focus on the value of public bonds, as their spreads have widened slightly, improving their relative value [29][32] Group 3: Policy and Events - The National Development and Reform Commission has issued guidelines for government investment funds, marking a systematic approach to fund allocation and investment focus [4] - Regulatory bodies are facilitating loan extensions for real estate companies, which is expected to improve their cash flow and market expectations [4] - Vanke has proposed multiple debt restructuring plans, indicating proactive measures to reach consensus with creditors [4]

Core Viewpoints - Understanding fragility is essential to comprehend the concept of anti-fragility, where certain systems become stronger and benefit from shocks and volatility [4][40]. - The current economic environment is characterized by high uncertainty, and the best strategy is to remain cautious and observe before making investment decisions [140][149]. Group 1: Investment Strategies - A "barbell strategy" is recommended, where 80% of assets are placed in extremely safe investments, while the remaining 20% is allocated to high-risk opportunities [9][123]. - Traditional diversification may not effectively hedge risks due to changing correlations between assets, making it unreliable [120][121]. - The importance of recognizing hidden risks in seemingly stable investments is emphasized, as these can lead to significant losses during extreme events [81][86]. Group 2: Economic Observations - The U.S. faces increasing vulnerability due to high debt levels and a lack of growth potential, which could lead to stagnation or regression [76][127]. - In contrast, China is viewed as having greater resilience and potential for growth, with a strong capacity to rebound from economic shocks [11][150][155]. - The current global economic landscape is marked by a shift towards "de-dollarization," with investors increasingly turning to gold and other hard assets as a hedge against uncertainty [104][108]. Group 3: Market Dynamics - The interconnectedness of global supply chains has heightened vulnerability, where disruptions in one area can have widespread economic impacts [65][66]. - The concept of "black swan" events highlights the unpredictability of significant market shifts, necessitating a focus on risk management and preparedness [95][100]. - The rise of AI introduces further uncertainty in the market, as its long-term effects on employment and economic structures remain unclear [133][140].