Core Viewpoint - The 2026 Bond Market Annual Forum highlighted expectations for long-term interest rates to remain in a wide range of fluctuations, with potential for a gradual recovery in the macro economy if housing prices stabilize in the next two years [1] Group 1: Interest Rate Trends - Long-term interest rates are expected to experience wide fluctuations at the bottom [1] - A gradual upward trend in the interest rate center is anticipated, driven by a potential stabilization in housing prices and ongoing "anti-involution" efforts [1] Group 2: Investment Strategies - The market environment suggests avoiding unilateral duration strategies, favoring a focus on coupon strategies [1] - Recommendations include using short-duration credit bonds as a base, employing leverage strategies for interest rate arbitrage, and actively managing long-end volatility to enhance returns [1] - There is an emphasis on actively positioning in "fixed income +" opportunities [1]

Group 1 - The net inflow of funds into the government bond ETF (511010) exceeded 280 million yuan in the past 20 days, indicating the value of allocation in the bond market [1] - Historical trends suggest that interest rates are more likely to follow a trend rather than revert to the mean, with macroeconomic fundamentals showing a clear trend and monetary policy maintaining stability [1] - The economic environment in China has been in a bottoming phase since 2015, with weak investment from traditional sectors but strong government investment, resilient exports, and consumer spending hovering at the bottom [1] Group 2 - The December CPI showed a mild increase, while the PPI's year-on-year decline narrowed, indicating that the economic bottom structure in China is gradually being established [1] - The central bank's monetary policy report from the fourth quarter of last year revealed limited new content and did not signal an urgent need for interest rate cuts, reflecting a neutral to slightly optimistic view on the macro economy [1] - If the current macro environment persists, the probability of interest rates rising is greater than that of falling, and the cost-effectiveness of wave trading is not as high as it was 25 years ago [2]

Summary of Insurance Sector Conference Call Industry Overview - The insurance sector in A-shares and H-shares is currently undervalued, with significant room for valuation recovery, particularly in Hong Kong stocks, where low valuation companies have performed notably well [1][4][12]. - Concerns exist regarding the high equity asset allocation ratio of insurance companies, which reached 15.4% by the end of Q3 2025, leading to increased profit uncertainty and valuation pressure [1][5][6]. Key Insights and Arguments - The decline in interest rates has resulted in a decrease in net investment yield for insurance companies, estimated to drop by 30-50 basis points annually. To meet profit targets, companies have increased their equity asset allocation [1][7]. - The pre-sale performance for the 2026 "opening red" period has exceeded expectations, driven by demand for dividend insurance products and the bancassurance channel, indicating marginal improvement in new business [1][8]. - Low valuation stocks like Ping An and China Pacific have shown strong performance due to their significant valuation recovery potential, while New China Life outperformed them earlier due to its lower valuation characteristics [1][9][11]. Valuation and Market Trends - A-shares and H-shares insurance companies exhibit interesting valuation phenomena, with the lowest valued companies in Hong Kong seeing the most significant price increases, indicating a clear valuation recovery trend [4]. - The average valuation recovery potential in A-shares is estimated at over 25%, while Hong Kong stocks have even greater potential based on current 10-year government bond yield assumptions [12]. Investment Opportunities - Current investment opportunities in the insurance sector are primarily focused on valuation recovery rather than short-term growth from specific companies. The core issue is the trend in interest rates, which directly impacts valuations [13]. - Recommended stocks include Ping An and China Pacific in A-shares, and China Life in H-shares, as they are expected to benefit from rising prices and interest rates, along with having substantial valuation recovery potential [2][14][17]. Future Outlook - The improvement in cash flow certainty for insurance companies is anticipated as the speed of decline in net investment yield is slower than that of liability costs. However, this external momentum will require time to manifest [16]. - The overall recommendation emphasizes the potential of low valuation insurance stocks that can benefit from the anticipated changes in the economic environment and cash flow certainty [18].

Group 1 - The Deputy Chief Cabinet Secretary of Japan, Aoki Kazuhiko, refrained from commenting on the foreign exchange market [1] - Emphasized the importance of stable fluctuations in exchange rates reflecting the fundamentals [1] - Stated that there will be continued close monitoring of interest rate trends [1]