Group 1: Report Industry Investment Rating - Not provided in the content Group 2: Core Viewpoints of the Report - In March 2026, the manufacturing PMI returned to the expansion range, with the production and demand sides both improving. The non - manufacturing and comprehensive PMIs also returned to the expansion range [2][3] - The improvement in demand on the market's demand side was stronger than that on the supply side, but the differentiation between domestic and foreign demand may continue. Domestic demand in the market may remain insufficient in the short term, and policy support is needed to boost demand [4] - There are positive signals in prices, but the gap between purchase prices and ex - factory prices has widened, which may compress corporate profit margins [5] - The PMIs of the construction and service industries have both increased, and the service industry PMI has returned to the expansion range. The construction industry remains confident in its future development [5] - The target range for the 10 - year treasury bond is expected to be 2 - 3%, with a central value of 2.5% [5] Group 3: Summary by Relevant Catalogs 3.1 PMI Data in March - The manufacturing PMI in March was 50.4%, a 1.4 - percentage - point increase from the previous value, higher than the market expectation. The non - manufacturing PMI was 50.1%, a 0.6 - percentage - point increase, and the comprehensive PMI was 50.5%, a 1.0 - percentage - point increase [2][3] - After the Spring Festival, as enterprises resumed work and production, the production index increased by 1.8 percentage points, the new order index increased by 3.0 percentage points, and the new export order index increased by 4.1 percentage points. The production and operation activity expectation index was 53.4%, a 0.2 - percentage - point increase [4] 3.2 Price Situation - The purchase price of major raw materials increased by 9.1 percentage points to 63.9%, and the ex - factory price increased by 4.8 percentage points to 55.4%. The ex - factory price index has remained in the expansion range for three consecutive months [5] 3.3 Industry Situation - The construction industry PMI was 49.3%, a 1.1 - percentage - point increase from the previous value, and the service industry PMI was 50.2%, a 0.5 - percentage - point increase. The business activity expectation index of the construction industry was 50.5%, a 0.4 - percentage - point decrease but still in the expansion range [5] 3.4 Bond Market Viewpoint - The target range for the 10 - year treasury bond is expected to be 2 - 3%, with a central value of 2.5%. The economic recovery is accelerating, and factors such as inflation, monetary policy, and real estate need to be considered [5]

Manufacturing Sector - The manufacturing PMI for March 2026 is reported at 50.4%, an increase of 1.4 percentage points from the previous month, indicating a return to the expansion zone[2][4] - The production index rose by 1.8 percentage points, while the new orders index increased by 3.0 percentage points, reflecting a positive trend in manufacturing activities[4][12] - The proportion of companies reporting insufficient demand decreased to 48.5%, down 6.6 percentage points from the previous month, marking the first drop below 50% since July 2022[12] External Demand and Trade - The new export orders index surged to 49.1%, up 4.1 percentage points from the previous month, indicating a significant improvement in external demand[18] - The import orders index also rose to 49.8%, reflecting a synchronized recovery in trade activities[18] Price Trends - The raw material purchase price index increased by 9.1 percentage points to 63.9%, outpacing the factory price index, which rose by 4.8 percentage points to 55.4%, indicating rising cost pressures for businesses[21] - Both raw material and finished goods inventory indices saw a slight increase, with raw material inventory rising to 47.7% and finished goods inventory to 46.7%[22] Service Sector - The service sector PMI improved to 50.2%, a 0.5 percentage point increase from the previous month, driven by post-holiday resumption of work[24] - Key sectors such as transportation and financial services showed strong business activity indices above 55.0%, while retail and hospitality sectors experienced a decline[24]

1. Report Industry Investment Rating There is no information about the report industry investment rating in the provided content. 2. Core Viewpoints of the Report - The fiscal data from January to February 2026 shows that non - tax revenue turned positive year - on - year, and fiscal expenditure was front - loaded, which supported the unexpected growth of economic data to some extent [4][5]. - The government will continue to implement a more proactive fiscal policy in 2026, mainly reflected in ensuring fiscal expenditure, optimizing the combination of government bond tools, improving the efficiency of transfer payment funds, optimizing the expenditure structure, and strengthening fiscal - financial coordination [5]. - It is expected that the target range of the 10 - year treasury bond is 2 - 3%, with a central value of 2.5% [7]. 3. Summary by Relevant Catalogs 3.1 1 - 2 Month Fiscal Data Concerns - Tax revenue increased by 0.1% year - on - year, and the growth rate decreased by 0.7 pct compared with the previous value. The better - than - expected import and export data in January and February may be the main reason for the year - on - year growth of tax revenue. The securities transaction stamp duty increased by 110.0% year - on - year. Non - tax revenue increased by 3.4% year - on - year, turning from negative to positive, driven by local governments' continuous activation of state - owned assets [4]. - Government fund revenue decreased by 16.0% year - on - year in January and February. Land transfer revenue decreased by 25.2% year - on - year, further dragging down government fund revenue. The decline of land transfer revenue directly led to the contraction of overall fund revenue, and the ebb of land finance may continue to drag down government fund revenue [4]. 3.2 General Public Budget - **Income**: From January to February, general public budget income increased by 0.7% year - on - year. Central income decreased by 1.7% year - on - year, and local income increased by 2.6% year - on - year. Tax revenues such as domestic value - added tax, import - link value - added tax and consumption tax, etc., increased compared with December 2025. Non - tax revenue turned positive, with a year - on - year increase of 3.4% [6]. - **Expenditure**: From January to February, general public budget expenditure increased by 3.6% year - on - year. Central expenditure increased by 4.5% year - on - year, and local expenditure increased by 3.5% year - on - year. The year - on - year growth rate of fiscal expenditure rebounded compared with December [6]. 3.3 Governmental Fund Budget - **Income**: From January to February, government fund income decreased by 16.0% year - on - year. Central income increased by 6.7% year - on - year, and local income decreased by 19.2% year - on - year. Land transfer income decreased by 25.2% year - on - year [7]. - **Expenditure**: From January to February, government fund expenditure increased by 16.0% year - on - year. Central expenditure increased by 8.0% year - on - year, and local expenditure increased by 16.3% year - on - year. Land transfer expenditure decreased by 1.9% year - on - year. The growth rate of government fund expenditure in January and February increased compared with the previous value [7]. 3.4 Bond Market Views - **Fundamentals**: The falsification of the under - expected economic recovery, combined with the possible broad credit and broad fiscal policies at the beginning of 2026, will accelerate the cyclical recovery [7]. - **Broad money**: If there are broad monetary policies (such as reserve requirement ratio cuts, interest rate cuts, bond purchases, etc.), similar to 2025, yields may decline briefly and then rise [7]. - **Inflation**: It is expected that inflation will pick up, and attention should be paid to whether the month - on - month PPI can remain positive [7]. - **Funding rate**: If the month - on - month inflation continues to rise, there is a possibility of tightening funds, and the yields of short - term bonds will also start to rise [7]. - **Real estate**: Real estate is not the main means of stabilizing growth this time. Similar to the situation in the United States after 2008, real estate is a lagging indicator. Real estate may bottom out after the recovery of various economic indicators and the rise of the stock market [7]. - **Bonds**: It is expected that the target range of the 10 - year treasury bond is 2 - 3%, with a central value of 2.5% [7].

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - The economic data at the beginning of 2026 showed an unexpected rebound, with industrial production, consumption, and exports all exceeding expectations, and the investment growth rate turning from negative to positive [1][4][5] - In the process of new and old kinetic energy conversion, there are structural highlights in the equipment manufacturing, new - quality productivity, and high - tech industries, but the real estate industry is still bottom - seeking [5] - The target range of the 10 - year treasury bond is expected to be 2 - 3%, with a central value of about 2.5% [6] 3. Summary According to Relevant Catalogs 3.1 1 - 2 Month Economic Data Focus - **Industrial Production**: In January - February 2026, the cumulative year - on - year growth of the added value of large - scale industries was 6.3%, exceeding the median and average forecasts of 9 institutions. The month - on - month growth was 0.83%, an increase of 0.44 pct compared with the previous value. The reasons were the later Spring Festival in 2026 and the high growth of exports [4] - **Consumption and Exports**: The total retail sales of consumer goods from January to February increased by 2.8% year - on - year, exceeding the median and average forecasts of 8 institutions. The cumulative export from January to February increased by 21.8% year - on - year, far exceeding the median and average forecasts of 6 institutions. However, domestic demand was still weaker than external demand [4] - **Investment**: The cumulative year - on - year growth of fixed - asset investment from January to February was 1.8%, turning from negative to positive. Infrastructure investment grew rapidly, with a year - on - year growth of 11.4%, while real estate development investment decreased by 11.1% year - on - year, still dragging down investment [5] 3.2 New and Old Kinetic Energy Conversion - **Equipment Manufacturing**: In January - February, the added value of large - scale equipment manufacturing increased by 9.3% year - on - year, accounting for 33.5% of all large - scale industries, and all 8 sub - industries achieved growth [5] - **New - Quality Productivity Industry**: In January - February, the added value of large - scale high - tech manufacturing increased by 13.1% year - on - year, contributing 31.5% to the growth of all large - scale industries [5] - **High - Tech Industry Investment**: In January - February, high - tech industry investment increased by 5.1% year - on - year, 3.3 pct higher than the growth rate of all investments [5] 3.3 Bond Market Viewpoint - **Fundamentals**: The falsification of the under - expected economic recovery, combined with the possible loose credit and fiscal policies at the beginning of 2026, accelerates the cycle recovery [6] - **Broad Money**: If there are broad monetary policies such as reserve requirement ratio cuts, interest rate cuts, or bond purchases, the bond yield may decline briefly and then rise, similar to 2025 [6] - **Inflation**: It is expected that inflation will rebound, and attention should be paid to whether the month - on - month PPI can remain positive [6] - **Funding Rate**: If the month - on - month inflation continues to rise, there is a possibility of tightened funds, and the short - term bond yield will also start to rise [6] - **Real Estate**: Real estate is not the main means of stabilizing growth this time. Similar to the situation in the United States after 2008, real estate is a lagging indicator and may bottom out after the recovery of various economic indicators and the rise of the stock market [6] - **Bonds**: The target range of the 10 - year treasury bond is expected to be 2 - 3%, with a central value of about 2.5% [6]

1. Report Industry Investment Rating No information about the report industry investment rating is provided in the given content. 2. Core Viewpoints of the Report - The export growth in January - February 2026 exceeded expectations. The cumulative export from January to February increased by 21.8% year - on - year, and the export in February alone increased by 39.6% year - on - year, far exceeding the market's forecast [3]. - The reasons for the export growth exceeding expectations are the later Spring Festival in 2026 and the improvement of external demand. The development of the AI - related industrial chain, export diversification, and positive port high - frequency data also contributed to the growth. Although the Spring Festival holiday in March may put pressure on imports and exports, the long - term positive trend remains unchanged [4][5]. - The root cause of China's continuous export exceeding expectations lies in the high cost - performance of Chinese goods, which is the result of domestic "involution" and technological progress. Even after "anti - involution", China's price advantage may last for a long time, so the report is optimistic about China's exports [6]. - In the bond market, on March 10, the long - term yield first rose and then fell. The report predicts that the target range of the 10 - year Treasury bond is 2 - 3%, with a central value of 2.5% [7][8]. 3. Summary by Relevant Catalogs 3.1 2026 January - February Import and Export Data - **Import and Export Growth**: In February 2026, imports increased by 13.8% year - on - year (25.7% in January), and exports increased by 39.6% year - on - year (10.0% in January). The trade surplus increased by 190.9% year - on - year. The cumulative export from January to February increased by 21.8% year - on - year, and imports increased by 19.8% year - on - year [3]. - **Exceeding Expectations**: The export in February far exceeded the market's forecast. The median and average of the 4 - institution forecast for February's export year - on - year growth were +4.0% and +3.8% respectively, while the actual growth was 39.6%. The median and average of the 6 - institution forecast for the cumulative export year - on - year growth from January to February were +7.5% and +7.3% respectively, and the actual growth was 21.8% [3]. 3.2 Reasons for the Export Growth Exceeding Expectations in January - February 2026 - **Spring Festival Factor**: The Spring Festival in 2026 was in late February, later than in 2025. The holiday disturbance was postponed, which was one of the reasons for the export growth exceeding expectations [4]. - **External Demand Improvement**: The external demand improved, and the export momentum was strong, with the export amount at a historical high [4]. - **Product Structure**: The development of the AI - related industrial chain promoted the high - growth of exports of electromechanical products and high - tech products. From January to February, the cumulative export of electromechanical products increased by 27.1% year - on - year, and the export of integrated circuits increased by 72.6% year - on - year, while high - tech products increased by 26.9% year - on - year [5]. - **Export Destination**: Except for the United States, exports to other major countries increased significantly. From January to February, exports to ASEAN increased by 29.4% year - on - year, and exports to Africa increased by 49.9% year - on - year [5]. - **Port High - Frequency Data**: The monthly average weekly container throughput of key ports in January and February increased by 13.5% and 10.9% year - on - year respectively, and the weekly throughput in the first 7 weeks was higher than that in the same period of 2025 [5]. 3.3 Root Cause of China's Continuous Export Exceeding Expectations The root cause is the high cost - performance of Chinese goods, which is the result of domestic "involution" and technological progress. Even after "anti - involution", China's price advantage may last for a long time due to the faster price increase in other countries [6]. 3.4 Bond Market Situation - **Market Performance on March 10**: The long - term yield first rose and then fell. The yield of the 10 - year Treasury bond's second - active bond reached 1.8190% in the early trading, and then the bond market recovered in the afternoon [7]. - **Bond Market Outlook**: It is predicted that the target range of the 10 - year Treasury bond is 2 - 3%, with a central value of 2.5%. The factors considered include economic fundamentals, monetary policy, inflation, capital interest rates, and the real estate market [8].

Core Viewpoint - In January-February 2026, China's exports increased by 21.8% year-on-year, driven by strong overseas demand, significant competitive advantages in high-value-added products, and a solidified diversified market advantage [5]. Group 1: Export Data - Cumulative exports for January-February reached $656.58 billion, exceeding expectations of 7.33% growth [4]. - Cumulative imports amounted to $442.96 billion, with a year-on-year increase of 19.8%, surpassing the expected 6.94% [4]. - The trade surplus for January-February was $213.62 billion, compared to a surplus of $114.11 billion in December 2025 [4]. Group 2: Future Outlook - The outlook for exports remains optimistic, despite potential short-term disruptions from the US-Iran conflict and high base effects [5]. - China's complete manufacturing system continues to showcase advantages, particularly in the automotive, electronics, and equipment manufacturing sectors [5]. - Strong demand from emerging markets, with manufacturing PMI remaining above the growth line, and robust infrastructure investment needs in Belt and Road Initiative countries are expected to boost exports of construction machinery, building materials, and electromechanical equipment [5]. - Upcoming visits by US President Trump to China may ease US-China relations, while strong AI investment demand and the EU's fiscal expansion are anticipated to further support China's exports [5].

Core Insights - The report highlights a decrease in the bond custody amount at the Shanghai Clearing House, with a total of 49.71 trillion yuan at the end of January, down from 49.88 trillion yuan, reflecting a net decrease of 176.29 billion yuan [5][7][8] - The total bond custody amount at both the Shanghai Clearing House and China Central Depository & Clearing Co., Ltd. (CCDC) increased to 179.31 trillion yuan, with a net increase of 757.62 billion yuan [7][8] - The report indicates that the overall leverage ratio in the bond market remained stable at 107.14% in January, with commercial banks being the main contributors to bond purchases [11][12] Total Research - The Shanghai Clearing House's bond custody amount decreased by 176.29 billion yuan, while CCDC's increased by 933.91 billion yuan, leading to a combined net increase of 757.62 billion yuan [7][8] - The main contributors to the net increase in bond custody were interest rate bonds, which saw a significant rise, while interbank certificates of deposit experienced a notable decrease [9] - Commercial banks were identified as the primary buyers of bonds, with a net increase of 10.22 trillion yuan in bond custody, while other financial institutions showed negative net increases [10] Market Outlook - The report suggests a target range for the 10-year government bond yield of 2-3%, with a central tendency around 2.5% [12][13] - Economic recovery is not meeting expectations, and there may be a shift towards looser monetary and fiscal policies in early 2026, which could accelerate the economic cycle [12] - The report emphasizes the importance of monitoring inflation trends, particularly the Producer Price Index (PPI), to gauge potential tightening of monetary policy [13]

Core Viewpoint - The upcoming Japanese House of Representatives election on February 8 will significantly impact Japan's political landscape and debt risk, with a continued focus on expansionary fiscal policy but a more cautious approach to avoid a "Truss moment" [2][8]. Group 1: Election Dynamics - The election features three main factions: the ruling coalition of the Liberal Democratic Party (LDP) and the Japan Innovation Party, the Center-Left Reform Alliance, and other opposition parties [2][3]. - The LDP, led by Prime Minister Kishi, is predicted to maintain a majority, with a 99% probability of Kishi continuing as Prime Minister and an 81% chance of the LDP securing over 250 seats [2][3][13]. - Three potential outcomes exist: a significant LDP win reducing the need for fiscal stimulus, a marginal increase in LDP seats leading to moderate debt risk, or a decline in LDP seats raising policy uncertainty and fiscal cliff risks [3][19][20]. Group 2: Post-Election Macro Policy - Post-election, Japan's macro policy will remain expansionary, but if the LDP gains a larger advantage, the pace of policy implementation may be more cautious [4][24]. - A key commitment is to lower the food tax rate, with a proposal to suspend it for two years, although this may be moderated post-election to alleviate market concerns [4][26]. - The LDP plans to enhance critical mineral reserve systems and establish a Japanese version of the Committee on Foreign Investment in the United States (CFIUS) to scrutinize foreign investments [4][32]. Group 3: Debt Risk Assessment - Japan's sovereign debt risk is relatively low, with a projected debt-to-GDP ratio of 230% by 2025 and interest payments constituting 1.49% of GDP in 2024 [5][37]. - A potential suspension of the food tax could create a 5 trillion yen deficit annually, impacting new bond issuance [5][37]. - Japan's status as a net creditor, with a net international investment position of 84% of GDP, and a low foreign ownership of government bonds (14%) contribute to its lower debt risk perception [5][43][44].

Core Viewpoint - The upcoming Japanese House of Representatives election on February 8 will significantly impact Japan's political landscape and debt risk, with a cautious approach expected to avoid a "Truss moment" [2][8]. Group 1: Election Dynamics - The election features three main factions: the ruling coalition of the Liberal Democratic Party (LDP) and the Japan Innovation Party, the Center-Left Reform Alliance, and other opposition parties [2][3]. - The LDP, led by Prime Minister Kishi, is projected to maintain a strong position, with a 99% probability of Kishi continuing as Prime Minister and an 81% chance of the LDP securing over 250 seats [2][3][13]. - Three potential outcomes are anticipated: 1. LDP gains a larger majority, reducing the need for excessive fiscal stimulus and minimizing debt shock risks [3]. 2. LDP sees a slight increase in seats, leading to moderate debt risk due to necessary cooperation with opposition parties [3]. 3. LDP loses seats, increasing policy uncertainty and fiscal cliff risks [3][20]. Group 2: Post-Election Macro Policy - Post-election, Japan's macro policy will remain focused on fiscal expansion, but with a more cautious approach to stabilize debt risks and avoid market volatility [4][24]. - A key commitment is the reduction of the food tax, with a proposal to suspend it for two years, although this may be moderated post-election to alleviate market concerns [4][26]. - The government plans to enhance critical mineral reserve systems and establish a Japanese version of the Committee on Foreign Investment in the United States (CFIUS) to scrutinize foreign investments [4][32]. Group 3: Debt Risk Assessment - Japan's sovereign debt risk is relatively low, with a projected debt-to-GDP ratio of 230% by 2025, and interest payments constituting 1.49% of GDP in 2024 [5][37]. - The potential suspension of the food tax could create a 5 trillion yen deficit, representing 17% of new bond issuance [5][37]. - Japan's status as a net creditor, with a net international investment position of 84% of GDP, and a low foreign ownership of government bonds (14%) contribute to its lower debt risk perception [5][43].

Group 1: Election Context - The Japanese House of Representatives election on February 8, 2026, will significantly impact the political landscape and debt risk in Japan[1] - The ruling coalition, consisting of the Liberal Democratic Party (LDP) and the Japan Innovation Party, holds 233 seats, while the opposition consists of the Center-Left Reform Alliance with 172 seats[3] - Current polls indicate a 99% probability that Prime Minister Kishi will remain in office, with an 81% chance that the LDP will secure over 250 seats[3] Group 2: Fiscal Policy Outlook - Post-election, Japan's macroeconomic policy will continue to favor expansionary fiscal measures, but with a more cautious approach to avoid a "Truss moment" scenario[2] - The LDP's proposed tax cuts, particularly a two-year suspension of the food tax, could create a fiscal gap of ¥5 trillion, representing 17% of new bond issuance[5] - Japan's fiscal deficit is projected to reach ¥40 trillion in 2025, with total government debt expected to be 230% of GDP[5] Group 3: Debt Risk Assessment - Japan's sovereign debt risk is relatively low, with a net international investment position of 84% of GDP, indicating a strong asset position[5] - The structure of Japanese debt ownership shows that only 14% is held by foreign investors, with the Bank of Japan holding 46%[5] - The potential for external spillover risks from Japan's debt situation will depend on the election outcome and subsequent government policies[5]