Report Industry Investment Rating No information provided in the content Core Viewpoints of the Report - The Middle East situation remains tense and complex, with the conflict entering a costly war of attrition. The risk of financial market volatility persists, but the direct impact on the Asian economy may gradually weaken as Asian vessels gain passage through the Strait of Hormuz and oil prices decline. The market is in a period of repeated fluctuations [3][11][12]. - In terms of asset allocation, it is recommended to focus on three main lines: sectors driven by domestic policies and in an upward industrial cycle, such as power grid equipment and lithium - battery materials; technology tracks with long - term growth potential and relatively low valuations, including computing infrastructure, semiconductor equipment and materials; and low - valuation value sectors like coal, chemicals, and finance. In the short term, it is advisable to control positions and seize structural opportunities while waiting for external risks to become clearer [3][12]. Summary by Relevant Catalogs 1. Weekly Market Observation 1.1. Equity Market Review and Observation - Last week (2026.03.23 - 2026.03.27), the A - share market was under short - term pressure due to external disturbances. The market adjusted significantly in the first half of the week and gradually recovered in the second half, with increased trading activity. The average daily trading volume of the entire A - share market was 21,093 billion yuan, a decrease compared to the previous week [11]. - The market hotspots were concentrated in sectors driven by fundamental improvements or external events. The top - performing industries included basic chemicals, non - ferrous metals, public utilities, and pharmaceutical biology. Innovative drugs and lithium - battery new energy were the leading sectors throughout the week [11]. - The Middle East situation continued to evolve in a highly tense and complex manner. The conflict has entered a costly war of attrition, and there is a risk of the region falling into an all - out melee [11]. - In the short term, the Iran - US conflict may lead to repeated attacks before April 6, bringing significant volatility to the financial market. However, the direct impact on the Asian economy may gradually weaken [3][12]. 1.2. Pan - Fixed - Income Market Review and Observation - Last week (2026.03.23 - 2026.03.27), the bond market oscillated and recovered. The yields of 1 - year, 10 - year, and 30 - year treasury bonds decreased by 0.50BP, 1.27BP, and 3.84BP respectively, to 1.25%, 1.82%, and 2.35% [4][13]. - The US Treasury yield curve steepened. The 1 - year US Treasury yield decreased by 3BP to 3.77%, the 2 - year yield remained flat, and the 10 - year yield increased by 5BP to 4.44% [14]. - The CSI REITs Total Return Index fell 0.83% last week, with warehousing logistics and industrial parks among the sectors with the largest declines. In the primary market, 4 new public REITs made progress [14]. 2. Fund Index Performance Tracking 2.1. Equity Strategy Theme - Based Index - **Active Equity Fund Selection**: The index selects 15 funds each period, with equal - weight allocation. The core positions select active equity funds based on performance competitiveness and style stability, and the style distribution is roughly balanced according to the CSI Equity - Oriented Fund Index [18]. - **Value - Oriented Equity Fund Selection**: The index includes both deep - value and quality - value styles. It selects 10 funds of deep - value, quality - value, and balanced - value styles based on multi - period style classification [18]. - **Balanced Equity Fund Selection**: The index selects 10 relatively balanced and value - growth style funds based on multi - period style classification. Fund managers in this style balance the valuation and growth of individual stocks and consider cost - effectiveness at the industry level [21]. - **Growth - Oriented Equity Fund Selection**: The index aims to capture the performance and valuation double - click opportunities of high - growth companies and selects 10 funds of active - growth, quality - growth, and balanced - growth styles based on multi - period style classification [23][25]. - **Pharmaceutical Equity Fund Selection**: The index selects funds based on the intersection market value ratio of fund equity holdings and the constituent stocks of the representative index (CITIC Pharmaceutical). It constructs an evaluation system and selects 15 funds to form the index [27]. - **Consumer Equity Fund Selection**: The index selects funds based on the intersection market value ratio of fund equity holdings and the constituent stocks of representative consumer - related indices. It constructs an evaluation system and selects 10 funds to form the index [30]. - **Technology Equity Fund Selection**: The index selects funds based on the intersection market value ratio of fund equity holdings and the constituent stocks of representative technology - related indices. It constructs an evaluation system and selects 10 funds to form the index [34]. - **High - end Manufacturing Equity Fund Selection**: The index selects funds based on the intersection market value ratio of fund equity holdings and the constituent stocks of representative high - end manufacturing indices. It constructs an evaluation system and selects 10 funds to form the index [37]. - **Cyclical Equity Fund Selection**: The index selects funds based on the intersection market value ratio of fund equity holdings and the constituent stocks of representative cyclical indices. It constructs an evaluation system and selects 5 funds to form the index [39]. 2.2. Other Fund Indices - **Money - Market Enhancement Index**: The money - market enhancement strategy index aims for liquidity management, pursues a curve that outperforms money - market funds, and is mainly configured with money - market funds and inter - bank certificate of deposit index funds. The performance benchmark is the CSI Money - Market Fund Index [45]. - **Pure - Bond Index**: - **Short - Term Bond Fund Selection**: The index aims for liquidity management and selects 5 funds with stable long - term returns, strict回撤 control, and significant absolute return capabilities. The performance benchmark is a combination of the short - term pure - bond fund index and the common money - market fund index [47]. - **Medium - and Long - Term Bond Fund Selection**: The index invests in medium - and long - term pure - bond funds, aiming for stable returns while controlling回撤. It selects 5 funds that balance coupon strategies and band - trading operations and adjusts the duration and the ratio of credit - bond funds and interest - rate - bond funds according to market conditions [50]. - **Fixed - Income Plus Index**: - **Low - Volatility Fixed - Income Plus Selection**: The index has an equity central position of 10%, selects 10 funds with an equity central position (considering convertible bond and stock positions) of less than 15% in the past three years and recently. The performance benchmark is a combination of the CSI 800 Index and the ChinaBond New Composite Full - Price Index [53]. - **Medium - Volatility Fixed - Income Plus Selection**: The index has an equity central position of 20%, selects 5 funds with an equity central position between 15% - 25% in the past three years and recently. The performance benchmark is a combination of the CSI 800 Index and the ChinaBond New Composite Full - Price Index [55]. - **High - Volatility Fixed - Income Plus Selection**: The index has an equity central position of 30%, selects 5 funds with an equity central position between 25% - 35% in the past three years and recently. The performance benchmark is a combination of the CSI 800 Index and the ChinaBond New Composite Full - Price Index [56]. - **Other Pan - Fixed - Income Indices**: - **Convertible Bond Fund Selection**: The index selects 5 convertible - bond funds based on investment proportion requirements and an evaluation system considering fund product, fund manager, and fund company dimensions [61]. - **QDII Bond Fund Selection**: The index selects 6 QDII bond funds with stable returns and good risk control based on credit and duration conditions [64]. - **REITs Fund Selection**: The index selects 10 REITs funds with stable operation, reasonable valuation, and certain elasticity based on the underlying asset types [65].

1. Report Industry Investment Rating - No relevant content provided 2. Core Views - From March 23 to March 27, 2026, all major equity market indices declined, with the ChiNext Index experiencing the largest drop of 1.68%. Among the 31 Shenwan primary industries, 9 industries rose, with non - ferrous metals, public utilities, chemicals, pharmaceutical and biological, and textile and apparel being the top five gainers, while non - bank finance, computer, agriculture, forestry, animal husbandry and fishery, beauty care, and national defense and military industry were the top five losers [1][12] - The scale of public funds exceeded 38 trillion yuan, and the total scale of private funds reached 22.60 trillion yuan. The equity market is still in an oscillating adjustment phase. Among them, the decline of equity - biased funds was the smallest, with an average decline of 0.31% and a positive return ratio of 32.20%; the average return of fixed - income + funds was 0.05%, with a positive return ratio of 58.03%; the average return of pure - bond funds was 0.07%, with a positive return ratio of 98.49%; the average return of pension target FOF was - 0.02%, with a positive return ratio of 45.73%. In addition, the average return of QDII funds was - 0.57%, with a positive return ratio of 27.70% [2][28][29] - Last week, the overall ETF market had a net capital outflow of 6.679 billion yuan. Structurally, bond - type ETFs had a significant net inflow of 21.479 billion yuan. In terms of liquidity, the average daily trading volume of the overall ETF market last week reached 532.374 billion yuan, the average daily trading volume reached 222.049 billion shares, and the average daily turnover rate was 9.31% [3][40] - Last week, 25 new funds were issued, the same as the previous period; 51 new funds were established, an increase of 5 compared to the previous period. New funds raised a total of 26.149 billion yuan, a decrease of 8.033 billion yuan compared to the previous period [4][51] 3. Summary by Relevant Catalogs 3.1 Market Review 3.1.1 Domestic Market Situation - From March 23 to March 27, 2026, all major equity market indices declined, with the ChiNext Index dropping 1.68%. Among the 31 Shenwan primary industries, 9 industries rose, with non - ferrous metals, public utilities, chemicals, pharmaceutical and biological, and textile and apparel being the top five gainers, while non - bank finance, computer, agriculture, forestry, animal husbandry and fishery, beauty care, and national defense and military industry were the top five losers. In the bond market, the ChinaBond Composite Full - Price Index rose 0.04%, the total full - price indices of ChinaBond Treasury bonds, financial bonds, and credit bonds fluctuated between a decline of 0.02% and an increase of 0.02%, the China Securities Convertible Bond Index rose 1.28%, and in the commodity market, the Nanhua Commodity Index fell 0.25% [12] 3.1.2 European, American and Asia - Pacific Market Situation - Last week, most major indices in European, American and Asia - Pacific markets declined. Among them, in the US stock market, the S&P 500 Index fell 1.56%, the Dow Jones Industrial Average fell 0.99%, and the Nasdaq Index fell 3.23%; in the European market, the French CAC40 rose 0.47%, and the German DAX fell 0.35%; in the Asia - Pacific market, the Hang Seng Index fell 1.29%, and the Nikkei 225 remained unchanged [18] 3.1.3 Market Valuation Situation - Last week, the valuation quantiles of most major market indices declined. In terms of the historical quantiles of price - to - earnings ratio, the Shanghai Composite 50 Index had the largest decline of 3.8 pct.; in terms of the historical quantiles of price - to - book ratio, the Shanghai Composite 50 Index also had the largest decline of 17.1 pct. Among industries, the top five industries with the highest historical quantiles of price - to - earnings ratio in the Shenwan primary index last week were real estate, building materials, comprehensive, chemicals, and electronics. Among them, the price - to - earnings ratio quantile of the real estate industry remained at a high level, and the price - to - earnings ratio quantile of the building materials industry reached 86.8%. Attention should be paid to the potential correction risk in the future. The five industries with relatively low historical quantiles of price - to - earnings ratio last week were non - bank finance, food and beverage, household appliances, agriculture, forestry, animal husbandry and fishery, and beauty care. Among them, the valuation of the non - bank finance industry was close to the historical low since 2013 [21] 3.2 Active Public Fund Situation 3.2.1 Market Hotspots - The scale of public funds exceeded 38 trillion yuan. As of the end of February 2026, there were 165 public fund management institutions in China, including 150 fund management companies and 15 asset management institutions with public fund management qualifications. The total net asset value of public funds managed by these institutions was 38.61 trillion yuan. The total number of funds in the market reached 13,821, an increase of 96 compared to the end of January. The share and net value increased to 32,768.6 billion shares and 38,605.2 billion yuan respectively, with a month - on - month increase of about 2.7% and 2.2% respectively, indicating a net inflow of funds. The capital structure showed the characteristics of continuous capital inflow into fixed - income and cash management funds, short - term pressure on equity funds, and increasing cross - border allocation. The market risk appetite was still in the process of recovery but had not fully rebounded [28] - The total scale of private funds reached 22.60 trillion yuan. As of the end of February 2026, the outstanding scale of private funds was 22.60 trillion yuan, continuing the steady expansion trend since 2025 and maintaining at a historical high level. The number of outstanding funds was 140,300, and the industry's capital - carrying capacity remained stable. Structurally, the scale of private equity investment funds was 11.16 trillion yuan, accounting for nearly half, still being the core support; the scale of private securities investment funds was 7.35 trillion yuan, showing strong elasticity in the context of market recovery; the scale of venture capital funds was 3.80 trillion yuan, continuing to play a supplementary role [29] 3.2.2 Fund Performance - The equity market is still in an oscillating adjustment phase. The decline of equity - biased funds was the smallest, with an average decline of 0.31% and a positive return ratio of 32.20%; the average return of fixed - income + funds was 0.05%, with a positive return ratio of 58.03%; the average return of pure - bond funds was 0.07%, with a positive return ratio of 98.49%; the average return of pension target FOF was - 0.02%, with a positive return ratio of 45.73%. In addition, the average return of QDII funds was - 0.57%, with a positive return ratio of 27.70% [2][29] 3.2.3 Industry Position and Overall Position of Active Equity Funds - Through the calculation of the industry positions of active equity funds, the top three industries with the largest increase in positions last week were basic chemicals, coal, and electronics; the top three industries with the largest decrease in positions were banks, public utilities, and transportation. The overall position of active equity funds on March 27, 2026, was 77.29%, an increase of 5.61 pct. compared to the previous period [2][37][38] 3.3 ETF Fund Situation - Last week, the overall ETF market had a net capital outflow of 6.679 billion yuan. Structurally, bond - type ETFs had a significant net inflow of 21.479 billion yuan. In terms of liquidity, the average daily trading volume of the overall ETF market last week reached 532.374 billion yuan, the average daily trading volume reached 222.049 billion shares, and the average daily turnover rate was 9.31%. In terms of individual bonds, last week, funds showed the characteristics of risk aversion and concentration on core assets at the index level: funds significantly flowed into low - risk and broad - based large - cap indices such as CSI AAA Science and Technology Innovation Corporate Bonds, short - term financing bonds, and CSI 300, while high - elasticity sectors such as chemicals, Hong Kong stock Internet, and CSI 1000 continued to experience outflows, indicating a decline in overall risk appetite and a more conservative allocation [3][40][44] 3.4 Fund Issuance Situation Statistics - Last week, 25 new funds were issued in China, the same as the previous period. Among them, there were 9 active equity - biased funds and 11 passive index funds. All 11 passive index funds were equity - type, mainly tracking indices such as CSI Science and Technology Innovation and Entrepreneurship Artificial Intelligence, CSI Hong Kong Stock Connect Information Technology Composite, CSI All - Share Household Appliances, and CSI All - Share Electric Power and Public Utilities. Currently, the issuance share of active equity funds is still at a historical low, but there has been an obvious upward trend since this year. 51 new funds were established last week, an increase of 5 compared to the previous period. New funds raised a total of 26.149 billion yuan, a decrease of 8.033 billion yuan compared to the previous period. Among them, Tianhong Honghua Hybrid A managed by Hu Yu had the largest fundraising scale, approximately 4.087 billion yuan [4][48][51]

Core Viewpoints - The convertible bond market is still adjusting, but valuations have dropped to their lowest point of the year, with the adjusted conversion premium rate currently at approximately 33.11% [9][10] - The compression in valuations is influenced by multiple factors, including adjustments in institutional expectations for the equity market's continued upward movement, as evidenced by changes in convertible bond ETF shares [9][10] - There is a rising pressure for forced redemptions as the equity market adjusts, leading issuers to show increased willingness to redeem high-priced bonds to avoid future unfavorable conditions [9][10] Market Review - The convertible bond market has experienced a notable adjustment since the Spring Festival, primarily due to the decline in the underlying equity market [9][10] - The current market environment reflects a cautious outlook on the sustainability of high equity prices, prompting issuers to act on redemption opportunities [9][10] Valuation Levels - The adjusted conversion premium rate has reached a year-to-date low, indicating significant valuation compression in the convertible bond market [9][10] - The market is witnessing structural pressures, particularly regarding the willingness of issuers to redeem bonds as market conditions change [9][10] Primary Issuance and Special Terms - Recent developments in issuance plans show various companies progressing through different stages of approval for convertible bond offerings, with issuance limits ranging from 1.39 billion to 35 billion [17] - The upcoming issuance and listing of convertible bonds include several notable companies, indicating ongoing market activity despite current adjustments [19][20] Special Terms - There is an increasing likelihood of forced redemptions for certain convertible bonds, with specific conditions outlined for triggering these actions [21] - The report highlights several bonds that may trigger redemption or adjustment based on current market conditions and issuer strategies [21][23]

Core Insights - The global asset pricing logic is changing under the backdrop of high oil prices, high inflation, and high interest rates, with U.S. Treasury yields becoming more sensitive to inflation and supply factors [2] - The long-term interest rate is facing upward pressure, while gold retains its allocation value in an inflationary and uncertain environment [2] - The U.S. dollar is supported by safe-haven demand in the short term but faces adjustment pressure in the medium term due to fiscal constraints and reserve diversification [2] - The attractiveness of RMB assets is expected to increase as China distances itself from conflict-prone areas and maintains policy space [2] - A-shares are influenced by external disturbances but still present structural opportunities in sectors like power equipment and high-end manufacturing [2] - Hong Kong stocks are more affected by foreign capital flows and exhibit higher volatility, but their attractiveness for medium to long-term capital is increasing due to low valuations [2] Section Summaries 1. U.S.-Iran Conflict Dynamics - The U.S.-Iran conflict has escalated into a prolonged confrontation, impacting global energy supply and prices, with Brent crude oil prices rising significantly [6][7] - The conflict has led to increased military spending by the U.S., with costs exceeding $10 billion related to Iran, contributing to the rapid expansion of U.S. federal debt [15] 2. U.S. Federal Reserve's Hawkish Shift Amid High Energy Prices - The Federal Reserve has signaled a significant reduction in rate cut expectations, with most officials supporting only one rate cut in 2026 [8][12] - Inflation forecasts have been revised upward, with the core PCE inflation expected to rise to 4.0% [8][12] 3. U.S. Treasury Debt Outlook - U.S. federal debt has surpassed $40 trillion, with rapid growth driven by persistent fiscal deficits and military spending related to geopolitical tensions [15][19] - Interest payments on the debt are projected to exceed $1 trillion, raising concerns about fiscal sustainability [19] 4. Asset Class Changes Under Re-Inflation Narrative - The core logic of global asset pricing is shifting towards a framework of multiple constraints, including high energy costs and inflation persistence [32] - The traditional safe-haven role of U.S. Treasuries is weakening as inflation and supply factors dominate market dynamics [34] - Gold is expected to benefit from its dual role as a hedge against inflation and a currency alternative [34] 5. Structural Changes in Asset Pricing - The current asset pricing system is undergoing a fundamental reconfiguration, with energy costs, fiscal constraints, and credit stability becoming central [41] - Assets with supply security and credit stability characteristics, such as gold and energy, are likely to gain new premium sources [41]

Group 1: Economic Performance - Industrial added value for January-February increased by 6.3% year-on-year, surpassing expectations by 1.1 percentage points[3] - Fixed asset investment (FAI) showed a cumulative year-on-year increase of 1.8%, against an expected decline of 2.7%[14] - Service sector production rose to 5.2% year-on-year, up 0.2 percentage points from the previous value[3] Group 2: Investment Trends - Infrastructure investment rebounded significantly, with broad infrastructure up 25.8% year-on-year and narrow infrastructure up 23.6%[4] - Manufacturing investment growth improved by 2.5 percentage points to 3.1%, with notable increases in electrical machinery and textiles[4] - Real estate investment saw a reduction in decline, improving by 6.1 percentage points to -11.1%[5] Group 3: Consumer Behavior - Retail sales (social retail) increased by 1.9 percentage points to 2.8% year-on-year, although cumulative growth declined by 0.9 percentage points[6] - Service retail continued to outperform goods retail, with a widening growth gap of 3.1 percentage points[6] - Key contributors to retail growth included home appliances and food, while automotive sales lagged[6] Group 4: Market Outlook - Economic performance in early 2026 exceeded expectations, suggesting a potential moderate recovery in equity markets[7] - The need for additional policies to support domestic recovery remains, particularly in light of geopolitical uncertainties and consumer demand fluctuations[7] - Risks include potential policy changes and unexpected economic downturns in the U.S.[8]

Investment Rating - The report assigns an "Overweight" rating for the industry [6] Core Insights - In January 2026, residents' asset allocation remains primarily in low-risk deposits, with a marginal increase in equity investments. Securities firms, as key intermediaries for equity assets, will benefit from the influx of resident funds into the market [2][10] - The total market for wealth management products reached 353.2 trillion yuan, with a quarter-on-quarter change of +0.7% and a year-on-year change of +10.3%. The net increase in wealth management products was 2.5 trillion units, with a quarter-on-quarter change of -38.9% [7][11] - The equity market experienced fluctuations, but residents' risk appetite remained high, indicating a shift of funds from deposits to higher-yielding assets [12][16] Summary by Sections 1. Wealth Management Market Overview - In January 2026, the direction of residents' asset allocation is still primarily low-risk, with a marginal increase in equity investments. The total market for wealth management products reached 353.2 trillion yuan, with a quarter-on-quarter change of +0.7% and a year-on-year change of +10.3% [11][12] 2. Public Funds: Significant Increase in Equity New Issuance, Noticeable Reduction in Bond Funds - The total scale of public funds reached 37.8 trillion yuan, with a quarter-on-quarter change of +0.1% and a year-on-year change of +18.3%. The new issuance of equity funds increased significantly by 66.5% [23][31] - The total number of public fund units was 31.9 trillion, with a quarter-on-quarter change of -0.4% and a year-on-year change of +8.8% [24][25] 3. Private Fund/Asset Management: Steady Growth in Private Fund/Asset Management Scale - The scale of private funds reached 22.4 trillion yuan, with a quarter-on-quarter change of +1.3%. The scale of private asset management reached 12.4 trillion yuan, with a quarter-on-quarter change of +0.6% [11][12] 4. Wealth Management/Insurance/Deposits: Fixed Income Management Still Favored - The scale of bank wealth management reached 29.7 trillion yuan, with a quarter-on-quarter change of -0.15%. The scale of resident deposits was 168.0 trillion yuan, with a quarter-on-quarter change of +1.3% [11][12] 5. Investment Recommendations: Securities Firms Overall Benefit from Resident Funds Entering the Market - The low-interest-rate environment and the profit effect of the equity market are driving residents to gradually invest in the market. Securities firms are expected to benefit from the influx of incremental funds. Recommended stocks include Industrial Securities and GF Securities [7][12]

Investment Rating - The report assigns an "Overweight" rating for the industry [6] Core Insights - In January 2026, residents' asset allocation remains primarily in low-risk deposits, with a marginal increase in equity investments. Securities firms, as key intermediaries for equity assets, will benefit from the influx of resident funds into the market [2][10] - The total market for wealth management products reached 353.2 trillion yuan, with a quarter-on-quarter change of +0.7% and a year-on-year change of +10.3%. The net increase in wealth management products was 2.5 trillion units, with a quarter-on-quarter change of -38.9% [7][11] - The equity market experienced fluctuations, but residents' risk appetite remained high, indicating a shift of funds from deposits to higher-yielding assets [12][16] Summary by Sections 1. Wealth Management Market Overview - In January 2026, the direction of residents' asset allocation is still primarily low-risk, with a marginal increase in equity investments. The wealth management financial products include public funds, private funds, private asset management plans, insurance products, and bank wealth management [10][11] 2. Public Funds: Significant Increase in Equity New Issuance, Noticeable Reduction in Bond Funds - The total scale of public funds reached 37.8 trillion yuan, with a quarter-on-quarter change of +0.1% and a year-on-year change of +18.3%. The market saw a slight increase in public fund assets, while bond funds experienced a significant reduction [23][24] - In January 2026, new public fund issuance reached 1.2021 trillion units, with a quarter-on-quarter change of +6.2% and a year-on-year change of +44.4%. Equity funds saw a substantial increase in new issuance, while bond funds faced pressure [31] 3. Private Asset Management/Funds: Stable Growth in Private Fund/Asset Management Scale - The scale of private funds reached 22.4 trillion yuan, with a quarter-on-quarter change of +1.3%. The new registration scale of private funds was 64.06 billion yuan, with a quarter-on-quarter change of -35.2% [11][12] 4. Wealth Management/Insurance/Deposits: Fixed Income Wealth Management Remains Popular - The scale of bank wealth management reached 29.7 trillion yuan, with a quarter-on-quarter change of -0.15%. The total resident deposit scale was 168.0 trillion yuan, with a quarter-on-quarter change of +1.3% [11][12] 5. Investment Recommendations: Securities Firms Overall Benefit from Residents' Market Entry - The low-interest environment and the profit effect of the equity market are driving residents' funds into the market steadily. Securities firms are expected to benefit from the influx of incremental funds, with recommendations for specific firms such as Industrial Securities and GF Securities [7][12]

Summary of Insurance Industry Conference Call Industry Overview - The conference call focuses on the **insurance industry** in China, discussing the impact of stock market and interest rate fluctuations on insurance companies' performance and valuation. Key Points Sensitivity to Equity Assets - A **10% increase in equity prices** can lead to an average **38.7% increase** in pre-tax profits for listed insurance companies. If companies increase their equity positions by **10%**, profit elasticity will double. China Life and Xinhua Insurance show the highest sensitivity in the industry [1][3][6]. Impact of Interest Rate Changes - A **50 basis points (BP)** increase in interest rates can enhance the average pre-tax shareholder equity of insurance companies by **8.5%**. Xinhua Insurance and Sunshine Insurance exhibit the most significant increases [1][3][6]. - The direction of profit impact from rising interest rates varies among companies. China Life and China Pacific show significant positive elasticity, while others may experience negative effects due to differences in asset classification [3][7]. Embedded Value (EV) Growth - If both investment return rates and risk discount rates increase by **50 BP**, the effective business value can grow by an average of **35%**, with group EV increasing by **10.3%**. Xinhua and Sunshine Insurance show superior elasticity [1][4][8]. Liability Cost Trends - The average new business liability cost is projected to drop to **2.76%** in 2024, a year-on-year improvement of **57 BP**. This is driven by lower preset rates and a shift towards dividend insurance products [1][4][10]. Asset Allocation Shifts - By the end of Q4 2025, the insurance industry's asset allocation will reach **38.5 trillion yuan**, with stocks and funds accounting for **15.4%**. There is a noticeable trend of increasing equity positions [1][5]. Valuation Metrics - As of March 2026, the insurance sector's **PE ratio** stands at **7.3 times**, indicating it is at a historical low, suggesting potential for recovery as market conditions stabilize [2][11]. Market Outlook - The stock market is expected to experience a **slow bull market**, with the CSI 300 and Shanghai Composite Index projected to rise by approximately **18%** in 2025. This is supported by increased retail investment and favorable regulatory policies [5][11]. Profit and Equity Sensitivity - A **10% rise in equity prices** will lead to an average **9.6% increase** in pre-tax shareholder equity. Xinhua Insurance is expected to see an **18.6% increase** in its pre-tax shareholder equity [6][7]. Future Liability Cost Trends - Factors influencing liability costs include preset rate adjustments, fee reductions, and product structure optimization. The overall trend is expected to be a continued decline in liability costs [10][11]. Investment Recommendations - Given the current low valuation and potential for recovery in the insurance sector, it is recommended to focus on companies like China Life and Xinhua Insurance for better performance prospects [11]. Additional Insights - The insurance industry is experiencing a shift towards equity investments, with a notable increase in the proportion of stocks and funds in asset allocation. This trend reflects a strategic response to market conditions and anticipated returns [1][5]. This summary encapsulates the critical insights from the conference call, highlighting the dynamics of the insurance industry in relation to market fluctuations and internal financial metrics.

1. Report Industry Investment Rating - No industry investment rating is provided in the report. 2. Core Views of the Report - From February 24 to February 27, 2026, all major equity market indices rose, with the CSI 500 having the largest increase of 4.32%. Among the 31 Shenwan primary industries, 25 industries rose, with the top five gainers being steel, non-ferrous metals, chemicals, environmental protection, and coal; the top five decliners were media, commercial trade, food and beverages, non-bank finance, and banks [1][12]. - The CSRC issued the "Administrative Measures for the Supervision of Information Disclosure of Private Investment Funds", which takes effect on September 1, 2026. The Shanghai Stock Exchange and China Securities Index Co., Ltd. announced the adjustment of constituent stocks of key indices such as the STAR 50, to be implemented after the close on March 13, 2026 [2][31][33]. - In terms of fund performance, quantitative funds had the largest increase, with an average increase of 2.22% and a positive return ratio of 92.26%. Fixed - income + funds rose 0.30% on average, with a positive return ratio of 73.12%. Pure - bond funds rose 0.01% on average, with a positive return ratio of 60.51%. Pension target FOFs rose 0.93% on average, with a positive return ratio of 99.50%. QDII funds fell 0.11% on average, with a positive return ratio of 58.16% [2][34]. - The top three sectors with the largest increase in positions of active equity funds last week were media, commerce and retail, and real estate; the top three sectors with the largest decrease in positions were electronics, non - ferrous metals, and pharmaceutical biology. As of February 27, 2026, the overall position of active equity funds was 77.23%, an increase of 0.81 pct from the previous period [2][40][42]. - Last week, the overall ETF market had a net capital outflow of 22.828 billion yuan. Stock - type ETFs had a relatively large net outflow of 36.286 billion yuan. The daily average trading volume of the overall ETF market reached 476.804 billion yuan, the daily average trading volume reached 168.72 billion shares, and the daily average turnover rate was 7.40%. The Hang Seng Technology, power grid equipment, securities, and Internet sectors had net capital inflows, with the Hang Seng Technology having a capital inflow close to 10 billion yuan. Broad - based indices such as the CSI 1000, CSI A500, CSI Small Cap 500, CSI 300, and SSE STAR 50 were the main varieties with capital outflows [3][46][49]. - Last week, 36 new funds were issued, an increase of 28 from the previous period; 5 new funds were established, a decrease of 59 from the previous period. New funds raised a total of 1.451 billion yuan, a decrease of 56.879 billion yuan from the previous period [4][54][59]. 3. Summary According to Relevant Catalogs 3.1 Market Review 3.1.1 Domestic Market Situation - From February 24 to February 27, 2026, all major equity market indices rose, with the CSI 500 rising 4.32%. Among the 31 Shenwan primary industries, 25 industries rose, and 6 industries fell. The top five gainers were steel, non - ferrous metals, chemicals, environmental protection, and coal; the top five decliners were media, commercial trade, food and beverages, non - bank finance, and banks. In the bond market, the ChinaBond Composite Full - Price Index fell 0.14%, and the total full - price indices of ChinaBond Treasury bonds, financial bonds, and credit bonds fell between 0.01% and 0.31%. The CSI Convertible Bond Index fell 0.23%. In the commodity market, the Nanhua Commodity Index rose 3.56% [12]. 3.1.2 European, American, and Asia - Pacific Market Situation - Last week, most major indices in European, American, and Asia - Pacific markets rose. In the US stock market, the S&P 500 rose 0.21%, the Dow Jones Industrial Average rose 0.34%, and the Nasdaq rose 0.18%. In the European market, the French CAC40 rose 0.98%, and the German DAX rose 1.17%. In the Asia - Pacific market, the Hang Seng Index fell 1.67%, and the Nikkei 225 rose 3.56% [20]. 3.1.3 Market Valuation Situation - Last week, the valuation quantiles of most major market indices rose. In terms of the historical quantile of price - to - earnings ratio, the CSI All - Share Index had the largest increase of 8.6 pct. In terms of the historical quantile of price - to - book ratio, the CSI 1000 had the largest increase of 5.4 pct. Among industries, the top five industries with the highest historical quantiles of price - to - earnings ratio of the Shenwan primary index were real estate, electronics, building materials, comprehensive, and chemicals. The price - to - earnings ratio quantile of real estate remained at a high level, and that of electronics reached 96.9%. The bottom five industries with the lowest historical quantiles of price - to - earnings ratio were non - bank finance, agriculture, forestry, animal husbandry and fishery, food and beverages, beauty care, and pharmaceutical biology. The valuation of the non - bank finance industry was close to its historical low since 2013 [23]. 3.2 Active Public - Offering Fund Situation - Market hotspots: The CSRC issued the "Administrative Measures for the Supervision of Information Disclosure of Private Investment Funds", which takes effect on September 1, 2026. The Shanghai Stock Exchange and China Securities Index Co., Ltd. announced the adjustment of constituent stocks of key indices such as the STAR 50, to be implemented after the close on March 13, 2026 [31][33]. - Fund performance: Quantitative funds had the largest increase, with an average increase of 2.22% and a positive return ratio of 92.26%. Fixed - income + funds rose 0.30% on average, with a positive return ratio of 73.12%. Pure - bond funds rose 0.01% on average, with a positive return ratio of 60.51%. Pension target FOFs rose 0.93% on average, with a positive return ratio of 99.50%. QDII funds fell 0.11% on average, with a positive return ratio of 58.16% [34]. - The top three sectors with the largest increase in positions of active equity funds last week were media, commerce and retail, and real estate; the top three sectors with the largest decrease in positions were electronics, non - ferrous metals, and pharmaceutical biology. As of February 27, 2026, the overall position of active equity funds was 77.23%, an increase of 0.81 pct from the previous period [40][42]. 3.3 ETF Fund Situation - Last week, the overall ETF market had a net capital outflow of 22.828 billion yuan. Stock - type ETFs had a relatively large net outflow of 36.286 billion yuan. The daily average trading volume of the overall ETF market reached 476.804 billion yuan, the daily average trading volume reached 168.72 billion shares, and the daily average turnover rate was 7.40%. The Hang Seng Technology, power grid equipment, securities, and Internet sectors had net capital inflows, with the Hang Seng Technology having a capital inflow close to 10 billion yuan. Broad - based indices such as the CSI 1000, CSI A500, CSI Small Cap 500, CSI 300, and SSE STAR 50 were the main varieties with capital outflows [3][46][49]. 3.4 Fund Issuance Statistics - Last week, 36 new funds were issued, an increase of 28 from the previous period, including 15 active equity - biased funds and 10 passive index funds. The 10 passive index funds were all stock - type, mainly tracking indices such as the CSI Battery Theme, Hang Seng Biotechnology, ChiNext 50, and agriculture, forestry, animal husbandry and fishery. Currently, the issuance share of active equity funds is still at a historical low, but there has been an obvious upward trend since this year. - Five new funds were established last week, a decrease of 59 from the previous period. New funds raised a total of 1.451 billion yuan, a decrease of 56.879 billion yuan from the previous period. The E Fund CSI Battery Theme ETF managed by Li Xu had the largest raised scale of about 859 million yuan [54][59].

Investment Rating - The report suggests a strong recommendation for high-quality brokerages with significant valuation and performance mismatches, particularly focusing on Guotai Junan [2] Core Insights - The securities sector is experiencing a positive development trend, with a notable increase in user engagement and market attractiveness. The monthly active user count for securities service applications reached 184 million in January 2026, reflecting a month-on-month growth of 5.11% and a year-on-year increase of 13.86% [2] - Insurance institutions are expected to slightly increase their allocation to A-shares in 2026, with a focus on equity assets. The report highlights a generally optimistic outlook for A-shares, particularly in sectors such as electronics, non-ferrous metals, and pharmaceuticals [3] - The report identifies three main investment themes: (1) high-quality brokerages with valuation mismatches, (2) companies in the biotechnology sector benefiting from investment themes, and (3) multi-financial firms with impressive performance growth [2][3] Market Review - The A-share market showed a 1.1% increase in the CSI 300 index, while the non-bank financial sector underperformed, declining by 1.2%. The securities and insurance sectors also saw declines of 0.4% and 3.7%, respectively [9] - The average daily trading volume for A-shares was 24,403 billion yuan, reflecting a 15.6% increase week-on-week. The new issuance of equity public funds reached 127.3 billion units in January-February 2026, marking a 110.4% year-on-year increase [15] Industry Dynamics - The report notes that major insurance companies are increasingly focusing on customized insurance products for humanoid robots, addressing emerging risks associated with advanced technologies [38] - The introduction of a new dividend insurance product by Zhongying Life with a predetermined interest rate of 1.25% indicates a shift in the insurance market towards lower guaranteed returns [36]