1. Report Industry Investment Rating The provided content does not mention the industry investment rating. 2. Core View of the Report - The proportion of high - price and high - valuation convertible bonds has reached a historical peak. With the TMT, automotive, chemical, electrical equipment, and machinery industries as representatives, the proportion of convertible bonds with both high prices and high valuations is over 40%. [4][22] - The convertible bond market is performing strongly. The median convertible bond price remains at a historical high, trading sentiment is hot, and certain types of convertible bonds have actively increased their valuations. [2][11] - Last week, the risk preference of funds decreased significantly. Stock ETF shares decreased substantially, while convertible bond ETFs were favored by funds. [3][21] 3. Summary by Related Catalogs Market Performance - Last week, there was policy cooling in the equity market. Broad - based ETF funds flowed out significantly, while convertible bond ETFs flowed in reversely. Bull market expectations were strong, and equity - like convertible bonds and newly - issued bonds drove the convertible bond performance to be stronger than that of equities. [2][11] - The median convertible bond price remained at a historical high, fluctuating around 138 yuan. The average daily trading volume of the entire convertible bond market was 92.2 billion yuan, second only to the "924" level. The 100 - yuan premium rate continued to rise to 33% at a historical high, and the implied volatility fluctuated around the historical extreme point of 45%. The implied volatility difference remained at a historical high of around 13%. [2][11] - The trading sentiment of convertible bonds was hot, and the turnover rates of convertible bonds with extremely low balances and low ratings were relatively high. The valuations of high - price and equity - like convertible bonds actively increased, with a growth rate (1.7%) higher than that of the underlying stocks (1.26%); the valuations of convertible bonds issued by companies with an underlying stock market value of over 20 billion yuan also actively increased, with a growth rate (1.9%) higher than that of the underlying stocks (0.8%); newly - issued bonds and convertible bonds listed within 2 years also significantly and actively increased their valuations. [2][11] Funds Sentiment - From the comparison of the share fluctuations of various broad - based indexes, bond - type, and major commodity (gold) ETFs, the risk preference of funds decreased significantly last week. Stock ETF shares decreased by 12%. In particular, the ChiNext ETF, Science and Technology Innovation 50 ETF, and SSE 50 ETF shrank by 16%, 12%, and 12% respectively last week. In contrast, the CSI 2000 ETF had a relatively large expansion, with its shares increasing by 7% last week. [3][21] - Convertible bond ETFs have been favored by funds recently. On the basis of performing no worse than equities in the previous week, their shares increased by 4.3% last week; the shares of interest - rate bonds continued to show an obvious shrinking trend. [3][21] Investment Strategy - Currently, the proportion of high - price and high - valuation convertible bonds has reached a historical peak. It is recommended to focus on newly - issued convertible bonds. Currently, newly - issued bonds are mainly from the Science and Technology Innovation Board, with high - quality underlying stocks and good performance realization. Against the background of strong expectations for the second stage of the equity bull market, their scarcity has increased. [4][22] - Combining performance, it is recommended to focus on: Maolai Convertible Bond, Qizhong Convertible Bond, Weidao Convertible Bond, Yongxi Convertible Bond, Luwei Convertible Bond, Weice Convertible Bond, Anji Convertible Bond, and Dinglong Convertible Bond in the electronics industry; Ruike Convertible Bond in the field of robotics and industrial automation; Jin 05 Convertible Bond, Funeng Convertible Bond, Jinlang Convertible Bond 02, and Yingliu Convertible Bond in the fields of energy power and gas turbines; Bo 25 Convertible Bond in the automotive industry; and Jin 25 Convertible Bond. [4][22]

Group 1: Economic and Industrial Trends - The core of the "14th Five-Year Plan" focuses on building a modern industrial system, emphasizing the reconstruction of high-tech industries over the next decade, particularly in areas like artificial intelligence, aerospace, and biomedicine [4][5] - The real estate market is undergoing a significant cleanup, returning to reasonable levels, with new construction and sales dropping to levels seen a decade ago, indicating a shift towards quality and sustainability in development [6][7] - The service consumption sector is identified as a key area for domestic demand growth, with current service consumption accounting for only 46.1% of household spending, significantly lower than the nearly 70% in the U.S., suggesting substantial room for expansion [7] Group 2: External Environment and Market Dynamics - The external environment is experiencing profound adjustments, with U.S.-China tech competition entering a new phase characterized by "ecological competition," which is more systematic and long-term [2][8] - The domestic industry is showing a "K-shaped" differentiation, where high-tech exports are growing while traditional labor-intensive products are declining, reflecting a structural shift in profitability among listed companies [8][9] - The trend of technology companies expanding overseas is becoming a significant growth engine, particularly in sectors like media, communications, and computing, highlighting a disparity between macroeconomic data and social sentiment [9] Group 3: Corporate Profitability and Market Outlook - Corporate profitability is showing signs of recovery, with A-share non-financial companies' revenue turning positive and net profit growth improving, indicating a shift towards asset-liability repair after a prolonged period of risk aversion [11][12] - The capital market is expected to transition from valuation-driven to performance-driven growth, with a structural bull market forming due to improving profitability and favorable internal and external conditions [12] - A potential super cycle for commodities is anticipated, with current commodity prices at historically low levels compared to U.S. equities, suggesting a forthcoming significant and sustained increase in prices [12]

1. Report Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints of the Report - The bond market is still mainly in a volatile state. Investors should be cautious about blind optimism and adopt a strategy of entering and exiting on the left side without lingering. In terms of investment portfolios, a "dumbbell + small - band" approach should be used. The short - end can use credit bonds under 2 years and interest - rate bonds under 3 years as the allocation base, and the long - end can use 30 - year interest - rate bonds for small - band trading [1][3]. - The Fourth Plenary Session's communique implies positive expressions. The equity bull market may continue, and investors should have confidence and perseverance in it. It also has implications for GDP growth, policy measures, investment themes, and the importance of domestic demand and consumption [11]. - The US is facing economic pressure due to tariff frictions. The long - term employment pressure is significantly greater than the temporary inflation pressure. The Fed may implement "three consecutive rate cuts". The US has a strong motivation to ease relations with China, and investors should expect a final agreement to be reached [23]. 3. Summary by Directory 3.1 Bond Market Weekly Observation 3.1.1 How to View the Enlightenment of the Fourth Plenary Session on the Capital Market? - The communique implies positive signals for the equity bull market. It emphasizes maintaining a reasonable GDP growth rate in the long - term, anticipating more policy measures, clarifying investment themes such as advanced manufacturing and technology, and increasing the importance of domestic demand and consumption. In the short term, the meeting may boost the stock market, and the bond market may adjust accordingly, but will later be affected by other factors [11][15][17]. 3.1.2 US Tariffs Lead to Recession, Weaker Bargaining Chips, and Strong Motivation for Easing - The fifth round of Sino - US economic and trade negotiations is taking place, with the location in an Asian city this time, closer to China's comfort zone. China's response to the US's TACO behavior is more mature, using rare - earth export and soybean import as countermeasures. The US is facing economic pressure, with employment pressure greater than inflation pressure, and the Fed may cut rates. The US has a motivation to ease relations with China, and a final agreement is expected [21][22][23]. 3.1.3 Bond Market Strategy: Enter and Exit on the Left Side without Lingering, and Adopt a "Dumbbell + Small - Band" Approach - The bond market is in a volatile state. A fast - in and fast - out strategy of buying on dips and taking profits on rallies is relatively effective. The 10 - year and 30 - year treasury bond active bonds have changed, and their core oscillation ranges are estimated. The investment portfolio should use a "dumbbell + small - band" approach, with short - end and long - end allocations as described above [27][28]. 3.2 Bond Market Asset Performance No specific summary content is provided in the given text for this part, only some related charts are mentioned. 3.3 High - Frequency Entity Tracking 3.3.1 Price - Related - This week, the Nanhua Agricultural Products Index and international crude oil prices rose, with prices of agricultural products showing a mixed trend. Brent crude oil rose by $4.93 per barrel, and WTI crude oil rose by $4.33 per barrel. Vegetable and meat prices had different changes, with some rising and some falling [39]. 3.3.2 Industry - Related - Industrial - related data improved slightly this week. The Nanhua Industrial Products Index rose, glass prices fell slightly, and coking coal prices rose. Supply - side data such as blast furnace and petroleum asphalt开工率 were better than last week [45]. 3.3.3 Investment and Real Estate - Related - This week, investment and real estate - related data on the demand side showed a slight recovery, with transaction volume data increasing, but the growth rate was lower than the historical average. The second - hand housing listing price index declined further, and the cumulative value of housing completion area increased compared to last month but was still lower than the historical average [55]. 3.3.4 Travel and Consumption - Related - This week, travel and consumption data were mixed, generally in line with the season. Subway passenger volumes in major cities increased, movie box - office revenues decreased, passenger car retail sales decreased but were higher than the historical average, and the number of domestic flights increased [61].

Market Overview - On September 3, the Shanghai Composite Index fell by 1.16%, the CSI 300 decreased by 0.68%, the STAR 50 dropped by 1.64%, the CSI 1000 declined by 1.46%, while the ChiNext Index rose by 0.95%, and the Hang Seng Index decreased by 0.6% [4][5] - The best-performing sectors on September 3 were comprehensive (+1.64%), communication (+1.61%), and electric equipment (+1.44%), while the worst-performing sectors included defense and military (-5.83%), non-bank financials (-3.05%), and computer (-2.71%) [4][5] - The total trading volume for the A-share market on September 3 was 23,956.82 billion, with a net inflow of 5.509 billion HKD from southbound funds [4][5] Important Insights - The report discusses the bond market, indicating that the current equity bull market driven by the migration of deposits does not necessarily lead to a corresponding decline in the bond market [6] - It highlights that the migration of deposits from residents and enterprises to non-bank institutions does not change the overall scale of bank liabilities, thus stabilizing the bond investment capacity of banks [6] - The report notes that historically, there has not been a bull market in equities accompanied by a bear market in bonds driven by deposit migration, as seen in previous bull markets from 2014 to 2015 and 2021 [6][7] Company Analysis - The report focuses on XCMG Machinery (000425), which has launched one of the largest equity incentive plans in the machinery industry, aiming to become a global leader in engineering machinery [8] - The company is expected to benefit from a recovery in domestic construction and an increase in overseas market share, supported by a significant improvement in mixed reform benefits and the implementation of the equity incentive plan [9] - Catalysts for investment include exceeding order expectations and growth in investment in real estate, infrastructure, and mining sectors [9]