1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report On June 4, the capital market remained loose, bullish sentiment rose, the bond market significantly recovered, and the main indices of the convertible bond market followed the upward trend with most individual convertible bonds rising. The yields of U.S. Treasury bonds across various maturities generally declined, while the yields of 10 - year government bonds in major European economies showed divergent trends [1]. 3. Summary by Directory 3.1 Bond Market News 3.1.1 Domestic News - The central government plans to support 20 cities, including Beijing and Tianjin, in implementing urban renewal actions [3]. - As of June 4, the net repayment of urban investment bonds this year has exceeded 220 billion yuan, and the proportion of public - offering urban investment bonds with a valuation above 2.2% is only about 10%. Future focus on generating returns lies in 2 - 5 - year urban investment bonds with a rating below AA [3]. - Shanghai encourages enterprises to apply for infrastructure REITs reserve projects and supports various cooperation and expansion methods [4]. - The Hong Kong Securities and Futures Commission is considering introducing virtual asset derivatives trading for professional investors and will formulate risk management measures [4]. - The 2025 Shanghai Cooperation Organization member states' finance ministers and central bank governors' meeting supports deepening regional financial cooperation [5]. 3.1.2 International News - In May, the U.S. ISM Services PMI contracted for the first time in a year, with significant changes in various sub - indices, which may put pressure on the manufacturing industry in the future [6]. - The U.S. ADP employment increase in May dropped to 37,000, the lowest level since March 2023, far below expectations, and investors' expectations of future interest rate cuts have risen significantly [7]. 3.1.3 Commodities - On June 4, international crude oil futures prices turned down, and international natural gas prices fell. WTI July crude oil futures fell 0.88% to $62.85 per barrel, Brent August crude oil futures fell 1.17% to $64.86 per barrel, COMEX gold futures rose 0.64% to $3398.80 per ounce, and NYMEX natural gas prices fell 0.43% to $3.706 per ounce [9]. 3.2 Capital Market 3.2.1 Open Market Operations On June 4, the central bank conducted 214.9 billion yuan of 7 - day reverse repurchase operations at a fixed - rate and quantity - tendered manner, with an operating rate of 1.40%. The same day, 215.5 billion yuan of reverse repurchases matured, resulting in a net capital withdrawal of 600 million yuan [10]. 3.2.2 Capital Interest Rates On June 4, the capital market remained loose. DR001 decreased by 0.03bp to 1.413%, and DR007 increased by 0.53bp to 1.555%. Various other interest rates also showed different changes [11][12]. 3.3 Bond Market Dynamics 3.3.1 Interest Rate Bonds - The yields of major active bonds of treasury bonds and policy - bank bonds declined. For example, the yield of the 10 - year treasury bond active bond 250011 decreased by 0.50bp to 1.6710%, and the yield of the 10 - year policy - bank bond active bond 250210 decreased by 0.60bp to 1.7110% [13][14]. - Information on bond issuance and bidding for various bonds on June 4, including the term, issuance scale, winning bid yield, and other indicators, is provided [15]. 3.3.2 Credit Bonds - On June 4, 3 industrial bonds and 1 urban investment bond had a transaction price deviation of over 10%. For example, "H8 Longkong 05" dropped by over 52%, and "21 Jingcheng Investment Green Bond 01" dropped by over 24% [16][17]. - Multiple companies announced credit - related events, such as Shenzhen Longfor Holdings' new bond restructuring plan, and several companies' credit ratings were revoked [19]. 3.3.3 Convertible Bonds - On June 4, the three major A - share indices rose, with the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index rising 0.42%, 0.87%, and 1.11% respectively. The main indices of the convertible bond market also rose, with the CSI Convertible Bond Index, Shanghai Convertible Bond Index, and Shenzhen Convertible Bond Index rising 0.49%, 0.40%, and 0.63% respectively [19][20]. - On June 4, Jianguang Convertible Bond announced that it is expected to trigger the condition for downward revision of the conversion price [22]. 3.3.4 Overseas Bond Markets - In the U.S. bond market on June 4, the yields of U.S. Treasury bonds across various maturities generally declined. The 2 - year and 10 - year U.S. Treasury bond yields both decreased by 9bp to 3.87% and 4.37% respectively. The 2/10 - year U.S. Treasury bond yield spread remained unchanged at 50bp, and the 5/30 - year yield spread widened by 2bp to 96bp. The break - even inflation rate of 10 - year U.S. inflation - protected Treasury bonds (TIPS) decreased by 1bp to 2.31% [23][25][26]. - In the European bond market on June 4, the yields of 10 - year government bonds in major European economies showed divergent trends. For example, the yield of the 10 - year German government bond increased by 2bp to 2.52%, and the yield of the 10 - year UK government bond decreased by 4bp [27]. - Information on the daily price changes of Chinese - funded U.S. dollar bonds as of the close on June 4 is provided, including the daily change, credit subject, bond balance, and other details [29].

Core Viewpoint - Hong Kong's Securities and Futures Commission is considering introducing virtual asset derivatives trading for professional investors, with a focus on robust risk management measures to ensure orderly and transparent trading [2][3]. Group 1: Market Development - The initial phase of the derivatives market is expected to pilot with perpetual contracts for mainstream virtual assets like Bitcoin and Ethereum, aligning with global regulatory trends [4]. - The introduction of derivatives trading is anticipated to increase the liquidity and vibrancy of the Hong Kong crypto market by over 50%, providing better hedging tools for investors [6]. Group 2: Current Market Status - Currently, Hong Kong has virtual asset futures ETFs in circulation, with three approved by the Securities and Futures Commission, and public trading of Bitcoin and Ethereum allowed since June 2023 [5]. - The revenue model for cryptocurrency exchanges heavily relies on derivatives trading, as evidenced by Coinbase's Q1 2025 report, which showed total revenue of $2.03 billion, with trading income constituting over 60% [5]. Group 3: Regulatory Framework - Professional investors in Hong Kong are defined as high-net-worth individuals or entities with specific asset thresholds, which include holding over HKD 40 million or an investment portfolio worth over HKD 8 million [3]. - The upcoming second policy declaration on virtual asset development will outline future policy directions, focusing on expanding the types of virtual asset products and services while ensuring investor protection [7].

Domestic News - The FTSE China A50 Index will include Jiangsu Bank and exclude Great Wall Motor [4] - The Energy Administration is organizing the first batch of pilot projects for the construction of a new power system [4] - The Hong Kong Securities and Futures Commission is considering introducing virtual asset derivatives trading for professional investors [4] - The Ministry of Industry and Information Technology is focusing on promoting the development of the artificial intelligence industry and empowering new industrialization [4] - Shanghai encourages local enterprises to actively apply for infrastructure REITs reserve projects [4] - The China Passenger Car Association estimates that wholesale sales of new energy passenger vehicles in May reached 1.24 million units, a year-on-year increase of 38% [4] - Tiger International denies "violating regulations to develop new clients in mainland China," stating that all operations are conducted within the regulatory framework [4] International News - Saudi Arabia plans to push OPEC+ to continue increasing oil production by at least 411,000 barrels per day in August and September to consolidate its market share [3] - Reports indicate that the Bank of Japan will consider slowing down its bond reduction pace next year [3] - The ISM survey shows that the US services PMI unexpectedly contracted in May, indicating rising inflation [3] - Trump calls for the complete elimination of the debt ceiling and urges bipartisan cooperation to achieve this [3] - Iran's Supreme Leader Khamenei states that completely abandoning uranium enrichment is against Iran's interests [3] - The Bank of Canada maintains its key interest rate but may consider lowering it in the future, with the Canadian dollar reaching a new high [3] - The US ADP employment figures for May significantly fell short of expectations, prompting Trump to call for immediate interest rate cuts from Powell [3] - Musk continues to criticize Trump's tax law, publicly urging fans to call legislators to reject the law [3] - The US Congressional Budget Office states that Trump's tax law will increase the US deficit by $2.4 trillion over the next decade [3] - Saudi Arabia lowers the oil price for July shipments to Asia to the lowest level in nearly four years, priced at $1.20 above the Oman/Dubai average [3] - The Federal Reserve's Beige Book reports slight declines in economic activity across six regions, with businesses generally expecting future costs to rise [3]