Domestic Outlook - The local two sessions have concluded, with national growth targets for 2026 expected to be cautiously set between 4.5% and 5%[1] - The carbon reduction task is more challenging than during the 14th Five-Year Plan, with carbon reduction likely to be a structural highlight this year[1] International Developments - The central bank has lowered the foreign exchange risk reserve ratio for forward foreign exchange sales from 20% to 0%, aiming to curb the rapid appreciation of the RMB[1] - The U.S. and Israel launched airstrikes on Iran on February 28, with Iranian media confirming the death of Khamenei on March 1. The closure of the Strait of Hormuz is a critical turning point, with potential oil prices exceeding $100 per barrel posing significant downside risks to the U.S. economy[1] - WTI crude oil prices are expected to reach $75-80 per barrel, with the annual average likely in the $65-70 range[1] Asset Performance - Geopolitical tensions and rising oil prices may temporarily hinder equity assets, while PPI-related assets are likely to continue benefiting[1] - The anticipated early positive turn in PPI year-on-year in Q2 aligns with favorable conditions for sectors such as electricity, construction materials, steel, chemicals, coal, and non-ferrous metals[1] Monetary Liquidity - From February 24 to February 28, the central bank achieved a net withdrawal of funds, with the 7-day reverse repo net injection totaling 788.6 billion yuan and a net withdrawal of 1.4 trillion yuan for 14-day reverse repos[2] - As of February 27, the prices for R001, DR001, R007, and DR007 have decreased by 9.46, 2.25, 8.10, and 7.40 basis points respectively compared to the beginning of the week[2]

Domestic Economic Outlook - The March construction season is expected to support a rebound in investment, driven by policy-oriented financial tools and a stabilization in investment trends in Q1[1] - The central bank's early-year excess MLF operations indicate a lower probability of a rate cut in the short term[1] International Economic Developments - Pressure on the independence of the Federal Reserve has temporarily eased, with expectations of a court ruling against Trump's dismissal of Cook[1] - Recent increases in long-term bond yields in the US and Japan have led to a strengthening of the yen[1] Currency and Asset Performance - On January 23, the RMB midpoint broke 7; if the USD remains stable, the RMB midpoint may rise to 6.7-6.8, with the effective exchange rate likely recovering to H2 2024 levels, maintaining the attractiveness of Chinese assets[1] - Continuous PPI recovery is expected to benefit inflation-related assets, particularly in sectors like non-ferrous metals, chemicals, construction materials, steel, and electric new energy[1] Monetary Policy and Liquidity - From January 19 to January 23, the central bank conducted a net liquidity injection of 229.5 billion RMB through 7-day reverse repos, with a total of 11,810 billion RMB injected and 9,515 billion RMB maturing[2] - The average funding price for DR001 fluctuated between 1.3% and 1.4%, indicating a neutral to loose liquidity environment[2] Government Debt Financing - Local government bonds net financed 222.37 billion RMB, while national bonds net financed 344.3 billion RMB, totaling 566.7 billion RMB in net financing[6] - Upcoming local government bond issuance is planned at 439.275 billion RMB, with a net financing scale of 367.887 billion RMB[6] Market Trends - The A-share market showed strong bullish sentiment despite fluctuations, with the Shanghai Composite Index at 4,136.16, reflecting a weekly increase of 0.84%[35] - The Hang Seng Index experienced a slight decline of 0.36% but has shown a year-to-date increase of 4.37%[35]

Core Insights - The social financing scale in December 2025 increased by 22,080 billion yuan, lower than the previous value of 24,888 billion yuan and above the expected increase of 18,153 billion yuan [1][3] - New RMB loans amounted to 9,100 billion yuan, significantly higher than the previous month's increase of 3,900 billion yuan and above the expected increase of 6,794 billion yuan [1][3] - The year-on-year growth of RMB loans remained stable at 6.4%, while M2 and M1 showed growth rates of 8.5% and 3.8% respectively [1][3] Social Financing Data - December's social financing increment maintained a high growth rate, with an increase of 22,080 billion yuan, which is 12,180 billion yuan more than the same month last year [1][3] - The performance of off-balance-sheet financing, including entrusted loans and trust loans, showed stability, with increases of 327 billion yuan and 529 billion yuan respectively, while bank acceptance bills decreased by 162 billion yuan [1][3] - Government bond issuance saw a significant decline, with a year-on-year decrease of 10,702 billion yuan, attributed to a high base from the previous year [1][3] Loan and Deposit Trends - In December, corporate bond financing reached 1,524 billion yuan, an increase of 1,683 billion yuan year-on-year, while domestic stock financing for non-financial enterprises was 560 billion yuan, up by 76 billion yuan [1][3] - The total amount of new RMB loans in December was 9,100 billion yuan, which is 800 billion yuan less than the same month last year, indicating potential capital outflows from the stock market [1][3] - Resident and non-financial enterprise deposits increased by 25,800 billion yuan and 12,200 billion yuan respectively, showing significant month-on-month growth [1][3] Monetary Supply and Liquidity - M2 growth in December was 8.5%, which is a 0.5 percentage point increase from the previous month [1][3] - The M1-M2 differential expanded to -4.7%, indicating a contraction in monetary liquidity, although the overall monetary policy remains accommodative [1][3] - Fiscal deposits decreased by 13,821 billion yuan, suggesting potential preemptive fiscal measures for 2026 [1][3]

Core Viewpoint - In recent years, Chinese export enterprises have shown a clear tendency to "hold foreign exchange without settling." Starting from early 2025, as the RMB enters an appreciation cycle and Chinese assets are revalued, the willingness of enterprises to settle foreign exchange is expected to rebound. The recent RMB exchange rate against the USD has broken through 7.0, and mainstream expectations suggest that the RMB will continue to appreciate, further stimulating enterprises' settlement sentiment and positively impacting liquidity and the market [2][3][12]. Group 1: Settlement Willingness and Scale - The "pending settlement" scale for enterprises is approximately $930 billion, with an expected increase in settlement willingness by 2025. From early 2022 to November 2025, export enterprises accumulated $930 billion in foreign exchange that has not been settled [3][7]. - The settlement rate, which measures the proportion of foreign exchange that enterprises actively convert to RMB, is a good indicator of their willingness to settle. A higher settlement rate indicates stronger willingness [8][10]. - Since early 2025, the settlement rate has improved significantly, rising from a low of 54.4% in February 2025 to a high of 71.2% in September 2025, indicating a shift from "holding foreign exchange" to "steady settlement" [10][11]. Group 2: Factors Influencing Settlement Willingness - Two main factors influence enterprises' willingness to settle: expectations regarding the RMB exchange rate and the comparative returns of holding different currencies. When enterprises expect the RMB to appreciate, they are more inclined to settle early to avoid exchange losses [11][13]. - The attractiveness of RMB assets has increased due to favorable developments in sectors like innovative pharmaceuticals and effective responses to trade tensions, which have boosted risk appetite and improved the performance of Chinese financial assets [13][14]. Group 3: Impact on Liquidity and Market - The settlement of foreign exchange essentially converts foreign assets into RMB deposits, impacting the balance sheets of the central bank, commercial banks, and enterprises. However, the effect on the base currency supply is minimal if commercial banks do not sell the foreign exchange to the central bank [15][20]. - If 20% of the pending settlement is realized by the end of 2026, it could lead to an increase in M1 by approximately 1.3 trillion RMB, contributing about 1.2 percentage points to M1 growth [24][27]. - The increase in M1 is expected to have limited impact on PPI due to insufficient effective demand, and some high-risk enterprises may channel funds into the stock market, providing incremental capital to A-shares [27][28][31].

Domestic Macro - Demand Side - During the New Year holiday, consumer demand for travel and cinema surged, with retail sales of passenger cars showing a narrowing year-on-year decline of 19.5%[1] - In December 2025, the external demand showed an increase in volume but a decrease in price, with the Baltic Dry Index (BDI) at 2315.2, reflecting a 5.1% increase[1] Domestic Macro - Production Side - The PMI and high-frequency data showed a divergence, with the PMI at 50.1% in December 2025, indicating no significant improvement in physical workload[1] - The production impact of the late Spring Festival in 2026 was minimal, with the production index showing a 3.42 percentage point increase compared to November 2025[1] Price Performance - CPI showed fluctuations in pork prices and a continuous rise in fruit prices, with a 0.43% increase noted[2] - PPI indicated a weakening in crude oil prices while non-ferrous metal prices showed volatility, with WTI at 1.77%[2] Fiscal Policy - In January 2026, local government bond issuance plans are set at 580 billion, reflecting a 104.4% increase compared to the previous year[2] Monetary and Liquidity Conditions - The yield curve for government bonds has shifted upward, with the SHIBOR 007 rate at 1.9560%, up by 51 basis points[2] Global Macro - Global financial market activity has cooled due to the New Year holiday, impacting trading volumes[2]

Domestic Insights - High-frequency data indicates that effective demand has been insufficient since Q4 2025, continuously squeezing corporate profit margins, leading to a significant reduction in the marginal effect of "price for volume" [2][12] - In November, the profit growth rate of industrial enterprises remained in negative territory, with a decline of 7.6 percentage points compared to the previous month [2][14] - The appreciation of the RMB may be nearing its peak, driven by concentrated settlement demand near year-end, but the central bank may begin to intentionally control the extent of appreciation [2][12] - A break of the 7 mark in the central parity requires an increase in corporate hedging rates and the proportion of cross-border RMB settlements, with expectations for a favorable timing in mid to late 2026 [2][12] Overseas Insights - Following the Bank of Japan's monetary policy meeting, Governor Ueda stated that they are steadily approaching the 2% inflation target and will continue to raise interest rates, maintaining a gradual tightening pace [2][13] - The U.S. Q3 GDP growth rate exceeded expectations at 4.3%, with over half of this growth attributed to personal consumption expenditures, while government investment has rebounded [2][13] - The high mortgage rates have a delayed transmission effect on the real estate market but are expected to significantly impact current consumption [2][13] Asset Market Insights - The A-share equity market continues its allocation trend, but short-term volatility may increase, especially with external disturbances expected after the New Year [3][12] - The USD/JPY exchange rate remains above 155, and any intervention by the Bank of Japan or a cooling of Fed rate cut expectations could cause temporary disturbances to domestic equity assets [3][12] Monetary Liquidity Tracking - The central bank's flexible operations have resulted in a tight balance in the funding environment, with a net injection of 652 billion yuan from various operations [4][12] - The average weekly rate for DR001 decreased by 0.950 basis points to 1.2633%, while DR007 increased by 0.330 basis points to 1.4464% [5][16] Government Bonds - The supply pressure of government bonds has significantly decreased, with a maturity repayment scale of 2,948.57 billion yuan, and the planned issuance for the upcoming week is 26 billion yuan, a substantial drop from the previous week [6][17] Interbank Certificates of Deposit - The weighted issuance rate for interbank certificates of deposit was 1.6394%, down 1.46 basis points from the previous week, while the secondary market saw slight increases in rates for various maturities [7][18] Major Asset Performance - Domestic long-term and short-term government bond yields showed a divergence, with short-term yields declining significantly [8][34] - Gold prices surged, while oil prices experienced fluctuations [11][34]

Group 1: Report Information - Report Title: Precious Metals Daily Review [1] - Date: December 25, 2025 [1] - Research Team: Macro Financial Team [2] - Researchers: He Zhuoqiao (Macro Precious Metals), Huang Wenxin (Treasury Bonds and Container Shipping), Nie Jiayi (Stock Index) [2] Group 2: Investment Rating - Not provided Group 3: Core Views - In the short - term, due to factors such as the speculation of the US federal government shutdown, the call for Fed rate cuts, and the decline of the US dollar index, the precious metals sector will continue to operate strongly, especially industrial precious metals. Investors are advised to hold a long - term view and short - sellers should reduce their positions. During the Christmas period, due to low trading volume and high price volatility, investors are advised to reduce their positions appropriately [4]. - In the medium - term, in 2026, the gold price will continue to be strong, with London gold expected to reach $4800 - 5000 per ounce. London silver is expected to reach $80 - 83.3 per ounce, and the London gold - silver ratio will drop to around 60. London platinum is expected to reach $2800 - 2950 per ounce, and the London gold - platinum ratio will drop to around 1.7. London palladium is expected to basically follow the gold trend, with an annual target of $2180 - 2280 per ounce. Investors are advised to maintain a long - term view, short - sellers should reduce the hedging ratio, and conservative investors can consider the arbitrage opportunity of going long on silver and platinum and short on gold [5]. Group 4: Market Conditions Intraday Market - Although the US Q3 economic growth rate far exceeded market expectations and pushed up US Treasury yields, the speculation of the federal government shutdown and the call for Fed rate cuts led to the decline of the US dollar index below 98. The precious metals sector was pushed up by liquidity premium and currency value factors. The platinum and palladium markets on the Guangzhou Futures Exchange continued to rise, but there was an internal adjustment risk due to the recent price surge. During the Christmas period, trading volume was low and price volatility increased [4]. Domestic Precious Metals Market | Contract | Previous Closing Price | Highest Price | Lowest Price | Closing Price | Change Rate % | Open Interest | Position Increase | | --- | --- | --- | --- | --- | --- | --- | --- | | Shanghai Gold Index | 1,015.98 | 1,024.65 | 1,002.59 | 1,016.64 | 0.06% | 359,804 | - 10801 | | Shanghai Silver Index | 16,448 | 17,655 | 16,431 | 17,608 | 7.05% | 818,578 | 24354 | | Guangzhou Platinum Index | 620.16 | 662.37 | 655.25 | 662.33 | 6.80% | 48,007 | 3569 | | Guangzhou Palladium Index | 532.71 | 578.62 | 559.21 | 578.62 | 8.62% | 25,929 | 3123 | [5] Group 5: Main Macro Events/Data - The initial estimate of the US Q3 GDP growth rate was 4.3% on an annualized quarterly basis, the fastest since Q3 2023, driven by strong consumer spending and a significant rebound in exports. Other data showed that the US consumer confidence in December deteriorated, and concerns about employment and income deepened. In November, manufacturing output was flat, and industrial output increased by 0.2% [18]. - The Trump administration announced that it would impose tariffs on semiconductor products imported from China, but the action would be postponed until June 2027 [18]. - According to the Bank of Canada's meeting minutes, before the interest - rate decision on December 10, the governing council found it difficult to predict whether the next move would be a rate hike or a rate cut [18].

Report Summary 1. Report Industry Investment Rating No information provided. 2. Core Viewpoints - In the short - term, due to the weak US employment and inflation data in November, the Fed's interest - rate cut expectation has re - emerged, which suppresses the US dollar index and stimulates the precious metals market. The precious metals prices are still likely to rise. The Guangzhou Futures Exchange's trading limit measures on platinum and palladium futures aim to cool down the surging industrial precious metals market. The precious metals sector will continue to be strong in the near future [4]. - In the medium - term, the global political and economic system restructuring and abundant monetary liquidity will support the gold price to continue rising in 2026, but Trump 2.0's new policies and the decline in Sino - US game intensity will limit the upward momentum. It is expected that the London gold price will reach $4800 - 5000 per ounce in 2026. Silver, with stronger industrial attributes and higher volatility, will gain more upward momentum, and the London silver price is expected to reach $73.5 - 77.5 per ounce, with the gold - silver ratio dropping to around 65. Platinum's consumption and investment demand substitution for gold and silver will continue, and the London platinum price is expected to reach $2000 - 2100 per ounce, with the gold - platinum ratio dropping to around 2.4. Palladium will basically follow the gold's trend, with an annual target of $1620 - 1700 per ounce [5]. 3. Summary by Directory 3.1 Precious Metals Market and Outlook - **Intraday Market**: The weak US employment and inflation data in November have led to the re - emergence of the Fed's interest - rate cut expectation, which has suppressed the US dollar index and stimulated the precious metals market. The precious metals prices are still likely to rise. The Guangzhou Futures Exchange's trading limit measures on platinum and palladium futures aim to cool down the market. It is recommended that investors maintain a long - biased trading strategy, and short - hedgers should reduce their positions. Attention should be paid to the impact of the US economic, employment, and inflation situations on the Fed's interest - rate cut expectation [4]. - **Domestic Precious Metals Market Data**: The previous closing price, highest price, lowest price, closing price, percentage change, open interest, and change in open interest of domestic precious metals contracts such as Shanghai Gold Index, Shanghai Silver Index, Guangzhou Platinum Index, and Guangzhou Palladium Index are provided [5]. - **Medium - term Market**: The global political and economic system restructuring and abundant monetary liquidity will support the gold price to continue rising in 2026, but Trump 2.0's new policies and the decline in Sino - US game intensity will limit the upward momentum. Silver will gain more upward momentum, and the gold - silver ratio will drop. Platinum's consumption and investment demand substitution for gold and silver will continue, and the gold - platinum ratio will drop. Palladium will basically follow the gold's trend. It is recommended that investors maintain a long - biased trading strategy, short - hedgers reduce the hedging ratio, and conservative investors can consider the arbitrage opportunity of going long on silver and platinum and short on gold [5]. 3.2 Precious Metals Market - related Charts - Multiple charts are provided, including Shanghai gold and silver futures indices, London gold and silver spot prices, Shanghai futures index basis against Shanghai Gold TD, gold and silver ETF holdings, gold - silver ratio, and the correlation between London gold and other assets [7][9][11]. 3.3 Main Macroeconomic Events/Data - **US**: The US consumer price index (CPI) growth has slowed down, partly due to the 43 - day federal government shutdown, which postponed data collection. Chicago Fed President Goolsbee said that if the current CPI trend continues, it will help open the door for further interest - rate cuts next year. The number of initial jobless claims decreased by 13,000 in the week ending December 13, indicating a stable labor market in December [17]. - **Europe**: The European Central Bank kept its policy interest rate unchanged and raised some growth and inflation forecasts, likely closing the door to further borrowing cost cuts in the near future. The ECB still believes that the inflation rate will be below 2% in 2026 and 2027, mainly due to falling energy costs, but expects it to return to the target level in 2028. The ECB's economic growth forecasts are 1.4% for this year, 1.2% for 2026, and 1.4% for 2027 and 2028 [17]. - **UK**: The Bank of England's policymakers passed a rate - cut resolution by a narrow majority, but hinted that the pace of future rate cuts may slow down. Five members voted to cut the benchmark interest rate from 4% to 3.75%, while four members supported keeping the rate unchanged due to concerns about high inflation. Governor Bailey changed his stance and voted for the rate cut, breaking the deadlock [18]. - **India**: India announced on Thursday evening that it has imposed a five - year anti - dumping duty on cold - rolled steel from China, with the duty ranging from $223.8 to $414.9 per ton [18].

Group 1 - The core viewpoint of the articles highlights the significant rise in precious metals, particularly gold, which reached a historical high on December 22, with spot gold increasing by 1% and COMEX gold rising by approximately 0.6% [1][3] - The A-share precious metals sector showed strong performance, with silver and non-ferrous metals hitting the daily limit, and companies like Hunan Silver, Western Gold, Zijin Mining, Zhongjin Gold, and Chifeng Gold experiencing gains [1] - The recent U.S. CPI data for November showed a year-on-year decline to 2.7%, below the expected 3.1%, which has led to an adjustment in market expectations regarding the Federal Reserve's interest rate cuts in 2026 [3] Group 2 - The increase in liquidity and strong supply constraints are driving commodity prices to challenge phase highs, as noted by CITIC Construction Investment [3] - The importance of basic raw materials for economic development is increasingly recognized by relevant countries, leading to the use of tariffs to secure these products, which exacerbates regional market shortages and further drives prices upward [3] - The mining ETF (159690) tracks the CSI Nonferrous Metals Mining Index, covering various sub-sectors, which helps to effectively diversify the price volatility risk of individual commodities [3] - The demand for resources is expected to have long-term support due to factors such as energy transition (electric vehicles, photovoltaics), AI computing infrastructure, and global easing policies, aiding investors in conveniently positioning for a "new resource cycle" [3]

Domestic Economic Outlook - The Central Political Bureau meeting and the Central Economic Work Conference have outlined the economic structure direction for the coming year, focusing on stimulating service consumption, enhancing total factor productivity, and managing real estate and local debt risks[6]. - November CPI showed a significant year-on-year increase, expected to rise to around 1.2% in December, while PPI is projected to be around -2.0%[6]. International Monetary Policy - The Federal Reserve lowered interest rates by 25 basis points in December and plans to purchase $40 billion in short-term bonds over the next 30 days, with a lower probability of further rate cuts in Q1 2026[18]. - The Bank of Japan is expected to raise interest rates on December 19, which could impact global equity markets, particularly the S&P 500, which has historically reacted negatively to Japanese rate hikes[18]. Asset Market Insights - The domestic asset market may see a gradual improvement, with a focus on technology and innovative pharmaceuticals in Hong Kong after mid-January 2026[19]. - The offshore RMB has appreciated due to the Fed's rate cut, seasonal currency settlement, and easing US-China trade tensions, but the overall macroeconomic situation will determine if this leads to a stronger performance in Hong Kong and A-shares[19]. Market Performance - The A-share market showed mixed results, with the Shanghai Composite Index down by 0.34%, while the Shenzhen Component and ChiNext indices rose by 0.84% and 2.74%, respectively[38]. - The Hang Seng Index decreased by 0.42%, while the Dow Jones Industrial Average reached a historical high, reflecting varied performances across global markets[38].