Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **A-share market in China** and its sentiment amid ongoing **geopolitical uncertainties**. The sentiment has continued to decline, impacting the overall market outlook. Core Insights and Arguments 1. **Market Sentiment Decline**: The weighted **MSASI** (Morgan Stanley A-share Sentiment Indicator) fell by **5 percentage points** to **41%** as of March 25, 2026, indicating a negative shift in investor sentiment compared to the previous cycle [2][6][13]. 2. **Turnover Trends**: Daily turnover for **ChiNext** increased by **3%** to **RMB 559 billion**, while A-shares rose by **7%** to **RMB 2,181 billion**. However, equity futures open interest decreased by **12%** to **RMB 448 billion** [2][3]. 3. **Inflation Forecasts**: The **China Economic team** revised the 2026 inflation forecasts upward, expecting a rebound in **PPI** (Producer Price Index) to turn positive by mid-2026 due to rising energy and commodity costs. However, this inflation is not expected to drive sustained demand growth [4][13]. 4. **Sector Preferences**: The report emphasizes a preference for **upstream and real asset-linked sectors** such as **Materials, Energy, selected Industrials, and Semiconductors**. The **Energy sector** was upgraded from equal-weight to overweight due to improved market dynamics [14][15]. 5. **Demand and Supply Dynamics**: There is a noted pressure on demand despite nominal price increases. A supply-side-driven price rebound may stall without a corresponding recovery in demand, especially as China faces a global macroeconomic slowdown [15]. 6. **Earnings Challenges**: Major index component companies are experiencing challenges in earnings and return on equity (ROE), particularly in the **Internet/e-commerce sector**, which is heavily represented in the MSCI China index and has been underperforming [15]. Additional Important Insights 1. **Investor Behavior**: The **30-day RSI** (Relative Strength Index) declined by **6%** over the reporting period, indicating weakening momentum in the market [2]. 2. **Net Inflows**: There was a net inflow of **US$4 billion** in southbound trading during March 19-25, contributing to year-to-date net inflows of **US$25.5 billion** [3]. 3. **Earnings Revision Breadth**: The consensus earnings revision breadth remains negative but has shown slight improvement compared to the previous week [2]. 4. **Geopolitical Sensitivity**: The A-share market is viewed as less sensitive to geopolitical uncertainties compared to offshore markets, which supports the preference for A-shares [13]. This summary encapsulates the key points from the conference call, highlighting the current state of the A-share market, investor sentiment, sector preferences, and macroeconomic factors influencing the market dynamics.

1. Report Industry Investment Rating - The report does not explicitly mention the industry investment rating. 2. Core Viewpoints of the Report - From the perspective of "wave - counting", interest rates have experienced about seven waves of decline, and the bond market is approaching the end of historical regression in terms of the adjustment time window [1][6]. - The logic of rising interest rates has become more perfect with the assistance of inflation, constructing the market's consistent judgment of "strong stocks and weak bonds" for this year's major asset classes at the end of last year. However, after the first - quarter, stocks are not that strong and bonds are not that weak [1][3][13]. - The bond market is still in a strong "bearish thinking", but the bear - to - bull reversal conditions are emerging, and the left - side varieties can gradually shift from indifference to attention [3][31][33]. 3. Summary by Related Catalogs Interest Rate Upward Logic Becomes More Perfect - Inflation is realized: The inflation data announced on March 9th was good. The war logic in March pushed oil prices to around $100, reducing the probability of the Fed's interest rate cut and ensuring the转正 of PPI in March [8]. - Bond supply and demand: Since December last year, due to the bond selling and redemptions caused by banks' EVE indicator exceeding the standard, the market is worried about the new issuance of local and national bonds. The demand for long - term bonds from insurance and funds has decreased, while the supply of long - term bonds is large, making short - selling a mainstream strategy [14]. - The fundamentals are improving, and the deflator is rising: The export data from January to February was good, and the physical data was relatively strong. The relationship between oil prices, inflation, and GDP deflator is clear, strengthening the bearish bond market [14]. - The market expects the seasonal "small spring" of real estate to turn into a trend - like "bottom": The real estate in first - tier cities has recovered again, and the "stagflation" logic of real estate, especially in first - tier cities, is more attractive than last year [11]. Necessary Conditions for Bear Market Reversal are Met - Short - sellers have few chips: The duration of public funds has reached a very low level (about 2.8 years), and they are almost in a state of "observing from the sidelines" in long - term varieties such as 30 - year treasury bonds, with only over 30 billion yuan in long - term bonds held [15][16]. - Short - sellers need to borrow: The active selling mainly comes from securities companies' proprietary trading through short - selling by borrowing bonds, and the borrowing balance accounts for 50% of the floating market. The strategy of going long on old bonds and short on T6 has not made significant profits, and the unstable label may be shifting to short - sellers [18][20]. Unstable Inflation Narrative and Sufficient Term Spread Pricing - Over - overdraft of pricing: The spread between 10 - year and 30 - year treasury bonds has widened to 50 - 55 basis points, above the historical median level in 2010 and close to the 70% quantile level after adjusting for the static coupon. The odds of further steepening have significantly decreased [23]. - Unstable inflation narrative: This is the second round of inflation trading this year. The three expected inflation routes in January have not been realized. The inflation mechanism is difficult to fundamentally change the internal driving force of the bond market of weak credit and strong deposits [25]. - New deflation logic: The US stocks have not risen since the end of last year, and the Hong Kong stock technology sector has adjusted since January. The logic is that new AI companies are undermining the business models and valuations of old technology companies, triggering discussions on deflation caused by technological unemployment [2][28]. How to Participate in Left - Side Varieties - The bond market is still in a strong "bearish thinking", but the logic of supply - demand, inflation, and chips can be questioned. The market is more bearish than in January, but the cost - performance of the current point is not high [31][32]. - The bond bear market may end when short - sellers cover their positions, the narrative switches again, and attention returns to fixed - income assets. Left - side varieties can gradually participate in the end of the bear market [33][36].

1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - Last week, the released February inflation data (CPI同比 1.3%, PPI同比 -0.9%) slightly exceeded market expectations. The February import - export growth rate was remarkable, and the US stated that the Iran conflict would end soon, making the Middle - East situation uncertain. The bond market declined again, and ultra - long bonds tumbled. The trading activity of ultra - long bonds increased slightly, with the term spread widening and the variety spread narrowing [1][4][10]. - For the 30 - year Treasury bond, as of March 13, the spread between the 30 - year and 10 - year Treasury bonds was 47BP, at a historically low level. Considering domestic economic data, the economic downward pressure in December eased, with the estimated December GDP year - on - year growth rate at about 4.5%, a 0.4% increase from November. The manufacturing PMI in January and February dropped to 49.3 and 49 respectively, indicating a weak start to the year. The deflation risk continued to ease. The report believes that the bond market is more likely to correct in the near future due to factors such as rising domestic inflation risk and reduced central bank bond - buying scale. The 30 - 10 spread is expected to fluctuate at a high level in the short term [2][11]. - For the 20 - year CDB bond, as of March 13, the spread between the 20 - year CDB bond and the 20 - year Treasury bond was 13BP, at a historically low position. Similar to the 30 - year Treasury bond situation, the bond market is more likely to correct in the near future. However, considering the bond market is still in a large oscillation range, the variety spread of the 20 - year CDB bond is expected to continue to fluctuate in a narrow range [3][12]. 3. Summary According to Relevant Catalogs 3.1 Ultra - long Bond Review - The February inflation data (CPI同比 1.3%, PPI同比 -0.9%) slightly exceeded market expectations. The February import - export growth rate was very good, and the US's statement on the Iran conflict made the Middle - East situation uncertain. The bond market declined, and ultra - long bonds tumbled. The trading activity of ultra - long bonds increased slightly, with the term spread widening and the variety spread narrowing [1][4][10]. 3.2 Ultra - long Bond Investment Outlook - **30 - year Treasury Bond**: As of March 13, the 30 - 10 spread was 47BP, at a historically low level. December economic downward pressure eased, with GDP growth rate estimated at 4.5% year - on - year, a 0.4% increase from November. January and February manufacturing PMI dropped, and deflation risk continued to ease. The bond market is more likely to correct due to rising inflation risk and reduced central bank bond - buying. The 30 - 10 spread is expected to oscillate at a high level in the short term [2][11]. - **20 - year CDB Bond**: As of March 13, the 20 - year CDB - Treasury spread was 13BP, at a historically low position. Similar economic situation as the 30 - year Treasury bond. The bond market is more likely to correct, but the variety spread of the 20 - year CDB bond is expected to fluctuate in a narrow range [3][12]. 3.3 Ultra - long Bond Basic Overview - The balance of outstanding ultra - long bonds is 25.3 trillion. As of February 28, ultra - long bonds with a remaining term over 14 years totaled 1,655,081 billion (excluding asset - backed securities and project revenue notes), accounting for 15.3% of the total bond balance. Local government bonds and Treasury bonds are the main sub - varieties. By variety, Treasury bonds accounted for 27.5%, local government bonds 67.3%, etc. By remaining term, the 30 - year variety has the highest proportion [13]. 3.4 Primary Market - **Weekly Issuance**: Last week (2026.3.9 - 2026.3.15), the issuance volume of ultra - long bonds decreased, totaling 474 billion yuan. Compared with the week before last, the total issuance volume dropped significantly. By variety, Treasury bonds issued 320 billion, local government bonds 154 billion, etc. By term, 15 - year bonds issued 30 billion, 20 - year 16 billion, 30 - year 107 billion, and 50 - year 320 billion [18]. - **This Week's Scheduled Issuance**: The announced ultra - long bond issuance plan for this week totals 1,442 billion. Ultra - long local government bonds account for 1,436 billion, and ultra - long medium - term notes 6 billion [24]. 3.5 Secondary Market - **Trading Volume**: Last week, ultra - long bonds were very actively traded, with a trading volume of 11,303 billion, accounting for 11.7% of the total bond trading volume. By variety, ultra - long Treasury bonds accounted for 38.9% of the total Treasury bond trading volume, ultra - long local bonds 45.0% of the total local bond trading volume, etc. Compared with the week before last, the trading volume of ultra - long bonds increased by 532 billion, and the proportion increased by 1.3% [27]. - **Yield**: Due to factors such as inflation data and international situation, the bond market declined, and ultra - long bonds tumbled. For Treasury bonds, the yields of 15 - year, 20 - year, 30 - year, and 50 - year bonds changed by 5BP, 6BP, 9BP, and 9BP respectively to 2.16%, 2.31%, 2.37%, and 2.55%. Similar changes occurred in CDB bonds, local bonds, and railway bonds [39]. - **Spread Analysis**: - **Term Spread**: Last week, the term spread of ultra - long bonds widened, with an absolute low level. The 30 - 10 spread of benchmark Treasury bonds remained at 47BP, a 2BP change from the week before last, at the 44% quantile since 2010 [46]. - **Variety Spread**: Last week, the variety spread of ultra - long bonds narrowed, with an absolute low level. The spreads of 20 - year CDB bonds and railway bonds against Treasury bonds were 13BP and 15BP respectively, a - 1BP change from the week before last, at the 11% and 10% quantiles since 2010 [47]. 3.6 30 - year Treasury Bond Futures - Last week, the main 30 - year Treasury bond futures contract TL2606 closed at 111.06 yuan, with an increase of - 1.53%. The total trading volume was 47.12 million lots (114,506 lots), and the open interest was 13.07 million lots (- 2,023 lots). The trading volume increased significantly compared with the week before last, and the open interest decreased slightly [54].

Group 1 - The core viewpoint of the article is that AI has entered a phase of recursive self-improvement, and humanoid robots are nearing mass production, with significant implications for the economy post-"singularity" [2][8][10] - Elon Musk stated that Tesla's "Optimus 3" is close to completion, with production expected to start this summer at a low initial output, ramping up to high production levels by next year [5][6][10] - Musk emphasized that the production of robots will follow a typical S-curve pattern, starting slowly and then rapidly increasing [6][7] Group 2 - Musk predicts that AI has already been in a recursive self-improvement stage for some time, with human involvement decreasing as each generation of models helps build the next [9][19] - He anticipates that fully automated self-improvement could be achieved by the end of this year or early next year, marking an acceleration in AI breakthroughs [9][19] - Musk envisions a future where the economy could grow tenfold in the next decade, provided there are no major external shocks like a world war [11][45] Group 3 - Musk believes that the importance of money will diminish in the future, as AI and robots will produce goods and services at a rate that far exceeds the supply of money, leading to deflation [10][59] - He suggests that a universal income could be implemented, essentially distributing money directly to people as production outpaces monetary supply [59][60] - Musk argues that future AI will not use human currency but will focus on energy and quality metrics, such as power and tonnage [10][62] Group 4 - Musk stated that Tesla does not plan to lay off employees; instead, they expect to increase their workforce as productivity per employee rises dramatically [11][57] - He highlighted that the total number of Tesla employees is around 150,000, with a significant portion working in factories, and the supply chain potentially involving 1 to 2 million people [57] - The anticipated increase in productivity is expected to be "nutty high," reflecting the transformative impact of AI and robotics on manufacturing [11][57]

Macro Analysis - China's February CPI rebounded to 1.3%, the highest in nearly three years, driven by the base effect from the Spring Festival and soaring travel prices during the holiday [2] - PPI exceeded market expectations, primarily due to rising prices in upstream industries like crude oil and non-ferrous metals, while consumer goods PPI remained relatively weak [2] - The report indicates that China is gradually escaping deflation, but the transmission mechanism of prices to wages remains weak, as inflation is mainly supply-driven and final consumption demand is still sluggish [2] - A sustained fiscal expansion is deemed necessary to stimulate demand and break the deflationary spiral, although this year's Two Sessions policies appear weaker than expected [2] - Future projections estimate CPI, PPI, and GDP deflator to rise from 2025 levels of 0.1%, -2.6%, and -1% to 2026 levels of 1.1%, 0.5%, and 0.8% respectively [2] - The People's Bank of China is expected to rely on structural monetary policy tools in the short term, with potential LPR and RRR cuts in Q2 2026 [2] Company Analysis - Futu Holdings (FUTU US) is expected to report 4Q25 earnings on March 12, with core indicators remaining resilient, although sequential growth may slightly slow [6] - The company's stock price has dropped 13% year-to-date, reflecting market downturns, but is seen as having priced in negative factors [6] - The report anticipates a 13% sequential decline in the number of new asset clients for 4Q25, with a total of 220,000 clients expected, representing a 3% year-on-year growth [7] - Total revenue for 4Q25 is projected at HKD 6.3 billion, a 2% sequential decline, with brokerage commissions and interest income also expected to decrease [8] - Operating expenses are expected to decrease by 7% sequentially, with net profit estimates of HKD 3.2 billion (GAAP) and HKD 3.3 billion (non-GAAP), reflecting stable performance [8]

Group 1 - The Chinese government has set the economic growth target for 2026 at "4.5-5%", which is a downward adjustment from the previous target of "around 5%" for 2025, indicating a focus on long-term development rather than maintaining high growth rates [1][4] - To achieve the adjusted growth target, there is a significant possibility of implementing additional economic stimulus measures, especially in light of recent external environmental challenges and uncertainties in international trade [4] - The risk of energy shortages in China is considered low due to the high proportion of coal in energy supply, progress in transitioning to renewable energy, and an increase in strategic oil reserves [1][5] Group 2 - The urgency for economic stimulus policies has decreased as China's economy has been supported by strong exports, allowing the government to prioritize the development of the technology sector and reduce reliance on real estate [2] - Despite the growth target being lowered, it still exceeds the 4.2% required to double per capita GDP by 2035, suggesting that the government has not abandoned its long-term goals [4] - There is skepticism regarding the ability to escape deflation, as domestic deflationary pressures remain entrenched, although rising costs in some industries could potentially lead to price increases that may help alleviate deflationary concerns [5]

Group 1 - The article discusses the recent violent rebound of SaaS stocks in the US market and questions whether the Hang Seng Index will follow suit [1] - It highlights that the Hang Seng Technology Index has declined due to three main reasons, including discussions in the US about layoffs and unemployment caused by AI, which impacts consumer spending [2][3] - The article provides data indicating that actively managed equity funds have a 16.23% allocation to Hong Kong stocks, with technology stocks making up about 35% of that allocation [2] Group 2 - The article mentions that the US IGV index has experienced a more significant decline, suggesting a broader impact on software and internet sectors due to AI [3] - It notes the appreciation of the Renminbi and its potential effects on the market [3] - The article points out deflationary pressures affecting certain components within the automotive sector [3]

Core Viewpoint - The article discusses the potential impact of the ongoing conflict in Iran on the global economy, particularly focusing on the reliance on energy supplies through the Strait of Hormuz and the implications for oil prices and inflation [1][4]. Group 1: Oil Market Dynamics - The Strait of Hormuz is a critical chokepoint for global oil supply, with approximately 20% of the world's oil transported through it. A significant disruption could lead to oil prices soaring above $100 per barrel [6]. - Brent crude oil prices have already risen nearly 12% in the past month, nearing a seven-month high of $73 per barrel due to escalating tensions [6]. - If the Strait remains open but Iranian oil sales are curtailed, oil prices may rise to at least $80 per barrel, with OPEC+ announcing a modest production increase of 206,000 barrels per day to stabilize the market [7]. Group 2: Economic Implications for the U.S. - The U.S. is projected to achieve 83% energy self-sufficiency by 2024, with only 17% of energy imports, the lowest in 40 years [8]. - However, a significant rise in global oil prices could adversely affect U.S. consumers and businesses, potentially pushing consumer price inflation from 2.4% to over 4% if prices reach $100 per barrel [10]. - A sustained increase in oil prices could hinder the Federal Reserve's plans to lower interest rates later in the year, with estimates suggesting a $10 increase in oil prices could reduce economic growth by 10 to 20 basis points [11]. Group 3: Global Inflation and Market Reactions - A rise in Brent crude oil prices to $100 per barrel could increase global inflation rates by 0.6% to 0.7%, affecting major economies, particularly in Asia [17]. - Europe is expected to face significant impacts from rising oil and liquefied natural gas costs, although the European Central Bank may maintain its current policies due to inflation rates being below target [18]. - The ongoing conflict may also lead to a stronger U.S. dollar, with predictions that a 10% increase in oil prices could result in a 0.5% to 1% rise in the dollar against a basket of global currencies [15]. Group 4: Broader Economic Risks - The global financial markets are currently volatile, with concerns over private credit and the impact of artificial intelligence on large corporations contributing to market instability [19][20]. - Continuous conflict in the Gulf region could further undermine market confidence, especially if it raises concerns about the Federal Reserve's monetary policy [22]. - Despite recent geopolitical events, some analysts remain optimistic about the resilience of global economic growth, suggesting that the economy has shown remarkable strength amid multiple shocks [22].

Core Viewpoint - The Bank of Japan's committee member Soichiro Takata indicates that the economy is no longer in deflation, emphasizing that concerns about returning to deflation have been eliminated [1][2]. Group 1: Economic Conditions - Takata states that the path to overcoming deflation is finally taking shape, driven by domestic structural factors rather than solely relying on external cost transmission [1]. - He expresses hope for a "true dawn" for Japan's economy, suggesting that the current situation is fundamentally different from past experiences [1]. Group 2: Monetary Policy - Takata advocates for a gradual increase in interest rates, noting that Japan's real short-term interest rates remain significantly negative, even after a potential rate hike in December 2025 [1]. - He warns of the risk that the Bank of Japan may fall behind the global recovery and rate hike cycle starting in 2026 [1]. Group 3: Debt and Market Stability - The need for cautious normalization of policies is emphasized, particularly regarding the pace of reducing government bond purchases [1]. - Takata highlights the risk of weak demand for ultra-long Japanese government bonds and warns of potential market volatility that could lead to dysfunction in the bond market [1]. Group 4: External Risks - He raises concerns about external risks, particularly the evolving U.S. trade policies that could heighten global risk sentiment and exacerbate currency market volatility due to diverging monetary policies between Japan and the U.S. [2]. - Takata acknowledges the moderate growth of the overseas economy but believes Japan has the foundation for endogenous inflation, suggesting that the central bank should focus more on rising prices [2].

Core Viewpoint - The former Governor of the Bank of Japan, Haruhiko Kuroda, advocates for continued interest rate hikes and tighter fiscal policies due to Japan's healthy economic state, while warning that Prime Minister Fumio Kishida's large-scale spending plans may accelerate inflation [1][2]. Group 1: Economic Conditions and Predictions - Kuroda predicts that the Bank of Japan should implement approximately two interest rate hikes per year in 2026 and 2027, aiming to gradually raise the benchmark interest rate to a neutral level that neither stimulates nor suppresses the economy [1][2]. - Japan has reportedly moved past decades of deflation, making the normalization of monetary policy essential to support the yen and prevent economic overheating [1][2]. Group 2: Policy Divergence - There is a significant policy divergence between Kuroda and Kishida, with Kuroda expressing skepticism about the appropriateness of increased spending and tax cuts proposed by the current administration [1][3]. - Kishida's administration has increased spending and temporarily suspended an 8% consumption tax on food to alleviate rising living costs, which Kuroda warns could exacerbate inflation and raise bond yields [3]. Group 3: Currency and Inflation Concerns - Kuroda acknowledges that the yen is currently too weak, suggesting that interest rates could rise to between 1.5% and 1.75% in the coming years if economic growth continues [4][5]. - The depreciation of the yen is contributing to higher import costs, thereby intensifying overall inflationary pressures [4][5]. Group 4: Communication and Policy Implementation - Kuroda emphasizes that while monetary interventions can have short-term effects on the yen, they do not guarantee lasting impacts, advocating for a more subdued communication approach as the Bank of Japan seeks to normalize policies [5].