Core Viewpoint - The domestic real estate market is experiencing a trend of declining transaction volume and prices, with average housing prices dropping by 30% from their peak, particularly in first-tier cities like Shanghai and Shenzhen [2] Group 1: Market Trends - The real estate market is facing a "dual decline" in both transaction amounts and areas sold, indicating a significant downturn [2] - Various government policies aimed at stimulating the market have been introduced, including the cancellation of purchase restrictions, lowering mortgage rates and down payment ratios, and tax exemptions for homebuyers [2] Group 2: Investment Considerations - For individuals with 500,000 yuan, it is suggested to keep the money in the bank rather than purchasing property, as the current housing prices in major cities are prohibitively high [6][8] - Even if 500,000 yuan could cover a down payment in second or third-tier cities, it would deplete all savings and impose a heavy mortgage burden, making bank savings or other investments a more prudent choice [6][8] - In a deflationary cycle, bank interest can supplement household expenses, while purchasing property could lead to significant wealth depreciation if housing prices continue to fall [8]

Core Viewpoint - The article emphasizes the importance of having a "margin of safety" in investments, particularly in the context of fixed income, as articulated by Liu Wanfeng, the director of fixed income investment at China Merchants Fund [2][67][71]. Group 1: Investment Philosophy - Liu Wanfeng's investment philosophy is heavily influenced by Seth Klarman's book "Margin of Safety," which stresses the necessity of risk management and maintaining a margin of safety to survive extreme market conditions [2][67]. - The concept of long-term compounding is highlighted, indicating that short-term decisions can jeopardize long-term gains, thus discipline in trading is crucial [3][68]. - Liu emphasizes the need for patience and long-term commitment in fixed income products, prioritizing steady returns over short-term gains [7][68]. Group 2: Team Structure and Decision-Making - The fixed income team at China Merchants Fund operates under a collective decision-making mechanism, ensuring thorough discussions and research support for investment decisions [4][5][6]. - The team consists of nearly 40 professionals, including 22 fund managers with an average experience of over 11 years, organized into specialized groups to enhance collaborative efforts [6][41]. - This structured approach has allowed the team to navigate market volatility effectively, as demonstrated in 2016 and post-2020 adjustments in the real estate bond market [5][40]. Group 3: Performance Metrics - As of the end of 2024, Liu manages eight funds with a total scale of approximately 35 billion, with a notable performance record of achieving positive returns for the flagship fund over ten consecutive years [7][8]. - The flagship product, "Zhaoshang Shuangzhai LOF," has maintained a maximum drawdown of no more than 2% in each complete year from 2016 to 2024, showcasing its stability [7][8]. - Liu's strategy involves adjusting the portfolio based on macroeconomic cycles, ensuring that the right types of bonds are held at the appropriate times [7][8]. Group 4: Market Outlook and Strategy - Liu forecasts a challenging bond investment environment characterized by low yields and high volatility, necessitating a more refined approach to investment strategies [11][56]. - The current macroeconomic landscape is described as a new phase where policy and investor behavior significantly influence the bond market, with a focus on maintaining stability amid low yields [20][21][22]. - Liu suggests that in the current market, attention should be directed towards the balance of policies and investor behavior, as these will dictate bond market fluctuations [21][22]. Group 5: Risk Management and Future Considerations - Liu advocates for a cautious approach to investment, emphasizing the importance of risk control and the need to avoid overexposure to market speculation [9][11][49]. - The article discusses the potential for passive investment strategies to gain traction in the current market, as they offer lower costs and clearer risk profiles compared to active management [51][53]. - Liu expresses the belief that the bond market will require a rational perspective moving forward, particularly in light of recent market adjustments and the need for careful analysis of macroeconomic indicators [62][56].

Core Viewpoint - April is a critical observation period for fundamental and policy changes, with key focuses on potential risks of fundamental fluctuations, the marginal easing of central bank attitudes, and the further developments following the implementation of tariffs by the Trump administration [1] Macro: Economic Cycle Position and State - The current Chinese economy exhibits three significant characteristics: 1. The phase of maximum downward pressure has likely passed, with the inventory cycle indicating that 2022-2023 was the most challenging period, and the low point of this cycle is expected to be at the end of 2023 to early 2024 [2] 2. Moving away from the peak of downward pressure does not imply a rapid rebound, as recent cycles indicate that the economy remains in a state of fluctuation [2] 3. Short-term economic recovery faces obstacles due to external trade pressures and slow recovery in real estate investment and consumption [2] Policy: Important Observation Window for Central Bank Attitude - April serves as a crucial observation window for the central bank's stance, focusing on liquidity management and potential hawkish signals, especially in light of significant bond issuance pressure [3] - The speed and proportion of government bond issuance in April will be vital for determining economic conditions in the second quarter [3] Overseas: Subtle Changes in Sentiment - The overall performance of the U.S. economy shows marginal changes, with a slight increase in unemployment and resilient labor market conditions, while retail sales have improved from negative growth [4] - Investor sentiment is changing rapidly, highlighting the uncertainty surrounding Trump’s policies [4] Major Asset Strategy Judgments - A-shares are experiencing a style switch, driven by clearer fundamental outlines and cyclical changes in market sentiment, leading to a shift in market style [5] - Bond market rates are expected to remain volatile, with the central bank's liquidity stance influencing bond yields [6] - Commodity prices, particularly copper and gold, are shifting focus back to fundamentals as tariff expectations have been priced in [7]