Investment Rating - The industry rating is "Outperform the Market" [3][25]. Core Viewpoints - The report emphasizes the ongoing effects of the Federal Reserve's interest rate cuts, suggesting that the growth trend in margin financing is likely to continue. The market is currently influenced by various factors including public fund assessment regulations, capacity reduction policies, and U.S. tariff policies, leading to fluctuations in the non-bank financial sector, particularly in brokerage and multi-financial sectors [1][11]. - The insurance sector is experiencing adjustments due to new public fund regulations and is expected to see a shift in product pricing, with major companies like China Life and Ping An Life adjusting their product rates by the end of August [2][13]. - The report recommends focusing on specific stocks within the brokerage sector, such as Xinda Securities and China Galaxy, and highlights companies with strong comprehensive capabilities and those benefiting from ETF developments, like Huatai Securities and CICC [1][12]. Summary by Sections 1. Main Points - The report covers the performance of major indices, with the CSI 300 Index at 4104.97 points (up 1.23%), the insurance index at 1304.49 points (up 0.25%), and the brokerage index at 6869.85 points (up 0.8%) [8]. - The report suggests that the non-bank financial sector may experience a volatile trend, influenced by macroeconomic narratives and overseas economic data [1][11]. 2. Key Investment Portfolio 2.1 Insurance Sector - The insurance sector is viewed as having attractive valuation recovery potential, with recommendations for companies like China Ping An, China Taiping, and New China Life due to their stable operations and strong growth [14]. 2.2 Brokerage Sector - The report highlights mid-sized securities firms benefiting from innovation and market conditions, recommending companies like East Money and Zhejiang Securities. It also suggests focusing on leading firms with diversified revenue structures, such as Huatai Securities and China Galaxy, which have strong earnings outlooks [15][16].

Investment Rating - The industry investment rating is "Outperform the Market" [3][21]. Core Viewpoints - The report highlights that geopolitical risks and market volatility are increasing, particularly due to the ongoing Israel-Iran conflict and U.S.-China trade negotiations, which may suppress market risk appetite [1][9]. - The non-bank financial sector, excluding insurance, has shown relative stagnation, while the banking sector has experienced significant volatility [1][9]. - The report suggests that financial weight sectors may benefit from an increase in market risk appetite and related policies, with a focus on the upcoming political bureau meeting in July [1][9]. Summary by Sections 1. Main Points - The report covers the performance of major indices, with the CSI 300 Index at 3864.18 points (-0.25%), the insurance index at 1229.00 points (2.06%), and the brokerage index at 6189.87 points (0.82%) [7]. - The insurance sector's investment scale is expected to grow steadily, with a notable increase in bond and stock allocations [2][10]. 2. Key Investment Portfolio 2.1 Insurance Sector - The insurance sector is currently undervalued, presenting opportunities for valuation recovery. Recommended stocks include China Ping An, China Pacific Insurance, and New China Life Insurance [11]. 2.2 Brokerage Sector - Focus on mid-sized securities firms benefiting from innovation and market conditions, such as East Money and Zheshang Securities. Large firms like Huatai Securities and China International Capital Corporation are also recommended due to their strong performance and low valuations [12].

1. Report Industry Investment Rating There is no information provided in the report regarding the industry investment rating. 2. Core Viewpoints of the Report - The equity market is expected to continue the pattern of index fluctuations and internal theme rotation, waiting for the progress of the technology industry to drive a new round of upward technology market. The adjustment of credit ratings in the convertible bond market does not cause panic for now, but if large - balance convertible bonds are downgraded, it may trigger market valuation compression and present a good opportunity to increase convertible bond positions. It is recommended to select bonds from three aspects: performance - driven, event - catalyzed, and dividend and defensive [2][3][16]. 3. Summary by Related Catalogs Market Trends (2025/6/3 - 2025/6/6) Stock Market - The equity market oscillated and rose last week. Driven by events such as NVIDIA's record - high FY1Q26 revenue and Broadcom's announcement of the start of Tomahawk 6 switch chip deliveries, the TMT sector performed well. The non - ferrous metals sector also had a high increase due to the rise in gold prices, while the previously strong new consumption and dividend sectors declined relatively. The Shenwan primary industries with the highest increases were communication (+5.27%), non - ferrous metals (+3.74%), electronics (+3.60%), comprehensive (+2.89%), and computer (+2.79%), while those with the lowest performance were household appliances (-1.79%), food and beverage (-1.06%), transportation (-0.54%), and coal (-0.50%) [7][8]. Bond Market - After crossing the end of the month, the capital market was balanced and loose. The news that the central bank would conduct large - scale outright reverse repurchase operations and that treasury bond trading operations were expected to restart in a timely manner was positive for the bond market. However, the global stock market rally and a slight increase in market risk appetite suppressed the bond market. Overall, the bond market oscillated slightly upward. The 10 - year treasury bond yield closed at 1.65% on Friday, down 1.65bp from the previous week [8]. Convertible Bond Market - Most convertible bond issues rose last week. The CSI Convertible Bond Index increased by 1.08% for the whole week, the median price increased by 1.00%, and the arithmetic average parity calculated increased by 2.35%. The overall market conversion premium rate decreased by 1.19% compared with the previous week. In terms of individual bonds, Jinling (football concept), Yitian (computing power concept), Jingyuan (computing power concept), Huati (virtual power plant concept), and Tianyang (financial IT) convertible bonds led the gains, while Zhongqi (lithography machine concept), Jingda (controllable nuclear fusion concept), and Dongshi (driving training) convertible bonds led the losses. The total trading volume of the convertible bond market last week was 256.298 billion yuan, with an average daily trading volume of 64.075 billion yuan, significantly higher than the previous week [8][11][13]. Outlook and Strategies (2025/6/9 - 2025/6/13) - With the suspension of reciprocal tariffs and positive macro - policies supporting economic resilience, the PMI data in May generally improved, and export orders significantly recovered compared to April. However, the changing attitude of Trump means that there is still significant uncertainty in Sino - US trade relations. After excluding the impact of share conversion, the market still has a high demand for convertible bonds due to the low bond market interest rates. The theme rotation in the convertible bond market is obvious. Currently, the adjustment of credit ratings has a limited impact, but if large - balance convertible bonds are downgraded, it may be a good opportunity to increase positions. It is recommended to use the inconsistency of driving factors between the dividend and technology sectors to reduce portfolio volatility and select bonds from three aspects: performance - driven, event - catalyzed, and dividend and defensive [2][3][16]. Valuation Overview - As of June 6, 2025, in the equity - biased convertible bonds, the average conversion premium rates of convertible bonds with parities in the ranges of 80 - 90 yuan, 90 - 100 yuan, 100 - 110 yuan, 110 - 120 yuan, 120 - 130 yuan, and above 130 yuan were 39.71%, 27.63%, 19.2%, 13.2%, 9.11%, and 4.79% respectively, at the 81%/62%, 73%/46%, 68%/42%, 66%/41%, 63%/41%, and 67%/32% percentile values since 2010/2021. The average YTM of debt - biased convertible bonds with parities below 70 yuan was 0.32%, at the 10%/2% percentile values since 2010/2021. The average implied volatility of all convertible bonds was 30.64%, at the 52%/29% percentile values since 2010/2021. The difference between the implied volatility of convertible bonds and the long - term actual volatility of the underlying stocks was - 17.23%, at the 13%/18% percentile values since 2010/2021 [17]. Primary Market Tracking - No convertible bonds were issued or listed last week (2025/6/3 - 2025/6/6). As of the announcements on June 6, there were no announcements of convertible bond issuances or listings in the coming week (2025/6/9 - 2025/6/13). Last week, Shenglan Co., Ltd. passed the listing committee review, and there were no new companies approved for registration by the exchange, accepted by the exchange, passed by the general meeting of shareholders, or with board of directors' proposals. Currently, there are 85 convertible bonds to be issued, with a total scale of 131.39 billion yuan, including 10 that have been approved for registration, with a total scale of 15.89 billion yuan, and 5 that have passed the listing committee review, with a total scale of 3.68 billion yuan [26].