Summary of Conference Call Notes Industry Overview - The focus is on the non-bank financial sector, particularly the insurance and brokerage industries, with a positive outlook on the capital market's stability and growth potential [1][2]. Key Points and Arguments 1. **Policy Support**: The chairman, Wu Qing, emphasized the commitment to consolidating the positive momentum in the capital market [3]. 2. **Market Stability**: The trading pressure is easing, enhancing the market's inherent stability and preventing significant fluctuations. The previous disruptions faced by brokerage and insurance sectors are being resolved, leading to a more stable market environment [3]. 3. **Market Performance**: - In 2026, the A-share market's daily trading volume reached nearly 30 trillion yuan, a 73% increase compared to 2025. - In January 2026, there were 4.92 million new A-share accounts opened, reflecting a month-on-month increase of 89% and a year-on-year increase of 213% [3]. 4. **Non-Bank Sector Outlook**: The non-bank financial sector is expected to perform well, with insurance showing improved profitability and a new cycle of growth established [3]. 5. **Asset Side**: Stable long-term interest rates and a favorable capital market environment are expected to enhance performance flexibility in the investment sector [4]. 6. **Liability Side**: The "opening red" (a term for the first sales of the year) sets a positive tone for new business throughout the year, with the insurance sector benefiting from the trend of bank deposits moving to insurance products, which are seen as a safe financial alternative [4]. 7. **Brokerage Sector**: - In a slow bull market, there is a significant mismatch between fundamentals and valuations, presenting high cost-performance ratios for investments. - Listed brokerages that have released earnings forecasts show a year-on-year net profit growth of approximately 60%. Leading brokerages are experiencing steady growth, while some smaller firms are showing notable performance elasticity [6]. - The overall price-to-book (PB) ratio for the brokerage industry is only 1.36 times, indicating a significant lag in valuation compared to fundamentals, suggesting a high cost-performance ratio at current levels [6]. Recommendations - Suggested companies to focus on include China Ping An, China Life, New China Life, and Guotai Junan [7]. Risk Factors 1. Significant fluctuations in the equity market could impact net profits. 2. Policy implementation may not meet expectations. 3. The growth rate of new business value (NBV) in the life insurance sector may fall short of expectations. 4. Risks associated with interest rate declines beyond expectations could lead to margin loss [8].

Market Overview - The market is currently experiencing a phase of consolidation after a period of overheating, primarily due to expectations of tightening overseas liquidity and pressure from cyclical sector corrections [1][12] - As these factors may gradually diminish, the market is expected to enter significant time windows such as the Spring Festival and the Two Sessions [1][12] Investment Insights - **Yang Jianhua**: Focus on sectors with performance realization. The market in January exhibited extreme volatility, and with a lack of new investment themes, a period of observation is anticipated. Consistent expectations have led to short-term fluctuations, but sectors with enduring narratives and performance potential may still present investment opportunities [2][13] - **Liao Hanbo**: Attention on AI and cyclical sectors. The market remains heated, with no immediate downward risks observed. However, rapid sector rotation complicates investment decisions. Future focus will be on new investment opportunities in AI and marginal changes in cyclical sub-sectors [3][14] - **Tan Xiaobing**: Short-term market may experience fluctuations. February presents a rare performance vacuum, and with a lengthy Spring Festival, some funds may realize profits early. The market is likely to show a fluctuating pattern, emphasizing stock selection [4][15] - **Long Yufei**: Continued optimism for new medical technologies. The ongoing wave of technological innovation in the medical and consumer sectors is expected to create investment opportunities, particularly in AI healthcare, brain-computer interfaces, surgical robots, AI innovative drugs, and innovative medical devices [5][17] - **Liang Furui**: Seeking new logic in innovative pharmaceuticals. The previously dominant BD trading model in the innovative drug sector has weakened, necessitating a new consensus to guide future market trends. Key directions include core value return, performance explosion from certain overseas platform-type innovative drug companies, and a positive cycle in BD trading [6][18] - **Chen Ziyang**: Potential differentiation in cyclical stocks. Strong performance in metals, oil, and chemicals is driven by positive economic expectations and liquidity support. High short-term price volatility necessitates finding a new balance between expectations and actual demand, with anticipated differentiation among cyclical stocks [7][19] - **Zhang Jian**: Focus on domestic consumption and price-increasing varieties. Key investment directions include domestic consumption resilience, price-increasing commodities like metals and chemicals, non-bank sectors benefiting from strong insurance growth, and the overseas expansion of Chinese manufacturing [8][20] - **Su Junyan**: Optimism for the spring market continuation. The strong inflow of funds at the beginning of the year is expected to sustain a bullish spring market, with manageable external risks and limited impact from the Federal Reserve's balance sheet reduction narrative [10][21] - **Lin Hao**: Structural market trends likely to continue. With new capital entering the market, there is sustained interest in technology growth sectors, cyclical sectors benefiting from "anti-involution," and commercial aerospace. The market may trend towards decoupling, with a focus on self-sufficiency and resource value reassessment [11][22]

Group 1 - China Ping An increased its stake in China Life by 14.2 million H-shares, surpassing a 9% holding, marking a rare large-scale investment in the same industry in recent years, signaling strong confidence in the insurance sector's fundamentals and valuation recovery potential [1] - Donghai Securities noted that the "New Year" sales for insurance in 2026 are robust, driven by the demand for wealth management and improved competitiveness of dividend insurance, with leading insurers expected to maintain a strong growth momentum in new premium income [1] - The insurance sector's allocation ratio increased from 1.03% to 2.13%, with a 23.42% rise in the insurance index in the fourth quarter, indicating a positive market trend and institutional interest in the sector [1] Group 2 - The non-bank financial sector remains under-allocated by 3.08 percentage points, with expectations of increased capital inflow and investment opportunities in financial technology, insurance valuation recovery, third-party payment companies, and expanded IPOs in the tech sector [2] - The Hong Kong Stock Connect non-bank ETF (513750) has seen a strong performance, with a 1.79% increase in the index and a 2.22% rise in the ETF, reflecting positive market sentiment and significant inflows [2] - The non-bank ETF reached a new high in scale at 38.118 billion yuan and 20.511 billion shares, with continuous net inflows over the past eight days, indicating strong investor interest [2] Group 3 - The Hong Kong Stock Connect non-bank ETF is the first and only ETF tracking the non-bank index, with insurance accounting for nearly 70% of its weight, highlighting the sector's dominance in the index [3] - The ETF includes up to 50 listed companies in the non-bank financial theme, reflecting the overall performance of this sector within the Hong Kong Stock Connect framework [3]

Investment Rating - The report maintains a "Positive" investment rating for the non-bank financial sector [7] Core Insights - The non-bank sector has shown weak overall performance this week, but some companies have disclosed high profit growth forecasts for 2025. The China Securities Regulatory Commission (CSRC) has issued guidelines to promote the return to fundamentals in the public offering securities investment fund industry, which is expected to drive long-term stable development [2][4] - The market trading volume has decreased, yet remains at historically high levels. The report suggests monitoring the sector's future performance [4] - In the insurance sector, the third-quarter reports have confirmed the logic of deposit migration, increased equity allocation, and improved new policy costs. The certainty of ROE improvement has increased, and valuations are expected to accelerate recovery [4] - The report highlights the increasing cost-effectiveness of overall allocations and ongoing revaluation in the sector [4] Summary by Sections Non-Bank Sector Performance - The non-bank financial index decreased by 1.5% this week, with an underperformance of 0.8% relative to the CSI 300, ranking 29th out of 31 sectors [5] - Year-to-date, the non-bank financial index has decreased by 1.6%, underperforming the CSI 300 by 3.1% [5] Market Overview - The average daily trading volume in the two markets was 27,988.78 billion yuan, down 19.23% week-on-week, with a daily turnover rate of 2.68%, down 68.47 basis points [5] - The leverage capital scale has rebounded, with a margin balance of 2.72 trillion yuan, up 0.23% [5] Insurance Sector Insights - The cumulative insurance premium income for November 2025 reached 57,629 billion yuan, a year-on-year increase of 7.56% [23] - Life insurance income was 41,472 billion yuan, up 9.06% year-on-year, while property insurance income was 16,157 billion yuan, up 3.88% [24] Company Recommendations - The report recommends companies with stable profit growth and dividend rates, including Jiangsu Jinzu, China Ping An, and China Pacific Insurance, due to their strong business models and market positions [4] - Additional recommendations include New China Life, China Life, Hong Kong Exchanges and Clearing, CITIC Securities, Dongfang Caifu, Tonghuashun, and Jiufang Zhitu Holdings based on performance elasticity and valuation levels [4]

Group 1 - The index reflects the overall performance of the securities industry within the Hong Kong Stock Connect, including stocks from asset management, custodial banks, investment banks, and brokerage firms [2] - As of the midday close, the index has increased by 5.5% [2] - The index's price-to-book ratio (PB) stands at 1.0 times [2] Group 2 - The valuation metric used for the index is applicable to companies with significant fixed assets and stable book values, or those with strong profitability [4] - The historical price-to-book ratio of the index indicates that the current ratio is higher than the historical average, suggesting a potential overvaluation [4] - The index was first published on July 15, 2013, and has been used to track the performance of the securities sector [4]

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - The convertible bond market continues to rise with equities, and although the upward space for convertible bond valuations is decreasing, they still have potential under the influence of optimistic equity sentiment. The current positions of major institutional convertible bonds are generally low, and the absolute funds have mostly been realized. Relative funds are cautious about increasing convertible bond positions, with most maintaining their positions to keep their rankings, and the bond - selection style is relatively aggressive. There are no short - term negative factors in the domestic market, and the impact of the interim reports is limited. In the current market, the slow - bull characteristics are significant, and there is still potential for off - market funds in convertible bonds. One can appropriately ignore short - term fluctuations, adhere to the mid - line bullish view, and add positions at important support levels if there are callbacks [6][9]. - The A - share market continued to rise last week due to the combined influence of internal and external factors. The Fed's latest statement was dovish, the market was optimistic about the US interest rate cut, the Sino - US chip competition ignited the sentiment of the domestic chip industry, and the release of DeepSeek - V3.1 promoted the domestic chip sector. At the same time, the non - bank sector continued to strengthen under the bull market expectation [6][9]. - The judgment on the future market remains unchanged. The market will fluctuate and strengthen. The driving force of this bull market comes from the improvement of grass - roots governance ability and technological competitiveness, which has increased public confidence [9]. 3. Summary by Directory 3.1 Convertible Bond Viewpoint: Low Convertible Bond Positions, Unchanged Bullish Logic - The convertible bond market continues to rise with equities, with increasing trading volume. The median absolute price reaches 135 yuan, and the premium rate per 100 yuan also hits a new high. Although the upward space for convertible bond valuations is decreasing, they still have potential under the influence of optimistic equity sentiment. The current positions of major institutional convertible bonds are generally low, and the bond - selection style is relatively aggressive [9]. - There are no short - term negative factors in the domestic market, and the impact of the interim reports is limited. The current market shows significant slow - bull characteristics, and there is still potential for off - market funds in convertible bonds. One can appropriately ignore short - term fluctuations, adhere to the mid - line bullish view, and add positions at important support levels if there are callbacks [9]. - The A - share market continued to rise last week due to the combined influence of internal and external factors. The Fed's dovish statement, the Sino - US chip competition, and the release of DeepSeek - V3.1 promoted the domestic chip sector, and the non - bank sector continued to strengthen under the bull market expectation [9]. 3.2 Convertible Bond Review: Sustained Equity Momentum, Convertible Bonds Rising Accordingly 3.2.1 Market Overall Performance: Equity Volume Increases and the Technology Sector Leads the Rise - From August 18th to August 22nd, the market continued to rise significantly. The Shanghai Composite Index rose 3.49%, the Shenzhen Component Index rose 4.57%, the CSI 300 rose 4.18%, the CSI 1000 rose 3.45%, the ChiNext Index rose 5.85%, the STAR 50 rose 13.31%, and the Beijing Stock Exchange 50 rose 8.40%. All industries closed up, with communication, electronics, and comprehensive industries leading the gains. The average daily trading volume increased significantly from 4861.19 billion yuan to 2.58 trillion yuan [12]. - The top ten convertible bonds in terms of gains last week were Dongshi, Jintong, Huayi, Weice, Dongjie, Shuiyang, Songyuan, Xinzhi, Bo23, and Songsheng Convertible Bonds. In terms of trading volume, last week, Outong, Dayuan, Saili, Dongjie, Huahong, Jintong, Zhongqi, Chongda, Tianlu, and Xinzhi Convertible Bonds were relatively active [12]. 3.2.2 Convertible Bonds Reach New Trading Highs, High - Price and Medium - High - Rating Convertible Bonds Lead the Rise - Last week, convertible bonds significantly followed the rise, with the average daily trading volume continuing to rise to 94.06 billion yuan. The CSI Convertible Bond Index rose 2.83%, the parity center rose 2.5% to 112.1 yuan, and the conversion premium rate center rose 0.4% to 21.7%. In terms of style, high - price and medium - high - rating convertible bonds performed well last week, while AAA - rated and double - low convertible bonds were relatively weak [17].

Core Insights - The non-bank sector is experiencing a transformation driven by policy initiatives, which are expected to enhance revenue growth in the securities and insurance industries [2]. Group 1: Securities Industry - The implementation of the "Implementation Opinions on Strengthening Self-Regulation to Promote High-Quality Development of the Securities Industry" is likely to expand wealth management, investment banking, and asset management businesses, benefiting overall industry revenue growth [2]. - As of July 14, the CSI 800 Securities and Insurance Index component stocks showed mixed performance, with Guolian Minsheng leading with a 6.70% increase [1]. Group 2: Insurance Industry - The notification on guiding insurance funds for long-term stable investments is expected to increase the allocation of high-dividend stocks and long-term government bonds, enhancing the investment returns of insurance companies and improving industry valuations [2]. - The CSI 800 Securities and Insurance ETF has seen a significant increase in net value, rising by 49.53% over the past year, indicating strong investor interest [1]. Group 3: Market Performance - As of June 30, the top ten weighted stocks in the CSI 800 Securities and Insurance Index accounted for 63.35% of the index, highlighting the concentration of investment in these key players [3]. - The CSI 800 Securities and Insurance ETF has experienced a growth of 81 million shares over the past year, reflecting robust demand in the non-bank sector [1].