Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Economics - **Focus**: Economic policies and outlook in China, particularly regarding stimulus measures and the upcoming Five-Year Plan Core Insights and Arguments 1. **No Near-term Stimulus**: The Politburo meeting decided to maintain cyclical policy continuity and will hold the 4th Plenary Session in October to discuss the 15th Five-Year Plan [8] 2. **Policy Prioritization**: The focus is on targeted social welfare and urban upgrades rather than broad stimulus measures. Supply-side reforms may be adjusted but not aggressively pursued [2][3] 3. **Economic Performance**: The Politburo noted robust economic performance in the first half of the year despite ongoing challenges, advocating for "more optimized implementation" of fiscal and monetary policies [3] 4. **Gradual Anti-involution Implementation**: The tone of the meeting was measured, indicating a gradual approach to the anti-involution initiative rather than a drastic shift [4][8] 5. **Support for Consumption**: New policies aim to support consumption through improved social welfare provisions, although fiscal support for service consumption remains limited [5][8] 6. **Urban Renewal Initiatives**: Urban renewal is highlighted as a policy lever to mitigate housing market downturns and bolster infrastructure investment demand [8] Additional Important Content 1. **Future Clarity on Policies**: More clarity on proactive rebalancing and stimulus signals is expected in the fall, particularly as growth may slow in the coming months [2][3] 2. **Supportive Capital Market Tone**: The Politburo maintained a supportive stance towards the capital market, aiming to consolidate the ongoing recovery [8] 3. **Focus on Social Welfare**: The emphasis on social welfare aligns with broader initiatives such as fertility subsidies and free preschool education, indicating a shift towards long-term structural support [8]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints - LGFVs continued to consolidate, and investors turned to USD issues for higher absolute yields as lower-yielding CNH issues lacked catalysts to tighten further [2] - China's PMI indicates waning economic momentum, and the policy easing window may not open until Q4 2025. China may have stronger motivation to advance economic rebalancing after a potential trade deal with the US [3][11] - Moody's changed the rating outlook of SK Hynix to positive from stable and affirmed its Baa2 rating, and SK Hynix is favored for its strong global market position and solid operating cash flow [7][9] Summary by Relevant Catalogs Trading Desk Comments - VNKRLE obtained up to RMB869mn loans from SZ Metro, and YLLGSP further bought back YLLGSP 5 1/8 05/20/26. VNKRLE 27 - 29 were 0.4 - 0.5pts lower, and YLLGSP 26 was 0.1pt higher [1] - In China IG, MEITUA/WB/XIAOMI 30s ended with 1 bp tighter to 1bp wider. New CB 3 - tranche CNH issues dropped 0.2 - 0.375pts from RO, and there was better buying on the 30yr papers [1] - In HK, HYSAN/NANFUN were unchanged to 0.5pt higher, whilst MTRC perps remained unchanged [1] - For TW lifers, CATLIF 34/39 were 1bp tighter to 2bps wider amid PB selling, NSINTW was unchanged, and SHIKON widened 1bp amid two - way flows [1] - For Thailand banks, BBLTB sub curve tightened 2 - 4bps and KBANK tightened 2bps [1] - In KR, DAESEC 26/29 widened 1bp and NHSECS 28 - 30 was 2bps tighter to 1bp wider. LGENSO curve retraced 2 - 4bps while HYNMTR/HYUELE tightened 1 - 4bps amid PB/AM buying [1] - FRN space is in good demand across Asia and EU bank papers. Investors in the region remained better buyers of Japanese and Yankee AT1s while there were selling flows from London [1] Morning Market Update - The new UBS 6.6 Perp was unchanged from RO at par, the new UBS 7 Perp was 0.1pt higher from RO at par. HAOHUA widened 1 - 2bps. DAESEC tightened 1 - 2bps. STANLN/MIZUHO/SUMIBK FRNs tightened 1 - 2bps. ANZ/CBAAU T2 widened 1 - 2bps [3] Macro News Recap - S&P (-0.37%), Dow (-0.74%) and Nasdaq (-0.03%) were lower on Thursday. US latest initial jobless claims was +218k, lower than the market expectation of +222k. US Jun'25 Core PCE price index was +2.8% yoy, higher than the market expectation of +2.7%. UST yield was largely unchanged on Thursday, 2/5/10/30 yield at 3.94%/3.96%/4.37%/4.89% [6] Desk Analyst Comments - Moody's changed the rating outlook of SK Hynix to positive from stable and affirmed its Baa2 rating, expecting its adjusted EBITDA to increase and adjusted debt/EBITDA to improve in FY25 - 26 [7] - SK Hynix overtook Samsung to become the world's leading memory chipmaker by revenue in Q2 2025, driven by higher demand for AI chips [8] China Economy Analysis - Manufacturing PMI further contracted with fading export front - loading. New order and export order indexes dropped, production moderated, and deflation pressure eased [11][12] - Non - manufacturing PMI softened as both service and construction activities moderated. Service PMI edged down, and construction PMI dipped [11][13] Offshore Asia New Issues - Offshore Asia New Issues (Priced): Chengdu & Europe Industrial Zone issued 156 USD mn in 3 - year bonds with a 6.95% coupon and unrated [17] - Offshore Asia New Issues (Pipeline): No new issues pipeline today [18] News and Market Color - There were 66 credit bonds issued onshore yesterday with an amount of RMB35bn. Month - to - date, 2,097 credit bonds were issued with a total amount of RMB2,143bn raised, representing a 12.7% yoy increase [19] - China new home sales fell 24% yoy in Jul'25 as stimulus impact faded [19] - Various company financial results and events were reported, such as Adani Enterprises' 1QFY26 EBITDA fall, MGM China's 2Q25 net revenue rise, etc. [19]