Core Points - The 2025 Policy Address by Hong Kong Chief Executive John Lee emphasizes economic development and aligning with national strategies [1] - Specific measures include accelerating the development of the Northern Metropolis, industrial innovation, and reinforcing Hong Kong's status as an international financial center [1] Development of Northern Metropolis - The Northern Metropolis is identified as a new economic engine for Hong Kong, with plans to establish a "Northern Development Committee" led by John Lee [2] - The government will create dedicated legislation to facilitate the development of the Northern Metropolis, including funding channels for park companies and streamlined cross-border logistics [2] - The first phase of the Hong Kong Science and Technology Innovation Cooperation Zone is complete, with major industries like life sciences and AI tenants moving in [2] Industrial Development and Innovation - Emphasis on artificial intelligence (AI) development, including a HKD 3 billion funding plan to attract international research talent [4] - Plans to establish the "Hong Kong AI Research Institute" by 2026 with a budget of HKD 1 billion to promote AI research and application [4] - The life sciences sector is set to grow, with initiatives to attract pharmaceutical companies for clinical trials and the establishment of an "International Clinical Trial Academy" [5] Reinforcing Hong Kong's Financial Center Status - The government aims to support tech companies in raising funds through the stock market and improve listing mechanisms [6] - Initiatives to enhance the bond market include creating a centralized platform for managing various assets and promoting offshore Chinese government bonds [6][7] - Plans to establish an international gold trading market and enhance commodity trading, including carbon trading [7][8] Stock Market Performance - Following the Policy Address, the Hang Seng Index rose by 1.41%, reaching a new high [9] - The Hong Kong stock market has seen significant recovery in 2025, with the Hang Seng Index up over 33% year-to-date and new stock issuance increasing dramatically [10][11] - The average daily trading volume in the Hong Kong stock market has surged by 118% year-on-year [11]

Core Viewpoint - Hong Kong will continue discussions with mainland institutions to implement offshore government bond futures and expand the variety of interest rate derivatives under the swap connect, while promoting the development of over-the-counter derivatives and cross-border RMB repurchase business with the mainland [1] Group 1 - The Hong Kong government aims to encourage more companies to issue bonds in Hong Kong, increasing market engagement from the Hong Kong Securities and Futures Commission, the Monetary Authority, and the Stock Exchange [1]

Report Information - Report Title: "Large Class Asset Morning Report" - Report Date: September 17, 2025 - Author: Macro Team of the Research Center [2] Global Asset Market Performance 10 - Year Treasury Yields of Major Economies - Yields and Changes: On September 16, 2025, the 10 - year Treasury yields of the United States, the United Kingdom, France, etc. were 4.029, 4.638, 3.488 respectively. There were various changes in the latest, weekly, monthly, and yearly periods. For example, the latest change in the US was -0.010, and the yearly change was 0.319 [3]. 2 - Year Treasury Yields of Major Economies - Yields and Changes: On September 16, 2025, the 2 - year Treasury yields of the United States, the United Kingdom, Germany, etc. were 3.560, 3.960, 2.000 respectively. There were also different changes in different time - spans [3]. Dollar Exchange Rates Against Major Emerging - Market Currencies - Exchange Rates and Changes: On September 16, 2025, the dollar - to - Brazilian real exchange rate was 5.297, and there were percentage changes in the latest, weekly, monthly, and yearly periods. For instance, the latest change was -0.37%, and the yearly change was -5.40% [3]. Stock Indices of Major Economies - Index Values and Changes: On September 16, 2025, the S&P 500 was 6606.760, the Dow Jones Industrial Average was 45757.900, etc. There were percentage changes in the latest, weekly, monthly, and yearly periods. For example, the latest change in the S&P 500 was -0.13%, and the yearly change was 22.16% [3]. Credit Bond Indices - Index Changes: The latest, weekly, monthly, and yearly changes of credit bond indices such as the US investment - grade credit bond index, the euro - zone investment - grade credit bond index, etc. were presented. For example, the latest change in the US investment - grade credit bond index was 0.04%, and the yearly change was 4.72% [3] Stock Index Futures Trading Data Index Performance - Closing Prices and Changes: The closing prices of A - shares, CSI 300, SSE 50, etc. were 3861.87, 4523.34, 2947.82 respectively, with corresponding percentage changes [4]. Valuation - PE Ratios and Changes: The PE (TTM) ratios of CSI 300, SSE 50, and others were 14.09, 11.80, 34.32 respectively, with环比 changes [4]. Risk Premium - Risk Premium and Changes: The risk premiums (1/PE - 10 - year interest rate) of S&P 500 and German DAX were -0.39 and 2.50 respectively, with环比 changes [4]. Fund Flows - Fund Flow Values: The latest values and 5 - day average values of fund flows in A - shares, the main board, etc. were provided. For example, the latest value of A - share fund flow was -305.93 [4]. Trading Volumes - Trading Volumes and Changes: The latest trading volumes of the Shanghai and Shenzhen stock markets, CSI 300, etc. were 23414.02, 6137.28, etc., with环比 changes [4]. Main Contract Basis and Premium/Discount - Basis and Premium/Discount: The basis and percentage of premium/discount of IF, IH, IC were given. For example, the basis of IF was -6.54, and the percentage was -0.14% [4] Treasury Bond Futures Trading Data Closing Prices and Changes - Closing Prices and Percentage Changes: The closing prices of Treasury bond futures T00, TF00, T01, TF01 were 108.000, 105.795, 107.680, 105.680 respectively, with corresponding percentage changes [5]. Fund Interest Rates - Interest Rates and Daily Changes: The R001, R007, and SHIBOR - 3M interest rates were 1.4778%, 1.4998%, 1.5530% respectively, with daily changes in basis points [5]

Core Viewpoint - The market's expectation for the Federal Reserve to restart the interest rate cut cycle in 2025 is rising, driven by concerns over the U.S. deficit exceeding 6% of GDP and debt repayment pressures, which have led analysts to suggest reducing U.S. Treasury holdings. However, this shift in expectation is now propelling U.S. Treasuries to outperform in the global sovereign bond market, ranking first in yields [1]. Group 1 - In 2025, the return rate of U.S. Treasuries, measured in local currency, is projected to reach 5.8%, making it the highest among the 15 major bond markets globally [3]. - Despite the significant yield advantage of U.S. Treasuries over other global sovereign bonds, the yield has dropped to a three-year low [3]. - The U.S. dollar index has declined by approximately 3% since the beginning of the year, allowing investors in overseas sovereign bonds to benefit from additional returns due to currency conversion, making the apparent returns from overseas assets higher than those from U.S. Treasuries [3]. Group 2 - Traders expect the Federal Reserve to cut rates three times by the end of the year, with the first cut likely occurring during the upcoming meeting on Wednesday [3]. - The yield advantage of U.S. Treasuries over other global sovereign bonds has narrowed from over 200 basis points in January to 120 basis points [3]. - Due to the depreciation of the dollar, Italian government bonds have emerged as the best-performing major bond market in 2025, with actual returns for dollar investors reaching 16%, while Spanish government bonds yielded 15% [3].

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the bond market, focusing on interest rate trends and investment strategies in the context of current market conditions [1][4][5]. Core Insights and Arguments - **Interest Rate Predictions**: The bond market shows signs of stabilization, but overall sentiment remains weak. The interest rate prediction model indicates a high probability (approximately 85%) of rising rates in the future, suggesting that current rebounds should be viewed as trading opportunities rather than a signal to chase gains [1][5][6]. - **10-Year Government Bond Yield**: It is anticipated that the yield on 10-year government bonds may rise by 20-30 basis points (BP) from the bottom, potentially reaching a high of around 1.85%-1.9% [1][5]. - **Market Sentiment**: A systemic decline in bond rates requires a significant reversal in sentiment, which is currently unlikely in the short term. The bond market is expected to remain volatile but not enter a bear market [1][6]. - **September Funding Pressure**: There is an expected increase in funding pressure in mid to late September due to a large volume of maturing certificates of deposit (CDs), although the tax period's impact is relatively minor [7][8]. - **Investment Strategy**: A "barbell" strategy is recommended for constructing bond portfolios, allowing for flexibility in adjusting long and short positions. It is advised to avoid large holdings in credit bonds with maturities over five years, while small positions in six-year subordinated capital bonds are acceptable [10][11]. Additional Important Insights - **Short-Term Instruments**: For short-term investments, the value of CDs is currently high, with rates close to 1.7%. It is suggested to prefer CDs over high-grade short-term credit bonds [9][8]. - **Local Government Bonds**: Investment strategies for local government bonds include focusing on long-term products with high issuance rates and considering arbitrage opportunities between primary and secondary markets [13][14]. - **Floating Rate Bonds**: For floating rate bonds with maturities of three years or less, attention should be given to specific bonds like 25 Longfa 7,809, while waiting for better pricing on 250,214 [19][20]. - **Arbitrage Opportunities**: There are potential arbitrage opportunities in the pricing of government bonds, particularly between 7-year and 10-year contracts, which could yield risk-free profits [21]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state of the bond market and strategic recommendations for investors.

虽然可转债今年表现抢眼，并为发行方提供了前所未有的融资便利，分析人士提醒，投资者应保持谨 慎。随着估值走高和零票息交易增多，未来风险可能上升。从长期来看，可转债作为股票与债券的混合 工具，历史上在追踪股市的同时，提供了显著优于债券市场的回报，有望继续成为多元化投资组合的重 要组成部分。 美国银行证券可转债研究主管Michael Youngworth表示："2025年可转债是领先的资产类别之一，表现超 过股票和高收益债。其受益于高Beta股票的上涨。"高Beta股票波动性较大，通常在市场上涨时涨幅更 快。今年市场表现的主要贡献者包括Bloom Energy(BE.US)、MP Materials(MP.US)和波音(BA.US)等公司 发行的可转债。波音去年发行的可转优先股自推出以来价格上涨约40%，受益于波音股价大幅反弹。此 外，阿里巴巴(BABA.US)作为最大海外发行方之一，今年股价和可转债价格均大幅上涨，公司近期完成 了32亿美元可转债发行。 目前，美国可转债市场规模约3250亿美元，但散户投资者参与度依然偏低。复杂的产品结构成为个人投 资者的主要障碍，且大多数理财顾问对该市场不够熟悉。市场主要由机构投 ...

Core Viewpoint - The article discusses the movements in German government bond yields, highlighting changes in various maturities and the yield spread between 2-year and 10-year bonds [1] Group 1: Yield Movements - The yield on the 10-year German government bond increased by 0.1 basis points to 2.693%, trading within a range of 2.679% to 2.718% during the day [1] - The 2-year German bond yield decreased by 1.5 basis points to 2.002%, with a trading range of 2.025% to 2.002% [1] - The yield on the 30-year German bond rose by 1.5 basis points to 3.275% [1] Group 2: Yield Spread - The yield spread between the 2-year and 10-year German bonds increased by 1.762 basis points, reaching +68.914 basis points [1]

Group 1: Investment Ratings - No investment ratings for the industry are provided in the report. Group 2: Core Views - As of September 15, 2025, private enterprise real - estate bonds and industrial bonds have higher valuation yields and spreads compared to other varieties. The yields of non - financial and non - real - estate industrial bonds and real - estate bonds have generally increased compared to the previous week [3][8]. - Among financial bonds, urban and rural commercial bank capital supplementary instruments and leasing company bonds have higher valuation yields and spreads. Financial bond yields have generally risen compared to the previous week [4][8]. - In the urban investment bond market, public urban investment bonds in Jiangsu and Zhejiang have relatively low weighted average valuation yields, while those in Guizhou, Yunnan, and Gansu have higher yields or spreads. Private urban investment bonds in coastal provinces such as Shanghai, Zhejiang, Guangdong, and Fujian have relatively low weighted average valuation yields, and those in Guizhou have higher yields [2][14][23]. Group 3: Summary by Category Urban Investment Bonds - **Public Urban Investment Bonds**: The weighted average valuation yields in Jiangsu and Zhejiang are below 2.65%. Bonds with yields over 4.5% are in prefecture - level and district - county - level areas of Guizhou. Yields in Yunnan, Gansu and other regions also have higher spreads. Compared to last week, the overall yields have increased, with an average increase of over 3BP for 2 - 3 - year and 3 - 5 - year varieties [2][14]. - **Private Urban Investment Bonds**: The weighted average valuation yields in coastal provinces such as Shanghai, Zhejiang, Guangdong, and Fujian are below 3%. Bonds with yields higher than 4% are in prefecture - level areas of Guizhou. Yields in Yunnan, Gansu and other regions also have higher spreads. Compared to last week, the overall yields have increased, with an average increase of 3.8BP for 2 - 3 - year varieties [23]. Industrial Bonds - **Non - financial and Non - real - estate Industrial Bonds**: Yields have basically increased. The yields of 2 - 3 - year private enterprise public perpetual bonds and private non - perpetual bonds have increased significantly [3][8]. - **Real - estate Bonds**: All yields have increased, with the adjustment of varieties over 1 year being stronger than that of short - term bonds. The yields of 1 - 2 - year state - owned enterprise private and private enterprise public non - perpetual bonds have increased by about 5BP [3][8]. Financial Bonds - **Leasing Company Bonds**: There has been some adjustment, with relatively large increases in the yields of 1 - 2 - year perpetual and 2 - 3 - year private perpetual varieties [4]. - **Bank Sub - debt**: It is the most volatile bond type among financial bonds. The yields of secondary capital bonds over 1 year and perpetual bonds over 2 years have significantly adjusted [4]. - **Commercial Financial Bonds**: They have strong defensive attributes, with all varieties having an adjustment within 3BP, and the yield of state - owned bank varieties within 1 year has decreased by 1BP [4]. - **Securities Company Bonds**: The performance varies by term. Some varieties within 2 years have stable yields, while the yields of 2 - 3 - year and 3 - 5 - year public sub - debt have increased by around 5BP [4].

Group 1 - The core viewpoint of the articles indicates that U.S. Treasury yields are mostly declining as investors digest strong retail sales data and anticipate a nearly certain interest rate cut by the Federal Reserve this week [1][2] - The U.S. retail sales in August showed a robust growth of 0.6%, marking the third consecutive month of strong performance, surpassing the Dow Jones forecast of 0.3% [2] - The Federal Open Market Committee (FOMC) is expected to lower the benchmark interest rate by 25 basis points (BPs), with market expectations indicating a cumulative rate cut of 75 BPs by the end of the year [2][3] Group 2 - The U.S. Treasury is set to issue two bonds totaling $98 billion, including $85 billion in 6-week short-term debt and $13 billion in 20-year bonds [3] - In the European market, bond yields are generally rising, with the 10-year German bond yield increasing by 1 BP to 2.705% [3] - In the Asia-Pacific market, Japanese bond yields are mostly declining, with the 20-year bond yield rising by 3.3 BPs to 2.678% [3]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The pressure on the bond market has been persistent recently, mainly due to three factors: the strengthening year - on - year growth of M1 signaling an economic recovery, the return of market risk appetite and the stability of the A - share market leading to capital diversion, and the "anti - involution" policy expectations driving up commodity prices and intensifying inflation expectations. The current one - year rolling stock - bond spread is - 0.6762%, approaching the + 2 standard deviation range (- 0.5408%) [5][60]. - The redemption pressure on public bond funds may ease temporarily, and there may be opportunities for the narrowing of the spread between 5 - 10 - year China Development Bank (CDB) bonds and treasury bonds. The market has already priced in the potential impact of the new public bond fund sales fee policy, causing the spread between CDB bonds and treasury bonds, especially in the 5 - 10 - year segment, to widen significantly. Since the policy is still in the consultation stage, the redemption pressure on public bond funds is expected to ease, and the spread may narrow [5][64]. - In the short term, be wary of the temporary impact caused by institutional profit - taking at the end of the quarter. Institutions that have increased their fixed - income asset allocations in the past three years are under significant profit - assessment pressure this year. The selling behavior at the end of the quarter, especially in September, may disrupt the market. Also, pay attention to the Federal Reserve's interest - rate meeting this week [6][65]. 3. Summary According to Relevant Catalogs 3.1 Weekly Bond Market Review - From September 8th to 12th, treasury bond yields first rose and then fell. Policy expectations and institutional behavior jointly dominated the market rhythm. The market was initially affected by the new public bond fund sales fee policy, and then gradually stabilized due to factors such as the central bank's liquidity support, clear expectations of interest - rate bond supply, and stable financial data [11]. - As of September 12th, treasury bond yields generally increased. The 1 - year, 10 - year, and 30 - year treasury bond yields rose by 0.41bp, 4.10bp, and 7.15bp respectively compared to the previous Friday. The yields of CDB bonds also increased, with the 10 - year CDB bond yield rising by 15.53bp [16]. - Most of the key term spreads of treasury bonds widened. The 10Y - 1Y spread of treasury bonds widened by 3.69bp to 46.70bp, and the 30Y - 10Y spread widened by 3.05bp to 31.70bp. For CDB bonds, the 10Y - 1Y spread widened by 11.88bp to 45.04bp, while the 30Y - 10Y spread narrowed by 8.88bp to 23.21bp [22]. 3.2 Bond Market Data Tracking 3.2.1 Funding Situation - From September 8th to 12th, the central bank's net open - market operation injection was 1,961.00 billion yuan. The central bank conducted 12,645.00 billion yuan in reverse repurchases, with 10,684.00 billion yuan maturing. Next week, 12,645.00 billion yuan of reverse repurchases will mature, a larger amount than the previous week [24]. - Funding rates generally increased. R001, DR001, R007, and DR007 rose by 3.7bp, 4.83bp, 2.51bp, and 3.25bp respectively compared to the previous week. The SHIBOR rates also increased. As of September 12th, the overnight, 1 - week, 2 - week, 1 - month, and 3 - month SHIBOR rates rose by 5.10bp, 3.30bp, 5.70bp, 1.20bp, and 0.30bp respectively compared to September 5th [25][35]. - The bill rate remained low, and the bill rate continued to be inverted with the SHIBOR rate. The difference in funding costs between non - bank institutions and banks narrowed, and the phenomenon of funding stratification eased [25][38]. 3.2.2 Supply Side - From September 8th to 12th, the total issuance of interest - rate bonds increased, while the net financing decreased. The total issuance scale of interest - rate bonds was 16,522.02 billion yuan, an increase of 6,280.41 billion yuan from the previous week. The net financing scale was 1,403.59 billion yuan, a decrease of 3,178.30 billion yuan from the previous week [40]. - The issuance scale of government bonds increased, and the net financing also increased. Treasury bonds were issued at 5,663.70 billion yuan, an increase of 2,173.00 billion yuan from the previous week, and local government bonds were issued at 3,016.72 billion yuan, an increase of 2,082.81 billion yuan from the previous week [43]. - The issuance scale of negotiable certificates of deposit (NCDs) increased, the net financing decreased, and the issuance rate increased. The total issuance of NCDs was 7,841.60 billion yuan, an increase of 2,024.60 billion yuan from the previous week, and the net financing was - 4,680.10 billion yuan, a decrease of 7,196.60 billion yuan from the previous week [46]. 3.3 Next Week's Outlook and Strategy 3.3.1 Next Week's Outlook - The supply pressure of treasury bonds will decrease next week. The planned issuance of treasury bonds is 2,770.00 billion yuan, and the planned issuance of local government bonds is 1,885.19 billion yuan [58]. - The central bank's net open - market operation injection was 1,961.00 billion yuan from September 8th to 12th. Although there will be tax payments next week, considering that September is not a major tax - paying month and the central bank's attitude towards liquidity support, the central level of funding rates is expected to remain stable [59]. 3.3.2 Bond Market Strategy - Pay attention to the opportunity of the narrowing spread between CDB bonds and treasury bonds. Given that the new public bond fund sales fee policy is still in the consultation stage, the redemption pressure on public bond funds is expected to ease, and the spread between CDB bonds and treasury bonds may narrow [64]. - Be wary of the temporary impact caused by institutional profit - taking at the end of the quarter. Institutions may sell bonds to realize floating profits in their OCI accounts at the end of the quarter, which may disrupt the market [65]. 3.4 Global Asset Classes - The U.S. Treasury yield curve flattened. As of September 12, 2025, the yields of 1Y, 2Y, 3Y, 5Y, 10Y, and 30Y U.S. Treasuries changed by + 1bp, + 5bp, + 4bp, + 4bp, - 4bp, and - 10bp respectively compared to September 5th, and the 10Y - 2Y spread narrowed by 9bp to 50bp [69]. - The U.S. dollar index weakened slightly, and the central parity rate of the U.S. dollar against the Chinese yuan decreased slightly. The prices of gold, silver, and crude oil generally strengthened. As of September 12, 2025, the COMEX gold futures price rose by 1.26%, the COMEX silver futures price rose by 2.81%, the WTI crude oil price rose by 1.13%, and the Brent crude oil price rose by 1.84% compared to September 5th [69][73].