1. Report Industry Investment Rating - Not provided in the report 2. Core View of the Report - The market will shift from "expectation-driven" to "profit-driven," entering the "selective alpha" stage. Stocks without performance support may remain weak, while sectors benefiting from policies and with improved performance may have sustainable opportunities. In the long term, the stock index trend will return to the domestic fundamentals and policies, and it is expected to resume an upward trend after the geopolitical risks ease [2] 3. Summary by Relevant Catalogs 3.1 Stock Index Futures Market - **IF Contracts**: The previous day's closing prices of IF contracts (current month, next month, next quarter, and far quarter) were 4658.40, 4642.00, 4591.00, and 4520.00 respectively, with price drops of -26.80, -25.20, -29.40, and -25.00. The trading volumes were 57171.00, 6223.00, 25918.00, and 8779.00, and the open interest changes were -5846.00, 1860.00, 3457.00, and 2469.00 [1] - **IH Contracts**: The previous day's closing prices of IH contracts were 2966.40, 2964.40, 2956.00, and 2918.60, with price drops of -17.40, -18.00, -19.80, and -18.80. The trading volumes were 24548.00, 3286.00, 10650.00, and 3605.00, and the open interest changes were 16.00, 842.00, 1152.00, and 844.00 [1] - **IC Contracts**: The previous day's closing prices of IC contracts were 8301.00, 8256.40, 8127.20, and 7969.80, with price drops of -70.00, -71.80, -86.80, and -89.00. The trading volumes were 70893.00, 9754.00, 43053.00, and 17844.00, and the open interest changes were -2274.00, 3006.00, 933.00, and 3624.00 [1] - **IM Contracts**: The previous day's closing prices of IM contracts were 8277.20, 8211.40, 8043.00, and 7839.20, with price drops of -40.00, -40.00, -55.20, and -57.40. The trading volumes were 105033.00, 14197.00, 50139.00, and 18452.00, and the open interest changes were -2695.00, 3373.00, 3404.00, and 3495.00 [1] - **Inter-Month Spreads**: The current inter-month spreads of IF, IH, IC, and IM contracts were -16.40, -2.00, -44.60, and -65.80 respectively, compared to the previous values of -19.00, -0.40, -43.20, and -68.00 [1] 3.2 Stock Index Spot Market - **Index Performance**: The previous day's values of the CSI 300, SSE 50, CSI 500, and CSI 1000 indices were 4687.56, 2985.34, 8359.47, and 8335.91 respectively, with percentage changes of -0.36%, 0.12%, -0.52%, and -0.33% [1] - **Industry Performance**: Among different industries, the energy sector had a 2.90% increase, while the raw materials, industrial, and optional consumption sectors had decreases of -0.48%, -0.64%, and -0.02% respectively. The main consumption, pharmaceutical, real estate and finance, and information technology sectors had changes of 0.08%, -0.77%, 0.01%, and -0.73% respectively. The telecommunications and public utility sectors had changes of -1.87% and 1.15% respectively [1] 3.3 Futures-Spot Basis - **IF Contracts**: The basis between IF contracts (current month, next month, next quarter, and far quarter) and the CSI 300 index were -17.50, -36.50, -83.30, and -157.90 respectively, compared to the previous values of -10.76, -28.36, -73.76, and -141.76 [1] - **IH Contracts**: The basis between IH contracts and the SSE 50 index were -1.54, -1.94, -8.34, and -47.14, compared to the previous values of -0.44, -1.44, -8.84, and -46.44 [1] - **IC Contracts**: The basis between IC contracts and the CSI 500 index were -58.47, -103.07, -232.27, and -389.67, compared to the previous values of -43.33, -86.53, -203.93, and -364.93 [1] - **IM Contracts**: The basis between IM contracts and the CSI 1000 index were -58.71, -124.51, -292.91, and -496.71, compared to the previous values of -50.53, -118.53, -274.33, and -477.33 [1] 3.4 Other Domestic and Overseas Indexes - **Domestic Indexes**: The previous day's values of the Shanghai Composite Index, Shenzhen Component Index, Small and Medium - Sized Board Index, and ChiNext Index were 4129.10, 14374.87, 8813.80, and 3317.52 respectively, with percentage changes of -0.10%, -0.63%, -0.26%, and -0.96% [1] - **Overseas Indexes**: The previous day's values of the Hang Seng Index, Nikkei 225, S & P 500, and DAX Index were 25716.76, 54452.96, 6672.62, and 23589.65 respectively, with percentage changes of -0.70%, -1.04%, -1.52%, and -0.21% [1] 3.5 Macroeconomic Information - The Fourth Session of the 14th National People's Congress closed on the afternoon of March 12, approving the government work report, the "15th Five - Year Plan" outline, and other important documents, and passing relevant laws [2] - The US will launch two new trade investigations on the "excess industrial capacity" of 16 major trading partners including China, which may lead to new tariffs. China opposes such political manipulation, and the EU will respond firmly if the US violates trade agreements [2] - Iran's Supreme Leader issued a statement, stating that Iran will not give up revenge and will take strategic measures. Meanwhile, Iran's Deputy Foreign Minister said that Iran has allowed some ships to pass through the Strait of Hormuz [2] - International oil prices soared on March 12. The US government plans to issue a temporary exemption for the "Jones Act" to ease the fuel supply pressure. The US Energy Secretary said that the oil price is unlikely to rise to $200 [2] - The central bank governor said that the central bank will continue to implement a moderately loose monetary policy to create a suitable monetary and financial environment for the economy [2] 3.6 Industry Information - From January to March 9, 82 OpenClaw vulnerabilities were collected. The National Industrial Information Security Development Research Center issued a risk warning, and the China Artificial Intelligence Industry Development Alliance will compile a risk management guide. Some banks have received regulatory risk warnings [2] - The global semiconductor industry is brewing a new round of price hikes. Texas Instruments, NXP, and Infineon will raise the prices of some products starting from April 1, with Texas Instruments' products having a maximum increase of 85% and Infineon's mainstream products having an expected increase of 5% - 15% [2] - Some airlines in China have canceled flights to Dubai again. The earliest ticket sales date is April 1 [2] - The Ministry of Industry and Information Technology plans to carry out a special action on "millisecond computing" in 50 regions to promote the development of computing - network integration [2] 3.7 Stock Index Views - The three major US stock indexes declined, and the stock index fell in the previous trading session. The coal sector led the gains, while the national defense and military industry sector led the losses. The market turnover was 2.46 trillion yuan. The margin trading balance increased by 5.397 billion yuan to 2.642689 trillion yuan on March 10 [2] - As the annual and first - quarter reports of listed companies are gradually disclosed, industry leaders with strong performance certainty will attract funds, driving the market to shift from "expectation - driven" to "profit - driven" [2]

Core Insights - The ongoing tensions in the Middle East are disrupting global air freight supply chains, particularly affecting the transport of goods between Asia and Europe [2][6] - Major airlines such as Qatar Airways and Emirates are significantly reducing flight operations due to restrictions and damage from recent attacks, leading to a decrease in cargo capacity [4][7] Group 1: Impact on Air Freight Operations - The number of flights at Dubai International Airport has dropped to approximately 39% of its normal schedule following an attack on February 28 [4] - Doha International Airport's flight operations have plummeted to just 3% of normal since March 8, with most flights suspended except for repatriation and limited cargo [4] - The disruption is causing delays in the shipment of various products, including clothing from Inditex, which is stuck in local airports [6] Group 2: Rising Costs and Alternative Routes - Air freight rates from Asia to Europe are increasing, with the TAC index reporting a rise of over 10% for routes from Vietnam, Bangkok, Taiwan, and India as of March 9 [6] - Airlines are now avoiding Middle Eastern airspace, leading to longer flight routes and increased operational costs [6] - Japan Airlines has ceased its Doha-Haneda route and is now using direct flights from Europe to Japan for transporting goods, indicating a shift in logistics strategies [7] Group 3: Cargo Volume Rankings - In 2024, FedEx leads global air transport turnover with 181 billion ton-kilometers, followed by Qatar Airways at 152 billion and Emirates at 123 billion [5] - Doha Airport is projected to handle 2.61 million tons of cargo in 2024, ranking 8th globally, while Dubai is expected to manage 2.17 million tons, ranking 11th [5]

Core Viewpoint - The Middle East situation has led to a significant increase in aviation fuel prices, prompting Cathay Pacific to raise its passenger fuel surcharge by over 100% despite having 30% of its crude oil hedged [1] Group 1: Fuel Surcharge Adjustments - Cathay Pacific will increase the passenger fuel surcharge for short-haul flights from HKD 142 to HKD 290, an increase of 104% [1] - The surcharge for medium-haul flights will rise from HKD 264 to HKD 541, reflecting an increase of approximately 105% [1] - Long-haul flight surcharges will increase from HKD 569 to HKD 1164, also showing a rise close to 105% [1] Group 2: Monitoring and Future Actions - The company stated it will regularly review the fuel surcharge levels and closely monitor the trends in aviation fuel prices [1]

Group 1 - Cathay Pacific Airways (00293) opened down 3% and is currently trading at HKD 12.6 with a transaction volume of HKD 1.8 billion [1] - Swire Pacific announced a placement of 2.52% of Cathay Pacific's shares, totaling 153 million shares, at a price of HKD 11.74 per share, representing a discount of approximately 9.6% from the closing price on March 12 [1] - The net proceeds from the placement are expected to be around HKD 17.89 billion, which will be used for general working capital purposes, and the company anticipates a gain of approximately HKD 3.65 billion from the placement [1] Group 2 - Cathay Pacific announced an increase in passenger fuel surcharges effective March 18, with increases exceeding 100% for short, medium, and long-haul flights [1] - The new surcharges will raise short-haul flights from HKD 142 to HKD 290, medium-haul from HKD 264 to HKD 541, and long-haul from HKD 569 to HKD 1,164 [1] - The airline stated that the increase in fuel surcharges is due to a nearly 100% rise in aviation fuel prices since March, influenced by recent developments in the Middle East [1] Group 3 - Bank of America Securities maintained a "underperform" rating on Cathay Pacific, indicating that the margins related to passenger and fuel have not yet been reflected in the stock price [1] - The target price set by Bank of America for Cathay Pacific is HKD 10.9 [1]

Market Overview - Major U.S. stock indices experienced declines, with the Dow Jones Industrial Average down 739.42 points (-1.56%), Nasdaq down 404.15 points (-1.78%), and S&P 500 down 103.18 points (-1.52%) [1] - Large tech stocks saw collective drops, with Tesla falling over 3%, Facebook down more than 2%, and Apple nearly 2% [1] - Semiconductor stocks also faced declines, with the Philadelphia Semiconductor Index down 3.43% and Intel dropping over 5% [1][2] Semiconductor Sector - Key semiconductor companies reported significant losses, including Intel down 5.69%, GlobalFoundries down 5.67%, and TSMC down 5% [2][3] - The overall semiconductor sector is under pressure, reflecting broader market trends [2][3] Banking and Airline Sectors - Banking stocks fell across the board, with JPMorgan down over 1%, Goldman Sachs down more than 4%, and Citigroup down over 3% [3] - Airline stocks also showed weakness, with Boeing down over 4% and Southwest Airlines down more than 7% [3] Chinese Stocks - The Nasdaq Golden Dragon China Index declined by 1.02%, with notable drops in companies like Hesai Technology and iQIYI, while XPeng Motors and Tencent Music saw gains [4] Commodity Prices - Gold prices showed slight increases, with spot gold up 0.2% to $5088 per ounce, while silver fluctuated before rebounding [4] - Crude oil prices experienced volatility, with WTI crude briefly surpassing $98 per barrel before dropping below $96 [4][5] Inflation and Economic Outlook - Rising oil prices are expected to impact U.S. inflation, with predictions of a potential increase in CPI by 0.3-0.4% if oil prices remain between $80-$100 per barrel [7][8] - Fitch Ratings adjusted its Brent crude oil price forecast for 2026 from $63 to $70 per barrel, anticipating significant economic impacts if prices exceed $100 [8] - Goldman Sachs has delayed its expectations for Federal Reserve rate cuts, now predicting cuts in September and December instead of June [9]

Core Viewpoint - Swire Pacific Limited A (00019) and Swire Pacific Limited B (00087) announced a share placement agreement to sell Cathay Pacific Airways shares at a price of HKD 11.74 per share, representing a discount of approximately 9.6% from the closing price of HKD 12.99 on March 12, 2026 [1] Group 1 - The share placement will involve the sale of approximately 2.52% of the total issued shares of Cathay Pacific Airways, excluding treasury shares [1] - The expected net proceeds from the placement are approximately HKD 1.789 billion, which will be used for general working capital purposes [1] - Following the placement, the company's ownership in Cathay Pacific Airways will decrease from approximately 47.64% to about 45.12%, assuming no change in the total number of issued shares [1] Group 2 - The company remains confident and committed to Cathay Pacific Airways despite the reduction in ownership percentage [1]

Core Viewpoint - Swire Pacific Limited A (00019) and Swire Pacific Limited B (00087) announced a share placement agreement to sell Cathay Pacific Airways shares at a price of HKD 11.74 per share, representing a discount of approximately 9.6% from the closing price of HKD 12.99 on March 12, 2026 [1] Group 1 - The company expects to raise approximately HKD 1.789 billion from the placement, which will be used for general working capital purposes [1] - The placement will reduce the company's stake in Cathay Pacific from approximately 47.64% to about 45.12% after the completion of the placement, assuming no change in the total number of issued shares [1] - The company remains confident and committed to Cathay Pacific despite the reduction in ownership percentage [1]

Core Insights - Cathay Pacific reported a net profit of HKD 10.828 billion for 2025, a year-on-year increase of 9.5%, driven by increased capacity, stable passenger volume, and strong cargo demand [1][3] Financial Performance - The airline's passenger revenue reached HKD 72.454 billion, up 15.8% year-on-year, while cargo revenue was HKD 24.279 billion, a 1.2% increase [3] - The group's subsidiary, Hong Kong Express, reported a passenger revenue of HKD 6.394 billion, growing by 6.7% [3] - However, revenue yield declined across the board, with Cathay Pacific's yield down 10.3%, cargo yield down 4.6%, and Hong Kong Express down 15.3% [3] - Hong Kong Express incurred a loss of HKD 999.6 million, with factors such as changing customer preferences and operational challenges impacting profitability [3] Operational Challenges - The average fuel price has surged approximately twofold since early 2023, significantly impacting operational costs [5][6] - Cathay Pacific's fuel consumption increased by 18.8% year-on-year, and the company is implementing a fuel hedging strategy to mitigate price risks [6][7] Strategic Initiatives - Cathay Pacific plans to enhance its investment in the Chinese mainland, expanding its route network and upgrading service offerings [7][8] - The group aims to diversify its route network, particularly in mainland China and Southeast Asia, to reduce reliance on single routes [4] - Cathay Pacific is set to introduce over 100 new aircraft, with significant investments exceeding HKD 100 billion planned for fleet expansion [8] Market Positioning - The group has increased its presence in the Greater Bay Area, with nearly one-third of its revenue now coming from this region [4][8] - Cathay Pacific is focusing on enhancing customer experience by incorporating more Chinese elements into its in-flight services [7][8]

Core Viewpoint - Cathay Pacific has achieved a net profit of HKD 10.828 billion for the fiscal year 2025, marking a 9.5% year-on-year increase, driven by increased capacity, stable passenger volume, and strong cargo demand [1][3] Financial Performance - The group recorded a profit attributable to shareholders of HKD 9.996 billion [3] - Passenger revenue reached HKD 72.454 billion, up 15.8% year-on-year [3] - Cargo revenue was HKD 24.279 billion, reflecting a 1.2% increase [3] - Hong Kong Express, a wholly-owned subsidiary, reported passenger revenue of HKD 6.394 billion, a 6.7% increase [3] - However, revenue yield declined across the board: Cathay Pacific down 10.3%, cargo down 4.6%, and Hong Kong Express down 15.3% [3] - Hong Kong Express incurred a loss of HKD 999.6 million, widening from previous losses [3] Operational Challenges - The rise in oil prices due to geopolitical tensions has significantly impacted operational costs, with fuel prices increasing approximately twofold since January [6][8] - The group plans to maintain a fuel hedging mechanism, with a hedging ratio of 30% for the current year [8] - The suspension of certain Middle Eastern routes due to geopolitical issues has led to increased demand for flights from Hong Kong to Europe [6][8] Strategic Initiatives - Cathay Pacific plans to increase investment in the Chinese mainland, expanding its route network and upgrading service offerings [1][9] - The group added five new destinations in 2025, increasing its total to 24 in mainland China [9] - Hong Kong Express aims to diversify its route network, particularly in mainland China and Southeast Asia, to reduce reliance on single routes [5] Fleet Expansion - The group is set to invest over HKD 100 billion, with plans to introduce more than 100 new aircraft in the coming years [10] - The first new generation long-haul aircraft, Boeing 777-9, is expected to be delivered in 2027 [10] Future Outlook - The group has reported profits exceeding HKD 30 billion for three consecutive years since 2023, marking a significant recovery from previous losses [11] - 2026 is identified as a pivotal year for the group, marking the beginning of a new five-year plan [11]

Core Viewpoint - Cathay Pacific reported a record revenue of HKD 116.766 billion for the year 2025, marking an 11.9% year-on-year increase, with a net profit of HKD 10.828 billion, up 9.5% year-on-year, showcasing resilience in a challenging industry environment [1] Revenue Breakdown - Cathay Pacific's passenger segment generated revenue of HKD 72.454 billion in 2025, a 15.8% increase year-on-year, with passenger capacity up 25.8% and total passengers transported reaching 28.9 million, a 26.5% increase [2] - The cargo segment achieved revenue of HKD 24.279 billion, a 1.2% increase year-on-year, with cargo capacity growing by 8.3% and cargo volume increasing by 9.5% to 1.677 million tons [2] - Cathay Dragon, a subsidiary, reported revenue of HKD 6.394 billion, a 6.7% increase year-on-year, with passenger capacity up 31.9% and passenger volume rising by 29.7% to 7.912 million, although it incurred a loss of HKD 999.6 million [2] Market Performance - The highest passenger load factor was in the European market at 89.2%, followed by the Americas at 87.5%, benefiting from demand and flight restrictions between mainland China and the U.S. [2] - The South Asia, Middle East, and Africa markets saw a significant capacity increase of 42.4%, with Riyadh also increasing to daily flights due to high demand [3] Strategic Initiatives - Cathay Pacific plans to invest over HKD 100 billion in fleet renewal, cabin upgrades, lounge renovations, and digital innovations to enhance customer experience and solidify its position as a key international aviation hub [3] - The company has committed to adding 20 new destinations in 2025, expanding its network to over 100 global destinations, including 24 in mainland China [3] Future Outlook - For 2026, Cathay Pacific anticipates a 10% increase in passenger capacity, alongside a corresponding rise in cargo capacity, despite challenges such as geopolitical conflicts and rising costs [4] - The company plans to receive 8 new narrow-body aircraft this year and introduce a new business class product on regional flights, with the Boeing 777-9 aircraft expected to enter service in 2027 [4] Stock Market Reaction - Following the earnings report, Cathay Pacific's stock price surged, closing at HKD 13.17 per share, a 4.36% increase, with intraday gains exceeding 5% [4]