Core Viewpoint - China has been actively reducing its holdings of U.S. Treasury bonds, selling $25.7 billion in July, bringing its total holdings down to $730.7 billion, the lowest level since 2009 [1][3]. Group 1: China's Actions - In 2022, China sold $173.2 billion in U.S. Treasury bonds, followed by $50.8 billion in 2023, and an additional $57.3 billion by July 2024 [3]. - The recent large-scale sale of over $200 billion indicates China's firm stance on reducing its U.S. bond holdings due to concerns over the reliability of U.S. economic and fiscal policies [3][5]. Group 2: U.S. Economic Concerns - The stability of the U.S. economy and government finances is crucial for maintaining confidence in the dollar and U.S. Treasury bonds [5]. - Concerns about a potential government shutdown due to budget disagreements between Democrats and Republicans have been raised, with a deadline approaching on September 30 [7]. Group 3: Global Financial Trends - The share of the dollar in global foreign exchange reserves has declined from over 70% in 2000 to 57.7% currently, indicating a downward trend in dollar dominance [13]. - Countries are increasingly seeking alternatives to the dollar for transactions, as evidenced by initiatives like the INSTEX system in the EU and currency swap agreements between China and the European Central Bank [13]. Group 4: Geopolitical Implications - The reduction of U.S. Treasury holdings by major buyers like China sends a significant signal to the U.S., indicating a shift in financial power dynamics [17]. - The use of financial instruments as a means of political leverage has transformed the nature of international relations, with countries exploring ways to reduce reliance on the dollar [15].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The bond market yield curve remained steep this week, with the 10Y maturity yield fluctuating around 1.85% and the 1Y Treasury bond maturity yield at 1.40%. The term spreads of 30Y - 10Y and 10Y CDB - 10Y Treasury bonds widened, and the curve steepening continued [3][11]. - There are two "certainties" in the current bond market. First, driven by large - banks' continuous buying of short - term bonds, the short - end is more stable, and the expectation of the central bank buying bonds in the fourth quarter is rising. Second, the anti - decline of credit bonds is expected to continue under the loose funds [3][12]. 3. Summary According to the Directory 3.1 This Week's Institutional Behavior Review: Two "Certainties" in the Bond Market 3.1.1 Yield Curve - Treasury bond yields generally increased. The 1Y yield decreased by 1bp, while the 3Y, 5Y, 7Y, 10Y, 15Y, and 30Y yields increased by about 1bp, 1bp, 5bp, 1bp, 2bp, and 2bp respectively. For CDB bonds, short - end yields increased, and mid - end yields decreased. The 1Y yield increased by 5bp, the 3Y yield increased by 4bp, and the 5Y yield decreased by about 3bp [14]. 3.1.2 Term Spreads - For Treasury bonds, the interest rate spread inversion deepened, and the long - end spreads narrowed. For CDB bonds, the interest rate spread inversion deepened, and the short - end spreads narrowed [16][17]. 3.2 Bond Market Leverage and Funding Situation 3.2.1 Leverage Ratio - From September 15 to September 19, 2025, the leverage ratio decreased weekly. As of September 19, it was about 106.91%, down 0.12pct from last Friday and 0.17pct from Monday [21]. 3.2.2 Average Daily Turnover of Pledged Repurchase - From September 15 to September 19, the average daily turnover of pledged repurchase was about 7.2 trillion yuan, a decrease of 0.33 trillion yuan from last week. The average daily overnight turnover accounted for 87.64%, a decrease of 0.79pct [27][28]. 3.2.3 Funding Situation - From September 15 to September 19, bank - related funds' net lending first decreased and then increased. The main funds' borrowers were securities firms, and money market funds' net lending increased fluctuantly. DR007 and R007 first increased and then decreased. 1YFR007 and 5YFR007 increased fluctuantly [32][33]. 3.3 Duration of Medium - and Long - Term Bond Funds 3.3.1 Median Duration - This week (September 15 - September 19), the median duration of medium - and long - term bond funds was 2.68 years (de - leveraged) and 2.8 years (leveraged). On September 19, the de - leveraged median duration decreased by 0.01 years compared with last Friday, and the leveraged median duration increased by 0.02 years [44]. 3.3.2 Duration by Bond Fund Type - The median duration of interest - rate bond funds (leveraged) decreased to 3.55 years, down 0.12 years from last Friday. The median duration of credit bond funds (leveraged) increased to 2.51 years, up 0.03 years from last Friday [47]. 3.4 Comparison of Category Strategies 3.4.1 Sino - US Yield Spread - The short - end spread widened, and the medium - and long - end spread narrowed. The 1Y, 2Y, and 3Y spreads widened by 5bp, 5bp, and about 3bp respectively, while the 5Y, 7Y, 10Y, and 30Y spreads narrowed [52]. 3.4.2 Implied Tax Rate - The short - end implied tax rate widened, and the mid - end narrowed. As of September 19, the 1Y, 3Y, and 30Y spreads of CDB - Treasury bonds widened, while the 5Y, 7Y, 10Y, and 15Y spreads narrowed [53]. 3.5 Changes in Bond Lending Balance - On September 19, the lending concentration of the second - most active 10Y CDB bond increased, while that of the active 10Y Treasury bond, the second - most active 10Y Treasury bond, the active 10Y CDB bond, and the active 30Y Treasury bond decreased. Except for large banks, all other institutions saw a decline [54].

Group 1 - The market's pricing expectations for "anti-involution" have strengthened since mid-September, leading to some recovery in the bond market, but significant adjustment pressure remains due to macro factors and limited buying power [1] - The current bond market adjustment since July differs from the one in the first quarter, as the central bank's liquidity tightening in Q1 forced financial institutions to reduce leverage, causing significant pressure on large banks' liabilities [3] - The yield curve of government bonds has shown a pronounced bear steepening characteristic in the current adjustment, with long bonds, especially ultra-long bonds, experiencing larger adjustments compared to the relatively stable performance of medium and short-term bonds [3] Group 2 - Since the third quarter, there has been a marginal improvement in the domestic economy, with easing U.S.-China trade tensions and a reduction in market risk aversion, but the "anti-involution" policy has created three negative effects on the bond market: supply contraction, rising prices, and increased risk appetite [5] - Recent trading pressures from funds have been significant, with a focus on selling ultra-long government bonds while buying short-term bonds, leading to a rapid decline in the duration of bond funds [5] - The performance of major institutions indicates a potential return of institutional buying power around the 10-year and 30-year government bond yields, but the sustainability of this trend remains to be observed [8]

Core Insights - The asset management industry in Beijing's Xicheng District has seen significant growth, with assets under management exceeding 20 trillion yuan, accounting for over 50% of the city's total and more than 1/8 of the national total [1][2] - The establishment of the Beijing Stock Exchange has further enhanced the asset management ecosystem, with over 270 listed companies and a total market capitalization exceeding 900 billion yuan [3] - Xicheng District aims to become a leading asset management hub by promoting diversification, internationalization, and professional service enhancement [4] Group 1 - The asset management sector in Xicheng District is crucial in connecting investor wealth needs with the financing demands of the real economy [1] - Since the implementation of new asset management regulations in 2019, Xicheng has attracted 171 asset management institutions, representing over 50% of newly introduced financial institutions [2] - The district's asset management industry encompasses various financial sectors, including banking, securities, insurance, funds, and trusts, creating a comprehensive asset management system [2] Group 2 - The Beijing Stock Exchange has attracted over 800 million qualified investors and has seen a significant increase in the number of professional investors from various fields [3] - The bond market ecosystem in Xicheng is robust, with nearly 80% of national bond issuance and registration handled by local institutions [3] - Xicheng District is focused on enhancing its financial services, particularly in technology-driven equity asset allocation and ESG asset management product development [3] Group 3 - The district's goal is to build a modern asset management highland, characterized by leading industry scale, openness, and a complete ecological system [4] - Future initiatives will include optimizing the asset management industry structure and accelerating the introduction of foreign asset management institutions [4] - The district aims to enhance its professional service system and attract more financial talent to support its growth objectives [4]

Core Viewpoint - The latest TIC report from the U.S. Treasury reveals significant changes in global holdings of U.S. Treasury bonds, particularly noting a substantial reduction in China's holdings in July 2025, which dropped by $25.7 billion from the previous month [1][2]. Group 1: Changes in U.S. Treasury Holdings - China reduced its U.S. Treasury bond holdings from $756.4 billion in June to $730.7 billion in July, marking a notable decrease of $25.7 billion [1][2]. - Japan increased its holdings by $3.8 billion, while the United Kingdom saw a larger increase of $41.3 billion, contributing to an overall increase of $31.9 billion in foreign holdings of U.S. Treasuries [9]. Group 2: Motivations Behind Changes - The reduction in China's holdings is attributed not to fears of a collapse in U.S. Treasury values or potential U.S. default, but rather to a strategic diversification of reserve assets [2]. - China's gold reserves have increased significantly, from 62.64 million ounces to 74.02 million ounces over the past two years, indicating a shift towards gold as a major reserve asset [3]. Group 3: Impact of Interest Rate Changes - The Federal Reserve's recent interest rate cuts are expected to lower U.S. Treasury yields, which typically leads to an increase in bond prices, potentially encouraging further investment in U.S. Treasuries [5][7]. - Historical trends show that during previous interest rate cut cycles, the prices of U.S. Treasuries have consistently risen, which may lead to increased holdings by foreign entities [7][11]. Group 4: Future Outlook - The expectation is that foreign central banks and institutions will continue to increase their allocations to U.S. Treasuries, as the perception of U.S. government debt as a safe asset remains strong despite interest rate fluctuations [11].

Core Viewpoint - The Chinese government is emphasizing the importance of financial support for technological innovation during the "14th Five-Year Plan" period, highlighting a collaborative approach between the Ministry of Science and Technology and financial institutions to foster high-quality development in technology finance [1][2]. Group 1: Policy Initiatives - The government is guiding venture capital to invest early, in smaller amounts, for the long term, and specifically in hard technology [2]. - As of June, the loan balance for technology-based small and medium-sized enterprises reached 3.46 trillion yuan, a year-on-year increase of 22.9%, which is 16% higher than the growth rate of other types of loans [2]. - The capital market's ability to support technological innovation is being enhanced through mechanisms like the "green channel" for key technology enterprises to facilitate financing, mergers, and bond issuance [2]. Group 2: Implementation and Future Plans - A nationwide coordinated approach to promote technology finance has been established, with a cross-departmental mechanism to enhance collaboration [2]. - The Ministry of Science and Technology is implementing innovative policies to encourage local governments and financial institutions to engage in distinctive innovation practices [3]. - Future efforts will focus on solidifying policy implementation to provide robust financial support for achieving high-level technological self-reliance [3].

Group 1 - The core viewpoint of the article highlights a significant shift in global capital flows, with foreign investors increasing their holdings in U.S. Treasury bonds while simultaneously reducing their investments in Chinese bonds, indicating a search for stability and better opportunities in uncertain times [1][3][25] - In June, foreign investors added $80.2 billion to U.S. Treasury holdings, bringing the total to $9.13 trillion, a record high, while foreign investment in Chinese bonds decreased by 370 billion yuan in the first half of the year, with over 90 billion yuan withdrawn in May alone [1][12] - The article suggests that the current trend of investing in U.S. Treasuries is driven by a combination of global uncertainties, including market volatility and geopolitical tensions, rather than a sudden increase in the attractiveness of U.S. assets [5][10][25] Group 2 - The expectation of a potential interest rate cut by the Federal Reserve is seen as a favorable opportunity for bond investors, as it could lead to higher prices for existing bonds, creating a "price difference" profit opportunity [7][8] - The reduction in foreign investment in Chinese bonds is characterized as a tactical repositioning rather than a complete withdrawal, with foreign investors still holding approximately 4.3 trillion yuan in Chinese bonds, which is less than 2.5% of the total market [12][13] - The article emphasizes that the capital outflow from the Chinese bond market is not indicative of a lack of confidence in China, but rather a strategic adjustment in response to market conditions and the performance of other asset classes, such as equities [17][19][25] Group 3 - The capital movement is framed as a global rebalancing rather than a direct confrontation between the U.S. and China, with international funds diversifying their investments across various markets, including Canada, Germany, and Japan [19][21] - The unique value of Chinese bonds is increasingly recognized, particularly their low correlation with bonds from developed economies, providing a valuable hedging opportunity for investors [21][23] - The article concludes that the current dynamics in the capital markets reflect a broader trend of seeking stability and risk diversification, with capital flows being driven by long-term strategic considerations rather than short-term market reactions [25][27]

Economic Development Initiatives - The Hong Kong government will establish a "Mainland Enterprises Going Global Task Force" to assist mainland companies in utilizing Hong Kong as a platform for international expansion, particularly targeting Southeast Asia and the Middle East [3] - The government aims to deepen international cooperation by seeking to establish an office for the Asian Infrastructure Investment Bank in Hong Kong and hosting several international economic conferences in the coming year [3] - Hong Kong will collaborate with exchanges in the Greater Bay Area to explore new businesses in bulk commodity trading and carbon trading, including the development of an offshore soybean spot market [3] Financial Sector Enhancements - The government plans to accelerate the development of new growth areas to solidify Hong Kong's status as an international financial center, including the establishment of an international gold trading market and a leading bond market [5] - Initiatives will encourage more companies to issue bonds in Hong Kong and promote the use of offshore Chinese government bonds as collateral in various clearing houses [5] Low-Altitude Economy Development - A "Low-Altitude Economy Development Action Plan" will be formulated, which includes enhancing core infrastructure and introducing specific legislation for non-traditional flying vehicles weighing over 150 kilograms [5][6] - The government will simplify the licensing process for low-orbit satellites and promote investments related to commercial space and aerospace technology [5] Tourism and Yacht Economy - The government will promote the yacht economy by easing requirements for visiting yachts and discussing measures for facilitating cross-border yacht travel with Guangdong Province [5] Innovation and Manufacturing - The government emphasizes the importance of technology innovation in driving high-value manufacturing and plans to introduce leading European aviation service companies to develop a sustainable aviation fuel industry [6] Local Economic Support Measures - The report includes measures to support the local economy, such as reducing water and sewage fees for non-residential users by 50% and encouraging banks to adopt more flexible credit policies for well-performing businesses [8]

Financial Market Development - The Hong Kong government aims to strengthen its financial system, targeting a return to the third position in the Global Financial Centers Index [3] - Plans include enhancing the stock market, establishing a leading bond market, and developing a vibrant currency market, alongside promoting insurance and wealth management sectors [3] - The establishment of an international gold trading market is also a priority, with a focus on financial technology and sustainable finance [3] Offshore Renminbi Market - The Hong Kong Monetary Authority (HKMA) will enhance the liquidity of the offshore Renminbi market through a new "Renminbi Business Fund Arrangement" to support enterprises in trade and capital expenditures [4] - More Renminbi bonds will be issued, and the government will explore using Renminbi for public expenditures [5] Investment Attraction and Tax Incentives - The government plans to optimize tax incentives for funds and family offices to attract more investment to Hong Kong [5] - The threshold for the "New Capital Investor Entry Scheme" will be adjusted, increasing the investment amount for non-residential properties from HKD 10 million to HKD 15 million, while lowering the price threshold for residential properties from HKD 50 million to HKD 30 million [5] Industry Development - The government is focused on transforming the industrial structure by nurturing emerging industries such as advanced manufacturing, life sciences, renewable energy, AI, and data science [7] - A policy package will be developed to attract high-value industries and potential enterprises to Hong Kong [7][22] Digital Assets and Fintech - The government is implementing a regulatory framework for stablecoin issuers and developing legislation for digital asset trading and custody services [6] - The HKMA is promoting the use of tokenized deposits and facilitating the issuance of tokenized bonds [5][6] Integration with National Development - The government aims to fully integrate into national development strategies, leveraging Hong Kong's unique advantages to support mainland enterprises in expanding into new markets [10] - A "Mainland Enterprises Going Global Task Force" will be established to facilitate this process [11] Infrastructure and Urban Development - The establishment of the "Northern Metropolis Development Committee" will streamline administrative processes and enhance resource investment in the Northern Metropolis area [13][21] - Plans include the development of an international trade center, shipping center, and innovation technology center [13][21]

Financial Market Development - The Hong Kong government aims to enhance the financial system, targeting a return to the third position in the Global Financial Centers Index [5] - Plans include strengthening the stock market, developing a leading bond market, and establishing an international gold trading market [7] - Initiatives to improve offshore RMB market liquidity and explore diverse cross-border funding channels are also highlighted [7][8] Industry Development - The government is focused on transforming the industrial structure by consolidating traditional industries while fostering emerging sectors such as advanced manufacturing, life sciences, renewable energy, and AI [11][12] - Specific strategies include attracting top pharmaceutical companies, promoting renewable energy, and establishing an AI research institute by 2026 with a budget of 1 billion HKD [13] Integration with National Development - The government plans to fully integrate into national strategies, leveraging Hong Kong's unique advantages to support mainland enterprises in expanding into new markets [15] - A dedicated task force will be established to facilitate mainland companies using Hong Kong as a platform for international expansion, including optimizing tax measures and establishing regional headquarters [15][16] Infrastructure and Governance - The establishment of the "Northern Metropolis Development Committee" aims to accelerate the development of the Northern Metropolis area, focusing on administrative efficiency and innovative construction methods [19][21] - The government will implement a package of incentives to attract high-value industries and enterprises to settle in Hong Kong [22]