Summary of Key Points from the Conference Call Industry and Company Involved - **Industry**: Chinese Equities and Foreign Exchange (FX) Market - **Company**: UBS AG Core Insights and Arguments 1. **CNH Catch-Up Potential**: There is potential for near-term gains in CNH due to rising expectations of Fed rate cuts and a rebound in Chinese equities, with a fair value improvement to 7.00 on models [1][3][5] 2. **FX Management Changes**: The People's Bank of China (PBoC) has shown a gradual tolerance for modest RMB strength, as indicated by the recent decline in USD/CNY fixings, suggesting a shift in FX management policy [2][7] 3. **Tariff Impact on CNH**: A significant reduction in USD/CNH to below 7.00 would require improved US-China trade relations, with a potential need to lower tariffs from approximately 35% to 20% [3][30] 4. **CTA Positioning**: Current positioning by Commodity Trading Advisors (CTAs) is heavily short on CNH, which could lead to a rapid decline in USD/CNH if daily fixings support continues [4][40] 5. **Balance of Payments (BoP) Improvement**: China's current account balance has reached a 10-year high, indicating strong BoP flows that should typically support CNH appreciation [5][20] 6. **Market Sentiment**: Despite the favorable conditions for CNH, the market has not fully embraced the potential for appreciation, with the onshore market remaining around 7.18 [2][18] 7. **Volatility and Carry Trade**: The current low volatility environment for CNH presents risks for carry trades, which could be vulnerable to shifts in FX policy [41][52] Other Important but Potentially Overlooked Content 1. **Historical Context of FX Management**: The current tight trading range for CNH reflects the strongest FX management seen in the last decade, coinciding with the new PBoC governor's tenure [7][10] 2. **Equity Market Correlation**: The relationship between CNH and Chinese equities has weakened, with a notable decline in beta values, indicating a decoupling of these markets [10][12] 3. **Consumer and Business Confidence**: Domestic activity remains weak, with consumer and business confidence lagging, which may affect CNH's performance [52][56] 4. **Potential Regional Impact**: Changes in CNH could influence regional currencies, although the sensitivity of these currencies to CNH movements has been historically low [58][60] 5. **Future Rate Expectations**: If growth expectations rebound, there could be upward pressure on China’s interest rates, but the bar for a sustained rebound is considered high due to ongoing economic challenges [67][69] This summary encapsulates the key points discussed in the conference call, highlighting the dynamics of the Chinese equities and FX market, particularly focusing on CNH's potential movements and the broader economic context.

Group 1: Gold Price Surge - International gold prices have skyrocketed, surpassing $3,500, marking a historical high, with futures reaching $3,518.5 per ounce and London gold touching $3,454 per ounce [1][3] - The surge in gold prices is attributed to multiple factors, including expectations of a 25 basis point rate cut by the Federal Reserve, which has increased the appeal of gold as a safe-haven asset [3][4] - Central banks, including those in China and Turkey, have been increasing their gold reserves, which has contributed to the short-term price surge [4] Group 2: Currency Dynamics - The US dollar index has recently experienced a decline, dropping below the 98 mark, influenced by rising expectations of a Federal Reserve rate cut [4][5] - The offshore Chinese yuan has appreciated significantly, reaching a high of 7.1173 against the dollar, marking its strongest position in nearly 10 months [4][5] - The appreciation of the yuan is supported by a combination of domestic currency management, external factors from the Fed's policies, and a positive outlook on China's economic fundamentals [5] Group 3: Market Implications - The fluctuations in gold prices, the depreciation of the dollar, and the appreciation of the yuan reflect a shift in the global economic landscape and changing investor expectations [7] - These financial market changes may impact various aspects of consumer behavior, including investment strategies, travel costs, and overseas shopping expenses [7]

Group 1 - In July, China's international balance of payments for goods and services trade reached 44,022 billion yuan, a year-on-year increase of 4% [1] - Goods trade exports amounted to 22,076 billion yuan, imports were 15,484 billion yuan, resulting in a surplus of 6,593 billion yuan; service trade exports were 2,651 billion yuan, imports were 3,811 billion yuan, leading to a deficit of 1,160 billion yuan [1] - The main components of service trade included transportation services with a total of 1,805 billion yuan, travel services at 1,793 billion yuan, other commercial services at 1,078 billion yuan, and telecommunications, computer, and information services at 715 billion yuan [1] Group 2 - In dollar terms, China's international balance of payments for goods and services trade in July was 3,459 billion USD for exports and 2,699 billion USD for imports, resulting in a surplus of 760 billion USD [1] - In July, the total turnover of China's foreign exchange market (excluding foreign currency markets) was 28.28 trillion yuan (equivalent to 3.96 trillion USD) [1] - From January to July, the cumulative turnover of China's foreign exchange market reached 179.15 trillion yuan (equivalent to 24.96 trillion USD) [2]

Core Insights - In July 2025, China's foreign exchange market (excluding foreign currency pairs) recorded a total transaction volume of 28.28 trillion RMB (approximately 3.96 trillion USD) [1] - The customer market transactions by banks amounted to 4.06 trillion RMB (approximately 0.57 trillion USD), while interbank market transactions reached 24.22 trillion RMB (approximately 3.39 trillion USD) [1] - The spot market accounted for a cumulative transaction of 9.47 trillion RMB (approximately 1.33 trillion USD), and the derivatives market had a cumulative transaction of 18.81 trillion RMB (approximately 2.63 trillion USD) [1] - From January to July 2025, the cumulative transaction volume of China's foreign exchange market was 179.15 trillion RMB (approximately 24.96 trillion USD) [1]

Report Information - Report Date: August 29, 2025 [2] - Report Team: Macro Team of the Research Center [2] Global Asset Market Performance 10-Year Treasury Yields of Major Economies - On August 28, 2025, yields in the US, UK, France, etc. were 4.205%, 4.699%, 3.477% respectively [3] - Latest changes ranged from -0.076% (Brazil) to 0.020% (Japan) [3] - One-year changes varied from -0.355% (Japan) to 0.784% (UK) [3] 2-Year Treasury Yields of Major Economies - On August 28, 2025, yields in the US, UK, Germany were 3.610%, 3.932%, 1.931% respectively [3] - Latest changes were from -0.120% (US) to 0.033% (South Korea) [3] - One-year changes were from -0.692% (Italy) to 0.249% (UK) [3] Exchange Rates of the US Dollar Against Major Emerging Economies' Currencies - On August 28, 2025, rates against Brazil, Russia, South Africa were 5.415, -, 17.698 respectively [3] - Latest changes were from -0.71% (South Korean won) to 0.02% (South African rand) [3] - One-year changes were from -5.36% (Thai baht) to 4.07% (South Korean won) [3] Stock Indices of Major Economies - On August 28, 2025, indices like S&P 500, Dow Jones, NASDAQ were 6501.860, 45636.900, 21705.160 respectively [3] - Latest changes were from -1.16% (Taiwan stock index) to 0.86% (Mexico stock index) [3] - One-year changes were from -5.88% (Thai stock index) to 35.93% (Spain stock index) [3] Credit Bond Indices - Latest changes were from -0.07% (Eurozone investment-grade) to 0.37% (Emerging economies' high-yield) [3][4] - One-year changes were from 3.84% (US investment-grade) to 13.45% (Emerging economies' high-yield) [3][4] Stock Index Futures Trading Data Index Performance - Closing prices of A-shares, CSI 300, SSE 50 were 3843.60, 4463.78, 2960.73 respectively [5] - Price changes were from 1.14% (A-shares) to 3.82% (ChiNext) [5] Valuation - PE (TTM) of CSI 300, SSE 50, CSI 500 were 13.86, 11.78, 32.73 respectively [5] -环比 changes were mostly 0.00, except S&P 500 with 0.09 [5] Risk Premium - 1/PE - 10-year interest rate of S&P 500 was -0.50, Germany DAX was 2.33 [5] -环比 changes were 0.02 (S&P 500) and 0.00 (Germany DAX) [5] Fund Flows - Latest values of A-shares, main board, ChiNext were -475.66, -570.85, -18.92 respectively [5] - 5-day average values were -668.34, -576.89, -114.20 respectively [5] Transaction Amounts - Latest values of Shanghai and Shenzhen stock markets, CSI 300, SSE 50 were 29708.03, 7394.24, 1952.15 respectively [5] -环比 changes were from -1947.62 (Shanghai and Shenzhen stock markets) to -24.39 (SSE 50) [5] Main Contract Premiums or Discounts - Basis of IF, IH, IC were -3.38, -0.93, -44.16 respectively [5] - Premium or discount rates were from -0.63% (IC) to -0.03% (IH) [5] Treasury Bond Futures Trading Data Closing Prices - Closing prices of T00, TF00, T01, TF01 were 108.040, 105.620, 107.795, 105.460 respectively [6] - Price changes were from 0.01% (T00) to 0.04% (TF00) [6] Fund Interest Rates - R001, R007, SHIBOR - 3M were 1.3643%, 1.5636%, 1.5500% respectively [6] - Daily changes were from -18.00 BP (R001) to 0.00 BP (SHIBOR - 3M) [6]

Group 1 - The euro to US dollar exchange rate is currently trading around 1.1663, showing a slight decline of 0.13% from the previous close of 1.1678, after a two-month consolidation phase [1] - The euro has experienced a significant rise over the past six months, moving from 1.0118 to 1.1829, with a recent low during the consolidation phase at 1.1391 [1] - Market expectations suggest that the Federal Reserve may announce an interest rate cut at the upcoming monetary policy meeting on September 17, which could act as a catalyst for a renewed upward trend in the euro to dollar exchange rate [1] Group 2 - Initial resistance for the euro to dollar exchange rate is seen at the August 22 high of 1.1742, followed by the July 24 weekly high of 1.1788 and the year-to-date high of 1.1830 from July 1, 2025 [2] - If the exchange rate breaks above this resistance zone, it may target the September 2021 high of 1.1909, just below the 1.2000 level [2] - Short-term support is focused on the 100-day simple moving average at 1.1495, with further support levels at the August low of 1.1391 and the May 29 weekly low of 1.1210 [2]

Global Asset Market Performance 10 - Year Treasury Yields of Major Economies - On August 27, 2025, the 10 - year Treasury yields in the US, UK, France, etc. were 4.235%, 4.735%, 3.517% respectively. The latest changes ranged from - 0.069% (Japan) to 0.076% (China), with weekly, monthly, and annual changes also varying across countries [3]. 2 - Year Treasury Yields of Major Economies - On August 27, 2025, the 2 - year Treasury yields in the US, UK, Germany, etc. were 3.730%, 3.960%, 1.912% respectively. The latest changes ranged from - 0.023% (Germany) to 0.050% (US), with different weekly, monthly, and annual changes [3]. US Dollar Exchange Rates Against Major Emerging - Market Currencies - On August 27, 2025, the exchange rates of the US dollar against the Brazilian real, Russian ruble, etc. had latest changes from - 0.25% (Brazil) to 0.39% (Malaysian ringgit), with varying weekly, monthly, and annual changes [3]. Stock Indices of Major Economies - On August 27, 2025, the closing prices of major stock indices like the S&P 500, Dow Jones Industrial Average, etc. were reported. The latest changes ranged from - 1.76% (Shanghai Composite Index) to 0.89% (Mexican stock index), with different weekly, monthly, and annual changes [3]. Credit Bond Indices - The latest, weekly, monthly, and annual changes of credit bond indices such as US investment - grade, euro - zone investment - grade, etc. were presented, with the latest changes ranging from - 0.02% (emerging - market high - yield) to 0.12% (euro - zone investment - grade) [3][4]. Futures Trading Data Stock Index Futures - The closing prices, price changes, valuations, risk premiums, fund flows, trading volumes, and basis spreads of A - share, CSI 300, SSE 50, etc. were reported. For example, the CSI 300 closed at 4386.13 with a - 1.49% change [5]. Treasury Bond Futures - The closing prices and price changes of Treasury bond futures T00, TF00, T01, TF01 were reported, with prices of 108.200, 105.660, 108.020, 105.590 respectively and price changes of 0.04%, 0.02%, 0.04%, 0.03% [6]. Other Information - The report was released by the macro team of the research center on August 28, 2025 [2] - The report also mentioned the performance of the domestic and foreign currency markets, bond markets, stock markets, and exchange - rate markets [7][8]

Group 1 - The UK inflation has been rising without signs of significant slowdown, leading to market expectations that the Bank of England is not in a hurry to initiate a rate cut cycle in the short term [1] - Catherine Mann, a member of the Monetary Policy Committee, emphasized the need to maintain high interest rates to curb inflation expectations, while also hinting that a sharper rate cut could be considered if domestic demand declines unexpectedly [1] - The Bank of England is attempting to balance controlling inflation and avoiding an economic hard landing [1] Group 2 - A rare and institutionally impactful event occurred in the US when President Trump announced the dismissal of Federal Reserve Governor Lisa Cook, marking the first time in the Fed's 111-year history that a governor was directly removed by a president [3] - Trump's public pressure on the Fed to lower interest rates has raised concerns about the independence of the central bank under political pressure, while also strengthening market expectations for a quicker shift to accommodative monetary policy [3] - The CME FedWatch tool indicates an 87% probability that the Fed will cut rates by 25 basis points in September, suggesting that easing expectations are being further priced in [3] Group 3 - The GBP/USD exchange rate is currently sensitive to intertwined policy and political risks, with the UK's persistent inflation supporting a tighter monetary policy, while concerns over the Fed's independence are creating potential long-term weakness for the dollar [4] - The future direction of the GBP/USD pair will largely depend on whether UK inflation can steadily decline and whether the Fed will implement a rate cut in September as expected, along with the dovish guidance that follows [4] - Political uncertainties in Europe and changes in market liquidity may amplify volatility in the short term [4]

Global Asset Market Performance - The 10-year government bond yields of major economies on August 26, 2025, showed various values and changes. For example, the US was 4.262 with a latest change of -0.014, a one - week change of -0.045, a one - month change of -0.059, and a one - year change of 0.378 [2]. - The 2 - year government bond yields also had different figures. The US 2 - year yield on August 26, 2025, was 3.680 with a latest change of -0.110, a one - week change of -0.070, a one - month change of -0.080, and a one - year change of -0.260 [2]. - The exchange rates of the US dollar against major emerging economies' currencies on August 26, 2025, had different changes. For the Brazilian real, the latest change was 0.37% and the one - week change was -1.34% [2]. - Major economies' stock indices had different performances on August 26, 2025. The S&P 500 closed at 6465.940 with a latest change of 0.41%, a one - week change of 0.85%, a one - month change of 1.49%, and a one - year change of 16.41% [2]. - Credit bond indices showed different changes. The US investment - grade credit bond index had a latest change of 0.04%, a one - week change of 0.25%, a one - month change of 0.86%, and a one - year change of 4.11% [2][3]. Stock Index Futures Trading Data - Index performances: A - shares closed at 3868.38 with a decline of 0.39%. The PE (TTM) of the S&P 500 was 27.49 with a环比 change of 0.11 [4]. - Fund flows: The latest value of A - share fund flow was -952.90, and the near 5 - day mean was -305.08 [4]. - Transaction amounts: The latest value of the Shanghai and Shenzhen stock exchanges' transaction amount was 26790.20 with a环比 change of -4621.17 [4]. - Main contract basis and spreads: The basis of IF was -3.59 with a spread of -0.08% [4]. Treasury Bond Futures Trading Data - Treasury bond futures: T00 closed at 108.185 with a rise of 0.21%, and TF00 closed at 105.620 with a rise of 0.11% [5]. - Fund rates: R001 was 1.3596% with a daily change of -20.00 BP [5].

Report Summary 1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints - The report comprehensively presents the performance of global asset markets on August 25, 2025, including the yields of 10 - year and 2 - year government bonds of major economies, exchange rates of the US dollar against major emerging - economy currencies, stock indices of major economies, stock index futures trading data, government bond futures trading data, and money market conditions [2][3][4] 3. Summary by Relevant Catalogs Global Asset Market Performance - **Government Bond Yields**: - **10 - year government bonds**: Yields and their changes (latest, weekly, monthly, and yearly) of 10 - year government bonds in major economies such as the US, UK, France, etc. are presented. For example, the US 10 - year government bond yield on August 25, 2025, was 4.276, with a latest change of 0.021, a weekly change of - 0.058, a monthly change of - 0.136, and a yearly change of 0.362 [2] - **2 - year government bonds**: Yields and their changes of 2 - year government bonds in major economies like the US, UK, Germany, etc. are provided. For instance, the US 2 - year government bond yield on August 25, 2025, was 3.790, with a latest change of 0.050, a weekly change of 0.050, a monthly change of 0.070, and a yearly change of - 0.140 [2] - **Exchange Rates**: - **US dollar against emerging - economy currencies**: Exchange rates and their percentage changes of the US dollar against currencies of emerging economies such as Brazil, Russia, South Africa, etc. are shown. For example, the US dollar - Brazilian real exchange rate on August 25, 2025, was 5.412, with a latest change of - 0.26%, a weekly change of - 0.45%, a monthly change of - 3.17%, and a yearly change of - 1.31% [2] - **Renminbi**: Exchange rates and their percentage changes of on - shore RMB, off - shore RMB, RMB central parity rate, and RMB 12 - month NDF are presented. For example, the on - shore RMB exchange rate on August 25, 2025, was 7.154, with a latest change of - 0.19%, a weekly change of - 0.44%, a monthly change of - 0.35%, and a yearly change of - 0.29% [2] - **Stock Indices**: - **Major economies**: Stock indices and their percentage changes of major economies such as the US (S&P 500, Dow Jones, Nasdaq), UK, France, etc. are given. For example, the S&P 500 index on August 25, 2025, was 6439.320, with a latest change of - 0.43%, a weekly change of - 0.15%, a monthly change of 0.78%, and a yearly change of 16.17% [2] - **Emerging economies**: Stock indices and their percentage changes of emerging economies such as Russia, Japan, Hong Kong, etc. are provided. For example, the Hang Seng Index on August 25, 2025, was 25829.910, with a latest change of 1.94%, a weekly change of 2.59%, a monthly change of 1.05%, and a yearly change of 50.97% [2] - **Credit Bond Indices**: - Yields and their percentage changes of investment - grade and high - yield credit bond indices in the US, eurozone, and emerging economies are presented. For example, the US investment - grade credit bond index on August 25, 2025, was 3463.860, with a latest change of - 0.08%, a weekly change of 0.37%, a monthly change of 1.36%, and a yearly change of 4.30% [2] Stock Index Futures Trading Data - **Index Performance**: Closing prices and percentage changes of A - shares, CSI 300, SSE 50, ChiNext, and CSI 500 are provided. For example, the closing price of A - shares was 3883.56, with a percentage change of 1.51% [3] - **Valuation**: PE(TTM) and their环比 changes of CSI 300, SSE 50, CSI 500, S&P 500, and German DAX are presented. For example, the PE(TTM) of CSI 300 was 13.97, with a环比 change of 0.00 [3] - **Risk Premium**: 1/PE - 10 - year interest rate and their环比 changes of S&P 500 and German DAX are given. For example, the 1/PE - 10 - year interest rate of S&P 500 was - 0.62, with a环比 change of - 0.01 [3] - **Fund Flow**: Latest values and 5 - day average values of fund flows in A - shares, main board, SME board, ChiNext, and CSI 300 are provided. For example, the latest value of A - share fund flow was - 177.24, and the 5 - day average value was - 340.99 [3] - **Trading Volume**: Latest values and环比 changes of trading volumes in Shanghai and Shenzhen stock markets, CSI 300, SSE 50, SME board, and ChiNext are presented. For example, the latest trading volume of Shanghai and Shenzhen stock markets was 31411.37, with a环比 change of 5944.27 [3] - **Main Contract Premium/Discount**: Basis and percentage basis of IF, IH, and IC are given. For example, the basis of IF was 5.38, with a percentage basis of 0.12% [3] Government Bond Futures Trading Data - Closing prices and percentage changes of government bond futures T00, TF00, T01, and TF01 are provided. For example, the closing price of T00 was 108.145, with a percentage change of 0.00% [4] - **Money Market**: - **Funding Rates**: R001, R007, and SHIBOR - 3M and their daily changes (in basis points) are presented. For example, R001 was 1.3901%, with a daily change of - 9.00 basis points [4] - **Big - Category Asset Morning Report**: Values and percentage changes of big - category assets on August 25, 2025, are provided. For example, the value was 1602.450, with a latest change of 0.31% [7]