1. Report's Industry Investment Rating No information provided regarding the industry investment rating. 2. Core Viewpoints of the Report - In February 2026, the overall credit performance was not weak. Despite a slight decline in credit volume, the financing demand of the enterprise sector met the seasonal pattern, and the long - term loans of enterprises provided obvious support. The social financing growth rate remained stable, and the M2 growth rate was mainly supported by household deposits. After excluding the M0 factor, the month - on - month growth of M1 and M2 was close to the seasonal level. Attention should be paid to the sustainability of enterprise credit repair [3][7][36]. 3. Summary by Relevant Catalogs Credit: Affected by the misalignment of the Spring Festival, household and short - term corporate loans were weak - **Household loans**: In February, household loans faced pressure. Short - term loans decreased by 469.3 billion yuan, 195.2 billion yuan more than the same period last year, mainly because households used year - end bonuses to repay short - term loans. Medium - and long - term loans decreased by 181.5 billion yuan, 66.5 billion yuan more than the same period last year. The year - on - year decline in the transaction area of commercial housing in 30 large and medium - sized cities widened, dragging down medium - and long - term loans. The post - festival property - pushing rhythm of real estate enterprises in March needs to be observed [11]. - **Enterprise long - term loans**: In February, new enterprise long - term loans reached 890 billion yuan, an increase of 350 billion yuan year - on - year. The growth rate rose from 8.2% to 8.5%, which may be related to the project construction at the beginning of the year and the role of policy - based financial instruments [16]. - **Enterprise short - term loans**: In February, new enterprise short - term loans were 600 billion yuan. Although it decreased seasonally compared with the previous month, it was still 270 billion yuan more than the same period last year, indicating the resilience of short - term business turnover demand. Bill financing decreased by 35 billion yuan, 204.3 billion yuan more than the same period last year, suggesting an improvement in the structure of real - economy financing demand [18]. Social Financing: Government bonds faced a high base, and off - balance - sheet bills supported social financing - **Government bonds**: In February, new government bonds were 1.4036 trillion yuan. Due to the high base in the same period last year (1.69 trillion), the year - on - year increase was 290.3 billion yuan less. The issuance rhythm of government bonds in the first quarter was still active, but there might be high - base disturbances from February to March, and in March, it might be about 400 billion yuan less year - on - year. In April, government bonds are expected to support social financing [19]. - **Trust loans and off - balance - sheet bills**: In February, new trust loans were 30.9 billion yuan, 63.9 billion yuan more than the same period last year, reflecting the recovery of infrastructure and some real estate financing demand. Unaccepted bills decreased by 175.5 billion yuan. Due to the low base in the same period last year, the year - on - year increase was 123.2 billion yuan, and the conversion of off - balance - sheet bills to on - balance - sheet was limited, positively contributing to social financing [26]. Deposits: M1 was mainly driven by cash withdrawal, and household deposits increased year - on - year during the Spring Festival month - **M1**: After excluding the impact of Spring Festival cash withdrawal, M1 growth was close to the seasonal pattern. In February, affected by the misalignment of the Spring Festival and strong household cash - withdrawal demand, M0 increased significantly. After excluding cash - withdrawal factors, the new - caliber M1 - M0 decreased by 2.56 trillion yuan in the current month, 500 billion yuan less than in February 2025. The year - on - year growth rate of M1 rose from 4.9% to 5.9%, while the year - on - year reading of M1 - M0 dropped from 5.2% to 4.8% [28]. - **Household and enterprise deposits**: Due to the misalignment of the Spring Festival, household and enterprise deposits showed a seasonal "one increases while the other decreases." In February, household deposits increased by 3.11 trillion yuan, 2.5 trillion yuan more than the same period last year, possibly due to year - end bonus payments. Enterprise deposits decreased by 2.65 trillion yuan month - on - month, 176 million yuan less year - on - year. Non - bank deposits increased by 1.39 trillion yuan month - on - month, 1.44 trillion yuan less than the same period in 2025. The year - on - year growth rate of M2 remained at 9% [32].

Group 1: Report's Industry Investment Rating - No information provided regarding the report's industry investment rating Group 2: Core Viewpoints of the Report - The current social financing growth rate has at least ended the stage of unilateral decline. In some statistical calibers, there is a trend of rising from the bottom [3][45] - The decline space of the current social financing growth rate is very limited, and the actual financing demand of enterprises is expected to rise from the bottom. The original unilateral decline guidance needs to be re - thought [5] - The social financing growth rate and M2 supply should match the economic development and expected price level in 2026, and it may not be what the policy wants to see if it is significantly lower than the sum of the two [4] Group 3: Summary of Each Section 1. Has the social financing growth rate bottomed out? 1.1 Different calculation methods of social financing growth rate - Due to the changes in the social financing caliber and the impact of debt resolution in the past two years, the guiding effect of social financing on the bond market has weakened. The report conducts multi - caliber analysis of social financing and restores the impact of debt resolution to analyze its details and future trends [12] - Since 2018, the social financing statistical caliber has been adjusted many times. In 2025, government bonds accounted for more than 20% of the social financing stock. Excluding government bonds, the social financing growth rate has oscillated around 6% in the past two years, and its guiding significance for interest rates has become stronger [14] - After excluding government bonds, further excluding corporate bill financing and undiscounted bank acceptances, the social financing growth rate has increased slightly in the past two years, and its guiding significance for interest rates has also become stronger [17][18] - Credit cannot fully reflect the real - entity financing demand. In 2025, A - share new financing marginally rebounded, and H - share new financing continued to climb. There is a substitution effect between corporate loans and industrial bonds, and the loan - bond spread is the core driving factor [20][24][28] - The decline of the balance growth rate of enterprise core credit financing has slowed down and has been relatively stable in the past six months. Considering non - financial industrial bonds, the core social financing growth rate of enterprises has increased significantly since the fourth quarter of 2025 [33][35] 1.2 What are the impacts of debt resolution? - Since the debt - resolution policy in 2023, especially after the local government bond swap for implicit debt policy in 2024, it has impacted the social financing growth rate and credit growth rate [39] - After restoring the impact of debt resolution, the credit growth rate, the social financing growth rate excluding government bonds, and the social financing growth rate excluding government bonds and bills in 2025 all experienced a process of rising first and then falling. Using enterprise core social financing (including industrial bonds) for restoration, the growth rate can be observed to oscillate and rebound at the bottom [41] 2. What are the policy requirements for the social financing growth rate? - The government work report in 2026 stated that the social financing scale and money supply growth should match the economic growth and price level expected target. In the past few years, the social financing growth rate was basically higher than the sum of the two, but the social financing growth rate excluding government bonds was lower than that. In 2025, the social financing growth rate excluding government bonds was only 5.94%. In 2026, the decline space of the social financing growth rate is limited, and the actual financing demand of enterprises is expected to rise from the bottom [48][49]

Core Viewpoint - The article discusses the impact of escalating geopolitical tensions in the Middle East on global markets, highlighting unusual market reactions where traditional safe-haven assets like gold and government bonds have declined alongside risk assets, leading to increased volatility across asset classes [3][8]. Historical Analysis - Historical analysis of nine key geopolitical conflicts shows that initial price volatility in oil, gold, and stocks often normalizes within weeks, regardless of the conflict's duration [4][5]. - For instance, during the 2025 conflict between Israel and Iran, oil and gold prices surged initially but reversed direction within 30 trading days, with Brent crude oil prices dropping 0.6% and gold prices declining 1.39% after the initial spike [5][6]. - The 2001 "9/11" attacks saw gold prices rise 6.85% on the first trading day but only increase 2.28% after 30 days, while oil prices surged over 34% during the Ukraine crisis but only rose 1.53% after a month [6]. Current Market Reactions - Recent market reactions to the ongoing conflict between the U.S. and Israel align with historical patterns, with Brent crude oil rising from $72.48 to over $78.16 per barrel, a 7.8% increase, while gold prices rose nearly 2.7% [8][9]. - The S&P 500 index experienced a slight recovery after an initial drop, indicating mixed market sentiment [8]. Potential Scenarios - Analysts outline four potential scenarios regarding the conflict's impact on oil prices: 1. (40% probability) Iranian oil facilities remain unaffected, leading to potential price declines. 2. (10% probability) Damage to Iranian facilities results in limited price increases. 3. (20% probability) Escalation targets oil facilities in Saudi Arabia and other regions. 4. (30% probability) Significant restrictions on shipping through the Strait of Hormuz, leading to major supply impacts [9][10]. Asset Class Implications - The stock market is expected to decline in the short term, with energy producers likely outperforming energy consumers due to rising oil prices [10]. - European and Japanese markets may face greater risks due to higher energy dependence compared to the U.S. market [10]. - Precious metals like gold and silver are anticipated to rise as geopolitical uncertainties persist, benefiting from increased risk aversion [12]. Long-term Investment Themes - The conflict may reinforce long-term investment themes focused on energy security, defense, dual-use technologies, and geopolitical fragmentation [13]. - If the conflict is short-lived, oil prices may revert to pre-conflict levels, with limited macroeconomic impacts, while gold prices are expected to rise due to geopolitical risk and inflation concerns [14].

Core Viewpoint - The management of interest rate risk is becoming a critical factor for large domestic banks in their allocation of long-term bonds, particularly from 2024 to 2025, as high government bond issuance continues to exert pressure on banks' asset allocation strategies [3][9]. Group 1: Current State of Interest Rate Risk Management - The requirements for interest rate risk management in Chinese banks are primarily based on the Basel Committee's framework, which includes the economic value change indicator (△EVE) under adverse interest rate fluctuations [4][10]. - The current assumption for parallel interest rate shocks in RMB is set at 225 basis points, which is higher than that for USD, indicating a stricter capital requirement for Chinese banks [13][19]. - The historical volatility of RMB interest rates has decreased significantly since 2008, suggesting that the current shock assumptions may be overly stringent compared to recent trends [14][19]. Group 2: Misconceptions About Interest Rate Risk - The collapse of Silicon Valley Bank (SVB) was primarily due to liquidity issues rather than interest rate risk, highlighting a misunderstanding in the market regarding the nature of bank failures [5][25]. - Stability in the liability side of banks can mitigate the risks associated with rising interest rates, as evidenced by the Japanese banking sector's resilience during recent rate increases [27][28]. - Historical instances of rising interest rates in China have typically been short-lived, allowing banks to manage temporary losses without triggering significant risk events [29][30]. Group 3: Structural Changes in Financing and Interest Rate Risk - Since 2015, the proportion of bond financing, particularly government bonds, in social financing has been increasing, leading to a longer average duration of bank assets [6][39]. - The average duration of government bonds is significantly longer than that of corporate loans, which contributes to the mismatch in asset-liability durations for banks [39][46]. - The current trend of increasing government bond issuance necessitates a careful approach to managing interest rate risk, as longer durations inherently increase exposure to interest rate fluctuations [46][47]. Group 4: Recommendations for Managing Interest Rate Risk - A coordinated approach between monetary and fiscal policies is essential to mitigate interest rate risks while supporting government bond issuance [54][55]. - The central bank's balance sheet expansion can help lower market interest rate risks and support government financing costs, thereby stabilizing the macroeconomic environment [54][56]. - Adjustments to the interest rate risk management requirements for banks should be considered to align with the current economic context and reduce unnecessary constraints on long-term bond allocations [58].

Core Insights - The total trading volume of the Mongolian securities market in 2025 is approximately 1.1 trillion tugrik (around 3.1 million USD), representing a 23.3% decrease from the previous year [1] Market Structure - The primary market accounted for 474.2 billion tugrik (approximately 1.3 million USD), which is 41.8% of the total trading volume [1] - The secondary market had a trading volume of 659 billion tugrik (approximately 1.9 million USD), making up 58.2% of the total [1] - The composition of the market includes asset-backed securities (32.8%), corporate bonds (28.6%), corporate stocks (25.3%), government bonds (12.8%), and securities investment fund shares (0.5%) [1] Monthly Performance - In December, the trading volume of the securities market was 253.8 billion tugrik (approximately 0.7 million USD), which is a 4.7% decrease compared to the same month last year [1]

Core Insights - The global key interest rates are rising, primarily due to the declining attractiveness of government bonds as "safe and liquid assets" [1] - The "natural rate" of interest, which reflects the equilibrium rate when the economy is fully operational and inflation is stable, has significantly increased since 2019, by approximately 1 percentage point in the US and other developed economies [1] - The decrease in demand for the safety and liquidity of government bonds may explain up to half of the increase in interest rates, as evidenced by the narrowing spreads in US corporate bonds [1] Group 1 - The natural rate is a theoretical concept but plays a crucial role in monetary policy, serving as a reference for central banks to determine whether policy rates are too tight or too loose [1] - The analysis indicates that both the US natural rate and its global counterparts have shown a clear upward trend post-COVID-19 [2] - From 1990 to 2019, a strong preference for safety and liquidity among investors led to declining yields on government bonds, which in turn lowered the natural rate [2] Group 2 - In addition to the declining attractiveness of government bonds, expectations of productivity gains from artificial intelligence are also potential factors driving the rise in the natural rate [2] - Challenges such as demographic shifts and rising military spending expectations may lead to an increase in the debt-to-GDP ratio for some economies, which could be factored into market interest rate expectations [2]

Core Insights - The global "natural rate of interest" has statistically increased by approximately 1 percentage point since 2019 in the U.S. and other developed economies [1] - The decline in the attractiveness of government bonds' "safety" and "liquidity" accounts for about 50% of the rise in interest rates [1] - Key factors contributing to the increase in interest rates include the diminished appeal of government bonds, AI-driven productivity growth prospects, and the surge in government debt-to-GDP ratios [1] - The shift in the natural rate of interest will significantly influence the interest rate decisions of the Federal Reserve and global central banks [1]

Core Insights - The People's Bank of China reported that in 2025, net financing of government bonds reached 13.8 trillion yuan, an increase of 2.5 trillion yuan compared to 2024 [1] - Corporate bond net financing was 2.4 trillion yuan, up by 482.3 billion yuan from 2024 [1] - By the end of 2025, the bond market custody balance stood at 196.7 trillion yuan [1] Bond Market Activity - The cash market transaction volume in 2025 was 425.3 trillion yuan, reflecting a 1.4% increase from 2024 [1] - The turnover rate of the interbank bond market was 230%, a decrease of 25 percentage points compared to 2024 [1] - The trading spread for active 10-year government bonds was 0.44 basis points [1] Yield and Spread Analysis - By the end of 2025, the yield on 10-year government bonds was 1.85% [1] - The yield spread between 10-year and 1-year government bonds narrowed by 8 basis points to 51 basis points compared to the end of 2024 [1] - The yield spread between 3-year AAA-rated medium-term notes and 3-year government bonds also narrowed by 4 basis points to 51 basis points compared to the end of 2024 [1] Foreign Participation - As of the end of 2025, the custody balance of foreign institutions in the Chinese bond market was 3.5 trillion yuan, accounting for 1.8% of the total custody balance [1] - In 2025, the cumulative issuance of Panda bonds reached 183.06 billion yuan, with 56 new foreign institutions entering the interbank bond market [1]

Core Viewpoint - The People's Bank of China has released data indicating significant growth in the bond market and futures trading for 2025, highlighting increased financing and participation from foreign institutions [1] Group 1: Bond Futures Market - In 2025, the transaction volume of the government bond futures market is projected to reach 97 trillion yuan, an increase of 43.9% compared to 2024 [1] - By the end of 2025, the open interest in government bond futures is expected to be 648,000 contracts, reflecting a 30.4% increase from the end of 2024 [1] - The closing price of the 10-year government bond futures main contract is anticipated to be 107.9 yuan, a decrease of 1.0% from the end of 2024 [1] Group 2: Bond Market Financing - In 2025, net financing for government bonds is projected to be 13.8 trillion yuan, an increase of 2.5 trillion yuan compared to 2024 [1] - Net financing for corporate bonds is expected to reach 2.4 trillion yuan, an increase of 482.3 billion yuan from 2024 [1] - By the end of 2025, the total custody balance in the bond market is forecasted to be 196.7 trillion yuan [1] Group 3: Foreign Participation - As of the end of 2025, the custody balance of foreign institutions in the Chinese bond market is expected to be 3.5 trillion yuan, accounting for 1.8% of the total custody balance [1] - In 2025, the cumulative issuance of Panda bonds is projected to be 183.06 billion yuan, with 56 new foreign institutions entering the interbank bond market [1]

Core Viewpoint - The People's Bank of China reports significant growth in the bond futures market and overall bond financing for 2025, indicating a robust outlook for the debt market in China [1] Group 1: Bond Futures Market - In 2025, the transaction volume of the government bond futures market is projected to reach 97.0 trillion yuan, an increase of 43.9% compared to 2024 [1] - By the end of 2025, the open interest in government bond futures is expected to be 64.8 million contracts, reflecting a 30.4% increase from the end of 2024 [1] - The closing price of the 10-year government bond futures main contract is anticipated to be 107.9 yuan, a decrease of 1.0% from the end of 2024 [1] Group 2: Bond Market Financing - In 2025, net financing for government bonds is projected to be 13.8 trillion yuan, an increase of 2.5 trillion yuan compared to 2024 [1] - Net financing for corporate bonds is expected to reach 2.4 trillion yuan, an increase of 482.3 billion yuan from 2024 [1] - By the end of 2025, the total custody balance in the bond market is forecasted to be 196.7 trillion yuan [1] Group 3: Foreign Participation - As of the end of 2025, the custody balance of foreign institutions in the Chinese bond market is expected to be 3.5 trillion yuan, accounting for 1.8% of the total custody balance [1] - In 2025, the cumulative issuance of Panda bonds is projected to be 183.06 billion yuan, with 56 new foreign institutions entering the interbank bond market [1]