Note: This column publishes historical research reports of companies in chronological order from old to new for readers' retrospective reference. The views and data in this article are based on the original research time, and some information may have changed.
Macro Overview
Important Events
1. There is a temporary ceasefire in the Israel-Iran conflict, but both sides are testing and preparing for each other, and the situation of nuclear attack, defense and regional security remains tense.
2. Monetary policy turning point: The Fed maintains stability and sends a signal of interest rate cuts.
Economic data
1. China:
- The profit growth rate of industrial enterprises dropped sharply in May, and the operating profit margin was under pressure, mainly due to the Sino-US tariff friction and weak end-user demand. The endogenous momentum of the economy has not seen substantial improvement.
- In terms of finance, there are signs of increased efforts around the "two heavy" and "two new" areas. The National Development and Reform Commission has announced that the third batch of old-for-new subsidies will be issued soon.
2. United States:
- Durable goods orders rebounded more than expected in May, but real estate sales continued to be weak and the consumer confidence index hit a new low.
- Discussions within the Fed on a July rate cut intensified.
Investment Tips and Major Asset Class Strategies
1. Interest rate bond market analysis
Market trends and funding :
- Yield performance: first up and then down, long-term bonds were suppressed by the rebound in risk appetite and adjusted back to a temporary high.
-Central Bank Operations: Over 1 trillion yuan of funds were injected at the end of the quarter to protect liquidity. However, non-bank leverage is high, liquidity stratification has emerged, and non-bank repurchase prices are relatively expensive.
- Institutional behavior : Third -party data showed that funds continued to maintain a net purchase status, and the incremental funds in the bond market were relatively strong before the end of the quarter.
Strategy and key locations :
-Core logic: Overall, the market is dominated by loose expectations, and investment opportunities are sought amid volatility.
-10-year Treasury yields are trading in the 1.62%-1.65% range. If it breaks below 1.62%, it may open up to the 2024 low of 1.58%;
-Short-term risk points:
The impact of over 200 billion yuan of interest rate bond issuance on the market this week;
The expected pace of realization of the reserve requirement ratio cut in July.
Overall market assessment : There are not many negative factors at present, and the risk of a reversal of interest rate increases is low.
2. Credit bond market analysis
Domestic primary and secondary credit bond markets: This week, affected by the continuous rise in the stock market and the end of the quarter, the overall trading sentiment of credit bonds was weak and there was some adjustment, showing an overall two-tier differentiation.
- Medium and high-grade credit bonds with interest rates below 2.5% are being sold at a premium . Municipal investment bonds with relatively higher absolute returns are less affected. Asset management institutions and other institutions still have strong demand for high-coupon assets.
Chinese offshore debt market:
- New issuance in the primary market continues to heat up . Many entities in Henan are stepping up the preparation of issuance documents. It is expected that nearly 10 364 bonds will be issued in the next two weeks. The capital side is in a serious wait-and-see mood and returns to the investment logic of price priority.
- New bond issuances will be discussed on a case-by-case basis and will need to refer to the filing requirements of the National Association of Financial Market Institutional Investors. It is reported that new issuances in the second half of the year will not require financial opinions.
- Strategy : Screen high-coupon assets based on the logic of narrowing credit spreads , and continue to arbitrage in the primary and secondary markets of corporate bonds and convertible bonds.
3. Analysis of A-share and Hong Kong stock market
Emotional and policy drivers :
- Geopolitical easing: War conflicts have eased, risk appetite has recovered, and stock market trading sentiment has improved compared with the previous stage;
- Policy stimulus: The central bank and six ministries announced consumption stimulus policies, which strengthened policy expectations for the second half of the year and further boosted market liquidity and risk appetite.
Hot topics :
-Hot Concepts: Stablecoins and virtual assets are popular. However, recently, official media have called for a cooling of the market, and the overvaluation of related stocks has also begun to fall back.
- Policy expectations: Further policies may be introduced around technology and digital assets, which deserves special attention.
IPO drives capital inflow: Hong Kong IPOs have been hot this year; A-H secondary listings have accelerated market sentiment. It is expected that in the next stage, the return of foreign capital is expected to increase, and the technology and high-yield sectors are attractive in stages.
- A-shares : The allocation direction should focus on growth and policy-supported sectors such as computers, non-bank financial institutions, and military industry, and take advantage of structural opportunities; be aware that fluctuations may bring about pressure for adjustment.
- Hong Kong stocks: Increase allocation to technology and high-interest financial sectors, pay attention to the liquidity brought by A-H secondary listings; pay close attention to changes in Hong Kong dollar policies and funding conditions.
In addition, the major US stock indexes hit new highs again, and the stock market led by the technology sector remains strong. A-shares and Hong Kong stocks are likely to drive the rise of the technology sector under the linkage effect.
4. Convertible bond market analysis
Index hits new high: Driven by the rebound of underlying stocks, the CSI Convertible Bond Index hit a new high this week.
Outstanding stress resistance : Although prices continued to be high in the second quarter, with policy support and a continuous reduction in inventory size, even if faced with major negative shocks (such as the tariff shock in early April and the Israel-Iran conflict in June), it still showed the advantages of both offense and defense with small retracements and fast recovery.
Strategy : The current median price is already at a relatively high level. For a period of time in the future, we will focus on taking profits, continue to capture targets that were mistakenly killed due to rating changes, and capture opportunities for high-low rotation. In terms of portfolio, we still maintain a high degree of dispersion.
5. Commodity market analysis
Sentiment-driven and asset performance : Market sentiment improved due to the easing of the Iran-Israel conflict, the expectation of a rate cut by the Federal Reserve, and the impact of the US consumer confidence index. Risk assets rose and safe-haven assets fell.
Constraints from economic fundamentals: The internal differentiation of the U.S. economy continues, China’s economic fundamentals have not yet reversed, and major asset classes are still experiencing fluctuations.
Market performance: The market of industrial products is more reflected in the game of expectations, and the price elasticity is limited; the capital level forms a phased support for the ferrous and nonferrous metals sectors.
6. Overseas market assets - US bonds and US stocks
Current market dynamics : The Fed maintains stability and sends a signal of rate cuts.
- The long-term yield of US Treasury bonds further declined (the yield of 10-year Treasury bonds reached 4.265%);
- The bond futures price platform moves further upward;
- Trading sentiment: The market began to bet on the June US employment report and core PCE data, and the US bond trading situation improved compared with the previous stage.
Downward resistance to yields : The "Great American Act" will be voted on before July 4th.
- If the bill is passed, it will lead to an increase in debt of approximately US$2.8-3 trillion, further pushing up US debt pressure and creating resistance to the downward trend of US bond yields at this stage.
Policy and Strategy Outlook :
- The Fed is likely to cut interest rates again in September. It is also possible that if the latest employment data is significantly lower than expected, the Fed will start cutting interest rates in July.
- Operational strategy : gradually increase US bond positions and seize turning point opportunities.
The content of this article only represents the analytical views of the team's investment research personnel, and does not represent the authoritative views of any organization. The data does not constitute any investment advice, and the information in this article does not constitute any investment opinions. It is for readers' reference only.
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