Liquidity remains ample. On the macro front, People's Bank of China Governor Pan Gongsheng stated that in 2026, the moderately loose monetary policy will continue to be implemented effectively. Various monetary policy tools, including reserve requirement ratio (RRR) cuts and interest rate reductions, will be used flexibly and efficiently to maintain abundant liquidity. There is still some room for RRR and interest rate cuts this year. Efforts will continue to safeguard the stable operation of financial markets. Expectation management will be enhanced to keep the RMB exchange rate basically stable at an adaptive and equilibrium level. Supervision of the bond market, foreign exchange market, money market, commercial paper market, and gold market will be strengthened. A mechanism for providing liquidity to non-bank financial institutions under specific circumstances will be established. The two monetary policy tools supporting the capital market will continue to be utilized effectively to support its stable development. Overseas, the preliminary U.S. S&P Global Manufacturing PMI for January was 51.9, slightly higher than the previous reading of 51.8; the preliminary Services PMI held steady at 52.5, while the preliminary Composite PMI edged up to 52.8, with all three figures coming in slightly below expectations.
The Shanghai Composite Index closed higher. In the spot market, the three major A-share indices showed mixed performance for the week. The Shanghai Composite Index rose 0.83% to close at 4,136.16 points, while the ChiNext Index fell 0.34%. Sector-wise, most industry indices gained, with Building Materials, Petroleum & Petrochemicals, Steel, and Basic Chemicals sectors surging over 7%. In contrast, the Banking, Communications, and Non-Bank Financial sectors were among the top decliners. The average daily turnover decreased to 2.8 trillion yuan, while the margin lending and securities lending balance increased to a record 2.6 trillion yuan. The China Securities Regulatory Commission (CSRC) officially released the guidelines for public fund performance benchmarks, and the Asset Management Association of China (AMAC) simultaneously issued detailed implementation rules, effective from March 1 this year. The new regulations focus on four key areas: precise profiling, full-process supervision, linkage to compensation, and information transparency, directly addressing industry pain points such as "vague benchmarks," "style drift," and "fund blind boxes." The new rules specify a one-year transition period for adjusting benchmarks of existing products. Overseas, the three major U.S. stock indices all closed slightly lower, with the Dow Jones Industrial Average falling 0.53% to 49,098.71 points.
Futures traded at a premium. In the futures market, the basis of stock index futures rose rapidly, with the near-month contracts of all four major stock index futures currently trading at a premium. Regarding trading volume and open interest, futures trading volume declined, but open interest increased compared to last week.
Domestic market macro and micro liquidity are expected to remain ample, and the momentum driven by capital flows is likely to continue. Under short-term policy adjustments, the performance of heavyweight sectors faces some suppression, and the divergence among the various indices is expected to become more pronounced. Among the futures contracts, the performance of the CSI 500 futures (IC) has been significantly stronger. Based on this market environment assessment, a bullish strategy on IC and CSI 1000 futures (IM) is maintained.
If domestic policy implementation falls short of expectations, overseas monetary policy proves more aggressive than anticipated, or geopolitical risks escalate, stock indices face downside risks.
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