Fixed Income Daily Market Update

CMBI Credit Commentary Fixed Income Daily Market Update固定收益部市场日报 Wesaw better selling on 2-5yr Korean corps this morning.FZSZJJ27/LNGFOR 28-29 rose 0.8-1.3pts. VNKRLE 27-29/FTLNHD 27/LASUDE26 were 0.7-1.3pts lower. Glenn Ko, CFA高志和(852) 3657 6235glennko@cmbi.com.hk ChineseAMCs:Prefer CFAMCI for better risk-adjusted return profiledespite conviction level is lower. See below. Cyrena Ng, CPA吳蒨瑩(852) 3900 0801cyrenang@cmbi.com.hk China Economy:Deflationary pressures set to ease but impulse remainedweak.CMBI expects deflationary pressures to ease in 2026,but themomentum should remain weak; CPI and PPI to reflate from 0% and-2.7%in 2025 to 0.7% and-0.5% in 2026. See below for comments from CMBIeconomic research. Yujing Zhang张钰婧(852)3900 0830zhangyujing@cmbi.com.hk Trading desk comments交易台市场观点 Yesterday,we saw heavy selling on front-end, less than three years Asian IGcredits ahead of theFOMC meeting. There were two-way interests on MiddleEastern credits like FABUH belly papers from banks and private banks,alongside modest buying in ARAMCO 10-year bonds. They were 1-4bpstighter.The FRN space was active with block-size trading in Chinesefinancials and Korean corporates, primarily amongbanks and AMs. In Korea,Chinese asset managers were selling DAESEC; global private banks tradedtwo-way on the HYUELE curve, with better selling on 2026s and better buyinginterests in 2029–33s. Chinese IG benchmarks overall traded up to 2bpstighter. Wesaw solid buying along the MEITUA curve while light selling onHAOHUA. There were two-way flows on FRESHK curve between onshoreand offshore AMs.LASUDE 26 surged 5.8pts after the announcement of thesale of 50% stakes in the CCB Tower for net proceeds ofHKD2.4bn toJD.com. See our commentsyesterday. FAEACO 12.814 Perp gained 1.0pt,after the company announced the sales of a 50% stakein Ritz Carlton hotelin Perth for cUSD66.4mn. DALWAN 11 02/13/26 rose another 0.5pt. See ourcomments on DALWAN on9 Dec’25. VEDLN 28-33s edged 0.1-0.3pt firmer.EHICAR 27 was up by 0.2pt while EHICAR 26 was down by 0.7pt. TheNWDEVL complex was 0.7pt lower to 0.1pt higher. In Chinese properties,VNKRLE 27-29 rose 2.0-2.1pts. LNGFOR 27-32 gained 0.3-1.3pts. FTLNHD26-27/FUTLAN 28 were 1.0-1.2pts higher.There were also tactical buyinginterests in short-dated CHJMAO/CPDEV from Chinese accounts.In SE Asia,GARUDA 31s rose 5.1pts. GLPSPs were up by 0.2-1.2pts. VLLPM 27-29gained 0.2pt. ACPM 4.85 Perp was 0.7pt lower. MEDCIJ 26-30s wereunchanged to 0.1pt lower.In LGFV space, RMs/AMs continued to buyonshore-AAA guaranteed USD issues. KNMIDI 8 1/2 08/20/26 increased by1.4pts. Last Trading Day’s Top Movers Marco News Recap宏观新闻回顾 Macro–S&P (+0.67%), Dow (+1.05%) and Nasdaq (+0.33%) were higher on Wednesday. US Fed announcedthe third federalfunds rate cut for the year by 25bps to a range of 3.5% to 3.75%. UST yield was lower onWednesday. 2/5/10/30 year yield was at 3.54%/3.72%/4.13%/4.78%. Desk Analyst Comments分析员市场观点 Chinese AMCs:Prefer CFAMCI for better risk-adjusted return profile despite the lower conviction The spreadcompression of Chinese AMC bonds continued, driven by continuous government support. Whilethe conviction levels are lower, CFAMCIs continue to be our top picks for their better risk-adjusted return profiles.Within the CFAMCI curve, we like CFAMCI 3.87511/13/29, CFAMCI 3.375 02/24/30 and CFAMCI 3.62509/30/30 for their lower cash prices at YTM of 4.6%, and provides a yield pick-up of c10-20bps over its AMCpeers. Outside CFAMCI, we like CCAMCL 4.4 Perp of which, we believe that the certainty of call onthe first call dateis also high. We are neutral on GRWALL 7.15 Perp on valuation. At 104.3, GRWALL 7.15 Perp is trading atYTC of 4.2% with the first call date in Jul’27. Consolidation of the three AMCs under CIC shows government support to continue As we have been arguing, we view the AMC sector a very strategically important constituent in maintaining thestability of the Chinese financial system. All big 4 Chinese AMCs are still be firmly in the grip of MOF. Hence,we take a top-down, instead of bottom-up, view on the sector. We view the consolidation of big three Chinese AMC, Cinda, Great Wall, and Orient, to Central HuijinInvestment (Central Huijin) showed the Chinese government’s support for the sector. The Ministry of Finance(MoF) completed the transfer of its equity holdings in three Chinese AMC to Central Huijin in Apr’25. As awholly-owned subsidiary of the China Investment Corporation (CIC), which is in turn whollyowned by the MoF,Central Huijin now acts as the controlling shareholder of these three AMCs. While the holding structure has changed, the MoF remains the ultimate beneficial owner. We view this as astrategic realignment to improve the financials, capitalization, as well as operating performance of these threeAMCs on a more commercial basis under a dedicated state capital manager. The transfer of ownership alsofollows the trajectory of China CITIC Financial AMC (CFAMCI), where CITI