China will directly increase its localized debt resources by 10 trillion yuan to drastically reduce the total hidden debt of local governments. A number of institutions believe that the implementation of the debt conversion plan may further support the strengthening of A-shares, and entities related to debt conversion actions are expected to directly benefit.

A relevant responsible comrade from the Central Finance Office said that rationally borrowing government debt for public expenditure, especially capital expenditure, is a common practice under market economy conditions, which is conducive to making good use of social savings, expanding domestic demand, enhancing public service capacity, and promoting economic development.

Currently, our government's debt ratio is around 70%, which is generally low internationally. China's government debt is mainly domestic debt. Most of it forms effective assets. There are also many other assets and resources that can be revitalized, and the overall risk of government debt is manageable.

It is necessary to develop Chinese chemical bonds, develop in chemical bonds, and effectively prevent and resolve local government debt risks.

According to the Guojungu Investment Research Report, long-term medium- and high-grade two-perpetual bonds will interpret the “core asset” logic. Pay attention to the structural opportunities of urban investment bonds within 3 years in regions benefiting from chemical bonds.

Companies with complete yield curves under the volume of industrial bonds issued by central enterprises still have room to reduce their profit margins. Fiscal debt can significantly improve local governments' cash flow statements.

Financial bonds, on the other hand, depend on local financial resources, the ability of governments at all levels to coordinate resources, and the asset quality of urban investment platforms.

In the context of CITI's exit platform and CITI's transformation, medium- to long-term investment logic may be divided. Since the implementation of the fiscal debt policy, the trend of 3-year and 5-year urban investment bonds (AA-) has diverged, indicating that the market still has differences over the investment logic of middle- and low-grade urban investment bonds after leaving the platform.

The Zhitong Finance App learned that Tianfeng Securities released a research report saying that in the past, China has mainly experienced three rounds of large-scale debt conversion actions: the first round was 2015-2017, the second round was 2018-2019, and the third round was a “package debt settlement plan” from 2023.

In the first two rounds, the pace of debt expansion in the environmental protection industry was highly linked to the rise and fall of the PPP model.

At this point, the pressure on accounts receivable has become an important reason for dragging down environmental protection industry reports. This “6+4+2” debt combination is not too strong, and is expected to have a positive impact on the public environmental protection industry.

Hong Kong stocks related to the environmental protection industry:

Dongjiang Environmental Protection (00895): Dongjiang Environmental Protection is a large group enterprise focusing on resource utilization and harmless treatment of industrial and municipal waste, recycling of rare metals, and collaborative development of water treatment, environmental engineering, and environmental testing. Currently, Dongjiang Environmental Protection has 44 hazardous waste management qualifications. The company's annual hazardous waste disposal capacity exceeds 2.8 million tons. The company headquarters and affiliated enterprises have a total of 60 units. The business network covers core areas of the hazardous waste industry such as the Pearl River Delta, Yangtze River Delta, Beijing-Tianjin-Hebei, Yangtze River Economic Belt, and the Midwest Market, serving more than 0.025 million customers.

Beijing Holdings Water Group (00371): Haitong Securities believes that as the debt conversion policy continues to advance, it is hoped that the current repayment issue will not only reduce the decline in profit margins due to credit impairment losses in the income statement, but will also further improve the sector's cash flow to maintain the high dividend ratio of water services and make up for the flaws in the original high dividend logic, thus further driving sector valuation. Dongwu Securities pointed out that early receipts from water solid waste were concerned about declining valuations, and debt-conversion and market-based reforms were promoted to resolve payment pain points and then welcome value restoration.