Core Insights - The public fund market in China reached a record high of 36 trillion yuan in August 2025, marking a growth of 1.18 trillion yuan from July, with a growth rate of 3.36% [1][2] Fund Categories Summary - **Equity Funds**: The scale reached 5.55 trillion yuan in August, increasing by 628.07 billion yuan from June, with a growth rate of 12.76%. The number of shares increased by 79.67 billion from July, a growth of 2.32% [2][3] - **Mixed Funds**: The scale was 4.16 trillion yuan in August, with an increase of 332.70 billion yuan, representing a growth rate of 8.69%. However, the number of shares decreased by 45.01 billion from July, a decline of 1.50% [2][3] - **Money Market Funds**: The scale reached 14.81 trillion yuan, with an increase of 196.35 billion yuan, reflecting a growth rate of 1.34%. The number of shares increased by 190.42 billion from July, a growth of 1.30% [2][3] - **Bond Funds**: The scale was 7.21 trillion yuan, with a decrease of 28.51 billion yuan, representing a decline of 0.39%. The number of shares decreased by 95.15 billion from July, a decline of 1.62% [2][3] - **Cross-Border Funds (QDII)**: The scale reached 797.32 billion yuan, increasing by 67.27 billion yuan, with a growth rate of 9.21%. The number of shares increased by 51.65 billion from July, a growth of 8.64% [2][3] Market Trends - The mixed fund category experienced significant net redemptions, totaling 450 billion yuan in August and 370 billion yuan in July, indicating a total net redemption of 820 billion yuan over two months [3][4] - The bond market saw a notable shift, with net redemptions of bond funds reaching 951 billion yuan in August, a decrease from 1.944 trillion yuan in July, as funds moved towards equity markets [5] - Non-bank deposits in China showed significant growth, with an increase of 5.87 trillion yuan in the first eight months of 2025, accounting for 28.63% of the total increase in RMB deposits during the same period [6][7]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The surge in non - bank deposits is not simply due to "deposits entering the market." It is influenced by government fiscal funds, enterprise "manual interest compensation" policy changes, and the transfer of residents' excess net savings [17][18]. - The current equity market rally may have some sustainability. If the A - share market rises steadily, about 3.3 trillion yuan of residents' "excess net savings" may continue to transfer, with 0.49 - 0.82 trillion yuan potentially entering the equity market [5][18]. 3. Summary According to the Directory 3.1 Non - bank Deposits Surge is Not Simply "Deposits Entering the Market" - In August 2025, the newly - added household deposits were only 110 billion yuan, the lowest in the same period in the past decade. In contrast, the newly - added non - bank financial institution deposits were 1180 billion yuan, significantly exceeding the seasonal level for two consecutive months [19]. - The view of "deposits entering the market" has methodological flaws, as the "household deposits/A - share total market value" ratio is affected by stock price changes and ignores data seasonality [19][21]. - The seasonal fluctuations of household deposits are mainly due to seasonal consumption demand and bank deposit assessment at the end of the half - year. The seasonal fluctuations of non - bank deposits are related to bank MPA assessments and the scale increase of bank wealth management products [21][25]. 3.2 Support Factor from the Government: Lubrication Effect of Active Fiscal Fund Allocation - As of August 2025, the balance of fiscal deposits was 7.8 trillion yuan. Fiscal deposits are mainly affected by broad fiscal revenues and expenditures and government bond net financing [30]. - In 2025, fiscal front - loading provided sufficient funds for government deposits. However, fiscal revenue showed a situation of "high financing, low precipitation," which may be related to the improvement of fiscal expenditure efficiency and the conversion of fiscal funds into entity - sector deposits [31][38]. 3.3 Support Factor from Enterprises: Persistent Scar Effect of Canceling the "Manual Interest Compensation" Policy 3.3.1 Calculation of the Proportion of "Ultra - compliant" Deposits Based on the Annual Reports of Listed Banks - Since the end of 2022, the central bank and regulatory authorities have introduced policies to guide large banks to increase credit investment in specific areas, resulting in more enterprise deposits being concentrated in large - bank systems [45]. - Banks have taken multiple measures to reduce deposit costs, but the effect is not obvious. The main reasons are the regular - ization of household deposits and the high cost of enterprise deposits affected by "manual interest compensation" [47][50]. - After the "manual interest compensation" was stopped in April 2024, about 40% of the current deposits of large state - owned and joint - stock banks were estimated to be "ultra - compliant" deposits. However, not all of these deposits will flow out immediately [56][61]. 3.3.2 Calculation of the Proportion of "Ultra - compliant" Deposits Based on the Trend of Enterprise Current Deposits in the Credit Caliber - After the cancellation of "manual interest compensation," the year - on - year decline of enterprise current deposits significantly expanded. From April to August 2024, the cumulative year - on - year over - reduction scale was 4502.42 billion yuan, accounting for about 18.3% of the total balance at the end of March 2024 [65][69]. 3.3.3 Two Factors for the Improvement of Enterprises' Short - term Capital Position - The issuance of government bonds and the allocation of fiscal funds have accelerated, injecting liquidity into the enterprise sector. The increase in settlement demand has led to an increase in RMB funds, which has also promoted the recovery of enterprise current deposits [70][71]. 3.4 Support Factor from Residents: Maturity Transfer of Excess Net Savings 3.4.1 Historical Review of Two Rounds of Residents' "Deposit Outflows" - From 2009 - 2011, residents' savings first flowed into the stock and real - estate markets and then into wealth management and trust products. This was due to the economic stimulus policies after the financial crisis and the subsequent tightening of monetary policy to control inflation [78][82]. - From 2014 - 2016, the bull markets in stocks and bonds, the rise of Internet finance, and the relaxation of real - estate policies led to the diversion of residents' deposits [89][102]. 3.4.2 Calculation of the Precipitated "Savings" with Migration Potential in the Resident Sector - Since 2020, residents' savings have significantly deviated from the linear trend, mainly in the form of regular deposits. As of August 2025, the excess regular savings were about 47.75 trillion yuan, while the excess current savings were only 0.33 trillion yuan [111][115]. - The concept of "excess net savings" is introduced to measure the real "excess" savings accumulation by considering both the asset and liability sides of the resident sector [118]. 3.5 The Bull Market Continues, and 3.3 Trillion Yuan of Deposits May Continue to Transfer This Year, with 0.49 - 0.82 Trillion Yuan Potentially Entering the Market - From June to August 2025, the "deposit transfer" of residents may be in the initial stage, mainly due to the transfer of matured "excess net savings" rather than a fundamental change in residents' risk preference [5][18]. - The equity market rally may have some sustainability. Leveraged funds, medium - and long - term funds entering the market, and foreign capital may support the market. If the A - share market rises steadily, about 3.3 trillion yuan of funds may continue to transfer, with 15% - 25% (about 0.49 - 0.82 trillion yuan) potentially entering the equity market [5].

Core Viewpoint - The recent increase in non-bank deposits by 1.18 trillion yuan in August, a year-on-year increase of 550 billion yuan, has sparked significant market interest, with differing opinions among analysts regarding the reasons behind this growth [1][2]. Group 1: Reasons for Non-Bank Deposit Increase - One perspective suggests that the increase in non-bank deposits is primarily due to the growth in stock account margins, as residents shift their savings into brokerage margin accounts and equity mutual funds [3]. - According to China International Capital Corporation (CICC), the increase in non-bank deposits correlates with a decrease in resident deposits, which grew by only 110 billion yuan in August, a year-on-year decrease of 600 billion yuan. This shift is attributed to the active capital market environment [3]. - Another viewpoint from Everbright Securities indicates that the "wealth effect" from a strong equity market has led to a transfer of resident deposits into non-bank deposits, with trading volumes in the stock market nearing peak levels [4]. Group 2: Alternative Explanations - Some analysts, like those from Xinda Securities, argue that the increase in non-bank deposits may also stem from a rising willingness to hold cash in non-bank products, especially given the weak bond market conditions in August [5]. - Huaxi Securities highlights that while the stock market's performance has driven some deposits into brokerage accounts, the overall speed of capital inflow into the market may not meet expectations, as evidenced by the number of new stock accounts opened in August [5]. - Additionally, data from the top 14 wealth management companies shows a net increase in their balances, suggesting that a portion of the funds may have flowed into non-bank deposits from wealth management products [6]. Group 3: Historical Context and Future Implications - Historical analysis by Galaxy Securities indicates that signs of a "deposit migration" are emerging, with a continuous decline in resident deposit growth and a potential shift towards equity assets [7]. - The correlation between non-bank deposit growth and the performance of the CSI 300 index has been noted, suggesting that the recent increase in non-bank deposits may reflect a broader trend in the equity market [8].

Summary of Conference Call Notes Industry Overview - The focus is on the bond market and macroeconomic conditions in China, particularly in relation to interest rates and economic growth forecasts [1][2][3][4][5][6]. Key Points and Arguments 1. **Economic Data Predictions**: August economic data is expected to weaken due to factors like anti-involution policies, but a rebound may occur in September due to seasonal end-of-quarter effects. If the current pace of industrial value-added growth is maintained, it could exceed 6% for the year, with GDP growth projected above 5% [1][4][5]. 2. **Bond Market Performance**: The bond market is currently underperforming, influenced by seasonal institutional behaviors and regulatory pressures. However, there may be opportunities in the fourth quarter [6]. 3. **Impact of New Lending Regulations**: New regulations on centralized lending are expected to have limited short-term negative effects but aim to improve market mechanisms in the long term, benefiting short-selling activities [7]. 4. **Conditions for Resuming Government Bond Trading**: The resumption of government bond trading is contingent on factors such as Sino-US relations, economic fundamentals, fiscal expansion, and financial risks. There is a high necessity for this to occur within the year [8][9]. 5. **Market Impact of Resuming Bond Trading**: Resuming government bond trading is seen as a positive development for the market, increasing demand for bonds, providing medium to long-term liquidity, and reducing costs for financial institutions, which helps stabilize market expectations [10]. 6. **Social Financing Data**: Recent social financing data shows a decline in growth for August, raising concerns about whether this trend will continue and if local government debt funds will be disbursed early in the fourth quarter [11]. 7. **Trends in Deposits**: There is a notable decrease in resident deposits below seasonal norms, while non-bank deposits have surged, primarily due to the expansion of wealth management products leading to financial disintermediation. This trend should not be simplistically interpreted as funds moving into the stock market [12][13]. Additional Important Insights - **Investment Strategy Recommendation**: In the current high-interest rate environment, a barbell strategy is recommended for investment portfolios, focusing on medium to high-grade credit bonds for the short term and long-term government bonds for flexibility [2][14]. Specific recommendations include 25T6 for three-year government bonds and 250,215 for ten-year bonds from the China Development Bank [2][14].

Core Viewpoint - The most significant change in the August financial data is the acceleration of "deposit migration," with household deposits declining for two consecutive months beyond seasonal trends, while non-bank deposits have seen a substantial increase [2][8][53]. Group 1: Deposit Trends - In August, household deposits decreased by 6000 million year-on-year, with a net increase of only 1100 million, marking two consecutive months of negative growth compared to seasonal averages, a first for 2025 [2][5][8]. - Non-bank deposits reached a record high for the same period, with an increase of 11800 million, indicating a shift in asset structure among residents [2][5][8]. - The relationship between household and non-bank deposits reflects a "seesaw" effect closely tied to capital market performance, suggesting early signs of changes in residents' asset allocation [2][8][53]. Group 2: Loan Trends - Household loans remain weak, with a year-on-year decrease of 1597 million, consistent with low consumer confidence levels [2][14][53]. - The consumer loan interest subsidy policy only started in September, meaning August data does not reflect its impact [2][14][53]. - The employment outlook is uncertain, as indicated by the Business Confidence Index (BCI) for hiring expectations, which fell to 44.07 in August, the lowest since March 2020 [2][14][53]. Group 3: Corporate Loan Dynamics - In August, the growth rate of medium and long-term corporate loans showed signs of stabilization, while short-term loans and bill financing decreased by 0.4 percentage points to 9.7% [3][20][54]. - The Producer Price Index (PPI) rebounded to -2.9% year-on-year, and the Purchasing Managers' Index (PMI) for business expectations rose from 52.6 to 53.7, indicating a potential shift in corporate investment attitudes from cautious to watchful [3][20][54]. Group 4: Social Financing and Policy Outlook - The growth rate of social financing stock declined by 0.2 percentage points to 8.8%, primarily due to the end of front-loaded fiscal financing [3][26][54]. - From January to July 2025, social financing stock growth accelerated from 8.0% to 9.0%, largely driven by front-loaded government bond financing, which totaled an additional 4.8 trillion [3][26][54]. - Future fiscal and monetary policy coordination may provide marginal support for the stability of social financing, with new subsidy policies and innovative financial tools expected to enhance credit and social capital mobilization [3][29][54]. Group 5: Overall Financial Data - In August, new credit totaled 5900 million, a year-on-year decrease of 3100 million, primarily from the corporate sector [4][36][56]. - The total social financing in August was 25700 million, down 4623 million year-on-year, mainly due to government bonds [4][36][56]. - M2 growth remained steady at 8.8%, while the new M1 increased by 0.4 percentage points to 6% [5][43][57].

Core Viewpoint - The article discusses the recent trend of "deposit migration" in China, where residents are moving their savings from traditional bank deposits to non-bank financial institutions, correlating this behavior with the performance of the domestic stock market [3][6]. Financial Data Summary - In August, resident deposits decreased by 110 billion yuan, a year-on-year decline of 600 billion yuan, marking two consecutive months of negative growth [5][6]. - Non-bank deposits increased by 1.18 trillion yuan in August, showing a significant year-on-year increase of 550 billion yuan, despite a month-on-month decline [5][6]. - The M1-M2 gap narrowed to -2.8%, the lowest since June 2021, indicating enhanced liquidity and a shift towards more active funds [5][6]. Deposit Structure Changes - The structure of deposits shows a clear trend of residents moving funds into the stock market, as evidenced by the contrasting changes in resident and non-bank deposits [6][7]. - The increase in non-bank deposits is interpreted as a signal of residents preparing to invest in capital markets, reflecting a shift in asset allocation [6][9]. Market Dynamics - The article highlights that the increase in non-bank deposits is often linked to a bullish stock market, with the performance of the stock market influencing the flow of funds into non-bank financial products [9][10]. - Analysts suggest that the current trend of deposit migration is likely to continue, driven by declining deposit attractiveness and a robust capital market [10][11]. Consumer Behavior Insights - Despite the increase in non-bank deposits, there remains a cautious attitude among residents regarding future economic conditions, with a strong inclination towards saving rather than spending or investing [11][12]. - The report indicates a persistent trend of deleveraging among residents, with a notable decrease in household loans, reflecting a broader economic caution [11][12]. Policy Implications - The article emphasizes the importance of government policies aimed at stimulating consumer spending, including direct incentives and loan support measures [12]. - It suggests that sustained improvements in employment and income are crucial for reviving consumer demand and stabilizing retail loan growth [12].

Investment Rating - The report maintains a "Positive" investment rating for the banking industry, indicating an expectation of returns exceeding the market benchmark by more than 5% [9][24]. Core Viewpoints - The growth rate of social financing (社融) has declined for the first time this year, primarily due to weak credit demand and a decrease in government bonds, with August's social financing year-on-year growth at 8.8% and a month-on-month decrease of 0.2 percentage points [9][10]. - The report highlights a significant drop in new loans, with a year-on-year decrease of 3,100 billion yuan in August, reflecting ongoing challenges in the credit market [14][20]. - M1 growth shows a trend of improvement, with a year-on-year increase of 6.0% in August, although non-bank deposits have cooled compared to previous months [20][21]. Summary by Sections Social Financing and Credit - In August 2025, social financing increased by 1.16 trillion yuan, which was higher than market expectations, but still represented a year-on-year decrease of 4,630 billion yuan [9][10]. - The report notes that the decline in social financing is largely driven by a reduction in both corporate loans and government bonds, with corporate direct financing also seeing a slight decrease [11][12]. Loan Dynamics - Total RMB loans grew by 6.8% year-on-year in August, with new loans amounting to 590 billion yuan, slightly above expectations but still reflecting a year-on-year decrease [14][15]. - The report identifies a "seesaw" effect between short-term corporate loans and bill discounting, indicating a strategic shift in bank lending practices [15][16]. Deposit Trends - In August, M1 and M2 growth rates were 6.0% and 8.8% respectively, with a narrowing gap between the two [20][21]. - New RMB deposits totaled 2.06 trillion yuan, with a year-on-year decrease of 1,600 billion yuan, indicating a shift in deposit behavior among residents and enterprises [22][23]. Investment Recommendations - The report suggests focusing on two main investment themes: high-dividend stocks due to insurance rate adjustments and fundamentally strong small to medium-sized banks [24]. - Specific stock recommendations include China Construction Bank, Industrial and Commercial Bank of China, and others, with some rated as "Buy" [24].

Core Viewpoint - The data from August indicates a continued trend of deposit migration, with a significant increase in non-bank deposits, suggesting a shift of funds from traditional savings to more active investment avenues like the equity market [1][4][5]. Group 1: Deposit Trends - In August, total new deposits reached 2.06 trillion yuan, with only 110 billion yuan coming from new resident deposits, a year-on-year decrease of 600 billion yuan [4]. - Non-bank deposits saw a substantial increase of 1.18 trillion yuan in August, following a record increase of 2.14 trillion yuan in July, marking the highest level since 2015 [5][4]. - The M1 growth rate expanded to 6.0% year-on-year in August, while M2 growth remained at 8.8%, narrowing the M1-M2 spread to 2.8%, the lowest in nearly 51 months [1][3]. Group 2: Market Implications - The acceleration of deposit migration is believed to be driven by a recovering equity market, with analysts suggesting that the stock market may be a primary destination for these funds [5][7]. - The number of new A-share accounts opened in August reached 2.65 million, a month-on-month increase of over 30%, indicating a growing interest from retail investors [8]. - Public fund market data shows a significant increase in equity fund subscriptions, with stock funds seeing a net increase of 108.79 billion units and a growth in scale of 485.54 billion yuan in August [12][13]. Group 3: Fund Market Dynamics - The total public fund market size grew by 571.66 billion yuan in August, alongside a 285.7 billion yuan increase in wealth management products, aligning closely with the 1.18 trillion yuan increase in non-bank deposits [12][13]. - The share of household deposits in the A-share market was 53% in July, indicating potential for further growth as the market recovers [13].

Core Viewpoint - In August, non-bank deposits in China continued to increase significantly, contributing to the overall growth in RMB deposits for the year [2] Group 1: Deposit Growth - In the first eight months of the year, RMB deposits increased by 20.5 trillion yuan [2] - Household deposits rose by 9.77 trillion yuan, while non-financial enterprise deposits increased by 610.6 billion yuan [2] - Fiscal deposits grew by 2.21 trillion yuan, and deposits from non-bank financial institutions increased by 5.87 trillion yuan [2] Group 2: August Data - As of the end of August, the balance of RMB deposits reached 322.73 trillion yuan, reflecting a year-on-year growth of 8.6% [2] - Preliminary statistics indicate that approximately 2.06 trillion yuan in new RMB deposits were added in August [2] - Non-bank deposits alone increased by about 1.18 trillion yuan in August, showing a significant year-on-year increase compared to the same month last year [2]

Core Viewpoint - The significant increase in non-bank deposits in July, reaching 2.14 trillion yuan, is attributed to the active financial investment environment and the potential flow of funds into the stock market, reflecting a shift in investor behavior amidst changing interest rates and market conditions [2][3][5]. Group 1: Non-Bank Deposits - Non-bank deposits increased by 2.14 trillion yuan in July, the highest level for the same period since 2015, with a year-on-year increase of 1.39 trillion yuan [2][5]. - The growth in non-bank deposits is linked to the rising activity in the capital markets, with many analysts suggesting that these funds may be redirected towards equities [3][4]. - The total increase in non-bank deposits from January to July reached 4.69 trillion yuan, which is 1.73 trillion yuan more than the same period last year [3][4]. Group 2: Market Dynamics - The increase in non-bank deposits is seen as a reflection of the current liquidity in financial institutions, indicating that the market remains relatively flush with cash [4]. - Analysts note that the relationship between non-bank and resident deposits suggests a "see-saw effect," where the recovery in capital markets and declining interest rates drive residents to move their savings into non-bank financial institutions [3][4]. - The stock market's performance has been robust, with high trading volumes contributing to the growth of margin deposits at securities firms, further supporting non-bank deposit increases [3][4]. Group 3: Investor Behavior - There is a distinction between high-net-worth investors entering the market and the general public, with the latter not significantly increasing their direct stock market participation [8][9]. - The current environment shows that while high-net-worth individuals are actively investing, retail investors are primarily channeling their funds into bank wealth management products rather than directly into equities [8][9]. - The overall participation of retail investors remains low compared to previous market peaks, indicating a cautious approach to entering the stock market [9].