Group 1 - The central bank has conducted a 600 billion MLF operation today, resulting in a net injection of 300 billion, indicating a continued loose liquidity environment [1][2][3] - The average yield of medium to long-term pure bond funds since the beginning of the year is only 0.29%, marking one of the worst years for bond investments [1] - The macro leverage ratio of China's non-financial sector reached 292.2% in Q1 2025, significantly higher than the average of developed economies at 252% [1] Group 2 - Jiangxi province has issued various local government bonds with different maturities and interest rates, including a 5-year bond at 1.80% and a 30-year bond at 2.46% [2] - The central bank has been increasing MLF operations for seven consecutive months, with expectations that market interest rates will not rise significantly in the fourth quarter [2][3] - The National Development Bank ETF has shown a 1.54% increase over the past year, with a trading volume of 330.73 million as of September 24, 2025 [3] Group 3 - The management fee for the National Development Bank ETF is 0.15%, and the custody fee is 0.05%, which are among the lowest in comparable funds [4] - The tracking error for the National Development Bank ETF over the past month is 0.011%, indicating high tracking precision compared to similar funds [5]

Group 1 - The global macro leverage ratio has been continuously increasing, primarily driven by government leverage, with total global debt exceeding 350% of GDP [2][5][6] - Major economies like the US, Japan, and China have shown a trend of increasing government leverage while corporate and household leverage remains stable or decreases [5][12][41] - The US government debt interest payments are projected to exceed $1 trillion for the first time, highlighting the growing fiscal pressure [41][42] Group 2 - The structure of leverage in major economies indicates that government departments are increasing their debt levels, while businesses and households are more cautious [5][9][12] - Japan's government has maintained a high leverage ratio, yet its economy has struggled with long-term stagnation despite significant fiscal stimulus [9][12][41] - China's government leverage has risen rapidly post-pandemic, contrasting with the declining leverage in many developed countries [12][35][41] Group 3 - The increasing reliance on debt to stimulate economic growth raises concerns about the sustainability of this model, as investment returns decline [45][46] - The need for effective fiscal policy is emphasized, with suggestions for improving the efficiency of government spending and addressing social welfare needs [57][58][59] - The demographic challenges, particularly aging populations, are driving up social security expenditures, necessitating higher government spending [33][35][41]

Core Viewpoint - The article emphasizes that the world has experienced a prolonged period of relative peace since the end of World War II, leading to significant population and economic growth, but also highlights the substantial costs associated with this growth, including rising inequality and increasing public debt [1] Economic Growth and Population - Since 1945, the global population has increased from 2.5 billion to 8.1 billion, indicating a substantial demographic expansion [1] - Economic growth has outpaced population growth, but this has come at a significant cost [1] Costs of Economic Growth - The article outlines several negative consequences of economic growth, including: - Widening wealth disparity - Environmental pollution - Intensified economic conflicts between nations - Domestic debt crises [1] Debt Dependency - Major global economies are increasingly reliant on debt for growth, with the rate of debt increase surpassing economic growth rates [1] - The macro leverage ratio is continuously rising, indicating a growing dependency on borrowing [1] Recommendations for Debt Management - The article suggests several measures to address the rising public debt: - Increase transparency regarding debt levels - Make hidden debts visible - Utilize larger-scale local special bonds to replace hidden debts - Encourage local governments to obtain long-term low-interest loans from policy banks and state-owned banks to replace hidden debts [1] - It also recommends that central banks implement significant interest rate cuts and modify laws to allow central banks to purchase government bonds, thereby increasing the proportion of government bonds in central bank assets [1]

Group 1 - The article discusses the long-term global peace since World War II, leading to significant population growth and economic expansion, but also highlights the rising issues of wealth disparity, environmental pollution, and increasing national debts [1] - Global macro leverage ratios have been increasing, primarily driven by government borrowing, with government debt levels reaching historical highs post-2008 financial crisis [2][5] - The article notes that the macro leverage ratio in China has surpassed 300%, exceeding that of the US and developed countries, indicating a trend of increasing government debt [2][14] Group 2 - The structure of leverage in major economies shows that government sectors are increasing leverage while corporate and household sectors are stabilizing or reducing their leverage [5][10] - The article explains that only governments are willing to increase leverage counter-cyclically, as they can coordinate fiscal and monetary policies to create favorable borrowing conditions [7][10] - It highlights that during significant economic events, government deficits and debts tend to spike, as seen during the COVID-19 pandemic [16][19] Group 3 - The article discusses the challenges of tax reforms, noting that high-income countries tend to maintain stable tax revenues while facing pressures to reduce corporate tax rates [22][24] - It points out that the US has seen a decline in corporate tax burdens while increasing payroll taxes, potentially exacerbating wealth inequality [24][25] - Japan's tax structure has shifted towards consumption taxes, which disproportionately affect lower-income groups [27][28] Group 4 - The article emphasizes the need for increased government spending on social security due to aging populations, with the US seeing a significant rise in mandatory spending related to social welfare [31][34] - China's government has been increasing subsidies to social insurance funds significantly, indicating a growing fiscal burden due to demographic changes [37][38] - The article warns of diminishing returns on debt-driven growth, suggesting that the efficiency of using debt to stimulate economic growth is declining [49][51] Group 5 - The article suggests that China should focus on demand-side strategies to address overcapacity and low inflation, advocating for increased consumption from both government and households [51][58] - It discusses the importance of improving the efficiency of fiscal spending, shifting from construction-focused investments to social welfare and public services [54][58] - Recommendations include enhancing transparency in public debt, reducing local government hidden debts, and improving the overall fiscal framework to support sustainable growth [59][60]

Core Viewpoint - The easing of external constraints on China's monetary policy is expected due to the Federal Reserve's interest rate cuts, which will provide more room for policy adjustments [1][2]. Group 1: Monetary Policy Environment - The Federal Reserve's interest rate cuts have led to a decline in the US dollar index, reducing pressure on the RMB exchange rate [1]. - Analysts suggest that the attractiveness of RMB assets is increasing, leading to more foreign capital inflows and higher demand for RMB, which supports its appreciation [1][2]. - The potential for further interest rate cuts by the Federal Reserve may continue to alleviate pressure on the China-US interest rate differential and the RMB exchange rate, allowing for a more accommodative monetary policy environment in China [1][2]. Group 2: Internal Constraints on Monetary Policy - Internal factors, such as maintaining necessary policy space and ensuring reasonable net interest margins, pose greater constraints on China's monetary policy compared to external factors [2]. - The net interest margin of commercial banks has fallen to a new low of 1.42%, which may limit the space for further interest rate cuts [2][3]. - The need to avoid excessive liquidity that could lead to inefficient allocation of financial resources is emphasized, suggesting a preference for targeted monetary policy measures [2]. Group 3: Future Outlook for Monetary Policy - There is still room for further interest rate cuts and reserve requirement ratio (RRR) reductions, as the macroeconomic environment remains challenging [4][5]. - Analysts predict that the People's Bank of China may lower the RRR by 0.25 to 0.5 percentage points in the third and fourth quarters to enhance liquidity [6]. - The coordination between fiscal and monetary policies is expected to strengthen, focusing on optimizing the structure of financial support to key sectors [6].

Core Viewpoint - The Federal Reserve has restarted interest rate cuts, lowering the federal funds rate target range by 25 basis points to between 4.00% and 4.25%, which reduces external constraints on China's monetary policy and enhances its operational space and autonomy [2][3][4]. External Constraints - The Fed's rate cut alleviates external pressures on China's monetary policy, allowing for a more "self-directed" approach [3][4]. - The alignment of monetary policy cycles between China and the U.S. is expected to broaden China's policy space and enhance its autonomy [4]. - The depreciation of the dollar and the decline in U.S. Treasury yields following the Fed's decision have reduced pressure on the RMB exchange rate, further easing external constraints [4][5]. Internal Constraints - Internal factors, particularly the pressure on bank interest margins, pose a greater constraint on China's monetary policy than external factors [6]. - The narrowing of net interest margins for commercial banks, which fell to a new low of 1.42%, limits the space for further interest rate cuts [6][7]. - The need to maintain a reasonable net interest margin and avoid excessive liquidity that could lead to financial risks is crucial for the stability of the banking sector [6][7]. Future Outlook - There remains potential for further cuts in reserve requirements and interest rates, as the current economic environment still faces challenges [9][10]. - Analysts suggest that the People's Bank of China may lower the reserve requirement ratio by 0.25 to 0.5 percentage points in the latter half of the year to optimize liquidity [9][10]. - The focus of monetary policy will likely shift towards structural adjustments to stimulate effective demand and support key sectors, rather than relying solely on broad interest rate cuts [10].

Group 1 - The macro leverage ratio in China rose by 1.9 percentage points to 300.4% in Q2 2025, marking the first time it has exceeded 300% [1] - The increase in China's macro leverage ratio is attributed to the growth of debt outpacing nominal GDP growth [2] - By the end of 2019, the macro leverage ratios for China, Germany, Japan, and the US were 239.5%, 202%, 382.9%, and 256.3% respectively, with China's ratio showing the most significant increase by 2024 [2] Group 2 - The leverage ratio of the non-financial corporate sector in China has shown a pattern of increase since 2022, reaching 139.4% by Q3 2024, driven by accelerated investment in manufacturing and emerging industries [7] - The average asset-liability ratio of state-owned enterprises in China's A-share market is 85.6%, higher than that of non-state-owned enterprises at 78.3% [9] - The government leverage ratio in China has increased from 59.6% at the end of 2019 to 88.4% by the end of 2024, contrasting with the trends in Germany, Japan, and the US [11][13] Group 3 - China's government has effectively implemented counter-cyclical policies, resulting in a more favorable outcome compared to Western countries during economic downturns [15][20] - The increase in China's government leverage ratio is not solely linked to international financial crises, as evidenced by significant increases during periods of domestic economic challenges [20]

Core Insights - The decline in household deposits in July 2023 is interpreted as a seasonal effect rather than a significant economic indicator, as historical data shows similar trends in previous years [2][3] - The relationship between household deposit changes and stock market fluctuations is weak, with non-bank financial institutions playing a more crucial role in market movements [4][5] - The trend of "more savings, less borrowing" among Chinese households continues, indicating a persistent deleveraging process [7][10] Group 1: Household Deposits and Loans - In July 2023, household deposits decreased by 1.11 trillion yuan, which is 780 billion yuan more than the same month last year [1] - The decline in household loans in July 2023, amounting to 489.3 billion yuan, marks a shift from the previous trend of positive growth since 2009 [3] - Cumulatively, household deposits increased by 9.66 trillion yuan in the first seven months of 2023, reflecting a year-on-year increase of 720.3 billion yuan [3] Group 2: Stock Market Dynamics - The stock market's performance in July does not correlate strongly with household deposit changes, as evidenced by varying stock index movements despite significant deposit fluctuations in previous years [2][4] - Non-bank financial institutions saw an increase in deposits of 2.14 trillion yuan in July 2023, indicating a potential shift in investment behavior away from traditional bank deposits [4][5] Group 3: Deleveraging Trends - The household leverage ratio in China has slightly decreased to 61.1% as of Q2 2023, down from 62.3% in Q1 2023, indicating ongoing deleveraging efforts [7][10] - The average household loan increase in the first seven months of 2023 was only 680.8 billion yuan, a decrease of 579.4 billion yuan compared to the previous year [4] - The widening gap between new deposits and new loans, reaching 8.98 trillion yuan, highlights the trend of households prioritizing savings over borrowing [4]

Report Information - Report Title: "Bonds Rise Amid Dispute - Asset Allocation Weekly" - Date: September 7, 2025 - Analysts: Luo Yunfeng, Huang Hailan 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Report Core View - China is in a marginal de - leveraging process, with the entity sector's debt growth rate trending downward. The government aims to stabilize the macro - leverage ratio, and large - scale debt resolution is beneficial for the whole society's expectations [2][19]. - In the short - term, the capital market shows a pattern of "stock bear and bond bull", with risk preference declining. The cost - performance ratio of stocks and bonds favors bonds, and the equity style turns to value dominance [6][24]. - In the de - leveraging cycle, the cost - performance ratio of stocks and bonds favors equities to a limited extent, and the value style is more likely to be dominant. The report recommends an A + H dividend portfolio and an A - share portfolio [9][66]. 3. Summary According to the Directory 3.1 National Balance Sheet Analysis Liability Side - In July 2025, the debt growth rate of the entity sector was 9.1% (previous value 8.9%), expected to drop to about 9.0% in August and further decline to around 8% by the end of the year. The capital situation in the financial sector may be tight in September [2][19]. - The net increase of government bonds last week was 184 billion yuan (higher than the planned 156.5 billion yuan), and this week's planned net increase is 578 billion yuan. The government's debt growth rate is expected to decline to 12.5% by the end of the year [3][20]. - The one - year Treasury bond yield is expected to have a lower limit of about 1.3%, the ten - year Treasury bond yield's lower limit is about 1.6%, and the thirty - year Treasury bond yield's lower limit is about 1.8% [3][20]. Asset Side - After a brief stabilization in June, the physical quantity data declined again in July. The full - year nominal economic growth target in 2025 is about 4.9%, and it is necessary to observe whether this will become the central target for China's nominal economic growth in the next 1 - 2 years [4][21]. 3.2 Stock - Bond Cost - Performance and Stock - Bond Style - Last week, the capital situation tightened, risk preference declined, and the cost - performance ratio of stocks and bonds favored bonds. The ten - year Treasury bond yield decreased by 1 basis point to 1.84%, and the one - year Treasury bond yield increased by 3 basis points to 1.40% [6][24]. - The broad - based rotation strategy underperformed the CSI 300 index by - 1.07 pct last week and - 7.11 pct since July. The maximum drawdown was 12.1% (compared with the CSI 300's 15.7%) [6][24]. - This week, the report moderately increases the proportion of growth stocks, recommending the CSI 1000 index (80% position) and the 30 - year Treasury bond ETF (20% position) [8][27]. 3.3 Industry Recommendation 3.3.1 Industry Performance Review - This week, A - shares declined with reduced trading volume. The Shanghai Composite Index fell 1.2%, and the Shenzhen Component Index fell 0.8%, while the ChiNext Index rose 2.4%. Among the Shenwan primary industries, power equipment, comprehensive, non - ferrous metals, medicine and biology, and textile and apparel had the largest increases, while national defense and military industry, computer, non - bank finance, electronics, and steel had the largest declines [32]. 3.3.2 Industry Crowding and Trading Volume - As of September 5, the top five crowded industries were electronics, power equipment, machinery, computer, and communication, while the bottom five were beauty care, comprehensive, coal, petroleum and petrochemical, and steel [33]. - The top five industries with increased crowding this week were power equipment, commercial retail, media, medicine and biology, and basic chemicals, while the top five with decreased crowding were computer, non - bank finance, national defense and military industry, electronics, and food and beverage [33]. - As of September 5, the crowding of power equipment, communication, electronics, machinery, and commercial retail was at relatively high percentiles since 2018, while that of petroleum and petrochemical, food and beverage, agriculture, forestry, animal husbandry and fishery, transportation, and coal was at relatively low percentiles [33]. 3.3.3 Industry Valuation and Earnings - This week, among the Shenwan primary industries, real estate, coal, petroleum and petrochemical, beauty care, and textile and apparel had the largest increases in PE(TTM), while national defense and military industry, computer, non - bank finance, electronics, and communication had the smallest increases [39]. - As of September 5, 2025, industries with high full - year 2024 earnings forecasts and relatively low current valuations compared to history include banks, insurance, coal, petroleum and petrochemical, transportation, auto parts, beauty care, and consumer electronics [40]. 3.3.4 Industry Prosperity - Externally, there was a general recovery. The global manufacturing PMI rose from 49.7 to 50.9 in August, and most major economies' PMIs increased. The CCFI index decreased by 0.62% week - on - week in the latest week, and port cargo throughput rebounded [44]. - Domestically, second - hand housing prices fell in the latest week, and quantity indicators showed mixed trends. The highway truck traffic volume declined, and the ten - industry fitted capacity utilization rate continued to rise slightly from July to August [44]. 3.3.5 Public Fund Market Review - In the first week of September (September 1 - 5), most active public equity funds outperformed the CSI 300. As of September 5, the net asset value of active public equity funds was 4.05 trillion yuan, slightly up from 3.66 trillion yuan in Q4 2024 [61]. 3.3.6 Industry Recommendation - In the de - leveraging cycle, the cost - performance ratio of stocks and bonds favors equities to a limited extent, and the value style is more likely to be dominant. The recommended A + H dividend portfolio and A - share portfolio mainly focus on industries such as banks, telecommunications, petroleum and petrochemical, and transportation [66].

Group 1 - The macro leverage ratio in China has increased to 300.4% in Q2 2025, marking a significant rise from 298.5% in Q1 2025, indicating a growing debt burden associated with economic growth [1] - The rapid increase in debt levels in China is primarily driven by government departments and state-owned enterprises leveraging up [2][9] - The macro leverage ratio of China is projected to rise from 239.5% in 2019 to 286.5% by the end of 2024, showing the most significant increase among major economies [2][28] Group 2 - The leverage ratio of non-financial enterprises in China has shown a pattern of increase since 2022, reaching 139.4% by Q3 2024, driven by significant investments in emerging industries and high-end manufacturing [5][32] - The debt levels of state-owned enterprises are notably higher than those of non-state enterprises, with an average asset-liability ratio of 85.6% for state-owned enterprises compared to 78.3% for non-state enterprises [7][9] - Government leverage in China has risen from 59.6% at the end of 2019 to 88.4% by the end of 2024, contrasting with the trends in Germany, Japan, and the US, where government leverage has fluctuated [9][10] Group 3 - The nominal GDP growth in China has been slower compared to the actual GDP growth, which has implications for the macro leverage ratio as it is inversely related to the growth of nominal GDP [32][34] - The price levels in China have been declining, negatively impacting the growth of nominal GDP, which is crucial for managing the macro leverage ratio [36][37] - The efficiency of debt usage in China is under scrutiny, with suggestions for improving capital allocation and enhancing productivity to manage the rising leverage ratio effectively [38][44]