Core Viewpoint - The recent data from the central bank indicates a significant outflow of bank deposits, with a total decrease of 2.46 trillion yuan in the first five months of the year, contrasting with an increase of 987.3 billion yuan in the same period last year. The month of May alone saw a direct evaporation of 1.17 trillion yuan in deposits, marking four consecutive months of net outflow, raising concerns about the declining attractiveness of bank deposits, particularly for small and medium-sized banks [1]. Group 1: Reasons for Deposit Outflow - The continuous reduction of bank deposit interest rates over the past two years has led to rates dropping to historical lows in the "1 era," prompting depositors to seek better returns elsewhere [4]. - Many depositors are increasingly investing in bank wealth management products, with a notable increase of 2.1 trillion yuan in April, bringing the total scale to 31.3 trillion yuan, as the annualized yield of these products (2.4%-2.8%) significantly exceeds that of traditional bank deposits [6]. - A substantial portion of the outflow, approximately 33.4% or 820 billion yuan, has been redirected to the A-share market, with new retail investor accounts surging by 62.3%, adding 8.73 million new investors [9]. - Public funds have seen a dramatic increase, with the total scale surpassing 29.7 trillion yuan by the end of May, reflecting a 3.6 trillion yuan increase since the beginning of the year, as many individuals prefer professional management over direct stock investments [12]. - Some individuals are withdrawing deposits to pay off mortgages early, motivated by the disparity between previous mortgage rates (5.88%) and current rates (around 3%), as well as declining property values [14]. Group 2: Impact on Consumption - The decline in deposit interest income has led some depositors to increase their consumption, contributing to a recovery in the low-end consumer market, with retail sales reaching 19.3 trillion yuan in the first five months, a year-on-year growth of 5.2% [16]. - While low-end consumption is rebounding, demand for high-end goods such as automobiles, luxury items, and real estate remains sluggish, indicating a mixed recovery in consumer spending [16].

Core Viewpoint - The article emphasizes the importance of balancing offensive and defensive assets in investment portfolios, particularly during uncertain market conditions. Defensive assets serve as a "stabilizing force" to protect investors' wealth amidst market volatility [2][32]. Group 1: Understanding Defensive Assets - Defensive assets are categorized as those that maintain stable intrinsic value and exhibit lower price volatility during market fluctuations, contrasting with risk assets that are more sensitive to market changes [4]. - The two primary functions of defensive assets are to reduce portfolio volatility and provide high credit quality and liquidity, ensuring stable cash flow during market downturns [4]. Group 2: Types of Defensive Assets - **Cash and Cash Equivalents**: High safety and liquidity, including money market funds that can be accessed anytime without fees [6][8]. - **Bond Assets**: Fixed income with potential for interest and price appreciation, with government bonds offering more stability than corporate bonds [10][11]. - **Dividend Assets**: Provide regular cash flow through dividends, performing well in bear markets and benefiting from valuation recovery in bull markets [14][15]. - **Gold**: Recognized as a "safe haven" asset during crises, maintaining value better than fiat currencies [16][18]. - **Commodities**: Stable demand and serve as a hedge against inflation, with specific commodities like oil and metals being particularly relevant during supply disruptions [20][21]. Group 3: Performance of Defensive Assets in Different Scenarios - **Economic Deflation**: Bond assets perform best due to liquidity and declining interest rates, while commodities lag [24][26]. - **Stagflation**: Commodities excel as inflation rises, while bonds struggle due to tightening monetary policy [28]. - **Geopolitical Conflicts**: Gold prices tend to rise significantly during conflicts, reflecting its status as a hard currency [30][31]. Group 4: Conclusion - In the current complex investment landscape, incorporating defensive assets into portfolios is essential. Diversifying across different types of defensive assets can enhance overall portfolio resilience [32].

Core Viewpoint - The current economic environment in China is characterized by significant monetary expansion leading to potential inflation, yet consumer prices are experiencing deflation, creating a paradox for cash holders who may benefit from increased purchasing power [1][3]. Group 1: Economic Context - The M2 money supply reached 326.06 trillion yuan in Q1, with a year-on-year growth of 7%, indicating severe monetary overexpansion [1]. - Despite the monetary expansion, the consumer price index (CPI) fell by 0.4% year-on-year in Q1, suggesting a deflationary trend in the economy [1][3]. - The deflation is attributed to two main factors: funds not flowing into the goods market and a decline in consumer demand due to economic downturns, leading to significant inventory accumulation [3]. Group 2: Advantages of Holding Cash - Cash holders are experiencing increased purchasing power, as prices for goods such as pork have dropped from 26-28 yuan per jin to 18-20 yuan per jin, and mid-range cars have decreased in price from 250,000 yuan to 160,000-180,000 yuan [5]. - Holding cash allows individuals to avoid risks associated with financial markets, where stock market losses have averaged 140,000 yuan per investor in 2024, and public funds have seen losses of 20-30% [7]. - In times of economic uncertainty, having cash provides a safety net against unemployment and unexpected expenses, allowing individuals to navigate financial difficulties more comfortably [9]. - Cash holders are positioned to seize new investment opportunities as asset prices decline during the deflationary cycle, enabling them to acquire undervalued assets in the future [11].