Core Insights - The article discusses the emergence of a "money shortage era" in China, characterized by a significant increase in money supply alongside a lack of liquidity among businesses, government, and consumers [1][3]. Economic Indicators - As of July 2025, China's broad money supply (M2) reached 329.94 trillion yuan, reflecting an 8.8% year-on-year growth, which is double the GDP [1]. - Despite the increase in M2, there is a prevailing sentiment of insufficient funds across various sectors, indicating a disconnect between money supply and actual economic activity [3]. Consumer Behavior Changes - There is a notable shift in consumer preferences towards cheaper cigarettes, with low-priced options becoming popular while high-end brands see declining sales due to reduced disposable income [5]. - Foot traffic in shopping malls has decreased significantly, leading to many physical stores struggling to survive, while online shopping is preferred for its cost-effectiveness and convenience [7]. - Consumers are increasingly opting for low-priced vegetables, with high-priced options seeing reduced demand as income growth stagnates [9]. - The trend of replacing household appliances has slowed, with consumers choosing to keep appliances until they break, prompting retailers to engage in price wars to stimulate demand [11]. - The second-hand market is gaining traction, with consumers purchasing used goods across various categories, including electronics and vehicles, as a cost-saving measure [13].

Group 1: Market Overview - The U.S. stock market shows strong performance, but 87.5% of stocks are either stagnant or declining, indicating a misleading overall market health [1][9][10] - Japan's economy remains sluggish, and the outlook for the Japanese stock market is not optimistic [1][13] - The European economy is largely following the U.S. trend, with concerns about sustainability once military spending increases cease [1][14] Group 2: Asset Allocation and Investment Strategy - Emphasis on growth in asset allocation, particularly in technology and innovative pharmaceuticals, driven by technological advancements [1][10] - Current corporate profit growth of 2.5% is insufficient to support a bull market in A-shares, which is characterized as a structural bull market [1][19] - Long-term bullish outlook on gold, with a recommendation to adjust asset allocation to 50% stocks, 30% bonds, and 20% gold [1][21][24] Group 3: Economic Challenges and Opportunities - The global economy is entering a phase of high volatility and low growth, with significant unresolved issues such as aging populations and national debts [3][4][5] - The AI revolution is seen as a potential driver for new business models and the emergence of dominant companies, similar to the post-dot-com bubble era [2][25] - Structural opportunities and risks are concentrated in technology stocks, with a potential for market consolidation in the AI sector [2][25]

Group 1: Economic Overview - The rapid depreciation of cash is anticipated in the coming years due to severe monetary overexpansion in China, with M2 reaching 330.29 trillion yuan and a year-on-year growth of 8.3% as of June 2025 [1] - The current economic environment is characterized by deflation, with the CPI index showing a month-on-month increase of 0.4% and year-on-year stability [1][3] Group 2: Real Estate Market - Housing prices have been declining since 2022, with an average national price drop exceeding 30%, and some cities experiencing declines over 50% [5] - Factors contributing to the continued decline in housing prices include an aging population leading to reduced demand, an oversupply of housing with 600 million units available, and decreased household income affecting purchasing power [5][6] Group 3: Education and Employment - The value of university degrees is diminishing, with 12.22 million graduates expected in 2025, leading to increased competition for jobs and many graduates resorting to low-skill employment [8] - The disconnect between university education and practical job skills is causing employers to prefer experienced candidates over fresh graduates [8] Group 4: Automotive Industry - The automotive market is experiencing significant price reductions, with domestic mid-range cars dropping by 20,000 to 30,000 yuan and imported brands by nearly 100,000 yuan [10] - Contributing factors to the price decline include an influx of electric vehicles leading to market saturation, aggressive pricing strategies from tech companies entering the automotive sector, and reduced consumer demand from middle-class families [10]

Core Viewpoint - Experts believe that the era of rapid price increases in China is approaching, primarily due to severe monetary overproduction by the central bank, with M2 reaching 330.29 trillion yuan by June 2025, which is double the GDP. However, instead of inflation, the economy is entering a deflationary cycle, with prices of goods like cars, houses, and luxury items still in a downward adjustment phase [1][3]. Economic Conditions - The deflationary cycle in the domestic economy is attributed to two main factors: despite significant monetary overproduction, much of the excess liquidity is not entering the goods or capital markets but is circulating within the financial system due to insufficient investment and consumption confidence. This has led to falling prices in the goods market [3]. - Additionally, the sluggish performance of the real economy has resulted in stagnant or declining household income, leading to a rapid shrinkage in consumer demand. Consequently, businesses face severe inventory backlogs and are compelled to lower prices to recover funds [3]. Investment Recommendations - As the economy enters a deflationary period, industry insiders advise caution regarding asset depreciation, suggesting that investors should avoid certain actions: - Do not chase high stock prices, as the recent bull market in A-shares is driven by capital inflow from low bank deposit rates, making it unsustainable [7][9]. - Exercise caution when purchasing wealth management products, as the market has seen an increase in losses, with many investors facing principal losses due to declining money market yields and rising bond market risks [11]. - Avoid investing in real estate, as the market has been in a long-term adjustment since 2022, with average housing prices dropping by 30% from their peak, and some cities experiencing declines of over 60% [13]. - Refrain from blind entrepreneurship, as the success rate is low in a shrinking market, with rising costs and intense competition posing significant challenges [15]. Market Outlook - Starting in September, there may be a need to prepare for asset depreciation, as both real estate and stock markets exhibit significant bubbles and lack long-term investment value. In a deflationary context, risks associated with bank wealth management products and entrepreneurship are high, potentially leading to principal losses. It is recommended to consider low-risk investment products, such as government bonds and large-denomination certificates of deposit, to preserve capital and take advantage of future investment opportunities when asset bubbles burst [16].

Core Viewpoint - The fastest depreciating asset in China over the next five years is not cash, but rather real estate, automobiles, luxury goods, and university degrees due to various economic factors and changing consumer behavior [1][3][5]. Group 1: Economic Context - As of June, the broad money supply (M2) in China reached 330.29 trillion yuan, growing by 8.3% year-on-year, indicating severe monetary overexpansion [1]. - The current economic growth rate has significantly slowed, reducing the likelihood of hyperinflation, with the Consumer Price Index (CPI) showing a slight deflation of -0.1% in the first half of 2025 [3]. Group 2: Depreciating Assets - **Real Estate**: Since 2022, housing prices have been in a long-term adjustment phase, with an average decline of 30% from historical highs, and some cities experiencing declines over 60% [5][7]. - **Automobiles**: A price war among domestic and foreign car brands is leading to significant depreciation, with mid-range cars dropping by 20,000 to 30,000 yuan and luxury brands seeing reductions of nearly 100,000 yuan [9]. - **Luxury Goods**: The global luxury goods market has seen a decrease of 50 million consumers, with 65.9% of consumers reducing purchases due to perceived low value for money, leading to price cuts from brands like Gucci and Burberry [11]. - **University Degrees**: The rapid increase in university enrollment has led to a devaluation of degrees, as employers now prioritize experience over academic qualifications, resulting in a surplus of graduates in the job market [13].

Group 1 - The long-term outlook indicates that the dollar credit system is under challenge due to excessive monetary issuance and the monetization of fiscal deficits, leading to increased demand for gold as a safe asset amid global geopolitical instability [1] - The trend of "de-dollarization" globally suggests that gold may become a new pricing anchor, providing upward momentum for precious metals [1] - The People's Bank of China continues to increase its gold reserves, reporting a total of 73.9 million ounces as of the end of June, with an increase of 70,000 ounces month-on-month, marking the eighth consecutive month of gold accumulation [1] Group 2 - The gold stock ETF (code: 517400) tracks the SSH Gold Stock Index (code: 931238), which is compiled by China Securities Index Co., Ltd., selecting 50 large-cap listed companies involved in gold mining, smelting, and sales from the mainland and Hong Kong markets [1] - The index constituents include gold mining companies and jewelry firms, reflecting significant industry concentration characteristics [1] - Investors without stock accounts can consider the Cathay CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF Initiated Link C (021674) and Initiated Link A (021673) [1]

Economic Overview - In the first half of 2025, China's GDP grew by 5.3% year-on-year, ranking among the top major economies globally [1] - The per capita disposable income for residents reached 21,840 yuan, also reflecting a nominal growth of 5.3% compared to the same period last year [1] - The Consumer Price Index (CPI) showed a slight decline of 0.1% year-on-year, indicating a stable yet decreasing trend in domestic prices [1] Real Estate Market Changes - The real estate market continued to experience a decline in both volume and price, with new residential sales area down by 3.5% and sales value down by 5.5% in the first half of 2025 [5] - A significant change in housing prices is expected, with a divergence in price trends across different cities; cities with previously larger declines may see a slowdown, while major cities like Shanghai and Shenzhen may face further price drops [5] - The pre-sale system for commercial housing is anticipated to be gradually abolished, with an increase in the proportion of completed homes for sale, allowing buyers to view properties before purchasing [7] - The government plans to accelerate the market entry of affordable housing, aiming to provide 6 million units over the next five years, which will likely reduce costs for buyers and exert downward pressure on market prices [7] Automotive Market Dynamics - The automotive market is experiencing a price reduction trend, with many brands reducing prices by 20,000 to 30,000 yuan for mid-range vehicles and up to 90,000 yuan for luxury cars [9] - Factors contributing to this price reduction include an influx of new energy vehicles, increased competition from tech companies entering the automotive sector, and a decline in demand due to reduced middle-class incomes [9] Banking and Savings Landscape - Concerns are rising that holding cash may become less valuable due to excessive money supply, with M2 reaching 326 trillion yuan, over twice the GDP of 2024 [11] - Despite a slight decline in CPI, the economy is currently experiencing deflation rather than inflation, as excess money is not circulating into the economy [11] - Although deposit rates have fallen to historic lows, further declines are expected to be limited, as extremely low rates may lead to significant withdrawals from banks, increasing financing difficulties [13]

Group 1: Economic Overview - The future expectation is that cash will depreciate rapidly due to severe domestic currency overproduction, with M2 reaching 330 trillion, double that of the US and more than the combined total of Europe and Japan [2] - Despite the expectation of inflation, the economy is currently in a deflationary cycle, with CPI down 0.1% year-on-year in the first half of the year, indicating a trend of stable but declining prices [2] - The lack of rapid depreciation of currency is attributed to two main reasons: insufficient confidence among businesses and consumers leading to a shrinking loan market, and a weak real economy causing reduced consumer income and spending power [2] Group 2: Real Estate Market - Since 2022, domestic housing prices have entered a long-term adjustment phase, with declines observed in second and third-tier cities, and first-tier cities like Shanghai and Shenzhen also experiencing price drops [5][7] - In Shanghai, housing prices have fallen from over 90,000 yuan per square meter to over 60,000 yuan, a decline exceeding 30%, with expectations of further decreases as prices return to reasonable levels [5][7] - The decline in housing prices is driven by three factors: extensive real estate regulation since 2016, reduced consumer income and purchasing power, and a prolonged decline in prices leading to a lack of investment appeal [7] Group 3: Automotive Market - The automotive market is experiencing a price drop, with some models from brands like Honda and Chevrolet seeing reductions of over 60,000 yuan, while domestic brands like Geely and BYD are also engaging in price promotions [6][9] - Average price reductions in the automotive sector range from 20,000 to 30,000 yuan, with some models dropping from 220,000 yuan to 180,000 yuan, indicating a continuing price war in the coming years [6][9] - Factors contributing to the decline in automotive prices include an oversupply due to the influx of electric vehicles, reduced purchasing plans among middle-income consumers, and increased competition from tech companies entering the automotive sector [9]

Group 1 - The core issue is the paradox of high money supply (M2 over 326 trillion, up 7% year-on-year) leading to deflation rather than inflation, as evidenced by the CPI data showing a 0.2% month-on-month and 0.1% year-on-year decline [1][3][4] - The first reason for the low prices is that the excess money is not circulating in the economy but is stuck in banks and financial institutions, similar to water flowing in pipes without reaching the fields [3] - The second reason is that consumers are hesitant to spend due to a challenging economic environment, leading to reduced demand and price drops as businesses try to clear excess inventory [4] Group 2 - Cash holders benefit from increased purchasing power during deflation, as prices for goods like pork and cars have significantly decreased, allowing them to buy more with the same amount of money [6][12] - Cash provides a hedge against investment risks, as many have faced significant losses in stocks and funds, making bank savings a safer option despite lower interest rates [8][12] - Having cash allows individuals to respond to emergencies or job losses without immediate financial pressure, providing a buffer during uncertain times [10][12] Group 3 - Cash holders can take advantage of potential investment opportunities when asset prices return to reasonable levels after deflation, positioning themselves for future gains [12] - The economic landscape is dynamic, and while cash is valuable now, it is essential to plan for future changes and diversify asset allocation to navigate different economic conditions effectively [14]

Core Insights - The domestic economy is experiencing a paradox where there is significant monetary overproduction, with M2 balance reaching approximately 325 trillion yuan, double the GDP, while all sectors of society are facing a cash shortage [1] - The lack of confidence in various markets is leading to a prolonged recovery period for restoring trust in the economy [1] Changes in Economic Behavior - Change 1: Government and public sector jobs are no longer seen as a "safe haven," with plans to reduce non-staff personnel by 20% annually in Heilongjiang Province and salary cuts in various regions due to declining fiscal revenues [3][5] - Change 2: The number of homebuyers is decreasing despite various market stimulus policies, as falling property prices and reduced incomes lead to a pessimistic outlook on future housing prices [3][7] - Change 3: More individuals are choosing to save money in banks, with new deposits reaching 9.22 trillion yuan in the first quarter of 2025, driven by a desire to prepare for uncertainties like unemployment and health issues [3][9] - Change 4: There is a noticeable downgrade in consumer spending, with high-end goods seeing reduced sales while demand for low-cost options in dining and entertainment is increasing due to stagnant or declining incomes [3][11] - Change 5: Marriage and birth rates are experiencing a sharp decline, with marriage registrations dropping to 1.81 million pairs in the first quarter of 2025, a decrease of 159,000 pairs year-on-year, and birth rates falling to 1.95 million, the lowest in nearly a decade [3][14][15]