1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The weak sentiment in the bond market persists, and it is waiting for the negative factors to materialize. The expectation of interest rate cuts within the year has weakened, and the improvement in inflation expectations continues to constrain the decline of Treasury bond yields. However, the current situation of the fundamentals and the capital market does not support a trend - like rebound in yields, so the bond market trend remains uncertain [6][70]. - Although the rumors of strict public - offering sales regulations and increased fund redemptions have intensified short - term fluctuations, preventive adjustments help release potential risks in advance, and regulatory statements have sent out signals to stabilize the market, so there is no excessive pessimism about the subsequent unilateral trend of the bond market [6][70]. - The current slope of the medium - and short - term end of the yield curve is relatively flat, and the long - term end is steeper. Curve trading may require event - driven factors such as interest rate cuts, inflation, or real - estate policies [6][70][71]. 3. Summary by Directory 3.1 First Part: Preface Summary 3.1.1 Market Review - In November, the bond market did not continue the previous month's recovery trend. Near the end of the month, rumors of the upcoming implementation of public - offering sales regulations resurfaced, and market sentiment quickly weakened. As of the mid - day on November 28, the main contracts of TS, TF, T, and TL decreased by 0.12%, 0.25%, 0.48%, and 1.68% respectively within the month. As of the close on November 27, the IRR of the main contracts of TS, TF, T, and TL were approximately 1.6325%, 1.6068%, 1.6707%, and 1.7541% respectively [5]. 3.1.2 Market Outlook - The weakening of the expectation of interest rate cuts within the year and the improvement in inflation expectations continue to constrain the decline of Treasury bond yields. The current fundamentals and capital market situation do not support a trend - like rebound in yields, and the bond market trend is still uncertain with few high - certainty opportunities [6]. - With the public - offering sales regulations still undecided, the market at the end of the month is more dominated by investor behavior and sentiment. The rumors of strict regulations and increased fund redemptions have intensified short - term fluctuations. However, preventive adjustments help release potential risks, and regulatory statements have sent out signals to stabilize the market, so there is no excessive pessimism about the subsequent bond market [6]. - The current slope of the medium - and short - term end of the yield curve is relatively flat, and the long - term end is steeper. Curve trading may require event - driven factors [6]. 3.1.3 Strategy Recommendations - Unilateral trading: Lightly bet on short - term rebounds, and a better window for going long may appear after the negative factors materialize [7]. - Arbitrage: Temporarily wait and see [7]. - Options: No recommendations [7]. 3.2 Second Part: Market Logic Analysis 3.2.1 "Weak Reality" Continues, Focus on Potential Expectation Gaps - In October, major domestic macro - economic indicators generally weakened. In terms of demand, in the investment sector, the single - month year - on - year growth rate of fixed - asset investment was - 12.2%, a decrease of 5.1 percentage points from the previous month, and the seasonally adjusted month - on - month growth rate was - 1.62%, a new low for the year. In the consumption sector, the year - on - year growth rate of total retail sales of consumer goods in October slightly decreased by 0.1 percentage points to 2.9% [10]. - In the foreign trade sector, in October, China's export amount decreased by 1.1% year - on - year, and the import amount increased by 1.0% year - on - year, both falling short of expectations. The decline in export growth was related to the high base in the same period last year and the intensification of Sino - US trade disputes. The weakening of import growth reflected the weak domestic demand [11]. - On the production side, although there was still resilience, the year - on - year growth rate also declined. In October, the year - on - year growth rate of industrial added value was 4.9%, a decrease of 1.6 percentage points from the previous month, and the seasonally adjusted month - on - month growth rate was 0.17%, a new low for the year [11]. - The bond market has not fully priced in the weak fundamentals because it is not difficult to achieve the annual economic growth target, and the decline in indicators may be temporary. However, the continuous weakening of some domestic demand indicators since the second half of the year may indicate that the multiplier effect of previous policies is not obvious, and the self - repair ability of the domestic economy is weak. Geopolitical factors also cannot be ignored [12][15]. 3.2.2 Prices Continue to Recover, Inflation Expectations Are Optimistic - Price indicators continued to recover. In October, the year - on - year and month - on - month growth rates of CPI were both 0.2%, an increase of 0.5 and 0.1 percentage points respectively from the previous month. The year - on - year and month - on - month growth rates of core CPI both increased by 0.2 percentage points to 1.2% and 0.2% respectively. In October, the year - on - year and month - on - month growth rates of PPI were - 2.1% and 0.1% respectively, an increase of 0.2 and 0.1 percentage points respectively from the previous month, and the month - on - month growth rate turned positive for the first time this year [21]. - The current recovery of CPI is driven by structural factors, and there may still be deflationary pressure. The high - frequency data shows that the upward momentum of industrial product prices is not strong, and price recovery may require demand - side policy support. Multiple factors may lead to the GDP deflator turning positive at least temporarily, which suppresses the performance of the bond market, especially long - term bonds [22][35]. 3.2.3 The Growth Rate of Social Financing Continues to Slow Down, and an Inflection Point in M1 Appears - In October, financial data was mediocre. New RMB loans were 220 billion yuan, a year - on - year decrease of about 280 billion yuan. The balance of loans increased by 6.5% year - on - year, a decrease of 0.1 percentage points from the previous month. The social financing scale was 815 billion yuan, a year - on - year decrease of 597 billion yuan, and the year - on - year growth rate of social financing was 8.5%, a decrease of 0.2 percentage points from the previous month [36]. - The slowdown in credit expansion affected deposit creation. In October, the year - on - year growth rate of M2 was 8.2%, a decrease of 0.2 percentage points from the previous month, and the year - on - year growth rate of M1 was 6.2%, a decrease of 1.0 percentage point from the previous month, showing an inflection point [39][41]. - Weak financial data is favorable for the bond market, but the market has already priced in the weakness to a certain extent. The probability of the central bank increasing monetary policy due to weak financial data is not high. In November, the loan situation may improve, and the social financing scale may be supported, but the year - on - year growth rate of some financial indicators such as M1 may continue to slow down [49]. 3.2.4 The Central Bank's Support Remains, but It's Difficult for Fund Prices to Decline - In November, the market's capital supply and demand were generally balanced. As of November 27, DR001 and DR007 were 1.3740% and 1.4685% respectively, up 3.68bp and 1.06bp from the previous month. The central bank's attitude towards maintaining liquidity is unchanged, and the reverse - repurchase operation shows a peak - shaving and valley - filling characteristic, and the pace of "long - term money" injection is stable [55]. - The third - quarter monetary policy report of the central bank continues to have a relatively loose tone, but the expectation of interest rate cuts and reserve requirement ratio cuts within the year has further decreased. It is difficult for fund prices to decline, which restricts the decline of Treasury bond yields, especially short - term yields. The report may also imply that the upper limit of the 30 - year Treasury bond yield is around 2.25% [65][67]. 3.2.5 The Public - Offering New Regulations Are Uncertain, and Incremental Information Is Mostly Negative - In mid - to late November, some investors may have briefly speculated on the central bank's Treasury bond trading information in November, causing the TF and T contracts to perform relatively strongly. However, near the end of the month, rumors of public - offering sales regulations suppressed bond market sentiment. Incremental information such as potential mortgage interest subsidy policies, Sino - US leader phone calls, and rumors of the central bank's bond purchases falling short of expectations are relatively negative [68]. - If the mortgage interest subsidy policy is implemented next year with a large subsidy amount and wide coverage, it will be negative for the bond market in the long - term, but the short - term impact may be mainly on sentiment [68]. 3.3 Third Part: Future Outlook and Investment Strategies - The expectation of interest rate cuts within the year has weakened, and the improvement in inflation expectations continues to constrain the decline of Treasury bond yields. The current fundamentals and capital market situation do not support a trend - like rebound in yields, and the bond market trend remains uncertain. The public - offering sales regulations are uncertain, and short - term fluctuations are intensified, but there is no excessive pessimism about the subsequent bond market [70]. - The current slope of the medium - and short - term end of the yield curve is relatively flat, and the long - term end is steeper. Curve trading may require event - driven factors [70][71]. - In terms of operations, after the sharp decline in Treasury bond futures at the end of the month, short - term unilateral trading can moderately bet on oversold rebounds. In the long - term, it is reasonable to allocate some long positions in Treasury bond futures to hedge against macro - expectation gaps. In terms of arbitrage, it is recommended to wait and see [71].

Core Viewpoint - The financial data for October indicates a continued decline in credit growth, while social financing and M2 growth remain relatively high, reflecting strong financial support for the real economy [2][3]. Group 1: Financial Data Overview - In October, new RMB loans amounted to 220 billion, with a month-on-month decrease of 1.07 trillion and a year-on-year decrease of 280 billion, leading to a loan growth rate of 6.5%, the lowest on record [6][7]. - The total social financing scale at the end of October was 437.72 trillion, with a year-on-year growth of 8.5% [8]. - M2 growth was 8.2% year-on-year, slightly down by 0.2 percentage points from the previous month, while M1 grew by 6.2% year-on-year [3][4]. Group 2: Loan and Financing Structure - The M1-M2 spread was 2%, indicating a solid trend of funds being converted into demand deposits, reflecting good activity in corporate operations and personal consumption [4][5]. - The structure of financing is shifting, with non-loan financing methods now accounting for over half of the total social financing increment, indicating a diversification in corporate financing channels [9]. Group 3: Future Outlook - There may be a new round of reserve requirement ratio cuts and potential interest rate reductions by the central bank before the end of the year, aimed at directing financial resources towards key sectors such as technology innovation and small enterprises [10].

Group 1: Financial Data Overview - In October 2025, new social financing (社融) amounted to 815 billion, a decrease from the previous value of 3.53 trillion[2] - The year-on-year growth of social financing stock was 8.5%, down from 8.7%[2] - M2 year-on-year growth was 8.2%, a decline from 8.4%[2] - New M1 year-on-year growth was 6.2%, down from 7.2%[2] Group 2: Key Insights - The continuous decrease in corporate medium to long-term loans for four months indicates a potential improvement in supply-demand balance[4] - The decline in household loans over the same period is more closely related to operational loans rather than consumer loans, which still show growth compared to 2024[4] - The significant increase in entrusted loans in October may be linked to the deployment of policy financial tools, although the impact on policy banks' balance sheets appears limited[4] - Direct financing through corporate bonds and domestic stock financing has shown consistent year-on-year growth, indicating a positive trend for high-tech and innovative enterprises[4] Group 3: Deposit Trends - Non-bank financial institution deposits increased by 770 billion year-on-year, suggesting stability in equity market transaction volumes[5] - The new M1's year-on-year decline is attributed to seasonal factors, with a notable drop from September's high growth[5] - The old M1 is expected to show a year-on-year decline, potentially dropping from 6.2% in September to around 3.4% by year-end, still above the -1.4% expected for the end of 2024[5] Group 4: Economic Indicators - Economic cycle indicators have shown a shift from the upward trend observed in the first eight months of the year, with September and October maintaining a fluctuating trend[6] - The change in the enterprise-resident deposit scissors difference indicates a potential slowdown in economic activity, which could impact future corporate profits[6]

Group 1: Credit and Financing Trends - Recent months have seen weak credit performance from both enterprises and households, with October's new social financing (社融) at 815 billion yuan, a year-on-year decrease of 597 billion yuan, marking the third consecutive month of decline[6] - The social financing stock growth rate fell from 8.7% to 8.5%[8] - Government bond financing in October was 489.3 billion yuan, a year-on-year decrease of 560.2 billion yuan, indicating a continued weakening of government bond support[12] Group 2: Monetary Indicators - M1 growth rate fell to 6.2% in October, ending a five-month upward trend, while M2 decreased by 0.2 percentage points to 8.2%[19] - The weighted average interest rate for new personal housing loans decreased by only 3 basis points to 3.06% as of the end of September[21] - The People's Bank of China has shifted focus from loan quantity targets to the quality and structure of loans, emphasizing the use of social financing and monetary indicators to gauge policy effectiveness[21] Group 3: Future Outlook - The urgency for incremental stimulus is expected to decrease as the focus shifts to the implementation and effects of existing policies, with potential for further monetary easing in the coming year[21] - The Ministry of Finance announced the allocation of 500 billion yuan from local government debt limits to support social financing in the last two months of the year[6]

Investment Rating - The report maintains a "Positive" outlook for the banking sector as of Q4 2025 [5][21]. Core Viewpoints - The report highlights that the growth of social financing remains under pressure, with a year-on-year increase of 8.5% in October 2025, which is a decrease of 0.2 percentage points compared to August [8][9]. - Credit growth is weak, with a notable reliance on bill financing to compensate for the decline in traditional loans [13][14]. - The report suggests that the banking sector is expected to show relative strength due to stabilizing interest margins and positive fundamental changes [21][22]. Summary by Sections Social Financing and Credit - In October 2025, social financing increased by 8.5% year-on-year, with a total increment of 815 billion yuan, which is 597 billion yuan less than the previous year [9][10]. - The total amount of RMB loans decreased by 201 million yuan, with a year-on-year decline of 3.166 billion yuan, indicating a seasonal dip in credit [8][9]. - Government bond issuance saw a year-on-year decrease of 560.2 billion yuan, further weakening the support for social financing [10][11]. - Direct corporate financing increased by 189.4 billion yuan, with bond financing up by 148.2 billion yuan and stock financing up by 41.2 billion yuan [10][11]. Loan Structure - Total RMB loans grew by 6.5% year-on-year, with new loans amounting to 220 billion yuan, which is 280 billion yuan less than the previous year [13][14]. - Household loans saw a significant decline, with short-term and medium-to-long-term loans both under pressure, leading to a year-on-year decrease of 5.156 billion yuan [13][14]. - Corporate loans primarily relied on bill discounting, which increased by 331.2 billion yuan year-on-year, while general loans saw a notable decrease [14][15]. Monetary Supply - M1 and M2 growth rates showed marginal declines, with M1 growing by 6.2% and M2 by 8.2% year-on-year [18][19]. - In October 2025, new RMB deposits totaled 610 billion yuan, with a year-on-year increase of 100 billion yuan, despite a significant drop in household deposits [18][20]. - Non-bank deposits increased significantly, indicating a shift away from traditional household savings [18][20]. Investment Recommendations - The report recommends focusing on high-quality small and medium-sized banks, with specific buy ratings for Chongqing Rural Commercial Bank, Ningbo Bank, Nanjing Bank, and Hangzhou Bank [21][22]. - It also suggests considering state-owned banks with stable fundamentals, such as Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China, which are currently unrated [21][22].

Core Insights - The financing structure for enterprises in China is shifting from reliance on bank loans to a more diversified approach that includes bonds and stocks, reflecting changes in the economic and financial landscape [1][2] Financing Trends - In the first ten months of 2025, the total social financing scale increased by 30.9 trillion yuan, which is 3.83 trillion yuan more than the same period last year. The net financing from corporate bonds was 1.82 trillion yuan, and government bonds accounted for 11.95 trillion yuan [1] - Other financing methods, excluding loans, now account for over half of the total social financing growth, with government bond net financing nearing 40% [1] Monetary Policy and Economic Indicators - The M2 money supply reached 335.13 trillion yuan at the end of October, with a year-on-year growth of 8.2%, indicating a supportive monetary policy stance [3][5] - The M1 money supply also showed a year-on-year increase of 6.2%, reflecting improved business activity and consumer demand [4][5] Loan Dynamics - In the first ten months, RMB loans increased by 14.97 trillion yuan, which is a decrease of 1.55 trillion yuan compared to the previous year. Corporate loans are performing better than residential loans, which remain weak [7][8] - The demand for medium to long-term loans from enterprises is expected to improve due to recent policy measures aimed at supporting key industries and projects [7] Consumer Credit and Housing Market - Residential loans decreased by 3.604 trillion yuan, with both short-term and medium to long-term loans showing significant reductions. The overall credit demand from households remains fragile [8] - Recent adjustments in housing purchase policies in major cities have led to a slight increase in new home sales, but the market remains uneven, particularly in the second-hand housing sector [8] Future Outlook - The focus of future policies will be on boosting domestic demand and consumption, with an emphasis on improving living standards, stabilizing employment, and enhancing the consumer environment [9]

Core Viewpoint - The People's Bank of China (PBOC) has reported that the growth rates of broad money (M2) and social financing remain high, creating a favorable monetary environment for economic recovery. The central bank is expected to continue implementing a moderately accommodative monetary policy to support the real economy [1][5]. Group 1: Social Financing and Government Bonds - As of the end of October, the total social financing stock reached 437.72 trillion yuan, with a year-on-year growth of 8.5%. The cumulative increase in social financing for the first ten months was 30.9 trillion yuan, which is 3.83 trillion yuan more than the same period last year [2]. - The rapid issuance of government bonds, including special refinancing bonds, has significantly supported the growth of social financing. In the first ten months of this year, the cumulative issuance of government bonds was approximately 22 trillion yuan, nearly 4 trillion yuan more than the previous year [2]. - The M2 balance at the end of October was 335.13 trillion yuan, with a year-on-year increase of 8.2%, while the narrow money (M1) balance was 112 trillion yuan, growing by 6.2% year-on-year [2]. Group 2: Loan Structure and Interest Rates - The total RMB loan balance reached 270.61 trillion yuan at the end of October, with a year-on-year growth of 6.5%. In the first ten months, RMB loans increased by 14.97 trillion yuan [3]. - The structure of loans is improving, with inclusive small and micro loans reaching 35.77 trillion yuan, growing by 11.6% year-on-year, and medium to long-term loans for the manufacturing sector at 14.97 trillion yuan, increasing by 7.9% [3]. - The average interest rate for newly issued corporate loans was 3.1%, approximately 40 basis points lower than the same period last year, while the average interest rate for new personal housing loans was also 3.1%, about 8 basis points lower year-on-year [3]. Group 3: Monetary Policy and Price Stability - The financial data for October indicates reasonable growth, providing strong financial support for the real economy. The supportive monetary policy is expected to continue promoting a reasonable recovery in prices [4]. - The growth rates of social financing and M2 have consistently remained above 8%, exceeding the nominal GDP growth rate by about 4 percentage points, with financing costs remaining low [4].

Core Viewpoint - The People's Bank of China reported that in October, both the broad money supply (M2) and the social financing scale maintained a high year-on-year growth rate, creating a favorable monetary environment for economic recovery [1] Group 1: Social Financing - As of the end of October, the total social financing scale was 437.72 trillion yuan, with a year-on-year growth of 8.5%. The cumulative increase in the first ten months was 30.9 trillion yuan, which is 3.83 trillion yuan more than the same period last year [2] - The issuance of government bonds, including special refinancing bonds, has accelerated, significantly supporting the growth of social financing. In the first ten months of this year, the cumulative issuance of government bonds was approximately 22 trillion yuan, nearly 4 trillion yuan more than the same period last year [2] - The M2 balance at the end of October was 335.13 trillion yuan, with a year-on-year growth of 8.2%, while the narrow money supply (M1) was 112 trillion yuan, growing by 6.2% year-on-year [2] Group 2: Loan Structure - The balance of RMB loans at the end of October was 270.61 trillion yuan, with a year-on-year growth of 6.5%. In the first ten months, RMB loans increased by 14.97 trillion yuan [3] - The structure of loans is continuously optimizing, with inclusive small and micro loans at 35.77 trillion yuan, growing by 11.6% year-on-year, and medium to long-term loans for the manufacturing sector at 14.97 trillion yuan, growing by 7.9% [3] - The average interest rate for newly issued corporate loans was 3.1%, approximately 40 basis points lower than the same period last year, while the average interest rate for new personal housing loans was also 3.1%, about 8 basis points lower year-on-year [3] Group 3: Price Recovery - The financial total in October maintained reasonable growth, providing strong financial support for the real economy. Supportive monetary policy is expected to continue promoting price recovery [4] - The growth rates of social financing scale and M2 have consistently remained above 8%, exceeding the nominal GDP growth rate by about 4 percentage points [4] - The effects of previous monetary policy adjustments are expected to continue to manifest, with the need for ongoing implementation of moderately loose monetary policy to maintain strong support for the real economy [5]

Core Insights - The financial statistics released by the People's Bank of China for October show significant year-on-year growth in three key indicators, indicating a robust financial environment supporting the economy [1][2]. Group 1: Financial Growth Indicators - As of the end of October 2025, the M2 (broad money) balance reached 335.13 trillion yuan, reflecting an 8.2% year-on-year increase, which is 0.8 percentage points higher than the same period last year [1]. - The total social financing stock stood at 437.72 trillion yuan, with an 8.5% year-on-year growth, surpassing the previous year's growth by 0.7 percentage points [1]. - From January to October this year, the incremental social financing amounted to 30.9 trillion yuan, exceeding the previous year's figure by 3.83 trillion yuan [1]. Group 2: Drivers of Social Financing Growth - The rapid issuance of government bonds, including special refinancing bonds, has significantly contributed to the growth of social financing, with a cumulative issuance of approximately 22 trillion yuan in government bonds from January to October, nearly 4 trillion yuan more than last year [2]. - The issuance of ultra-long-term special government bonds increased from 1 trillion yuan last year to 1.3 trillion yuan this year, indicating proactive fiscal support for economic growth [2]. Group 3: Monetary Supply and Economic Activity - The M2 balance's 8.2% year-on-year growth, alongside a 6.2% increase in M1 (narrow money) to 112 trillion yuan, suggests improved liquidity and economic activity, with the "M1-M2 spread" narrowing to 2 percentage points [2]. - This indicates a shift towards more active deposits, reflecting heightened business operations and a recovery in personal consumption [2]. Group 4: Comprehensive Financial Indicators - The sustained high growth in financial data underscores strong financial support for the real economy, with a shift in corporate financing from traditional bank loans to a more diversified approach utilizing bonds and stocks [3]. - Over half of the incremental social financing this year has come from non-loan sources, highlighting the changing structure of financing and the importance of observing broader financial metrics [3]. Group 5: Monetary Policy and Economic Environment - Current monetary policy remains supportive, aimed at fostering a conducive environment for reasonable price recovery, with M2 and social financing growth rates consistently above 8%, outpacing nominal GDP growth [4]. - While there is still room for monetary policy adjustments, the diminishing marginal efficiency of excessive easing and potential negative effects, such as capital market volatility, warrant careful management of monetary conditions [4].

Core Viewpoint - The People's Bank of China (PBOC) has reported that M2 and social financing growth rates remain high, creating a favorable monetary environment for economic recovery. The current monetary policy stance is supportive, aiming to promote reasonable price recovery and maintain strong support for the real economy [1][12]. Monetary Supply and Financing - As of October 2025, the M2 balance reached 335.13 trillion yuan, with a year-on-year growth of 8.2% [4]. - The social financing scale stood at 437.72 trillion yuan, reflecting a year-on-year increase of 8.5% [5]. - From January to October, the incremental social financing was 30.9 trillion yuan, which is 3.83 trillion yuan more than the same period last year [6]. - The balance of various loans in renminbi was 270.61 trillion yuan at the end of October, showing a year-on-year growth of 6.5% [7]. Loan Rates and Structure - The average interest rate for newly issued corporate loans (in both domestic and foreign currencies) in October was 3.1%, approximately 40 basis points lower than the same period last year [7]. - The structure of loans is continuously optimizing, with inclusive small and micro loans growing by 11.6% year-on-year, and medium to long-term loans for the manufacturing sector increasing by 7.9% [11]. Government Bonds and Financing Channels - The issuance of government bonds and special refinancing bonds has accelerated, significantly supporting the growth of social financing. In 2025, the issuance of ultra-long special government bonds increased from 1 trillion yuan to 1.3 trillion yuan [8]. - The financial system has become more diversified, with enterprises increasingly utilizing bonds and stocks for financing rather than relying solely on bank loans [8]. Economic Indicators and Price Trends - The Consumer Price Index (CPI) turned positive in October, rising by 0.2% year-on-year, while the core CPI (excluding food and energy) increased by 1.2%, marking the highest growth since March 2024 [12]. - The Producer Price Index (PPI) decreased by 2.1% year-on-year, with the rate of decline narrowing for three consecutive months [12]. Future Monetary Policy Outlook - The current monetary policy is deemed supportive, with expectations for continued implementation of moderately loose monetary policies to maintain strong support for the real economy [12].