Core Viewpoint - The January social financing data indicates a stable start to the year, with a total increase of 7.22 trillion yuan, surpassing market expectations and showing a year-on-year increase of 1654 billion yuan. However, the growth rate of social financing stock has slightly decreased to 8.2% [1][5][11]. Summary by Sections Social Financing - In January, social financing increased by 7.22 trillion yuan, exceeding the market average expectation of 6.5 trillion yuan, with a year-on-year increase of 1654 billion yuan. The growth rate of social financing stock is 8.2%, down by 0.1 percentage points from the previous month [1][5][6]. Entity Loans - Entity loans increased by 4.9 trillion yuan, which is a year-on-year decrease of 3194 billion yuan. This is attributed to several factors, including a high base from the previous year and a balanced credit supply-demand environment [2][7][9]. Government and Corporate Bonds - Government bonds increased by 9764 billion yuan, a year-on-year increase of 2831 billion yuan, indicating a proactive fiscal approach. Corporate bonds saw an increase of 5033 billion yuan, with a year-on-year increase of 579 billion yuan [3][9][10]. Bank Acceptance Bills - Undiscounted bank acceptance bills increased by 6293 billion yuan, a year-on-year increase of 1639 billion yuan, primarily due to a reduction in the scale of bills discounted to banks [3][9]. Monetary Supply - M1 grew by 4.9% year-on-year, up by 1.1 percentage points from the previous month, driven by cross-border capital flows and improved risk appetite among micro-entities. M2 increased by 9%, up by 0.5 percentage points from the previous month, supported by factors such as interbank investment expansion [4][10]. Overall Assessment - Overall, the January credit and social financing data shows a stable start. Despite the lack of significant recovery in medium to long-term loans indicating weak entity investment activities, improvements in non-entity activities have enhanced liquidity in the real sector, contributing to the rebound in M1 and M2 growth rates [4][11].

Core Insights - The central bank's financial data report for January 2026 indicates a year-on-year increase in M2 money supply by 9%, with a month-on-month rise of 0.5 percentage points [1] - M1 money supply also saw a year-on-year growth of 4.9%, up by 1.1 percentage points from the previous month [1] - The total social financing scale increased by 7.22 trillion yuan in January, which is 166.2 billion yuan more than the same period last year [1] Monetary Supply Data - M0 money supply year-on-year growth is reported at 2.7%, down from 10.2% [1] - M1 money supply year-on-year growth is at 4.9%, compared to the previous month's 3.8% [1] - M2 money supply year-on-year growth is at 9%, an increase from 8.5% in the prior month [1] Additional Financial Metrics - New RMB deposits in January amounted to 8.09 trillion yuan [1] - New RMB loans issued in January totaled 4.71 trillion yuan [1] - The increase in social financing scale for January stands at 7.22 trillion yuan [1]

Core Viewpoint - The financial data for January 2026 indicates a strong start to the year for China's economy, with significant growth in social financing and M2, reflecting effective monetary policy support for economic stability [1][2]. Group 1: Financial Growth Indicators - The social financing increment reached a historical high of 7.22 trillion yuan in January, exceeding the previous year by 166.2 billion yuan [1]. - M2 (broad money) grew by 9% year-on-year, surpassing market expectations, while M1 (narrow money) increased by 4.9% [1][2]. - Government bond financing in January amounted to 976.4 billion yuan, a year-on-year increase of 283.1 billion yuan, representing 13.5% of the total social financing, the highest level since 2021 [2]. Group 2: Monetary and Fiscal Policy - The People's Bank of China has adopted a more proactive macroeconomic policy, with a focus on collaboration between fiscal and monetary policies to enhance effectiveness [1][2]. - The central bank has implemented a flexible monetary policy, including a 0.25 percentage point reduction in structural tool rates to encourage bank lending to key sectors [2]. - The government has accelerated the issuance of bonds, with a notable increase in the scale of local government bonds to support economic activities [2][3]. Group 3: Credit and Loan Dynamics - In January, new loans totaled 4.71 trillion yuan, with a year-on-year growth of 6.1%, aligning with market expectations [4]. - Corporate loans increased significantly, with over 70% being medium to long-term loans, driven by the launch of major projects [5][6]. - Short-term loans for enterprises also saw a rise, attributed to seasonal factors such as year-end bonuses and increased operational funding needs [6]. Group 4: Cost of Financing - The average interest rate for newly issued corporate loans was approximately 3.2%, down about 20 basis points from the previous year, indicating a favorable borrowing environment [6][7]. - The transparency in corporate loan costs has improved, leading to lower non-interest costs and easing the financial burden on businesses [7]. Group 5: Policy Effectiveness and Future Outlook - The cumulative effects of monetary policy adjustments are expected to continue influencing the economy positively, with a focus on both stock and incremental policies [8][9]. - The current level of personal mortgage rates is comparable to the zero-interest periods in developed economies, suggesting a supportive environment for consumer borrowing [8].

Group 1 - The core viewpoint of the articles highlights the robust growth in China's financial metrics at the beginning of 2026, with a record social financing increment of 7.22 trillion yuan and an M2 growth rate of 9%, indicating strong monetary support for the economy [1][2][4] - The increase in M2 is attributed to both a low base from the previous year and positive trends in the capital market, suggesting that the monetary policy is effectively supporting economic stability [2][3] - The government has adopted a more proactive fiscal policy, with significant increases in government bond issuance, reaching 976.4 billion yuan in January, which is the highest level for the same period since 2021 [2][3] Group 2 - In January, new loans amounted to 4.71 trillion yuan, with a year-on-year growth of 6.1%, aligning with market expectations, and reflecting a stable credit environment [4][5] - The structure of new credit shows a significant increase in medium to long-term loans for enterprises, driven by major project launches and consumer demand ahead of the Spring Festival [5][6] - The personal loan sector also saw a slight increase, supported by diverse consumer needs and favorable policies aimed at enhancing consumer loan uptake [6][7] Group 3 - The integration of stock and incremental policies is emphasized as crucial for observing the cumulative effects of monetary policy, with a focus on maintaining stable support for the real economy [7][8] - The central bank has implemented multiple monetary policy adjustments since 2018, leading to a significant reduction in loan interest rates, which has facilitated easier access to credit for businesses and consumers [7][8] - Compared to developed economies, China's monetary policy remains stable and continuous, with current personal mortgage rates nearing historical lows, indicating a favorable environment for borrowing [7][8]

Economic Outlook for January Industry Overview - The report focuses on the economic outlook for January, highlighting key indicators such as CPI, PPI, and financial forecasts related to the Chinese economy [1] Key Points and Arguments Price Predictions - January CPI is projected to increase by 0.6% year-on-year (previous value: 0.8%), with a month-on-month increase of 0.4% (previous value: 0.2%) [1] - For industrial products, January PPI is expected to decrease by 1.8% year-on-year (previous value: -1.9%), with a month-on-month decrease of 0.3% (previous value: 0.2%) [1] Financial Forecasts - In January, new RMB loans are expected to reach 5 trillion yuan, a decrease of 130 billion yuan year-on-year, with a growth rate falling by 0.2 percentage points to 6.2% [1] - New social financing in January is projected to be 6.9 trillion yuan, a decrease of approximately 98 billion yuan year-on-year, with a growth rate declining by 0.2 percentage points to 8.1% [1] - M2 growth rate is expected to be 8.5%, unchanged from the previous month; M1 growth rate is projected to be 2.2%, down from 3.8%, a decline of 1.6 percentage points [1] Future Monetary Policy Predictions - Economic growth and the promotion of reasonable price recovery will be key considerations for monetary policy throughout 2026, alongside financial stability [1] - A total easing operation of 25-50 basis points in reserve requirement ratio (RRR) and a 10 basis point interest rate cut is anticipated, with a gradual approach and infrequent adjustments [1] - Structural policy tools will continue to be emphasized, with a focus on guiding credit structure and supporting areas such as domestic demand, technological innovation, and small and medium-sized enterprises [1] Important but Overlooked Content - There is a risk that an escalation of geopolitical conflicts could unexpectedly boost China's economic performance by addressing overcapacity issues [1] - The potential for policy implementation to fall short of expectations is highlighted as a risk factor [1]

Report Summary 1. Report Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints - The bond market oscillates between stable growth and easing expectations. Influenced by the stock market, the Political Bureau meeting signaled loose monetary policy, the LPR remained unchanged, and the Fed's rate - cut expectations and global trade uncertainties increased the uncertainty of foreign capital inflows. Short - term attention should be paid to policy signals at the end of the month [3]. 3. Summary by Directory I. Interest Rate Pricing Tracking Indicators - **Price Indicators**: China's CPI (monthly) had a 0.20% month - on - month increase and a 0.80% year - on - year increase; China's PPI (monthly) had a 0.20% month - on - month increase and a - 1.90% year - on - year decrease [9]. - **Monthly Economic Indicators**: Social financing scale was 442.12 trillion yuan, with a month - on - month increase of 2.05 trillion yuan (+0.47%); M2 year - on - year growth was 8.50%, with a month - on - month increase of 0.50% (+6.25%); Manufacturing PMI was 49.30%, with a month - on - month decrease of 0.80% (-1.60%) [10]. - **Daily Economic Indicators**: The US dollar index was 97.61, up 0.49 (+0.50%); The offshore US dollar to RMB exchange rate was 6.9411, down 0.011 (-0.16%); SHIBOR 7 - day was 1.49, down 0.10 (-6.01%); DR007 was 1.49, down 0.10 (-6.40%); R007 was 1.68, up 0.17 (+11.44%); The 3 - month inter - bank certificate of deposit (AAA) was 1.58, unchanged (+0.00%); The AA - AAA credit spread (1Y) was 0.09, unchanged (+0.00%) [11]. II. Overview of the Treasury and Treasury Futures Market The report provides multiple charts showing the trends and proportions related to the treasury futures market, including the closing prices, price changes, precipitation of funds, positions, and net positions of various treasury futures varieties [13][14][18]. III. Overview of the Money Market Liquidity The report presents charts on the inter - bank pledged repurchase transaction statistics, local government bond issuance, the spread between China Development Bank bonds and treasury bonds, treasury bond issuance, Shibor interest rate trends, and the yield trends of inter - bank certificates of deposit (AAA) [24][27][29]. IV. Spread Overview The report shows the trends of inter - period spreads of various treasury futures varieties and the spreads between spot bond term spreads and futures cross - variety spreads through multiple charts [34][35][37]. V. Two - Year Treasury Futures The report includes charts on the implied interest rate and the maturity yield of the two - year treasury futures main contract, the IRR of the TS main contract and the funding rate, and the three - year basis and net basis trends of the TS main contract [43][45]. VI. Five - Year Treasury Futures The report provides charts on the implied interest rate and the maturity yield of the five - year treasury futures main contract, the IRR of the TF main contract and the funding rate, and the three - year basis and net basis trends of the TF main contract [47][55]. VII. Ten - Year Treasury Futures The report offers charts on the implied yield and the maturity yield of the ten - year treasury futures main contract, the IRR of the T main contract and the funding rate, and the three - year basis and net basis trends of the T main contract [56][57]. VIII. Thirty - Year Treasury Futures The report contains charts on the implied yield and the maturity yield of the thirty - year treasury futures main contract, the IRR of the TL main contract and the funding rate, and the three - year basis and net basis trends of the TL main contract [62][67]. 4. Strategies - **Unilateral**: As the repurchase rate declines, the prices of treasury futures oscillate [4]. - **Arbitrage**: Pay attention to the decline of the 2603 basis [4]. - **Hedging**: There is medium - term adjustment pressure, and short - sellers can use far - month contracts for moderate hedging [4].

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - The stock index will decline while bonds will rebound. Stock index futures will see a decline in trading volume below 3 trillion, and the stock market will experience an oscillating decline. For treasury bond futures, due to sufficient monetary liquidity and a decline in domestic market interest rates, long positions in treasury bonds can be held lightly [122][124] 3. Summary by Relevant Catalogs 3.1 Market Review - **Shanghai 50 and CSI 300**: These indices are oscillating at high levels [9] - **CSI 500 and 10 - year Treasury Bonds**: The CSI 500 has fallen from high levels, and treasury bond futures have rebounded slightly [15][16] 3.2 Market Momentum Analysis - **Trading Volume**: The trading volumes of the Shanghai 50, CSI 300, CSI 500, and CSI 1000 have all increased [20][23] - **Margin Trading Balance**: The margin trading balance exceeds 2.5 trillion [27] - **Turnover Rate**: The turnover rates of the Shanghai 50 and CSI 300 are stable, while those of the CSI 500 and CSI 1000 have significantly declined [30] - **CSI 300 Sector**: The sectors are relatively consistent. The ALPHA of the energy, materials, and telecommunications sectors is positive, while that of the industrial, optional, consumer, financial, pharmaceutical, and public sectors is negative throughout the cycle [36][39] - **Newly - Listed Companies**: In December, the number of listed companies increased by a net of 13 [47] 3.3 Fundamental Analysis - **Monetary Market Indicators** - **Treasury Bond IRR**: The quarterly IRR of 10 - year treasury bond futures has significantly declined, while that of 5 - year treasury bond futures is stable [77][80] - **Inter - bank Repurchase Rate**: The inter - bank repurchase weighted interest rate has slightly declined [84] - **Shibor**: The short - term Shibor has slightly declined [89] - **Economic Indicators** - **CPI - PPI**: In December, the CPI was 0.8%, showing a slight rebound, and the PPI growth rate reached - 1.9% [93] - **PMI**: In December, the PMI fell to 50.1, and the non - manufacturing PMI was 50.2, indicating weak economic recovery [98] - **Consumption**: In December, the year - on - year growth rate of total retail sales of consumer goods was 0.9%, and consumer data declined. However, consumer confidence is trending upwards [104][108] - **Monetary Supply**: In December, the year - on - year growth rate of M2 was 8.5%, and the growth of credit accelerated. M1 was 3.8%. The newly - added RMB loans were 910 billion [111][115] 3.4 Market Outlook - **Stock Index Futures**: The trading volume of the stock market will shrink below 3 trillion. Policy adjustments and regulatory actions will lead to an oscillating decline in the stock index [124] - **Treasury Bond Futures**: Due to sufficient monetary liquidity and a decline in domestic market interest rates, the 10 - year treasury bond yield has fallen to around 1.8090%. Long positions in treasury bonds can be held lightly [124]

Group 1 - The latest financial data shows that by the end of December 2025, the broad money supply (M2) reached 340.29 trillion yuan, an increase of 8.5% year-on-year, while the narrow money supply (M1) was 115.51 trillion yuan, up 3.8% year-on-year [1] - M1 represents the money that is readily available for spending, indicating an increase in consumer spending power and market activity, while M2 reflects the overall increase in money supply and liquidity in the economy [2] - The "scissor difference" between M2 and M1 has been a focal point for the market; a widening gap suggests that businesses are opting to deposit funds in banks rather than invest, indicating a decline in investment willingness amid economic pressures [3] Group 2 - The narrowing of the "scissor difference" observed since last year indicates a reduction in corporate demand for liquid deposits, suggesting increased investment activities and a positive economic outlook [3]

Investment Rating - The industry investment rating is "Outperform the Market" [5][24]. Core Insights - The report indicates a slight decline in the growth rate of social financing (社融) to 8.3% year-on-year as of December, with a month-on-month decrease of 0.2% [6][9]. - The report highlights a divergence in financing between households and enterprises, with household loans decreasing by 916 billion yuan in December, while enterprise loans increased by 1.07 trillion yuan [15][10]. - The People's Bank of China announced a 0.25 percentage point reduction in various structural monetary policy tool rates on January 15, 2026, indicating a focus on maintaining moderate monetary easing while emphasizing structural adjustments [20][4]. Summary by Sections Social Financing - In December, social financing increased by 2.21 trillion yuan, which is a year-on-year decrease of 600 billion yuan, primarily due to a reduction in government bonds [9][6]. - The total social financing stock reached 442.12 trillion yuan by the end of December, with a year-on-year growth rate of 8.3% [9][6]. Loan Data - As of December, the balance of RMB loans was 271.9 trillion yuan, reflecting a year-on-year growth of 6.3% but a month-on-month decline of 0.1% [14][3]. - The report notes that short-term loans for households decreased by 1.023 trillion yuan, while medium- to long-term loans increased by 100 billion yuan [15][10]. Monetary Aggregates - M2 grew by 8.5% year-on-year in December, with a month-on-month increase of 0.5%, while M1's growth rate was 3.8%, showing a month-on-month decline of 1.1% [19][4]. - New RMB deposits in December amounted to 1.68 trillion yuan, which is an increase of 3.08 trillion yuan year-on-year, with a year-on-year growth rate of 8.7% [19][4]. Investment Strategy - The report anticipates that the overall revenue and net profit growth rates for listed banks will stabilize in 2025 and 2026, supported by strong risk compensation capabilities [20][4]. - The current dividend yield in the banking sector remains attractive, suggesting that long-term capital will continue to allocate towards the banking sector, which will help solidify the valuation floor [20][4].

Group 1: Credit Performance - Corporate credit outperformed household credit in December 2025, with significant increases in short-term and medium-to-long-term loans compared to the same period in 2024[4] - Household sector continued to deleverage, with a net repayment in short-term loans and only 10 billion yuan in new medium-to-long-term loans, primarily due to poor real estate sales and decreased willingness to consume[4][21] - Overall, the total social financing scale increased by 3.34 trillion yuan year-on-year, reaching 35.6 trillion yuan for the entire year[13] Group 2: Monetary Supply and Deposits - M2 growth rate improved to 8.5% year-on-year in December 2025, up from 8% in November[13] - Non-bank financial institutions saw better deposit performance compared to 2024, influenced by regulatory changes in interbank deposit rates[5][23] - New household deposits exceeded those of 2024, indicating limited scale of deposit migration[5][24] Group 3: Future Outlook and Risks - Future positive factors include continued support from policy financial tools, proactive government bond financing, and structural interest rate cuts, with expectations for social financing growth to stabilize or slightly increase[6] - Risks include unexpected changes in the economic environment and policy adjustments that could impact market risk appetite and bond market dynamics[7][30]