Report Industry Investment Rating No information provided in the given text. Core Viewpoints - In July, the social financing scale showed a seasonal decline after the cross - quarter period, with an increment of 1.16 trillion yuan, an increase of 38.93 billion yuan year - on - year but a significant drop from the previous month. The net financing of government bonds was 1.24 trillion yuan, an increase of 55.9 billion yuan year - on - year, strongly supporting the social financing. Credit financing shrank significantly, with a decrease of 426.3 billion yuan in the month and an additional decrease of 345.5 billion yuan year - on - year. Off - balance - sheet non - standard financing decreased by 166.6 billion yuan, and direct financing was not enough to make up for the traditional financing gap [1][7]. - In July, M1 growth continued to rise, with a year - on - year increase of 5.6%, 1.0 percentage point faster than the previous month, reaching a 29 - month high, mainly due to the low - base effect, improvement of enterprise cash flow, and the conversion of deposits to investments. M2 increased by 8.8% year - on - year, with a 0.5 - percentage - point increase from the previous month. Although the M2 - M1 gap narrowed, the (M2 - M1)/M1 indicator was still at a high level [1][12]. - The new RMB loans were unexpectedly - 5 billion yuan, an additional decrease of 31 billion yuan year - on - year, the first single - month negative growth since August 2005, indicating weak real - economy financing demand. The enterprise - side financing structure deteriorated slightly, and the household - side long - and short - term loans both shrank. On August 13, the implementation plan for the fiscal discount policy for personal consumption loans was released to relieve the pressure on the household side [2][17]. Summaries According to Related Catalogs 7 - Month Social Financing Seasonal Decline - Social financing scale: In July, the social financing scale increment was 1.16 trillion yuan, an increase of 38.93 billion yuan year - on - year but a significant decline from the previous month. It mainly relied on the net financing of government bonds (1.24 trillion yuan, an increase of 55.9 billion yuan year - on - year). Credit financing decreased by 426.3 billion yuan in the month, an additional decrease of 345.5 billion yuan year - on - year. Off - balance - sheet non - standard financing decreased by 166.6 billion yuan, and direct financing was not sufficient to fill the traditional financing gap [1][7]. - M1 and M2: M1 growth continued to rise, with a year - on - year increase of 5.6%, 1.0 percentage point faster than the previous month, reaching a 29 - month high. M2 increased by 8.8% year - on - year, with a 0.5 - percentage - point increase from the previous month. The M2 - M1 gap narrowed to 3.2% (previous value 3.7%), but the (M2 - M1)/M1 indicator was still at a high level [1][12]. - New RMB loans: The new RMB loans were - 5 billion yuan, an additional decrease of 31 billion yuan year - on - year, the first single - month negative growth since August 2005. The enterprise - side financing structure deteriorated slightly, and the household - side long - and short - term loans both shrank. The government released a policy to relieve the pressure on the household side [2][17].

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - The "relocated" deposits remain as deposits and do not reduce the allocation power in the bond market. Even if residents' deposits move to the stock market, they still exist in the form of margin deposits, so the overall bank deposits do not decrease, and the asset - side allocation power will not decline [1]. - Credit showed negative growth and relied on bills, indicating weak financing demand. Both corporate and household credit demand was weak in July, with high - frequency data showing a weakening in real - estate sales [2][9]. - Government bonds are still the main support for social financing. However, if there is no new fiscal budget, government bond supply may decrease year - on - year in the future, and social financing may face pressure again [3][4][14]. - The base effect pushed up the M1 growth rate, and non - bank deposits drove the M2 growth rate to rebound. As the government bond issuance pace slows down, fiscal deposits may decrease year - on - year, increasing market liquidity [5][20]. - The bond market may experience short - term or periodic fluctuations and is waiting for a breakthrough. As the commodity and stock markets cool down, the bond market is expected to oscillate in the short term, and interest rates may break through downward as the fundamentals change and the asset shortage evolves, more likely around or in the fourth quarter [6][23]. 3. Summary by Relevant Contents Credit Situation - In July, new credit was - 500 billion yuan, a year - on - year decrease of 310 billion yuan. Corporate long - term loans decreased year - on - year, short - term loans were flat compared with the previous year, and bill financing increased year - on - year. Household new long - term and short - term loans both decreased year - on - year, and high - frequency data showed weak real - estate sales and household credit demand [2][9]. Social Financing Situation - In July, new social financing was 1.16 trillion yuan, a year - on - year increase of 389.3 billion yuan, with a year - on - year growth rate of 9.0%. Government bonds were the main support, with an increase of 555.9 billion yuan year - on - year to 1.244 trillion yuan. Non - government bond social financing growth was weak, and if there is no new budget, government bond supply may decrease year - on - year in the future, putting pressure on social financing growth [3][4][14]. Monetary Supply Situation - In July, the M1 growth rate rebounded from 4.6% to 5.6% mainly due to the base effect, and there was no trend - like increase in the two - year compound growth rate. The M2 growth rate was 8.8%, a 0.5 - percentage - point increase from the previous month, mainly driven by the year - on - year increase in non - bank deposits. As the government bond issuance pace slows down, fiscal deposits may decrease year - on - year, increasing market liquidity [5][17][20]. Bond Market Outlook - The bond market may experience short - term or periodic fluctuations. As the commodity and stock markets cool down, the 10 - year and 30 - year treasury bonds are expected to oscillate in the short term. As the fundamentals change and the asset shortage evolves, interest rates may break through downward, more likely around or in the fourth quarter [6][23].

Core Viewpoint - The article highlights several new phenomena in credit and financial data for July, indicating a trend of private deleveraging and government leveraging in the second half of the financial cycle, influenced by seasonal factors [2][4]. Group 1: Credit and Financial Data Trends - Social financing (社融) continued to accelerate while credit remained weak, with new social financing reaching 1.16 trillion yuan, an increase of 389.3 billion yuan year-on-year, and a slight rise in growth rate from 8.9% in June to 9.0% in July [4]. - New credit in July was -50 billion yuan, showing a significant change compared to June, reflecting seasonal loan issuance patterns and local debt replacement impacts [4][5]. - Despite weak credit data, loan interest rates remained stable, indicating a shift in financial institutions' operational philosophy towards prioritizing asset quality over merely increasing loan volume [5]. Group 2: Financial Investment and Deposits - The active financial investment environment contributed to a significant increase in non-bank deposits, which reached 2.14 trillion yuan in July, a year-on-year increase of 1.39 trillion yuan [6]. - The increase in non-bank deposits is consistent with previous months, suggesting heightened financial investment activity in the private sector amid declining deposit rates [6]. Group 3: Monetary Supply and M1/M2 Trends - M2 growth rate reached 8.8% year-on-year in July, supported by accelerated fiscal spending, with a month-on-month annualized growth rate of 12.8% [6]. - M1 growth rate increased to 5.6% year-on-year in July, with a month-on-month annualized growth rate exceeding 6%, influenced by active financial investment and low base effects from previous months [7]. - The article anticipates that the year-on-year growth rate of monetary supply will likely continue to improve in the third quarter, with M2 potentially exceeding 9% and M1 around 6% [8].

Group 1: Financial Data Overview - In July, the total social financing (社融) stock growth rate rebounded to 9.0% year-on-year, while the credit growth rate under the social financing measure fell to 6.8%[3] - New social financing in July was 1.2 trillion RMB, with a year-on-year increase of 0.4 trillion RMB, primarily supported by government bonds[7] - The new RMB loans in July were negative at -50 billion RMB, marking a historical low since data tracking began[7] Group 2: Economic Outlook and Policy Implications - The growth rate of social financing may peak and decline, with government bonds providing some support, but a year-on-year decrease in government bonds is expected in Q4[3] - Future policies may prioritize the implementation of existing policies, with incremental policies being adjusted based on domestic and international conditions[3] - There remains a window for interest rate cuts and reserve requirement ratio reductions within the year, alongside an emphasis on accelerating the issuance of existing government bonds in Q3[7] Group 3: Credit and Deposit Trends - The credit demand has shown a temporary decline due to the "anti-involution" measures, which have squeezed out inflated loans and led to a reduction in credit demand[7] - M1 and M2 growth rates improved, with M1 rising to 5.6% and M2 to 8.8% year-on-year, driven by increased non-bank deposits[7] - In July, the total new loans for households and enterprises were both negative when excluding bill financing, indicating a weak credit environment[7]

Group 1 - In July, M2 growth accelerated to 8.8%, with a balance of 329.94 trillion yuan, indicating a 0.5 percentage point increase from the previous month and a 2.5 percentage point increase year-on-year [1] - The balance of RMB loans reached 268.51 trillion yuan, growing by 6.9% year-on-year, while the balance of foreign currency loans was 272.48 trillion yuan, with a year-on-year growth of 6.7% [1] - The total social financing stock was 431.26 trillion yuan, reflecting a year-on-year growth of 9.0%, with an incremental increase of 1.13 trillion yuan, which is 361.3 billion yuan more than the previous year [1] Group 2 - The increase in M2 and M1 growth rates suggests strong financial support for the real economy, despite external environment fluctuations and real estate market adjustments affecting financing demand [2] - Current loan interest rates are at historical lows, and the banking system has ample liquidity to meet market financing needs, with loan growth rates around 7.0%, significantly higher than nominal GDP growth [5] - The monetary policy is expected to maintain a supportive stance in the second half of the year, focusing on reducing financing costs and increasing credit accessibility to stimulate domestic demand [5]

Core Viewpoint - The article discusses the seasonal increase in loan issuance in June, but highlights the ongoing pressure from insufficient demand, leading to a weaker credit growth outlook for July [6][7]. Group 1: Loan Issuance and Credit Growth - In June, new loans totaled 3.1 trillion yuan, a year-on-year decrease of 670 billion yuan, indicating a relative weakness in credit growth after the initial surge at the beginning of the year [6]. - For July, it is anticipated that new RMB loans will be less than 100 billion yuan, with a year-on-year decrease of 200 billion yuan, resulting in a growth rate around 7% [6][7]. - The loan issuance pattern is expected to follow a "front low, back high" trend, with significant pressure on negative growth in early July due to the expiration of concentrated loans from June [6]. Group 2: Corporate and Retail Credit Dynamics - On the corporate side, short-term loans are expected to experience seasonal negative growth, while the demand for medium and long-term loans is declining due to ongoing economic pressures [7]. - The manufacturing sector is facing increased operational pressures, leading to a seasonal decline in financing demand, as indicated by the PMI remaining below the "expansion line" for four consecutive months [7]. - Retail credit growth remains weak, with low willingness among residents to increase leverage, particularly in mortgage loans, which are expected to show negative growth due to seasonal declines in the real estate market [7]. Group 3: Social Financing and Monetary Supply - It is projected that new social financing in July will be between 1 to 1.2 trillion yuan, with a year-on-year increase of approximately 300 to 500 billion yuan, maintaining a growth rate around 9% [8]. - The government bond issuance is expected to be the main driver of social financing growth [8]. - M1 growth is expected to remain stable around 4.5%, while M2 growth may slightly decline to approximately 8.1%, reflecting seasonal shifts in deposits [9][10].

Group 1: Financial Data Overview - In June 2025, new RMB loans amounted to 2.24 trillion, an increase of 110 billion year-on-year[4] - The total social financing scale in June was 4.20 trillion, up 900.8 billion year-on-year[10] - The broad money supply (M2) grew by 8.3% year-on-year, an increase of 0.4 percentage points from the previous month[4] Group 2: Credit and Financing Trends - June saw a significant recovery in new loans, primarily due to a low base from the previous year and the effects of recent financial support measures[6] - Cumulatively, new loans in the first half of the year totaled 12.92 trillion, a decrease of 350 billion year-on-year, largely influenced by local government debt replacement[9] - The structure of credit improved, with short-term loans for enterprises increasing by 490 billion in June, indicating rising short-term financing needs[8] Group 3: Government and Policy Impact - Government bond financing was a major driver of social financing growth, with an increase of 503.2 billion year-on-year in June[12] - The financial support measures implemented in May are gradually showing positive effects, contributing to the increase in both new loans and social financing[5] - The central bank is expected to continue implementing a moderately loose monetary policy, with potential further interest rate cuts and reserve requirement ratio reductions in the second half of the year[16]

Summary of Key Points from Conference Call Records Industry or Company Involved - The discussion primarily revolves around the A-share market in China and its cyclical nature, particularly focusing on the bull market phases and the performance of listed companies. Core Points and Arguments 1. **Cyclical Nature of A-share Market**: The A-share market exhibits a five-year cycle closely tied to China's political cycle, with specific years (4 and 9) often marking market bottoms and years (1 and 7) indicating tops [1][4][5]. 2. **Bull Market Phases**: The bull market is divided into three stages: - **Stage 1**: Driven by policy easing, leading to a rebound [1][5]. - **Stage 2**: Requires accelerated profit growth or strong liquidity, with M1 growth being a critical factor [1][8]. - **Stage 3**: Occurs post-regulatory cooling, characterized by new highs in indices but declining trading volumes, indicating reduced capital inflow [1][9]. 3. **Profit Growth Concerns**: Current market fluctuations reflect concerns over profit growth recovery, with indices showing horizontal movement around key resistance levels [1][8]. 4. **Free Cash Flow Improvement**: By 2025, listed companies are expected to show improved operating cash flow and reduced capital expenditures, leading to a rise in free cash flow and a shift towards value investing [1][11][12]. 5. **Market Dynamics**: The relationship between the stock and bond markets is highlighted, with the stock market beginning to exhibit characteristics of fixed income due to stable free cash flow yields [1][13][16]. 6. **Investor Behavior**: Increased investor interest in high-quality stocks and emerging sectors, driven by the perception of stable returns and growth potential [20][21]. Other Important but Possibly Overlooked Content 1. **Resistance Levels**: The concept of "profit-taking resistance levels" is crucial, where investors tend to sell at certain price points, creating selling pressure that hinders market breakthroughs [1][6]. 2. **Impact of M1 Growth**: The growth of M1 is emphasized as a significant factor for market liquidity and investor confidence, which is essential for entering the second stage of the bull market [2][18]. 3. **ETF and Private Fund Growth**: The increase in financing balances and the expansion of industry and thematic ETFs indicate a positive feedback mechanism in the market, supporting further growth [22]. 4. **Hong Kong Market Performance**: The Hong Kong stock market is noted for its strong performance, which often influences the A-share market positively [23][24]. 5. **Credit Spread Concerns**: The current credit spread being at a negative two standard deviations indicates a potential underestimation of credit risk, suggesting market fragility [28]. This summary encapsulates the essential insights from the conference call, focusing on the A-share market's cyclical behavior, the dynamics of bull market phases, and the implications for investors and market participants.

Historical Review of Size and Style Rotation - From 2008 to 2010, small-cap stocks outperformed due to significant economic stimulus and abundant liquidity, with small-cap stocks being more sensitive to funding[6] - Between 2011 and 2013, large-cap stocks gained favor as economic growth pressures increased, highlighting their defensive attributes[8] - The period from 2013 to 2015 saw a resurgence of small-cap stocks driven by the rise of new industries and increased M&A activity, with leverage funds entering the market[9] - From 2016 to 2021, large-cap stocks dominated as supply-side reforms improved profitability for leading companies, while M&A activity cooled[10] - In the 2021 to 2023 period, small-cap stocks regained strength due to changes in funding structure and the rise of new industries like AI[12] Growth vs. Value Style Rotation - From 2011 to 2014, value stocks outperformed as the economy shifted from stimulus-driven growth to self-sustained growth, with GDP growth declining[15] - In 2015, growth stocks saw a rebound due to the rise of the internet and new industries, despite ongoing economic pressures[19] - The period from July 2016 to October 2018 favored value stocks as traditional industries improved amid tightening liquidity[21] - From November 2018 to July 2021, growth stocks outperformed due to the rise of new industries and favorable liquidity conditions[23] - From August 2021 to August 2024, value stocks are expected to dominate due to tightening global liquidity and geopolitical uncertainties[25] Key Indicators and Future Outlook - The historical analysis indicates that size and style rotations are influenced by fundamental factors, liquidity, valuation, and policy[27] - The correct prediction rate for small-cap outperformance since 2005 is 69%, while for growth vs. value since 2011 is 77%[2] - In the first half of 2025, small-cap stocks outperformed with a 7.54% increase in the CSI 1000 index compared to a 1.37% increase in the CSI 300 index[2] - The outlook for the second half of 2025 suggests a potential shift towards large-cap stocks due to institutional investor preferences and external uncertainties[2]

Group 1: Social Financing and Credit - In June, the social financing scale increased by 4.2 trillion yuan, a year-on-year increase of 901.6 billion yuan, primarily supported by government bonds and short-term corporate loans [1] - Net financing of government bonds reached 1.35 trillion yuan, a year-on-year increase of 507.2 billion yuan, indicating sustained fiscal policy efforts [1] - New RMB loans amounted to 2.36 trillion yuan, with corporate loans contributing significantly, particularly short-term loans which increased by 1.16 trillion yuan, a year-on-year increase of 490 billion yuan [1] Group 2: Household Credit and Demand - Household loans increased by 597.6 billion yuan, a year-on-year increase of only 26.7 billion yuan, reflecting slow recovery in household credit [2] - Real estate sales remain under pressure, with new home transaction area in 30 cities down by 2.15% year-on-year and second-hand home prices down by 7.26% [2] - The weak growth in household medium and long-term loans is mainly due to early repayment of mortgages, with leverage willingness still needing policy stimulation [2] Group 3: Loan Rates and Financial Structure - The weighted average interest rate for new corporate loans was approximately 3.3%, showing limited decline since the beginning of the year, while personal housing loan rates remained at 3.1% [3] - There was a year-on-year decrease of 371.6 billion yuan in bill financing, as banks actively compressed low-yield assets, leading to gradual optimization of the credit structure [3] Group 4: Money Supply and Liquidity - M1 growth rate significantly rebounded to 4.6%, driven by last year's low base and improved corporate liquidity [4] - New corporate demand deposits increased by 1.7 trillion yuan, a year-on-year increase of 975.5 billion yuan, indicating enhanced operational cash flow efficiency [4] - The reduction of fiscal deposits by 820 billion yuan, along with the seasonal return of wealth management funds, contributed to the increase in deposits from residents and enterprises [4] Group 5: Savings and Consumption Trends - In the first half of the year, household deposits increased by 10.77 trillion yuan, with a savings-to-loan ratio of 9.21, reflecting conservative consumption and investment sentiment [5] - Despite a slight rebound in short-term loans due to consumption scenarios, new loans from the household sector remained at a historical low of 1.17 trillion yuan [5] - Policy measures are needed to further unleash consumption potential, with declining deposit rates potentially encouraging a shift from savings to consumption [5] Group 6: Policy Outlook and Market Expectations - The third quarter is expected to see a peak in government bond issuance, providing continued support for social financing growth [6] - The central bank may maintain reasonable liquidity through reserve requirement ratio cuts and interest rate reductions, focusing on "moderate easing" and structural tools [6] - Overall, June's financial data reflects a balance between active fiscal support and weak recovery in real demand, necessitating ongoing policy efforts to stabilize expectations, promote consumption, and optimize credit structure [6]