Report Industry Investment Rating The provided content does not mention the industry investment rating. Core Viewpoints of the Report - In June, the overall social financing and credit exceeded expectations. The year-on-year growth rate of social financing stock rebounded by 0.2 pct to 8.9%, and credit data improved significantly, becoming one of the main supporting items for social financing [1][6]. - The improvement in short-term loans for enterprises and residents reflects the marginal boost in corporate business activities and residents' spending willingness. However, the impact of seasonal factors needs attention. The positive trend of medium- and long-term loans for residents and enterprises requires attention to its sustainability [1][6]. - The improvement in June's credit data indicates that incremental policies are gradually taking effect, and the economic fundamentals show "resilience." However, structural pressures still exist and may require further policy support [1][6]. - In the bond market, the overall favorable environment for the bond market in the third quarter has not fundamentally changed. The current prominent stock-bond "seesaw" effect is more of a disturbing factor. Long-term interest rates are expected to fluctuate narrowly around 1.65%, and there is no need to overly worry about adjustment risks [1][6]. Summary by Related Catalogs 1.1. In terms of total volume, government bonds and credit form support - In June, the new social financing was 419.93 billion yuan, a year-on-year increase of 90.08 billion yuan. The year-on-year growth rate of social financing was 8.9%, up 0.2 pct from the previous month. The social financing growth rate (excluding government bonds) was 6.1%, up 0.078 pct from the previous month [7]. - Government bonds remained the core driving force for social financing and are expected to support the economic performance in the second quarter. Fiscal front-loading has been in place since the beginning of the year, and government bond issuance has increased significantly year-on-year. In the second quarter, the net financing of government bonds significantly exceeded the seasonal level [7]. - In June, the new RMB loans (social financing caliber) increased by 16.73 billion yuan year-on-year, exceeding expectations. The improvement in credit supply is due to the seasonal increase in banks' credit supply demand in the end-of-quarter month and the positive factors in economic operation with the continuous implementation of a package of stable growth policies [2][7]. 1.2. In terms of structure, short-term corporate loans performed brightly - In June, the new RMB loans were 224 billion yuan, a year-on-year increase of 11 billion yuan. Among them, short-term loans for residents increased by 1.5 billion yuan year-on-year, medium- and long-term loans for residents increased by 1.51 billion yuan year-on-year, short-term loans for enterprises increased by 49 billion yuan year-on-year, and medium- and long-term loans for enterprises increased by 4 billion yuan year-on-year [13]. - Residents' willingness to increase leverage improved moderately. The "618" promotion and summer travel plans in June may have led to the concentrated release of household consumption demand, and policies such as trade-in of consumer goods also provided support [13]. - Medium- and long-term loans for residents are a comprehensive reflection of the relief of early mortgage repayment pressure and the year-on-year decline in real estate transactions. The reduction of existing mortgage rates may reduce early mortgage repayment, but the reduction of deposit rates in May may increase the pressure [13]. - Short-term corporate loans continued to improve year-on-year, becoming the main supporting item for new credit. This may be due to the end-of-quarter impulse and the implementation of structural monetary policy tools in early May [14]. - The impact of replacement bond issuance on medium- and long-term corporate loans was marginally relieved. The low base in the same period last year and the improvement in corporate operations, as reflected in the PMI data, also contributed to the increase [14]. 1.3. Under the low-base effect, the year-on-year growth of M1 was high - In June, the year-on-year growth rate of M2 was 8.3%, up 0.4% from the previous month and 2.1% from the same period last year. The year-on-year growth rate of M1 was 4.6%, up 2.3% from the previous month and 6.3% from the same period last year [22]. - The increase in residents' deposits was 247 billion yuan, a year-on-year increase of 33 billion yuan. Non-financial corporate deposits increased by 177.73 billion yuan, a year-on-year increase of 77.73 billion yuan. Fiscal deposits decreased by 82 billion yuan, a year-on-year decrease of 700 million yuan. Non-bank deposits decreased by 52 billion yuan, a year-on-year decrease of 34 billion yuan [22]. - The year-on-year and month-on-month growth rates of M1 and M2 both improved, and the year-on-year growth of M1 was significant. This is mainly due to the low-base effect caused by the "manual interest compensation" rectification in April last year and the bond bull market, which led to a decline in M1 and M2 growth last year [22]. - The continuous fiscal efforts at the end of the quarter also supported the growth of M1 and M2. The net financing scale of government bonds in the second quarter this year was significantly higher than that in the same period last year, and fiscal expenditure was strong [23]. - The phased easing of external tariff games and the continuous strengthening of domestic stable growth policies boosted corporate business expectations and residents' consumption confidence, which may have promoted the activation of general deposits [23].

Economic Overview - In June, the total social financing (社融) stock growth rate rebounded to 8.9% year-on-year, while the credit growth rate remained stable at 7.0%[2] - New social financing in June amounted to 4.2 trillion RMB, an increase of 0.9 trillion RMB year-on-year[6] Government Debt and Credit Impact - Government bonds and credit have significantly supported the year-on-year increase in social financing, with government bonds contributing 1.4 trillion RMB in June, up 0.5 trillion RMB year-on-year[6] - Excluding government bonds, the social financing growth rate rose to 6.1%[6] Future Projections - The high point of social financing growth may return to above 9% within the year, driven by base effects and the pre-issuance of government bonds[2] - However, there is pressure for a decline in social financing growth in the second half of the year due to potential economic indicators weakening and escalating trade conflicts[2] Monetary and Fiscal Policy - There remains a window for potential interest rate cuts and reserve requirement ratio reductions within the year, alongside the possibility of structural monetary tools and the resumption of government bond purchases by the central bank[2] - The main focus for Q3 will be on accelerating the issuance of existing government bonds, with a net financing of 8.5 trillion RMB as of July 13, up 4.3 trillion RMB year-on-year[6] Loan Trends - Corporate medium and long-term loans turned positive year-on-year for the first time in four months, with an increase of 400 billion RMB, while household medium and long-term loans continued to show a year-on-year increase[6] - In June, new loans totaled 2.2 trillion RMB, with household loans contributing 0.6 trillion RMB, reflecting a slight recovery in corporate credit demand[6]

Summary of Financial Data for May 2025 Industry Overview - The financial data for May 2025 indicates a significant impact from government financing, particularly through special treasury bonds and local government bonds, which have contributed notably to social financing [1][3]. Key Points and Arguments 1. **Government Financing Support**: Government financing remains a primary support for social financing, with special treasury bonds and local government bonds providing strong backing. The fiscal expenditure has been more robust compared to the same period in previous years [3]. 2. **Short-term Loans Increase**: There has been a year-on-year increase in short-term loans for enterprises, likely due to heightened short-term funding needs following tariff relaxations. This trend mirrors data from March 2025 [2][4]. 3. **Corporate Bond Financing Growth**: The issuance of technology innovation bonds has driven an increase in corporate bond financing, indicating a positive trend in this area [2][4]. 4. **Weakness in Medium to Long-term Loans**: Despite the increase in short-term loans, medium to long-term loans for enterprises remain low, reflecting a weak investment sentiment among businesses due to uncertainties surrounding tariff policies [2][4]. 5. **Non-bank Deposit Growth**: Non-bank deposits have continued to show high growth, potentially due to a shift of private sector deposits towards wealth management and other non-bank assets following a reduction in deposit rates [2][5]. 6. **M1 Growth Recovery**: The M1 money supply has seen a rebound in growth, driven by an increase in corporate demand deposits, aligning with the rise in short-term loans [2][5]. 7. **Concerns Over Deposit Trends**: The trend of converting current deposits into fixed-term deposits among government agencies has not shown significant improvement, which may affect future government procurement activities [2][5]. Additional Important Insights - The overall performance of financial data in May 2025 exceeded expectations, with the new social financing scale surpassing forecasts. Although new RMB loans were slightly below expectations, the actual performance, excluding bill financing, was still strong [2][6]. - The sustained high level of fund inflows from non-bank institutions has provided considerable support to the market, contributing to the positive overall financial data for the month [6].