Summary of Key Points from Conference Call Records Industry or Company Involved - **U.S. Inflation Analysis**: Bank of America (BofA), JPMorgan Chase (JPM) - **Chinese Credit Market**: Goldman Sachs (GS) - **Lithium Supply in China**: Goldman Sachs (GS) - **Global Natural Gas Market**: JPMorgan Chase (JPM) - **Chinese Baijiu Market**: Goldman Sachs (GS) - **Chinese IP Retail and Toys**: Goldman Sachs (GS) - **Tencent Music Entertainment (TME)**: Goldman Sachs (GS) Core Insights and Arguments U.S. Inflation Analysis 1. **CPI Performance**: In July, the overall CPI in the U.S. increased more than expected due to a rebound in energy prices, while core CPI growth was slightly below market expectations, indicating a counterbalancing effect between components [1][2][5] 2. **Energy Price Impact**: The significant rise in energy prices, particularly gasoline, was a major factor driving the overall CPI above expectations, attributed to rising crude oil prices and reduced refinery maintenance [2][6] 3. **Core Inflation Trends**: Core CPI's decline was primarily due to falling used car prices, easing service inflation, and a slowdown in rent increases, aligning with the Federal Reserve's expectations for a gradual cooling of core inflation [3][6] 4. **Market Predictions**: Despite short-term energy price volatility, the sustained decline in core inflation supports the Fed's current policy stance, with a slight increase in market expectations for rate cuts later in the year [6][10] Chinese Credit Market 1. **Historic Loan Decline**: In July, China's new RMB loans turned negative for the first time in 20 years, reflecting weak credit demand compounded by seasonal factors [14][18] 2. **Loan Demand Disparity**: There was a significant drop in medium to long-term loans for enterprises, indicating insufficient investment willingness, while residential loans remained weak due to poor real estate sales [15][18] 3. **Seasonal and Regulatory Effects**: The decline in credit data was influenced by seasonal repayment peaks and stricter financial regulations, which limited loan issuance [16][18] 4. **Policy Implications**: The negative loan growth, although partly driven by short-term factors, indicates insufficient credit demand amid a sluggish economic recovery, prompting expectations for increased counter-cyclical policy measures [18] Lithium Supply in China 1. **Supply Chain Overview**: China plays a crucial role in the global lithium supply chain, being the largest importer of lithium concentrate and a significant producer of lithium carbonate and hydroxide [24] 2. **Future Supply Growth**: Domestic production expansions and strategic partnerships with overseas mining companies are expected to drive lithium supply growth in the coming years [25] 3. **Supply Uncertainties**: The lithium supply faces uncertainties related to extraction technology efficiency, cost control, and geopolitical factors that could impact imports [26] 4. **Price Dynamics**: The interplay of strong demand and supply growth uncertainties will directly influence lithium price trends [27][28] Global Natural Gas Market 1. **Transition Role of Natural Gas**: Natural gas is viewed as a transitional energy source in the context of global energy decarbonization, with resilient demand in power generation and industrial sectors [30] 2. **Policy-Driven Demand Changes**: Carbon reduction policies may increase the cost of natural gas usage in certain industries, affecting long-term consumption patterns [31] 3. **Regional Market Dynamics**: The U.S. focuses on export and infrastructure upgrades, while Europe may see a significant decline in natural gas demand due to energy security policies [32] 4. **Investment Implications**: Policy trends will shape global natural gas supply chain investments, potentially diverting capital expenditures towards renewable energy and hydrogen sectors [33] Chinese Baijiu Market 1. **Policy and Market Balance**: Recent macro and industry policies aim to balance growth stimulation and risk control, impacting the demand recovery pace in the baijiu industry [35] 2. **Wholesale Price Trends**: Major high-end baijiu brands continue to experience weak wholesale prices, reflecting initial recovery stages in channel confidence and end-demand [36] 3. **Channel Dynamics**: The recovery in terminal sales is uneven, with cautious restocking by distributors due to demand uncertainties [37] 4. **Investment Outlook**: Despite short-term pressures, the long-term outlook for high-end brands remains resilient, with a focus on inventory reduction and policy effects on demand improvement [39] Chinese IP Retail and Toys 1. **Labubu Series Price Adjustment**: The premium level of the Labubu series has recently declined due to increased supply and waning consumer novelty, though overall demand remains high [41] 2. **Stable Prices for Other IPs**: Other major IPs have maintained stable prices, indicating sustained consumer interest in diverse IP offerings [42] 3. **Expansion of IP Collaborations**: Miniso is actively expanding collaborations with various IPs, enhancing product freshness and driving sales growth [43] 4. **Market Dynamics**: Offline channels remain core to IP retail, with significant traffic increases during peak seasons, while online platforms provide price references [44] 5. **Long-term Growth Drivers**: The long-term growth of the IP retail and toy market will depend on operational capabilities, content iteration, and channel optimization [45] Tencent Music Entertainment (TME) 1. **Performance Exceeds Expectations**: TME's Q2 performance surpassed market expectations, driven by growth in online music subscriptions and improved advertising revenue [46] 2. **User Growth**: The number of paid online music users continues to rise, with an increase in ARPPU, reflecting ongoing optimization in content supply and user engagement [47] 3. **Diversification of Revenue**: TME is actively expanding revenue sources beyond core music services, benefiting from advertising and deep collaborations with artists [48] 4. **Profitability Improvement**: Enhanced operational efficiency and cost control have led to improved profit margins, particularly in content and bandwidth costs [49] 5. **Upgraded Annual Guidance**: Based on strong Q2 results and upcoming activities, TME has raised its annual performance guidance, with medium to long-term growth reliant on diversified revenue and global strategies [50]

Investment Rating - The industry investment rating is "Positive" [8] Core Viewpoints - The continuous fiscal efforts have driven a year-on-year increase in social financing (社融) by 9% as of the end of July, with a month-on-month improvement of 0.1 percentage points [2][15] - In July, the total social financing increased by 1.16 trillion yuan, a year-on-year increase of 390.1 billion yuan, primarily supported by government bond financing [2][15] - The demand for credit remains weak, with a year-on-year growth rate of 6.9% for RMB loans, reflecting a decrease of 500 billion yuan in July [3][17] Summary by Sections Social Financing - As of the end of July, social financing stock increased by 9% year-on-year, with a month-on-month improvement of 0.1 percentage points [2][15] - The net financing of government bonds reached 1.24 trillion yuan, a year-on-year increase of 555.9 billion yuan, indicating strong fiscal support for the real economy [2][15] - The total social financing added in July was 1.16 trillion yuan, with direct financing performing better than the previous year [2] Credit Demand - The demand for credit is weak, with RMB loans decreasing by 500 billion yuan in July, a year-on-year reduction of 3.1 trillion yuan [3][17] - Corporate credit demand is particularly weak, with the main increase coming from bill financing [3] - Residential loans also saw a significant decrease, with a reduction of 4.893 trillion yuan in July, reflecting a year-on-year decline of 2.793 trillion yuan [3] Monetary Supply - M1 and M2 growth rates increased to 5.6% and 8.8% year-on-year, respectively, with month-on-month improvements of 1 percentage point and 0.5 percentage points [7] - The total RMB deposits increased by 500 billion yuan in July, a year-on-year increase of 1.3 trillion yuan [17] Investment Recommendations - The report maintains a positive outlook on the banking sector, highlighting the stable performance of banks amid ongoing fiscal support and a favorable liquidity environment [8] - It suggests focusing on banks with historical risk clearance, low valuations, and those that are significantly underweighted by active funds [8]

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].

Report Industry Investment Rating - The report is bullish on the bond market, predicting that the yield of the 10Y Treasury bond will fluctuate between 1.6% - 1.8% in the second half of 2025 and may gradually return to around 1.65%, and the 5Y national stock secondary will fall below 1.9%. It is also bullish on long - duration sinking urban investment and capital bonds, urban investment dim sum bonds and US dollar bonds, and strongly recommends perpetual bonds of Minsheng, Bohai, and Hengfeng Banks, and pays attention to capital bond opportunities of Tianjin Bank, Beibu Gulf Bank, and China Property Insurance [2]. Report's Core View - In July 2025, credit demand was weak, with a rare negative growth in new loans. The growth rates of M2 and M1 both rebounded. Social financing increased year - on - year, but its growth rate may have reached a phased peak. The report is bullish on the bond market [1][2]. Summary by Relevant Content Credit Situation - In July, new loans were - 500 million yuan, a rare negative growth, indicating weak credit demand. The near - zero interest rate of 1 - month term transfer discount at the end of July reflected poor credit delivery. The reduction of time deposit rates in May may increase the pressure of early mortgage repayment. Individual loans decreased by 48.93 billion yuan, including a decrease of 38.27 billion yuan in short - term individual loans and 11 billion yuan in medium - and long - term individual loans. Corporate short - term loans decreased by 55 billion yuan, corporate medium - and long - term loans decreased by 26 billion yuan, and bill financing increased by 87.11 billion yuan. Credit demand may be weak in the long term due to low capacity utilization in manufacturing, weak real estate investment, and limited infrastructure investment space [2]. M2 and M1 Situation - Since January 2025, the central bank has adopted a new M1 caliber, which further includes personal current deposits and customer reserves of non - bank payment institutions on the basis of the previous M1. As of the end of July 2025, the balance of the new - caliber M1 reached 111.06 trillion yuan. The new - caliber M1 growth rate in July was 5.6%, a 1 - percentage - point increase from the end of the previous month, related to the stock market recovery and a low year - on - year base. The M2 growth rate in July was 8.8%, a 0.5 - percentage - point increase from the previous month [2]. Social Financing Situation - In July, the social financing increment was 1.16 trillion yuan, a year - on - year increase of 0.39 trillion yuan, mainly from the net financing of government bonds and corporate bonds. The increment of RMB loans to the real economy was - 42.63 billion yuan, a year - on - year decrease of 34.55 billion yuan; undiscounted bank acceptance bills were - 16.38 billion yuan; corporate bond net financing was + 27.91 billion yuan; government bond net financing was 1.24 trillion yuan, a year - on - year increase of 0.56 trillion yuan. The social financing growth rate at the end of July was 9.0%, a 0.1 - percentage - point increase from the end of the previous month and a 1 - percentage - point increase from the beginning of the year. It is expected that in 2025, new loans will be similar year - on - year, government bond net financing will increase significantly year - on - year, social financing will increase significantly year - on - year, the social financing growth rate may rise first and then fall, and may reach about 8.2% at the end of the year. Due to the misalignment of government bond issuance rhythms, the social financing growth rate may have reached a phased peak in July and may decline in the next few months [2]. Bond Market Outlook - The financial data in July reflected weak financing demand in the real economy. The recent bond market correction was mainly due to the non - bank sentiment fluctuations caused by the strong stock market, rather than changes in the economic fundamentals. In 2025, the bond market lacks a trending market and requires correct band operations. The report predicts that the yield of the 10Y Treasury bond will fluctuate between 1.6% - 1.8% in the second half of the year, and currently, with the central bank's continuous easing, it is fully bullish on the bond market [2].

Group 1: Report Industry Investment Rating - Not mentioned in the provided content Group 2: Core Views of the Report - The capital rate in July continued to decline, and the capital market was relatively friendly. It is expected that the capital rate in August will likely maintain a stable and slightly loose pattern [2][6] Group 3: Summary of July Review - Most term capital rates declined in July. The operating centers of DR007 and DR014 decreased by 6bp and 8bp respectively, and those of R001, R007, and R014 decreased by 4bp, 10bp, and 12bp respectively. The deviation of DR007 from the policy rate also narrowed [2][12] - The number of days when DR007 dropped below "policy rate + 10bp" increased significantly in July, rising from 5% in previous months to 45% [2][13] - The central bank continued to support the capital market in July. The total capital injection through reverse repurchase, MLF, and outright reverse repurchase was 48.8 billion, with the net injection scale being the second - highest in the same period since 2018. The capital injection during the tax period was the highest in the same period since 2018, and a large - scale reverse repurchase was carried out after the unexpected tightening of capital rates on July 24 [2][14] - The rapid decline in the bill rediscount rate may indicate poor credit demand in July. Banks may use bill financing to increase credit scale, which reduces the consumption of excess reserves and benefits the capital market [3][19] - The yield of inter - bank certificates of deposit fluctuated. The R007 - DR007 spread reached a new low in the same period since 2019 [21] Group 4: Summary of August Outlook - The market's expectation for further loosening of the capital market in the future is not strong, but the capital rate in August may still maintain a stable and slightly loose pattern [4][6] - Whether the capital market will experience "secondary tightening" is crucial for the bond market. The current bond market adjustment is mainly driven by price increase expectations. If the capital follows and tightens, it will form an additional negative factor [4][32] - Historically, commodity price increases do not necessarily lead to synchronous increases in capital prices. There were cases in 2017, 2018, and 2021 where the building materials composite index rose while the capital rate remained flat or declined [4][33] - The current social financing and exchange rate situations are different from those in the first quarter. Social financing is likely to decline in the second half of the year, and the exchange rate pressure has significantly eased [5][39] - The PMI indicates that the current fundamentals are weaker than those in the first quarter. Since 2024, the capital rate has been more sensitive to fundamental changes. The recent decline in high - frequency fundamental signals suggests that there is no upward risk for the capital rate [5][43] - The net financing pressure of government bonds in August will increase slightly compared to July, but the overall liquidity gap will narrow. Assuming the central bank conducts equal - amount roll - overs of maturing monetary tools, the estimated excess reserve ratio in August will decline [44][47]

Investment Rating - The industry investment rating is "In line with the market" and the rating has been maintained [3][24]. Core Insights - Financing demand has shown signs of recovery, with a significant rebound in M1 growth. The June financial data indicates an increase in both loans and deposits, reflecting improved liquidity conditions and a recovery in credit demand [6][21]. - The report highlights that the increase in short-term loans for enterprises and the weak recovery in household loans are notable trends. The overall credit environment is improving, supported by fiscal measures [11][24]. Summary by Sections Financial Data Overview - As of the end of June 2025, the balance of RMB loans reached 268.56 trillion yuan, with a year-on-year growth of 7.06%. In June, RMB loans increased by 2.24 trillion yuan, which is 110 billion yuan more than the previous year [7][11]. - The balance of short-term loans was 67.94 trillion yuan, with a growth rate of 6.28%, while the balance of medium to long-term loans was 179.18 trillion yuan, growing at 6.76% [7][11]. Loan Composition - In June, household loans increased by 597.6 billion yuan, with short-term loans at 262.1 billion yuan and medium to long-term loans at 335.3 billion yuan. This indicates a slight recovery in household financing demand [11][24]. - Corporate loans saw a significant increase, with new loans amounting to 1.77 trillion yuan, including 1.16 trillion yuan in short-term loans, reflecting improved business operations and reduced trade tensions [11][24]. Monetary Supply and M1 Growth - M2 growth rate was 8.3% in June, while M1 growth rate rebounded to 4.6%, an increase of 2.3 percentage points from the previous month. This rebound is attributed to the low base effect from last year [18][21]. - The report notes that the increase in M1 is indicative of a recovery in liquidity, with significant contributions from both household and corporate deposits [16][18]. Investment Recommendations - The report suggests that the recent increase in new credit and improved monetary supply indicate a marginal improvement in the liquidity environment. It recommends focusing on large banks with sufficient provisions and stable profitability as the earnings disclosure period approaches [21][24]. - The emphasis is placed on the long-term investment potential of the banking sector, particularly in light of new regulations encouraging stable investments from insurance companies [24].

Core Insights - Hong Kong consumers exhibit a cautious financial outlook amid a complex economic environment, employing a dual strategy of prudent short-term spending control and long-term financial planning to enhance financial resilience [1][3] Consumer Sentiment - In Q2 2025, 44% of surveyed Hong Kong consumers reported an increase in income over the past three months, a significant rise from 29% year-on-year, with Generation Z showing the highest increase at 56%, up 11 percentage points from the previous year [1][2] - Despite the income increase, 52% of consumers expect their income to remain stable or decrease over the next 12 months, reflecting diminished confidence in future income growth [1][2] Financial Concerns - Key concerns affecting household financial situations over the next six months include inflation of daily necessities (57%) and employment prospects (54%), linked to rising inflation rates and increasing unemployment since February [2] - Approximately 24% of consumers worry about their ability to pay at least one current bill or loan, an increase from 20% the previous year [2] Spending Adjustments - To cope with financial instability, 39% of consumers have reduced discretionary spending on dining out and travel, while another 39% have increased emergency fund savings, 25% have boosted retirement savings, and 20% have accelerated debt repayment [2][3] Market Outlook - Despite ongoing challenges, positive signals in the Hong Kong market include increased activity in the real estate sector and a recovery in the stock market driven by new IPOs [2] - Interest rates in Hong Kong are expected to remain low, with market expectations of further interest rate cuts in the US by the second half of 2025 [2]

Group 1: Report Industry Investment Rating - No specific industry investment rating is provided in the report. Group 2: Core Viewpoints - The economic negative cycle of "housing price slump, stock market slump - wealth shrinkage - consumption downgrade" in the past two years has ended. Despite unfavorable factors such as the weak real - estate market, the economy is expected to stabilize. The interest - rate bonds may have a narrow - range and phased oscillation, and there is a positive view on long - duration credit bonds with a yield of over 2%. It is recommended to conduct band operations on interest - rate bonds by closely monitoring the capital situation and defend once the capital tightens. Since early June, there has been a continuous positive view on long - duration sinking urban investment bonds, capital bonds, and insurance sub - debt, and strong recommendations have been made for long - duration capital bonds of Minsheng, Bohai, and Hengfeng. Attention should also be paid to investment opportunities in Hong Kong - listed bank stocks and China Property Insurance's capital - supplementing bonds [3]. Group 3: Summary by Related Catalogs 1. Financial Data in June 2025 - On the afternoon of July 14, the central bank disclosed the financial data for June 2025: new loans reached 2.24 trillion yuan, and social financing was 4.2 trillion yuan. At the end of June, M2 reached 330.3 trillion yuan, a year - on - year increase of 8.3%; M1 increased by 4.6% year - on - year; and the social financing growth rate was 8.9% [1]. 2. New Loans in June 2025 - New loans in June increased slightly year - on - year, which may be related to banks' efforts to boost credit scale. Generally, April and May in the second quarter are off - peak months for credit delivery, while June is a peak month. The credit data in the first half of the year was affected by the replacement of implicit debts. The low stock mortgage interest rate and the stable stock market alleviated the pressure of early mortgage repayment. However, the significant reduction in deposit interest rates may exacerbate the pressure of early mortgage repayment. In June, individual loans increased by 59.76 billion yuan, including a 26.21 - billion - yuan increase in short - term individual loans and a 33.53 - billion - yuan increase in medium - and long - term individual loans, with a slight year - on - year increase. In June, short - term corporate loans increased by 1.16 trillion yuan, medium - and long - term corporate loans increased by 1.01 trillion yuan, and bill financing decreased by 410.9 billion yuan. Due to issues such as low capacity utilization in the manufacturing industry, weak real - estate investment, and limited infrastructure investment space, credit demand may be weak in the long term. After banks boosted credit scale in June, new loans in July are expected to be low [3]. 3. M2 and M1 Growth Rates in June 2025 - Both the M2 and M1 growth rates rebounded in June. Since January 2025, the central bank has adopted a new M1 caliber, which further includes individual current deposits and non - bank payment institution customer reserves on the basis of the previous M1. As of the end of June 2025, the balance of the new - caliber M1 reached 113.95 trillion yuan. In recent years, the year - on - year growth rate trends of the old and new M1 calibers have been similar, but the new - caliber M1 growth rate trend is more stable. In June, the new - caliber M1 growth rate was 4.6%, a 2.3 - percentage - point increase from the previous month. Since the fourth quarter of 2024, the growth rates of both the old and new M1 calibers have significantly rebounded, indicating an improvement in economic activity. In June, the M2 growth rate was 8.3%, a 0.4 - percentage - point increase from the previous month [3]. 4. Social Financing in June 2025 - Social financing increased significantly year - on - year in June. The social financing increment in June was 4.2 trillion yuan, a year - on - year increase of 0.9 trillion yuan. The increase mainly came from government bonds and credit. In June, the increment of RMB loans to the real economy was 2.36 trillion yuan, a year - on - year increase of 0.17 trillion yuan; the undiscounted bank acceptance bills decreased by 190 billion yuan; the net corporate bond financing was 241.3 billion yuan; and the net government bond financing was 1.35 trillion yuan, a year - on - year increase of 0.5 trillion yuan. At the end of June, the social financing growth rate was 8.9%, up 0.2 percentage points from the end of the previous month and 0.9 percentage points from the beginning of the year. Looking forward to 2025, it is expected that new loans will increase slightly year - on - year, the net government bond financing will expand significantly year - on - year, social financing will increase significantly year - on - year, the social financing growth rate may first rise and then fall, and the social financing growth rate at the end of the year may reach around 8.3% [3].

Report Summary 1. Report Industry Investment Rating - No industry investment rating is provided in the report. 2. Core Viewpoints - The market's expectation of the capital market is marginally cautious, as indicated by the upward movement of certificate of deposit (CD) yields and interest rate swaps (IRS) [2]. - The repo trading volume increased, while the lending scale of large - scale banks decreased, and the lending scale of money market funds increased [3]. - The bill rate decreased, indicating a decrease in credit demand and an increase in bill - padding demand, with general credit demand expected in July. The USD/CNY exchange rate increased, and the Sino - US interest rate spread widened [4]. - The capital market is expected to remain balanced this week, but capital interest rate fluctuations may increase [5]. 3. Summary by Content 3.1 Certificate of Deposit and Interest Rate Swap - Last week, the total maturity of CDs was 510.52 billion yuan, and the issuance was 427.13 billion yuan, with a net financing scale of - 83.39 billion yuan. As of the last trading day of last week, the 1 - year AAA CD maturity yield was 1.63%, up from the previous week. This week, the single - week maturity scale of CDs is about 802.81 billion yuan, with greater maturity pressure than the previous week [2]. - In terms of interest rate swaps, the average value of the 1 - year FR007 interest rate swap last week was 1.53%, up from the previous week [2]. 3.2 Repo Market - Last week, the pledged repo trading volume was between 7.7 trillion and 8.6 trillion yuan. The average trading volume of R001 repos was 7,355.9 billion yuan, an increase of 545 billion yuan from the previous week. As of the last trading day of last week, the outstanding repo balance was 11.8 trillion yuan, down from the previous week [3]. - By institution, the lending scale of large - scale banks decreased, and the lending scale of money market funds increased. The borrowing scales of securities firms, funds, and wealth management products decreased. As of Friday, the repo balances of large - scale banks and money market funds were 4.89 trillion yuan and 2.12 trillion yuan, down 694.7 billion yuan and up 48.8 billion yuan from the previous week respectively. The positive repo balances of securities firms, funds, and wealth management products were 1.79 trillion yuan, 2.29 trillion yuan, and 704 billion yuan, down 78.5 billion yuan, 150.3 billion yuan, and 140.5 billion yuan from the previous week respectively [3]. 3.3 Bill and Exchange Rate - Last Friday, the 6M national stock bill transfer quotation was 0.89%, down from the last trading day of the previous week. The decrease in the bill rate indicates a decrease in credit demand and an increase in bill - padding demand, with general credit demand expected in July [4]. - Last Friday, the USD/CNY exchange rate was 7.17, slightly up from the previous week, and the Sino - US interest rate spread widened. The strong US non - farm payrolls data in June led to a decline in the expectation of the Fed's interest rate cut, and the increase in short - term supply pressure after the debt ceiling increase pushed up US Treasury yields [4]. 3.4 This Week's Focus - This week, 525.7 billion yuan of open - market funds will mature, including 425.7 billion yuan of reverse repos and 100 billion yuan of MLFs [5]. - China's June trade data will be released on Monday, and the performance of imports and exports will be monitored. China's June and Q2 economic data will be released on Tuesday, and the domestic fundamental performance will be monitored. The US June CPI and PPI data will be released on Tuesday and Wednesday respectively, and the US inflation performance will be monitored. June's financial data may be released this week, and the performance of credit and social financing will be monitored. Tuesday is the tax payment deadline, and the central bank's hedging efforts and capital market disturbances will be monitored [5].

Investment Rating - The industry investment rating is "Positive" for the banking sector, indicating an expectation of performance that exceeds the market benchmark by more than 5% over the next six months [24]. Core Insights - The growth of social financing (社融) in May was primarily supported by proactive fiscal policies, with a year-on-year increase of 8.7% in outstanding social financing [1][2]. - Credit demand remains weak, with a notable decline in new loans compared to previous months, particularly in corporate loans [2][3]. - The issuance of government bonds has been front-loaded, contributing significantly to the increase in social financing, with net financing of government bonds reaching 1.46 trillion yuan in May [2]. - The overall loan growth rate is at 7.1%, reflecting a slight decrease from the previous month, and the total new loans for May amounted to 620 billion yuan [1][2]. - The banking sector is expected to maintain stable growth in scale due to the issuance of long-term special government bonds and a shift in local government focus towards economic recovery [8][9]. Summary by Sections Social Financing and Credit - In May, social financing increased by 2.29 trillion yuan year-on-year, mainly driven by government bond issuance [2]. - Corporate loans showed a mixed performance, with short-term loans increasing while medium to long-term loans decreased due to debt replacement impacts [3]. - The total new loans for May were 620 billion yuan, down 330 billion yuan year-on-year, with a cumulative total of 1.07 trillion yuan for the first five months, reflecting a decrease of 460 billion yuan year-on-year [2][3]. Deposits and Monetary Supply - M2 increased by 7.9% year-on-year, while M1 saw a year-on-year growth of 2.3%, significantly influenced by a low base from the previous year [4]. - New deposits in May reached 2.18 trillion yuan, an increase of 500 billion yuan year-on-year, with notable contributions from non-bank and fiscal deposits [4][19]. Interest Rates and Profitability - The average interest rate for new corporate loans remained stable at approximately 3.2%, while personal housing loans also held steady at around 3.1% [3][15]. - The banking sector is expected to experience manageable pressure on net interest income due to declining loan rates and adjustments in deposit rates [8][9].