Investment Rating - Investment rating: Positive (maintained) [1] Core Viewpoints - Credit and social financing growth are diverging, with financial support for the real economy shifting from indirect financing (loans) to direct financing, primarily through government bonds [4] - The increase in social financing in July was mainly driven by government bonds, with a notable increase of 1.24 trillion yuan, the highest for the month in many years [4] - The report highlights a trend of deposits moving from residents to non-bank financial institutions, indicating a shift in risk appetite among investors [5] Summary by Sections Credit Market Analysis - In July, RMB loans decreased by 50 billion yuan, a year-on-year reduction of 310 billion yuan, with a balance growth rate of 6.9%, down 0.2 percentage points from June [3] - The demand for credit remains weak, with both corporate and household loan demands declining, particularly in medium to long-term loans [3][4] - The increase in corporate loans was primarily supported by bills, which saw a year-on-year increase of 312.5 billion yuan [3] Social Financing Insights - Social financing increased by 1.16 trillion yuan in July, a year-on-year increase of 289.3 billion yuan, with a stock growth rate of 9.0%, up 0.1 percentage points from June [4] - The divergence between social financing and credit growth suggests a transition in how financial support is provided to the real economy [4] Deposit Trends - M2 grew by 8.8% year-on-year in July, while M1 saw a significant increase of 5.6%, indicating signs of deposit activation [5] - The report notes that the increase in non-bank deposits by 1.39 trillion yuan contrasts with a decrease in resident deposits by 780 billion yuan, highlighting a clear trend of funds moving towards non-bank sectors [5] Investment Recommendations - The report suggests that dividend strategies remain solid, with a focus on direct financing as the primary means of financial support for the real economy [5] - It recommends specific banks such as CITIC Bank, Construction Bank, Agricultural Bank, and others as beneficiaries of the current market conditions [5]

Group 1: Financial Data Overview - In June 2025, new social financing (社融) increased by 41,993 billion yuan, up 9,008 billion yuan year-on-year, exceeding market expectations of 37,051 billion yuan[1] - New loans from financial institutions reached 22,400 billion yuan in June, an increase of 1,100 billion yuan year-on-year, also surpassing the market forecast of 18,447 billion yuan[2] - The net issuance of government bonds in June was 1.40 trillion yuan, significantly higher than the market consensus of approximately 1.07 trillion yuan[3] Group 2: Loan Demand Analysis - New short-term loans for enterprises hit a record high of 11,600 billion yuan in June, increasing by 4,900 billion yuan year-on-year, while medium and long-term loans were relatively modest at 10,100 billion yuan, up only 400 billion yuan[4] - The total corporate financing demand indicator for June was 18,800 billion yuan, which, despite a year-on-year increase of 1,588 billion yuan, remains below the 24,900 billion yuan level of the same period in 2022-2023[5] - For households, new short-term and medium-long-term loans were 2,621 billion yuan and 3,353 billion yuan respectively, with year-on-year increases of only 150 billion yuan and 151 billion yuan, indicating weak consumer demand[6] Group 3: Deposit and Liquidity Trends - New deposits in June 2025 rose to 32,100 billion yuan, a year-on-year increase of 7,500 billion yuan, although still below levels seen in 2021-2023[7] - The proportion of demand deposits in new deposits reached 83% for households and 95% for enterprises, indicating a shift towards liquidity[8] - M1 growth rebounded to 4.6% in June, driven by increases in demand deposits from both enterprises and households, each contributing nearly 1 trillion yuan[9] Group 4: Economic Outlook and Risks - The internal demand logic remains unchanged, with government departments continuing to leverage, but the transmission of demand to enterprises and households is not smooth[10] - The strong performance of credit in June may lead to weaker data in July, as historically, July figures have been significantly below expectations[11] - Potential risks include unexpected adjustments in domestic policies and liquidity conditions, which could impact market stability[12]