Group 1 - The article discusses the trend of deposit migration in China, highlighting that a significant amount of deposits will mature annually, with estimates of 83 trillion, 91 trillion, and 105 trillion yuan for the years 2023, 2024, and 2025 respectively, indicating a strong liquidity support for capital markets [1][2] - It is noted that the migration of residents' deposits to capital markets is likely a result of market heat rather than a cause, emphasizing that emotional fluctuations are short-term variables while beliefs are more stable [2][3] - The article suggests that for stable long-term capital market returns, the focus should shift away from narratives that stimulate short-term bull market emotions, as these could negatively impact medium to long-term returns [2][3] Group 2 - The potential of residents' deposits should first be viewed as consumption potential and then as liquidity potential, with a focus on enhancing consumer confidence to boost corporate performance and return on equity (ROE) [3][4] - The article warns against overemphasizing deposit migration as a reason for bull markets, as this could lead to unpredictable micro liquidity states, which may not be beneficial for long-term market development [3][4] - The analysis indicates that the current banking sector has a low price-to-earnings (PE) ratio of about 7 times compared to the overall market PE of 21 times, suggesting that banks, as holders of high-quality debt, present better annualized returns [5][6] Group 3 - The macro liquidity outlook suggests that without additional fiscal budget increases, the current fiscal expansion's year-on-year intensity will begin to decline in August, with social financing growth potentially reaching its peak [4][5] - The article highlights that the liquidity in the interbank bond market may become unstable due to the decline in fixed deposit yields, leading to a shift towards shorter-term deposits and increased unpredictability in market liquidity [4][5] - Investment recommendations emphasize a long-term perspective and balanced allocation, suggesting that banks with superior free cash flow and excess provisions should be prioritized for investment [5][6]

Investment Rating - The report maintains a "Recommended" rating for the industry, indicating a positive outlook for the sector's fundamentals [1]. Core Insights - The report highlights that a significant amount of deposits are maturing annually, with estimates of 83 trillion, 91 trillion, and 105 trillion for the years 2023, 2024, and 2025 respectively, suggesting that liquidity supports price increases in capital markets [4]. - It notes that the migration of household deposits to capital markets is likely a result of market sentiment rather than a fundamental shift in investment philosophy, emphasizing the need for rational optimism [4]. - The report argues that for the capital market to achieve stable returns, it should focus less on short-term bullish narratives and more on enhancing consumer confidence to improve corporate performance and return on equity (ROE) [4]. - It discusses the potential wealth effect of a bull market on consumption and economic growth, stressing that short-term market fluctuations could exacerbate wealth inequality and reduce average consumption tendencies [4]. - The report suggests that the large volume of household deposits should primarily serve as a consumption potential before being viewed as liquidity potential for capital markets [4]. - It emphasizes that if the market overly attributes deposit migration as a reason for a bull market, it could lead to unpredictable micro liquidity conditions, which may not be beneficial for long-term market development [4]. Summary by Sections Industry Scale - The industry comprises 41 listed companies with a total market capitalization of 11,078.3 billion and a circulating market capitalization of 10,489.1 billion [1]. Performance Metrics - The absolute performance over 1 month, 6 months, and 12 months is -6.5%, 11.6%, and 33.3% respectively, while the relative performance is -11.1%, 4.9%, and 7.6% [3]. Macro Liquidity Outlook - The report maintains that without additional fiscal budget increases, the current fiscal expansion's impact will begin to wane, with social financing growth likely peaking soon [5]. - It indicates that the liquidity in the interbank bond market may become unstable due to the shift towards shorter-term deposits and the potential for increased volatility in non-bank deposits [5]. Investment Recommendations - The report suggests that the short-term adjustment phase is nearing its end, with an upcoming window for excess returns, while the mid-term market outlook remains positive [5]. - It highlights that the banking sector's price-to-earnings (PE) ratio is approximately 7 times, significantly lower than the overall market PE of about 21 times, indicating a favorable investment opportunity [5].