1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - The adjustment of the 14 - day reverse repurchase tender method is beneficial for the decline of cross - quarter funds prices. The current institution's cross - quarter progress is slow, and the central bank's adjustment shows its intention to support cross - quarter liquidity, which helps to stabilize the cross - quarter funds price. Although this week's funds were tightened due to multiple factors, it cannot be inferred that the central bank's attitude has changed. Next week, the overall liquidity pressure is expected to ease marginally [3][26][29]. 3. Summary According to the Directory 3.1 Money Market 3.1.1 This Week's Funds Review - The central bank's OMO had a net injection of 5623 billion yuan this week, and a 6000 - billion - yuan 6M outright reverse repurchase was carried out on Monday, with a monthly net injection of 3000 billion yuan. A 1500 - billion - yuan 1M treasury cash fixed - deposit operation was conducted on Wednesday, with a winning bid rate of 1.78%, the same as the previous value. Affected by factors such as the tax period and government bond payments, funds were marginally tightened. DR001 once rose to 1.51% on Thursday and only eased significantly on Friday [3][8]. - The trading volume of pledged repurchase fluctuated and declined this week, with the average daily trading volume decreasing by 0.33 trillion yuan to 7.16 trillion yuan. The net lending of large banks decreased in the first half of the week and rebounded above 4 trillion yuan in the second half. The net lending of city commercial banks and joint - stock banks decreased on Monday and recovered in the middle of the week but declined again on Friday. The net lending of non - banks increased significantly on Wednesday and then decreased slightly, while the net borrowing of non - banks increased in the second half of the week. The funds gap index first rose and then fell [3][16]. - The September cross - quarter progress of inter - bank institutions and exchanges was slow, with the overall market cross - quarter progress at the lowest level in recent years. The excess reserve ratio in August decreased by 0.1 pct to 1.1%, lower than the expected 1.4%, mainly due to the unexpected increase of 3370 billion yuan in government deposits [3][20][22]. - This week, funds tightened marginally due to multiple exogenous disturbances, especially the freezing of 8512 billion yuan by the new stock Jinhuaxincai on the Beijing Stock Exchange, which caused a significant increase in GC001 on Tuesday and Wednesday. However, funds eased on Friday, and the average values of DR001 and DR007 since September were 1.39% and 1.48% respectively, similar to those since Q3, so it cannot be inferred that the central bank's attitude has changed [3][26]. 3.1.2 Next Week's Funds Outlook - Next week, the treasury bond payment scale is expected to be 3320 billion yuan, and the local bond issuance scale of 12 regions is 1961 billion yuan, with an actual payment scale of 2422 billion yuan. The net payment scale of government bonds will decrease from 4030 billion yuan this week to 908 billion yuan, but the single - day net payment on Monday will reach 2525 billion yuan [3][33]. - The report maintains the assumption that the treasury bond issuance in September is 1.49 trillion yuan with a net financing of about 7300 billion yuan, and the local bond issuance is 9000 billion yuan with a net financing of 4900 billion yuan. It is estimated that the government bond issuance scale in September is about 2.39 trillion yuan, with a net financing scale of about 1.22 trillion yuan [3][41]. - It is estimated that the treasury bond issuance scale in October is about 1.25 trillion yuan, with a net financing scale of about 2700 billion yuan, and the local bond issuance scale is 7100 billion yuan, with a net financing scale of 4600 billion yuan. The overall government bond issuance scale in October is expected to be about 1.96 trillion yuan, with a net financing of about 7300 billion yuan [3][44]. - Next week, the maturity scale of reverse repurchases will rise to 18268 billion yuan, and there will be a 3000 - billion - yuan MLF maturity on Thursday. The main exogenous disturbances to the funds will be concentrated in the first half of the week. Although the demand for cross - quarter funds will increase in the second half of the week, the central bank will stabilize funds through 14 - day reverse repurchase injections, MLF is likely to be renewed in excess, and the end - of - quarter fiscal expenditure may also provide some hedging. It is expected that the liquidity pressure will ease marginally compared to this week [3][52]. 3.2 Inter - bank Certificates of Deposit - This week, the 1Y Shibor rate rose 0.6BP to 1.67%, and the secondary rate of 1 - year AAA - rated inter - bank certificates of deposit rose 0.5BP to 1.68% [53]. - The issuance scale of inter - bank certificates of deposit increased while the maturity scale decreased this week, with a net financing of 903 billion yuan. The net financing scales of state - owned banks, joint - stock banks, city commercial banks, and rural commercial banks were 2469 billion yuan, - 843 billion yuan, - 529 billion yuan, and - 47 billion yuan respectively. The issuance proportion of 1Y certificates of deposit rose to 23%, and the 3M certificates of deposit had the highest issuance proportion at 36%. Next week, the maturity scale of certificates of deposit is about 8941 billion yuan, an increase of 881 billion yuan compared to this week [57]. - The issuance success rates of state - owned banks, city commercial banks, and rural commercial banks increased compared to last week, while that of joint - stock banks decreased. Except for the relatively low issuance success rate of state - owned banks, the others were above the average level in recent years. The issuance spread of 1Y certificates of deposit between city commercial banks and joint - stock banks narrowed [58]. 3.3 Bill Market This week, bill rates fluctuated and rose. The rates of 3M and 6M national stock bills rose 10BP and 7BP respectively to 1.25% and 0.86% [4]. 3.4 Bond Trading Sentiment Tracking - This week, bond yields fluctuated at a high level, and the spreads of credit and Tier 2 perpetual bonds were relatively stable. Large banks' willingness to increase bond holdings decreased significantly, especially for medium - and short - term treasury bonds. Their willingness to reduce holdings of 3 - 7 - year policy financial bonds and local bonds increased, and they tended to reduce holdings of Tier 2 perpetual bonds [4]. - Trading - type institutions tended to increase bond holdings, including fund companies and securities companies. The willingness of other products to increase holdings also rose, while that of other institutions decreased. Allocation - type institutions tended to reduce bond holdings. Rural commercial banks tended to reduce bond holdings, the insurance companies' willingness to increase holdings decreased, and the wealth management products' willingness to increase holdings was basically the same as last week [4].

Report Industry Investment Rating No relevant content provided. Core View No specific core view was clearly presented in the given text. Summary by Related Content Government Bond Net Financing - Government bond net financing was 60.84 billion yuan in Week 37 (9/8 - 9/14) and 31.79 billion yuan in Week 38 (9/15 - 9/21). As of Week 37, the cumulative amount reached 1.11 trillion yuan, exceeding the same period last year by 490 billion yuan [1][7]. - The sum of national debt net financing and new local bond issuance was 56.22 billion yuan in Week 37 and 40.56 billion yuan in Week 38. As of Week 37, the cumulative general deficit was 870 billion yuan, with a progress of 78.5%, surpassing the same period last year [1][7]. National Debt - National debt net financing was 41.56 billion yuan in Week 37 and 28.71 billion yuan in Week 38. The total national debt net financing for the year is 666 billion yuan. As of Week 37, the cumulative amount was 530 billion yuan, with a progress of 78.9%, exceeding the average of the past five years [10]. Local Debt - Local debt net financing was 19.28 billion yuan in Week 37 and 3.09 billion yuan in Week 38. As of Week 37, the cumulative amount was 590 billion yuan, exceeding the same period last year by 280 billion yuan [12]. - New general debt issuance was 1.47 billion yuan in Week 37 and 2.07 billion yuan in Week 38. The local deficit for 2025 is 80 billion yuan. As of Week 37, the cumulative new general debt was 63.55 billion yuan, with a progress of 79.4%, exceeding the same period last year [12]. - New special - purpose debt issuance was 13.19 billion yuan in Week 37 and 9.78 billion yuan in Week 38. The planned new special - purpose debt for 2025 is 440 billion yuan. As of Week 37, the cumulative amount was 340 billion yuan, with a progress of 77.6%, exceeding the same period last year. Special new special - purpose debt of 118.19 billion yuan has been issued, including 21.4 billion yuan since September. Land reserve special - purpose debt of 33.02 billion yuan has been issued [2][15]. Special Refinancing Bonds - Special refinancing bond issuance was 2.62 billion yuan in Week 37 and 2.14 billion yuan in Week 38. As of Week 37, the cumulative amount was 196 billion yuan, with a issuance progress of 98% [2][30]. Urban Investment Bonds - Urban investment bond net financing was 1.55 billion yuan in Week 37 and is expected to be - 0.7 billion yuan in Week 38. As of this week, the balance of urban investment bonds is 1.02 trillion yuan [3][33].

Fiscal Performance - Cumulative broad fiscal expenditure from January to August decreased year-on-year to 8.9%, with August showing a decline to 6%[3] - National general public budget revenue reached 14.8 trillion yuan, growing by 0.3% year-on-year, while expenditure was 17.9 trillion yuan, increasing by 3.1%[7] Revenue Trends - Tax revenue in August continued to show positive growth for five consecutive months, with a year-on-year increase of 3.7%, while non-tax revenue fell by 3.8%[10] - The structure of tax revenue in August revealed significant contributions from securities transaction stamp duty, which surged by 226% year-on-year, contributing 1.4 percentage points to overall tax revenue growth[10] Expenditure Insights - August's broad fiscal expenditure fell by 5.8% year-on-year, with public fiscal expenditure down by 0.6% and government fund expenditure declining by 19.9%[10] - Key areas such as social security and education maintained high growth rates, with expenditures increasing by 10.9% and 4.0% respectively[10] Land Sales and Debt - Revenue from land sales turned negative again in August, decreasing by 5.4% year-on-year, although overall land transaction values showed a 2% increase compared to last year[10] - The issuance of special bonds and treasury bonds supported fund expenditures, with actual issuance from January to August reaching 4.8 trillion yuan, up by 1.6 trillion yuan year-on-year[10] Debt Management - The government debt showed negative growth in August, indicating potential downward pressure on fiscal expenditure growth due to last year's high base[10] - The net financing of government debt from January to August was 4.3 trillion yuan, with expectations of a decline of 1.4 trillion yuan from September to December[10]

Revenue and Expenditure Trends - From January to August 2025, the combined revenue growth rate of the first and second accounts was 0%, maintaining stability compared to the previous value of 0%[2] - The combined expenditure growth rate was 8.9%, slightly down from 9.3% in the previous period, indicating a small decline in expenditure growth[2] - The revenue growth was primarily supported by a significant increase in stamp duty, which contributed 0.8 percentage points to the overall tax revenue growth[5] Tax Revenue Insights - Stamp duty (including securities transaction stamp duty) saw a year-on-year growth of 27.4%, up from 20.7% previously, with securities transaction stamp duty increasing by 81.7% compared to 62.5% earlier[5] - The number of new A-share accounts opened in August reached 2.6503 million, representing a 165% increase year-on-year and a nearly 35% increase month-on-month[15] - Non-tax revenue growth declined to 1.5%, significantly lower than the five-year average growth rate of 10.4%[10] Government Debt and Expenditure - The issuance of government bonds slowed down, with a total of 10.46 trillion yuan issued from January to August, which is 1.9 percentage points lower than the same period last year[20] - The expenditure growth rate for the first account was 3.1%, down from 3.4%, while the monthly year-on-year growth rate was 0.8%, a decrease from 3%[20] - Infrastructure spending saw a decline, with a growth rate of -5% for the four major infrastructure categories, while social security and education expenditures maintained stable growth rates of 10% and 5.6%, respectively[20] Land Revenue and Market Conditions - Government fund revenue from land sales continued to show seasonal lows, with a cumulative growth rate of -1.4% from January to August, worsening from -0.7% previously[17] - In August, land transfer revenue was 231.3 billion yuan, down from 267.9 billion yuan, with a cumulative growth rate of -4.7%[17] - The land market's performance is expected to depend heavily on the recovery of the real estate market, which currently shows weak demand indicators[17]

Fiscal Performance - General fiscal expenditure cumulative year-on-year growth reached 9.3%, aligning with the annual budget level[3] - General fiscal revenue for January to July was 13.6 trillion yuan, a year-on-year increase of 0.1%, while expenditure was 16.1 trillion yuan, up 3.4%[6] - In July, general fiscal revenue increased by 3.4% year-on-year, while expenditure decreased by 12.4%[9] Revenue and Taxation - Tax revenue has shown positive year-on-year growth for four consecutive months, with July's tax revenue increasing by 4.6%[9] - Major tax categories such as VAT, consumption tax, corporate income tax, and personal income tax grew by 4.3%, 5.4%, 6.4%, and 13.9% respectively[9] - Non-tax revenue saw a decline, with July's non-tax revenue down 12.4% year-on-year[9] Expenditure Trends - Social security, health, and education expenditures increased significantly, with year-on-year growth rates of 13.1%, 14.2%, and 4.6% respectively[9] - Infrastructure spending has been reduced, with traditional infrastructure sectors showing negative growth[9] - Debt interest payments rose to 8.9% year-on-year, indicating increasing pressure on debt management[9] Land Sales and Special Bonds - Land sale revenue continued to show positive growth, increasing by 7% year-on-year, supported by active land market transactions[9] - Special bonds and specific government bonds have significantly bolstered fund expenditures, with fund spending growing by 31.7% year-on-year[9] Government Debt and Future Outlook - The front-loading of government debt has boosted fiscal expenditure, but expectations for economic stability still require fiscal support[9] - Excluding capital injections and debt relief funds, general fiscal expenditure growth would drop from 9.3% to 2.9%[9] - The net financing of government debt is expected to decrease in the second half of the year, impacting local government cash flow and economic indicators[9]

Core Viewpoint - The report from China Galaxy Securities indicates that government bonds continue to support social financing growth, while credit demand remains weak. Opportunities for retail credit growth may arise from the implementation of personal consumption loans and business loan interest subsidies [1]. Group 1: Social Financing and Government Bonds - In July, new social financing amounted to 1.16 trillion yuan, an increase of 386.4 billion yuan year-on-year; as of the end of July, the stock of social financing grew by 9% year-on-year, with a month-on-month increase of approximately 0.1 percentage points [1]. - The issuance of new government bonds reached 1.24 trillion yuan in July, a year-on-year increase of 555.9 billion yuan, supporting the continued rise in social financing growth [2]. - The total issuance of government bonds in July was 2.44 trillion yuan, which is 732.8 billion yuan more than the same period last year [2]. Group 2: Credit Demand and Loan Trends - As of the end of July, the balance of RMB loans from financial institutions grew by 6.9% year-on-year, a decrease of 0.2 percentage points from the previous month; in July alone, RMB loans decreased by 50 billion yuan, a year-on-year decrease of 310 billion yuan [3]. - Resident loans decreased by 489.3 billion yuan in July, with short-term loans down by 382.7 billion yuan and medium to long-term loans down by 110 billion yuan, primarily due to weak real estate sales and early repayments [3]. - Corporate loans increased by 60 billion yuan, but short-term loans decreased by 550 billion yuan, reflecting ongoing challenges in demand and debt management [3]. Group 3: Monetary Supply and Deposits - The growth rates of M1 and M2 in July were 5.6% and 8.8% year-on-year, respectively, with month-on-month increases of 1 percentage point and 0.5 percentage points [4]. - By the end of July, RMB deposits in financial institutions increased by 8.7% year-on-year, with a month-on-month increase of 0.4 percentage points; in July alone, deposits increased by 500 billion yuan, a year-on-year increase of 1.3 trillion yuan [4]. - Non-bank deposits surged by 2.14 trillion yuan year-on-year, reflecting a significant shift in deposits due to active capital markets, with the Shanghai Composite Index rising by 3.74% [4].

Core Viewpoint - China Galaxy issued a report on the banking industry on August 14, recommending a buy rating for banks based on several key factors [1] Group 1: Financial Indicators - Social financing continues to show a year-on-year increase [1] - RMB loans have turned to negative growth, with government bonds contributing significantly to the increase in social financing [1] - M1 and M2 growth rates continue to rise, with a substantial increase in non-bank deposits [1] Group 2: Credit Demand - Seasonal weakness in credit is noted, with both household and corporate loan demand still needing recovery [1]

Core Viewpoint - July's social financing data indicates that while M1 and M2 growth exceeded market expectations, new loans and social financing fell short, reflecting changes in financing structure, seasonal factors, and shifts in household investment behavior [1][2][3] Monetary Supply - In July, M2 expanded by 8.8% year-on-year, while M1 grew by 5.6%, both surpassing Bloomberg's consensus expectations of 8.3% and 5.2% respectively [1][7] - The year-on-year growth rate of M1 increased from 4.6% in June to 5.6% in July, partly due to low interest rates and the reactivation of deposits by residents and enterprises [7] - M2's year-on-year growth rate rose from 8.3% in May to 8.8% in July, significantly higher than the expected 8.3% [8] Social Financing - July's new social financing amounted to 1.16 trillion yuan, lower than the expected 1.63 trillion yuan, but showed a year-on-year increase of 389.3 billion yuan [6][10] - Government bond net issuance in July was 1.24 trillion yuan, contributing approximately 4.1 percentage points to the year-on-year growth of social financing [2][6] - The net issuance of government bonds in the first seven months of the year reached 8.9 trillion yuan, an increase of 4.9 trillion yuan year-on-year, indicating a proactive fiscal policy [3][4] Loan Dynamics - New RMB loans in July decreased by 500 billion yuan, contrasting with the expected increase of 300 billion yuan, reflecting weak demand from the private sector, particularly in the real estate market [2][4][5] - The total amount of short-term and medium-to-long-term loans for residents fell by 287.1 billion yuan year-on-year, primarily due to weakened demand in the real estate sector [2][4] - Corporate short-term and medium-to-long-term loans decreased by 5.5 billion and 2.6 billion yuan respectively, indicating a decline in financing demand amid rising uncertainties [5][6] Fiscal Policy Impact - The acceleration of social financing growth in July was supported by the front-loaded issuance of government bonds, which is expected to continue influencing the broad credit cycle positively [3][4] - The overall fiscal expenditure growth in the first half of the year was 8.9%, significantly higher than the -2.8% recorded in the same period last year [4] - The sustainability of fiscal stimulus in the latter half of the year may face uncertainties, particularly in light of potential reductions in government bond issuance compared to the previous year [4]

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]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - In the first half of the year, fiscal expenditure was front - loaded, while fiscal revenue was weak. The general budget fiscal deficit increased year - on - year, and the broad fiscal deficit rate was at a relatively high level. In June, the growth rates of general public budget revenue and expenditure both declined, while those of government - funded revenue and expenditure increased significantly. In the second half of the year, the intensity of fiscal expenditure is expected to decline, and policy - based financial instruments are expected to be introduced in the third quarter, while other incremental fiscal policies may need to wait [1][3][4][5]. Summary by Directory 1. First - half Fiscal Operation - **Revenue and Expenditure Growth**: From January to June, the cumulative year - on - year growth rate of broad fiscal revenue was - 0.6%, remaining negative. The year - on - year growth rate of broad fiscal expenditure was 8.9%, indicating front - loaded expenditure. In June, the year - on - year growth rates of broad fiscal revenue and expenditure were 2.8% and 17.6% respectively, showing marginal improvement [9]. - **Budget Completion**: Compared with the annual budget, the revenue side fell short of expectations. The cumulative year - on - year growth rate of general public budget revenue was - 0.3% (the annual budget was + 0.1%), mainly due to the actual - 1.2% growth of tax revenue (the annual budget was + 3.7%) and the 3.7% growth of non - tax revenue (the annual budget was - 14.2%). The cumulative year - on - year growth rate of government bond fund revenue was - 2.4%, and it was still challenging to achieve the 0.7% annual budget growth. On the expenditure side, the growth rate of fiscal expenditure was 3.4%, slightly lower than the 4.4% annual budget growth. The growth rate of government - funded expenditure was 30%, slightly lower than the 23.1% annual budget growth, and its sustainability needs further observation [1][11]. - **Deficit and Debt**: The general budget fiscal deficit in the first half of the year was 2.57 trillion yuan, a year - on - year increase of about 0.5 trillion yuan. Assuming a 4% nominal GDP growth this year, the cumulative broad fiscal deficit rate from January to June was 3.7%, at a relatively high level compared with previous years, similar to 2022, indicating strong support from debt income for fiscal expenditure. The issuance of general treasury bonds, replacement special bonds, and special treasury bonds was front - loaded, and the issuance of special bonds was neutral with an accelerating trend since the end of June [1][2][15]. 2. June Fiscal Data Review - **Revenue Side**: In June, the year - on - year growth rate of general public budget revenue turned negative (- 0.3%), but the structure improved. Tax revenue increased by 1.0% year - on - year, and non - tax revenue decreased by 3.7% year - on - year. Among taxes, personal income tax, domestic VAT, and securities trading stamp duty had relatively high growth rates. The year - on - year growth rate of government - funded revenue was 20.8%, a significant improvement, but its sustainability may be weak due to the continued weak growth of real estate investment [3][22][27]. - **Expenditure Side**: The expenditure intensity of the general public budget decreased, with a year - on - year growth rate of 0.38%. The year - on - year growth rate of government - funded expenditure increased significantly to 79.2%, mainly due to the improvement of government - funded revenue in June and the impact of the issuance of special treasury bonds since April. Structurally, traditional infrastructure expenditure continued to contract, while expenditure on science and technology and social security had relatively high growth rates [3][30]. 3. Outlook for the Second - half Fiscal Situation - **Expenditure Intensity**: The intensity of fiscal expenditure is expected to decline in the second half of the year. The net financing scale of government bonds is expected to decrease. It is estimated that the net financing of local bonds in the third and fourth quarters will be 1.7 trillion yuan and 537.4 billion yuan respectively, and that of treasury bonds will be 1.6 trillion yuan and 1.7 trillion yuan respectively. The net financing of government bonds in the third and fourth quarters will be 3.3 trillion yuan and 2.2 trillion yuan respectively, with a significant year - on - year decrease, which may drag down the year - on - year growth of fiscal expenditure. In addition, the scale of special bonds for project expenditure is also expected to decline in the second half of the year [4][34]. - **Policy Expectations**: The third quarter may enter a policy observation period. Policy - based financial instruments are expected to be introduced, but the timing is uncertain. Other incremental fiscal policies may need to wait until after the introduction of policy - based financial instruments or when the domestic economy weakens [5][41].