Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The macro - policy tone is expected to continue the characteristics of expansionary neutrality. The demands for stabilizing growth, expanding domestic demand, and stabilizing expectations remain. The meeting may emphasize policy continuity, and the necessity of strong stimulus may decline. It will also use the current window period to accelerate structural adjustment and industrial reform [1][15]. - Different policy areas may have various focuses, including "anti - involution" policies, fiscal policies, monetary policies, real estate policies, and consumption policies [16]. - After the July Politburo meeting, the bond market interest rates often show a trend of first falling and then rising, but the specific trend depends on the macro - economic situation and policy paradigm evolution [26]. Summary According to Relevant Catalogs 1. 7 - month Politburo Meeting Preview - **Economic Situation**: In the first half of 2025, China's GDP grew by 5.3% year - on - year, showing resilience. However, there are still economic pressures such as insufficient effective demand, a weak real estate market, low - level prices, and external uncertainties [14]. - **Policy Focuses** - **"Anti - involution" Policy**: Due to over - expansion of production capacity in some industries and price wars, the PPI has been negative for 33 consecutive months. The July Politburo meeting may focus on this policy to promote domestic structural adjustment, optimize supply, and prevent risks [16]. - **Fiscal Policy**: Considering the easing of Sino - US tariff games and the 5.3% GDP growth in the first half, it is expected to continue the tone of the April meeting, emphasizing the issuance and use of local government special bonds and ultra - long - term special treasury bonds. Attention should be paid to new policy - based financial instruments [18]. - **Monetary Policy**: It is expected to maintain a "moderately loose" tone, providing sufficient liquidity and coordinating with fiscal policies. The probability of an interest - rate cut in the short term may be low, and attention should be paid to the expansion of structural monetary policy tools [20]. - **Real Estate Policy**: In the first half of the year, real estate sales and investment were weak. In the second half, loose policies may be expected, focusing on releasing demand (such as lowering provident fund loan interest rates and relaxing purchase restrictions in core cities) and optimizing supply (such as improving the acquisition policy of existing commercial housing and financing mechanisms) [21][22]. - **Consumption Policy**: The contribution rate of domestic demand to economic growth has been increasing. The July Politburo meeting may continue to emphasize the importance of expanding domestic demand and promoting consumption. In the second half, consumption policies may continue to exert force, such as implementing "two new" policies, developing service consumption, and increasing the income of low - and middle - income groups [23]. - **Bond Market Performance**: After the July Politburo meeting, bond market interest rates often show a trend of first falling and then rising. From 2013 - 2024, on T + 5 days, the average 1 - year treasury bond interest rate decreased by 4BP, and the 10 - year treasury bond interest rate decreased by 1BP; on T + 30 days, the average 1 - year treasury bond interest rate increased by 4BP, and the 10 - year treasury bond interest rate increased by 1BP [26]. 2. 2024: Policy Tone Continues Positive Orientation, Bond Market Maintains Volatility - **Policy**: The meeting proposed that macro - policies should "continue to exert force and be more effective", emphasizing policy continuity. Fiscal policies focused on accelerating the issuance and use of special bonds and using ultra - long - term special treasury bonds; monetary policies aimed to increase support for the real economy [28][30]. - **Bond Market**: After the meeting, on T + 30 days, the 1Y and 10Y treasury bond yields increased by 6BP and 2BP respectively [28]. 3. 2022: Policy Intensity Slows Down, Economic Targets are Weakened, Interest Rates Decline - **Policy**: Compared with the April meeting, the judgment of economic downward pressure was alleviated. The meeting no longer emphasized achieving the annual economic growth target. Fiscal policies focused on using local government special bond funds, and monetary policies focused on implementing existing policies [35][37]. - **Bond Market**: After the meeting, on T + 30 days, bond market interest rates were in a downward trend, especially after the central bank unexpectedly cut OMO and MLF interest rates by 10BP in August [35]. 4. 2021: Policy Shifts from Structural Adjustment to Growth Stabilization, Bond Market Consolidates in a Range - **Policy**: The economic situation judgment changed, and the task of "stabilizing growth" took precedence over "structural adjustment". Fiscal policies were more proactive, accelerating local government bond issuance. Monetary policies focused on supporting small and medium - sized enterprises and difficult industries [42][49]. - **Bond Market**: After the meeting, the 10 - year treasury bond yield showed a trend of first falling and then rising, and the short - end yield had a larger callback amplitude in the third quarter [52].

Investment Rating - The report does not explicitly state an investment rating for the banking sector Core Insights - The growth of domestic RMB loans reached 268.6 trillion yuan by the end of June 2025, with a year-on-year growth rate of 7.10%, indicating a downward shift in the loan growth rate since 2024 [1] - The total domestic RMB deposit balance was 320.2 trillion yuan by the end of June 2025, with a year-on-year growth rate of 8.30%, showing an acceleration in deposit growth due to a low base effect from the previous year [3] - The issuance of special refinancing bonds reached 45.87 billion yuan in Q2, with a total issuance of 1.8 trillion yuan in the first half of the year, which is expected to gradually reduce the negative impact on credit growth [1][3] Summary by Sections Loan Growth - In Q1 2025, new loans added amounted to 9.7 trillion yuan, while Q2 saw a decrease to 3.1 trillion yuan, primarily due to a reduction in medium to long-term loans for enterprises [1] - Short-term loans and bill financing for enterprises decreased by 129 billion yuan, with bill financing down by 660.2 billion yuan as banks shifted focus to higher-yielding loans and bonds [1] Deposit Growth - Q1 2025 saw an increase of 13.0 trillion yuan in deposits, while Q2 added 5.0 trillion yuan, with significant contributions from non-bank deposits, household deposits, and government deposits [3] - The structure of deposits is shifting from on-balance-sheet to off-balance-sheet, driven by declining deposit rates [3] Sector Outlook - Short-term impacts from tariff policies may affect exports, but long-term expansionary policies aimed at stabilizing the real estate market and boosting consumption are expected to support economic growth [4] - The banking sector is anticipated to benefit from these policies, with specific banks like Ningbo Bank, Postal Savings Bank, and China Merchants Bank highlighted as potential investment opportunities [7]

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - The "moderately loose" tone of monetary policy will continue. Aggregate monetary policy tools will take turns to maintain reasonable and sufficient liquidity. The central bank will use tools such as medium - term lending facilities, outright reverse repurchases, and pledged supplementary loans to make up for medium - and long - term liquidity gaps. There is a possibility of restarting the buying and selling of national bonds to adjust liquidity under the premise of a stable bond market. A 50BP reserve requirement ratio cut in the second half of the year is expected to be implemented. Structural monetary policy tools will be enriched to further support key areas such as scientific and technological innovation, consumption, the capital market, and "two new" and "two important" sectors. A 20BP interest rate cut in the second half of the year is also expected to be implemented [2][3][29] 3. Summary by Relevant Catalogs 3.1 2025 Q2 Monetary Policy Committee Meeting Highlights - The description of the domestic economy is positive, with new challenges of "more trade barriers" and "low - running prices". The judgment of the external economic environment has changed from "weak growth momentum in the world economy" in Q1 to "weakening growth momentum in the world economy", and the description of the domestic economic environment has become more optimistic. However, concerns about "persistently low - running prices" are newly added [5] - Monetary policy continues to be "moderately loose" and pays more attention to "flexibility". The implementation of subsequent monetary policies will focus more on quality, and emphasize flexible control of the intensity and rhythm of policy implementation [6] - Structural monetary policy supports key areas such as "two new" and "two important". It continues to support areas such as scientific and technological innovation, consumption, and the capital market, and adds support for "two new" and "two important" areas [6] - Exchange - rate pressure has eased. Three "resolutely" statements are deleted, and the tone of stabilizing the exchange rate has become more relaxed. The appreciation of the RMB exchange rate has relieved the short - term constraints on monetary policy [7] - The real estate market is mainly focused on "stability". The stance of "stabilizing the real estate market" continues, and if the market declines in the future, there is still room for policy intensification [7] 3.2 Economic and Financial Data Performance from January to May 2025 - Industrial added - value growth has slowed marginally, and service - sector production has been relatively stable. From February to May 2025, the year - on - year growth rates of industrial added value were 5.9%, 7.7%, 6.1%, and 5.8% respectively. The growth rates of high - tech industries remained high, and some industries' production was affected by exports [11] - Consumption growth has been remarkable, mainly driven by the expansion of the trade - in policy and online sales promotions. From February to May 2025, the year - on - year growth rates of total retail sales of consumer goods were 4%, 5.9%, 5.1%, and 6.4% respectively. However, the follow - up policy recovery and its sustainability in supporting consumption need to be monitored [12] - The growth rate of fixed investment has continued to decline. Infrastructure and manufacturing investment have remained resilient, while real estate investment has been a drag. From February to May 2025, the year - on - year growth rates of fixed - asset investment completion were 3.5%, 2.8%, 1.1%, and 0.7% respectively [13] - Export growth has slowed marginally, and the "rush - to - export" effect has diminished. From February to May 2025, the year - on - year growth rates of export amounts were 3.6%, 12.3%, 8.1%, and 4.8% respectively. Although the impact of tariffs on exports has weakened, the impact of weakening external demand still needs attention [14] - In terms of prices, both CPI and PPI have remained low, with unstable demand and narrowed corporate profit margins. From January to May 2025, the year - on - year growth rates of CPI were 0.5%, - 0.7%, - 0.1%, - 0.1%, and - 0.1% respectively, and those of PPI were - 2.3%, - 2.2%, - 2.5%, - 2.7%, and - 3.3% respectively [17] - In terms of social financing, the increment of social financing and credit has slowed down in Q2, and government bonds have been the main support. Government bonds have been the main support for social financing, while credit has gradually declined [18] - In terms of credit, the new loans of residents have declined, while corporate short - term loans have increased and medium - and long - term loans have decreased. From January to May 2025, the new short - term and medium - and long - term loans of residents have decreased, while corporate short - term loans and bill financing have increased, and medium - and long - term loans have decreased [19] - In terms of government bonds, in the first half of 2025, the net financing of general national bonds was about 2.5 trillion yuan, and that of special national bonds was about 0.9 trillion yuan. The total issuance scale of local government bonds was about 5.5 trillion yuan, and the net financing was about 2.5 trillion yuan [19] 3.3 Review of Monetary Policy and Tools in the First Half of 2025 - The "moderately loose" monetary policy has been implemented. In Q2, policies such as reserve requirement ratio cuts and interest rate cuts have been implemented. The central bank has also proposed to optimize monetary policy intermediate variables and improve the interest rate transmission mechanism [22] - In terms of interest rates, policy rates remained unchanged in Q1, and an interest rate cut was implemented in Q2. The money market interest rates have been continuously loose in the first half of 2025 [23] - In terms of aggregate, a reserve requirement ratio cut was implemented in May, releasing 1 trillion yuan of long - term liquidity. In June, the central bank carried out outright reverse repurchases and medium - term lending facilities. Although the net investment in the second quarter was less than that in the first quarter, overall, medium - and long - term liquidity achieved net investment [24] - In terms of structure, in May, the central bank increased the quota of re - loans for scientific and technological innovation and technological transformation, increased the quota of re - loans for supporting agriculture and small businesses, and established re - loans for service consumption and elderly care. Currently, the balance of structural monetary policy tools is about 7 trillion yuan, accounting for about 15% of the central bank's balance sheet [25] 3.4 Summary and Outlook - The "moderately loose" tone of monetary policy will continue. Aggregate and structural monetary policy tools will be used to support key areas, and there is a possibility of a 50BP reserve requirement ratio cut and a 20BP interest rate cut in the second half of the year [29]

Group 1 - The core viewpoint is that China's economy is showing unexpected resilience, with signs of stabilization in first and second-tier cities, while third and fourth-tier cities are facing prolonged adjustment periods due to high inventory and insufficient demand [2][3] - New housing sales and construction indicators are expected to decline year-on-year in 2025, but are projected to bottom out and stabilize in 2026 [2] - The policy focus on stabilizing the real estate market requires a balance between short-term relief and long-term transformation, with new initiatives like affordable housing and urban village renovations being crucial to offset the decline in commodity housing [2][3] Group 2 - The risks in China's real estate sector differ fundamentally from Japan's "balance sheet recession," as the impact on households is milder compared to the significant exposure of Japanese companies to real estate [3] - Consumption and investment are expected to improve due to policy initiatives, with the scale of trade-in programs doubling from 150 billion to 300 billion, indicating a shift from policy statements to actionable measures [3] - The central government's fiscal expansion is a key feature of the second half of the policy agenda, contrasting with last year's focus on hidden debt replacement and bank recapitalization [3] Group 3 - The monetary policy faces challenges in balancing "stable exchange rates" and "broad credit," with the reserve requirement ratio at 6.4% and limited room for interest rate cuts, although 1-2 rate cuts are still anticipated this year [3] - The RMB exchange rate is stabilizing due to eased tariff risks, with expectations of it trading in the 7.2-7.3 range against the USD over the next 6-12 months, making exporters' currency settlement intentions a key variable [3] - Short-term growth stabilization still relies on investment, as consumption stimulus must address two main bottlenecks: slowing income growth and weakened employment expectations, alongside the diminishing wealth effect from real estate [4]

Monetary Policy Insights - The central bank has decided to implement a comprehensive reserve requirement ratio (RRR) cut of 0.5 percentage points, expected to release approximately 1 trillion yuan in liquidity, promoting stable growth in loans for households and enterprises[2] - A simultaneous reduction of 0.25 percentage points in the interest rates of structural monetary tools such as re-loans for agriculture and small enterprises will help lower the cost of liabilities for commercial banks, stabilizing net interest margins and enhancing the efficiency of interest rate transmission[2] - The expectation for continued active use of RRR cuts in the second half of the year remains, with an annual forecast of 100-150 basis points (BP) in total[2] Real Estate and Consumption - Policy interest rates have been reduced by 10 basis points (BP) and public housing loan rates by 25 BP to stabilize the real estate market, which is crucial for supporting domestic demand[3] - The creation of 500 billion yuan in service consumption and pension re-loans aims to stimulate demand for durable goods and services, particularly in the post-real estate cycle[3] - The recent downward trend in the real estate market, especially in second and third-tier cities, indicates that policy support is still needed to maintain stability[3] Economic Strategy and Trade Relations - The "stable exchange rate - stable real estate - promote domestic demand" cycle is expected to strengthen, providing a basis for China to engage in equal trade negotiations with the U.S.[3] - The Ministry of Commerce has signaled a willingness to engage in talks with the U.S., emphasizing mutual respect and benefit as prerequisites for dialogue[3] - The combination of stable real estate policies and measures to boost consumption and investment is enhancing market confidence in China's ability to manage external shocks[3] Capital Market Support - The central bank is increasing support for technological innovation and transformation with an additional 300 billion yuan in re-loans, alongside the creation of risk-sharing tools for tech innovation bonds[4] - The China Securities Regulatory Commission (CSRC) plans to introduce further reforms for the Sci-Tech Innovation Board and the Growth Enterprise Market to enhance market inclusivity and adaptability[4] - A combined monetary policy tool worth 800 billion yuan is aimed at stabilizing capital market expectations and mitigating potential market volatility risks[4]

Investment Rating - Industry rating: Outperform the market (maintained rating) [4] Core Viewpoints - The report emphasizes the development opportunity for "domestic demand" and highlights the value of sector allocation. The government's work report for 2025 includes stabilizing the real estate market as a key requirement for economic and social development. There is a positive expectation for incremental policies, which are crucial for stabilizing domestic demand amid export fluctuations. The recent deep adjustment in the sector has improved the cost-effectiveness of allocations, with A-share Shenwan real estate PB at 0.7X and H-share domestic real estate PB at 0.47X, nearing historical lows [1][9]. Summary by Sections 1. Market Overview - New housing market transactions for the week totaled 201 million square meters, with a month-on-month decline of 0.90% and a decrease of 1.46 percentage points compared to the previous month. The cumulative inventory stands at 111.49 million square meters, with accelerated de-stocking in second and third-tier cities, while first-tier cities are slowing down [3][15]. - The second-hand housing market saw transactions of 207 million square meters, with a year-on-year increase of 19.70%, although this represents a decline of 19.38 percentage points from the previous month [3][24]. - The land market recorded a transaction area of 2.628 million square meters, with a rolling 12-week year-on-year decline of 15.78% [3][29]. 2. Financing Dynamics - As of April 10, 2025, approximately 850 projects for acquiring idle land using special bonds have been announced nationwide, covering over 40 million square meters and totaling 128.2 billion yuan. The majority of these projects are led by local state-owned enterprises [2][11]. 3. Investment Recommendations - The report suggests focusing on non-state-owned enterprises benefiting from debt resolution, policy relief, and demand improvement. It also highlights leading real estate companies with product advantages and regional enterprises with improved market share. Additionally, it recommends second-hand intermediaries benefiting from increased transaction activity [4][10]. - Specific companies to watch include: 1. Non-state-owned enterprises: Longfor Group, Gemdale Corporation, New Town Holdings, Greentown China, and Binjiang Group 2. Local state-owned enterprises: Yuexiu Property, Urban Construction Development, and Jianfa International Group 3. Leading state-owned enterprises: China Overseas Land & Investment, China Merchants Shekou, Poly Developments, and China Resources Land 4. Quality property management firms: China Overseas Property, Poly Property, China Resources Mixc Life, Wanwu Cloud, and China Merchants Jinling [4][10].

Investment Rating - The report indicates a positive outlook for the Tianjin real estate market, suggesting a "small spring" trend in land transactions and new home sales for early 2025 [3]. Core Insights - The Tianjin real estate market has shown signs of recovery with significant land transactions and new home sales, establishing a solid foundation for market development in 2025 [3]. - The top 10 real estate companies in Tianjin achieved a total sales volume of 6.92 billion yuan in January and February 2025, with a minimum threshold of 480 million yuan for the ranking [4]. - The top-selling project, "Jian Investment Yuhe Yuan," recorded sales of 580 million yuan, leading the project sales ranking [6]. Sales Performance of Top 10 Companies - The top three companies by sales volume are: 1. 泰达建设 (Teda Construction) - 1.36 billion yuan 2. 中海地产 (China Overseas Property) - 950 million yuan 3. 天津城投 (Tianjin Urban Investment) - 740 million yuan [4][6]. - The total sales area for the top 10 companies reached 1.1 million square meters [4]. Project Sales Performance - The top 10 residential projects in Tianjin achieved a total sales volume of 2.95 billion yuan, with a minimum threshold of 210 million yuan for the ranking [6]. - The leading project by sales area was "Jian Investment Yuhe Yuan," with a transaction area of 21,000 square meters [6]. Policy Environment - In February, the central government emphasized boosting consumption, including housing demand, and urged local governments to enhance the supply of affordable housing [8]. - The report anticipates that the upcoming national meetings will release more positive signals for stabilizing the real estate market, which is expected to boost market confidence [8]. Land Market Analysis - In February 2025, Tianjin launched 23 land parcels, including 5 residential land parcels, with a total transaction amount of 4.657 billion yuan [10][12]. - The most notable transaction was for a residential land parcel in Heping District, which sold for 296 million yuan with a premium rate of 8.82%, marking a new high since 2018 [3][13].