Report Industry Investment Rating There is no information provided regarding the report's industry investment rating. Core Viewpoints of the Report - In January, the market experienced a double - bull situation in stocks and bonds. The Wind All - A Index rose 5.83%, and the yield of the 10 - year treasury bond dropped 4 basis points to 1.81%. The stock - bond ratio favored stocks, with growth outperforming value in the equity style. The improvement in macro - liquidity in January was beneficial to both equities and bonds. Looking ahead to February, with the accelerated issuance of local bonds, the liability growth rate of the real - sector is expected to rebound slightly, and macro - liquidity will improve, which is favorable to equities, while the bond market has strong supply and demand and limited investment value. The equity style is expected to gradually move towards balance in February. There are concerns about the potential impact of a decline in US technology stocks on the domestic market [4]. - In December 2025, the liability growth rate of the real - sector decreased to 8.4%. Structurally, the liability growth rates of households and the government were lower than the previous values, while that of non - financial enterprises was higher. It is expected that the liability growth rate of the real - sector will gradually decline and approach the nominal GDP growth rate. The liability growth rate of the government sector is expected to rebound slightly in January 2026, and the real - sector liability growth rate may decline slightly [5][14]. - In December 2025, the year - on - year growth rate of the US Treasury bond balance decreased slightly, and fiscal deposits decreased. It is expected that the real and nominal economic growth rates in the US will decline in 2026, and the liability growth rate of the real - sector will remain stable. In China and other emerging economies, it is expected that a phased economic bottom will be formed at the end of 2022, and then recovery will begin. Commodity prices are expected to decline, and the long - term cycle logic may change. If the valuation of the US technology sector is re - evaluated, global funds may flow from the US to China [15][43]. Summary Based on the Table of Contents 1.全社会债务情况 - As of the end of December 2025, the total social debt balance in China was 505.3 trillion yuan, with a year - on - year growth rate of 8.3%. The debt balance of financial institutions (inter - bank) was 92.2 trillion yuan, with a year - on - year growth rate of 7.9%. The debt balance of the real - sector was 413.1 trillion yuan, with a year - on - year growth rate of 8.4% [16][18][21]. - Specifically, the household debt balance was 81.3 trillion yuan, with a year - on - year growth rate of 0.4%. The government debt balance was 119.1 trillion yuan, with a year - on - year growth rate of 12.4%, and it is expected to rebound slightly in January 2026. The non - financial enterprise debt balance was 212.8 trillion yuan, with a year - on - year growth rate of 9.6%. The medium - and long - term loan balance growth rate of non - financial enterprises rebounded by 0.3 percentage points to 8.1% [23]. - In December 2025, the year - on - year profit of industrial enterprises increased by 5.3%, and the liability balance increased by 4.2% year - on - year. The profit of state - owned enterprises decreased by 32.4% year - on - year [26]. 2.金融机构资产负债详解 - As of the end of December 2025, the debt balance of broad financial institutions was 166.8 trillion yuan, with a year - on - year growth rate of 4.9%. The debt balance of banks was 136.6 trillion yuan, with a year - on - year growth rate of 5.4%. The debt balance of non - banking financial institutions was 30.2 trillion yuan, with a year - on - year growth rate of 3.0% [29]. - In December 2025, the excess reserve ratio of banks was 1.8%, and the money multiplier was 8.45. The three quantitative indicators of monetary policy showed two increases and one decrease, indicating that monetary policy was marginally relaxed in December 2025 and continued to be relaxed in January 2026. The liquidity of non - banking financial institutions was also marginally relaxed [31][34]. - The year - on - year growth rate of the base money supply in December 2025 was 8.5%. The new broad - money supply indicator NM2 generally followed the trend of M2, but there were periods when their relative performance differed. It is expected that the year - on - year growth rate of NM2 will be lower than that of M2 in the future, indicating limited room for further monetary policy relaxation [36][39]. 3.资产配置 - In January, the market was characterized by a double - bull situation in stocks and bonds. The improvement in macro - liquidity was beneficial to equities and bonds. In February, with the accelerated issuance of local bonds, macro - liquidity will improve, which is favorable to equities, while the bond market has strong supply and demand and limited investment value. The equity style is expected to gradually move towards balance [41]. - In December 2025, the year - on - year growth rate of the combined foreign assets of the central bank and banks increased, and the yield spread between Chinese and US 10 - year treasury bonds widened. It is expected that the real and nominal economic growth rates in the US will decline in 2026, and the liability growth rate of the real - sector will remain stable. If the valuation of the US technology sector is re - evaluated, global funds may flow from the US to China [43].

1. Report Industry Investment Rating No relevant information provided. 2. Core Viewpoints of the Report - The focus of observation has shifted to the government bond issuance in January 2026. The government bond issuance in January 2026 is in line with expectations. The long - end bonds are at the upper limit of the expected range and are worth participating in. For equities, the style is generally balanced with growth slightly dominant before the significant increase in government bond issuance. The report recommends a portfolio of the Shanghai Composite 50 Index (40% position), the China Securities 1000 Index (40% position), and the 30 - year Treasury Bond ETF (20% position) [2][8][21] - In the deleveraging cycle, the stock - bond ratio favors equities to a limited extent, and the value style is more likely to be dominant. The report recommends an A + H dividend portfolio of 13 stocks and an A - share portfolio of 20 stocks, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation [9][55] 3. Summary by Relevant Catalogs 3.1 National Asset Balance Sheet Analysis - **Liability Side**: In November 2025, the liability growth rate of the real - economy sector was 8.6% (previous value: 8.7%), in line with expectations. It is expected to decline to around 8.3% in December 2025, lower than the 8.8% at the end of 2024, consistent with the goal of stabilizing the macro - leverage ratio. The government debt growth rate is expected to decline to around 12.4% in December 2025 from 13.1% at the end of November 2025. The central bank's stance on stabilizing the macro - leverage ratio remains unchanged, and the quantitative fiscal targets are awaited from the Two Sessions in 2026 [2][16][17] - **Monetary Policy**: Last week, the capital market tightened marginally. The one - year Treasury bond yield rose to 1.34% at the weekend. It is estimated that the lower limit of the one - year Treasury bond yield is about 1.3%, with a central value around 1.4%, and a 10 - basis - point interest rate cut is expected in 2026. The term spread between the ten - year and one - year Treasury bonds narrowed to 51 basis points. The spreads between the ten - year and one - year Treasury bonds and between the thirty - year and ten - year Treasury bonds are expected to be in the range of 20 - 50 basis points, and the future yield ranges of the ten - year and thirty - year Treasury bonds are expected to be around 1.6% - 1.9% and 1.8% - 2.3% respectively [3][17] - **Asset Side**: In November 2025, the physical volume data showed signs of stabilizing at a low level compared to October. The full - year real economic growth target for 2025 was set at around 5%, and the nominal economic growth target was around 4.9%. It remains to be seen whether a nominal economic growth rate of around 5% will become the central target for China's nominal economic growth in the next 1 - 2 years [4][18] 3.2 Stock - Bond Cost - effectiveness and Stock - Bond Style - **Macroeconomic Background**: Since 2011, China has entered a period of declining potential economic growth, which seems to have ended in Q4 2024. Subsequently, China's profit cycle has entered a state of narrow - range oscillation at a low level. The government's policy goals of stabilizing the macro - leverage ratio, having the financial sector benefit the real economy, and ensuring that housing is for living in rather than speculation are still in effect, and the deleveraging on the liability side has limited room for further contraction. If the valuation of the technology sector in the US is re - evaluated, global funds may flow from the US to China, and attention should be paid to whether the RMB exchange rate will enter an appreciation channel. The risk appetite may also oscillate within a certain range [6][19] - **Market Performance**: Last week, the capital market tightened marginally, resulting in a double - kill of stocks and bonds, with the growth style still dominant. The yields of both long - and short - term bonds rose, and the stock - bond cost - effectiveness favored stocks. The ten - year Treasury bond yield rose by 1 basis point to 1.85%, the one - year Treasury bond yield rose by 5 basis points to 1.34%, and the thirty - year Treasury bond yield rose by 4 basis points to 2.27%. The broad - based rotation strategy outperformed the CSI 300 Index by 0.03 pct last week but has underperformed the CSI 300 Index by - 5.34 pct since its establishment in July 2024, with a maximum drawdown of 12.1% (compared to 15.7% for the CSI 300 Index) [7][20] 3.3 Industry Recommendations - **Industry Performance Review**: This week, the A - share market rose with increased trading volume. The Shanghai Composite Index rose 0.13%, while the Shenzhen Component Index fell 0.58% and the ChiNext Index fell 1.25%. Among the Shenwan primary industries, petroleum and petrochemicals, national defense and military industry, media, automobiles, and machinery and equipment had the largest increases, with weekly changes of 3.9%, 3.1%, 2.1%, 1.4%, and 1.3% respectively. Public utilities, food and beverages, power equipment, pharmaceuticals, and non - bank finance had the largest declines, with weekly changes of - 2.7%, - 2.3%, - 2.2%, - 2.1%, and - 1.8% respectively [26][27] - **Industry Crowding and Trading Volume**: As of December 31, the top five industries in terms of crowding were electronics, power equipment, machinery and equipment, national defense and military industry, and computers, with values of 15.5%, 9.4%, 8.9%, 8%, and 6.8% respectively. The bottom five were comprehensive, beauty care, coal, steel, and petroleum and petrochemicals. The top five industries with increased crowding this week were media, machinery and equipment, household appliances, computers, and national defense and military industry. The trading volume of the entire A - share market rebounded this week. Media, petroleum and petrochemicals, computers, beauty care, and national defense and military industry had the highest year - on - year growth rates in trading volume [28][30] - **Industry Valuation and Earnings**: This week, among the Shenwan primary industries, the PE (TTM) of petroleum and petrochemicals, national defense and military industry, media, machinery and equipment, and automobiles had the largest increases, while public utilities, food and beverages, power equipment, pharmaceuticals, and non - bank finance had the largest declines. Industries with high full - year 2024 profit forecasts and relatively low current valuations compared to historical levels include banking, insurance, coal, public utilities, transportation, pharmaceuticals, beauty care, new energy, and consumer electronics [34][35] - **Industry Prosperity**: Externally, there was a marginal decline in demand. The global manufacturing PMI decreased from 50.5 to 50.4 in December. Internally, the second - hand housing price remained flat in the latest week, and the quantity indicators showed mixed trends. The capacity utilization rate of ten industries showed a fluctuating upward trend from May to December 2025 [39] - **Public Fund Market Review**: In the fifth week of December (December 29 - 31), most actively managed public equity funds outperformed the CSI 300 Index. As of December 31, the net asset value of actively managed public equity funds was 3.95 trillion yuan, slightly up from 3.66 trillion yuan in Q4 2024 [52] - **Industry Recommendations**: In the deleveraging cycle, an A + H dividend portfolio of 13 stocks and an A - share portfolio of 20 stocks are recommended, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation [55]

Overview - The report discusses the performance of the Chinese economy and financial markets, highlighting a stable liquidity environment and a potential slight improvement in profitability in early 2026 [2][5]. Group 1: Overall Debt Situation - As of November 2025, China's total social debt reached 502.7 trillion, with a year-on-year growth rate of 8.6%, slightly down from 8.7% in the previous month [16][22]. - The debt growth rates for households and government sectors were lower than previous values, while non-financial enterprises saw an increase, with their debt balance growing by 9.3% [22][24]. Group 2: Financial Institutions' Assets and Liabilities - By the end of November 2025, the broad financial institution debt balance was 166.5 trillion, reflecting a year-on-year growth of 5.9%, which is lower than the previous 6.5% [30]. - The banking sector's debt balance was 136.6 trillion, with a year-on-year growth of 7.4%, down from 7.7% [30]. Group 3: Asset Allocation - The report indicates that the domestic stock market is bullish while the bond market remains stable, with liquidity conditions exceeding previous expectations [2][5]. - In November 2025, the year-on-year growth rate of bank bond investments was recorded at 17.3%, slightly lower than the previous 17.5% [42]. Group 4: Economic Outlook - The report anticipates that profitability may see a slight improvement in January 2026, with the debt side remaining stable and risk appetite at a high level [5][14]. - The expected fluctuation range for ten-year bond yields in 2026 is projected to be between 1.6% and 1.9% [5][6].

Summary of Conference Call Records Industry Overview - The records primarily discuss the macroeconomic environment and the bond market in China, focusing on the trends in private sector debt and the implications for the real estate market and overall economic stability [1][2][4][5]. Key Points and Arguments 1. **Debt Growth Trends** - The growth rate of private sector debt has decreased to 8.7% in October, with expectations to further decline to approximately 8.2% by December, aligning with government policies aimed at stabilizing macro leverage [1][5]. - Household loan growth has dropped to 1.5%, indicating weak willingness for households to invest in the market [1][5]. 2. **Market Performance in November** - November experienced a dual decline in both stock and bond markets, attributed to marginal contraction in macro liquidity and specific events like the Vanke incident [2][4]. - Despite short-term disturbances, the probability of systemic liquidity risk remains low, suggesting potential entry points for investors [2][4]. 3. **Real Estate Market Outlook** - The low growth rate of household loans suggests a near-bottom position for the real estate market, with expectations for gradual stabilization and recovery [6]. 4. **Future Policy Environment** - The policy environment for the upcoming year is expected to remain stable, focusing on maintaining macro leverage and addressing hidden debts, with limited improvements in financial sector liquidity [10][11]. 5. **Impact of Fiscal Policies** - The high base effect from fiscal front-loading in 2025 may influence fiscal policies and market performance in early 2026, similar to the situation observed in April 2023 [8][10]. 6. **Risk Appetite and Market Dynamics** - Risk appetite has been declining since 2007, currently in a narrow fluctuation state, with limited potential for sustained increases in risk preference [3][12]. - Observations indicate that risk appetite is influenced by equity market volume, the stock-bond relationship, and market style [12]. 7. **Currency and Economic Relations** - The RMB exchange rate reflects relative changes, with potential for increased global capital inflow if China's economic growth continues to outperform that of the U.S. [18][19]. 8. **Investment Strategy Recommendations** - The recommended investment strategy is to focus on bonds combined with value stocks, as growth assets are viewed pessimistically due to declining U.S. economic growth [24]. Other Important Insights - The records highlight the importance of monitoring marginal changes in economic indicators rather than absolute data, emphasizing the role of private sector debt growth as a proxy for profitability expectations [17]. - The potential for a "slow bull" market driven by corporate earnings rather than valuation fluctuations is discussed, suggesting a sustainable investment environment [20]. - The overall profitability cycle is expected to remain in a narrow fluctuation state, with low return expectations for the near future [21][22]. This comprehensive analysis provides insights into the current economic landscape, investment strategies, and the anticipated trajectory of the Chinese market.

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In the past 4 weeks, the domestic stock and bond markets both rose slightly, mainly due to the marginal relaxation of the capital market in October, with a slight decline in risk appetite and no unexpected overall trend [2]. - Looking ahead to November, profits will continue to run smoothly. After a slight improvement in the capital market at the beginning of the month, the risk of marginal convergence of macro - liquidity is increasing, and risk appetite is likely to continue to decline. The trend of bond - equity ratio favoring bonds and equity style favoring value remains unchanged. A combination of long - term bonds and value stocks is recommended [2][14][41]. - China's profit cycle may have entered a low - level narrow - range oscillation stage since the fourth quarter of last year. The private sector debt growth rate is introduced as a supplementary variable to proxy for profit, and currently, the further downward space of this data is limited [3]. - The domestic part of macro - liquidity corresponds to policies. In the long run, policies are endogenous and should conform to the economic cycle. China's policy goals of stabilizing the macro - leverage ratio and financial institutions benefiting the real economy have remained stable [3]. 3. Summary by Relevant Catalogs 3.1全社会债务情况 - As of the end of September, China's total social debt balance was 500.1 trillion yuan, with a year - on - year growth of 8.4%, down from the previous value of 8.8% [16]. - At the end of September, the debt balance of financial institutions (inter - bank) was 91.5 trillion yuan, with a year - on - year growth of 6.4%, down from the previous value of 8.0% [18]. - At the end of September, the debt balance of the real sector was 408.6 trillion yuan, with a year - on - year growth of 8.8%, down from the previous value of 8.9%. Among them, the household debt balance was 81.9 trillion yuan, with a year - on - year growth of 2.2%; the government debt balance was 117.1 trillion yuan, with a year - on - year growth of 14.5%; the non - financial enterprise debt balance was 209.7 trillion yuan, with a year - on - year growth of 8.5% [21][23]. - In September, the profit of industrial enterprises increased by 21.6% year - on - year, and the profit of state - owned enterprises increased by 7.5% year - on - year [26]. 3.2金融机构资产负债详解 - As of the end of September, the debt balance of broad financial institutions was 164.9 trillion yuan, with a year - on - year growth of 5.9%, down from the previous value of 6.1%. Among them, the bank debt balance was 135.5 trillion yuan, with a year - on - year growth of 7.1%; the non - bank financial institution debt balance was 29.4 trillion yuan, with a year - on - year growth of 0.8% [29]. - In September, the three quantitative indicators of monetary policy (base money balance growth rate, financial institution debt growth rate, and excess reserve ratio) showed two declines and one increase. Monetary policy continued to converge marginally in September, slightly relaxed in October, and the probability of further convergence remains high [7][14][31]. - The newly constructed NM2 has a similar trend to M2 but a lower absolute level since 2017. The recent situation indicates that the probability of further marginal convergence of monetary policy is still large [38]. 3.3资产配置 - In the past 4 weeks, the domestic stock and bond markets both rose slightly. Looking ahead to November, a combination of long - term bonds and value stocks is recommended [2][41]. - In September, the year - on - year growth rate of bank bond investment balance was 18.8%, lower than the previous value of 19.6%. The growth rate of the central bank and banks' total foreign asset balance was 3.6%, higher than the previous value of 3.4% [41][42]. - It is expected that the real economic growth rate of the United States will decline this year, inflation will remain high, and the nominal economic growth rate will decrease. The debt growth rate of the US real sector is expected to remain stable at around 3.4%. If the valuation of the US technology field is re - evaluated, global funds may flow from the US to China [15][42].

Report Investment Rating No relevant content provided. Core Viewpoints - The overall economic situation shows that China is in a marginal de - leveraging process. The growth rate of the real - sector's liabilities is expected to decline, and the government's liability growth rate is also trending down. The economic growth rate needs further observation, and the risk preference has increased recently, with the stock - bond ratio favoring stocks [1][2][6]. - It is recommended to use the equity growth style instead of the bond position this week, suggesting an allocation of 60% in the Shanghai Composite 50 Index and 40% in the CSI 1000 Index. In the de - leveraging cycle, the stock - bond ratio favors equities to a limited extent, and value stocks are more likely to outperform. A + H and A - share dividend portfolios are recommended, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation [8][9][10]. Summary by Directory 1. National Balance Sheet Analysis - **Liability Side**: In September 2025, the real - sector's liability growth rate was 8.9%, expected to remain stable around 8.9% in October and then decline to about 8.5% by the end of the year. The government's liability growth rate was 14.5% in September, expected to drop to around 14.0% in October and 13.0% by the end of the year. The central bank's policies reinforce the judgment of stabilizing the macro - leverage ratio [1][2]. - **Monetary Policy**: Last week, the money market was generally stable. The one - year Treasury yield rose to 1.47% at the weekend, with an estimated lower limit of about 1.3%. The term spread between the ten - year and one - year Treasuries was stable at 38 basis points. The future yield ranges of the ten - year and thirty - year Treasuries are estimated to be around 1.6% - 1.9% and 1.8% - 2.3% respectively [3]. - **Asset Side**: The physical quantity data in September continued to weaken compared to August. The full - year nominal economic growth target for 2025 is around 4.9%, and it remains to be seen whether this will become the central target for China's nominal economic growth in the next 1 - 2 years [3]. 2. Stock - Bond Cost - effectiveness and Stock - Bond Style - **Overall Outlook for 2025**: China's asset prices are mainly affected by changes in the national balance sheet. The real GDP growth rate on the asset side is expected to fluctuate between 4 - 5%, and the liability growth rate of the real sector is expected to decline. The stock - bond cost - effectiveness generally favors bonds, but recently, due to the increase in risk preference, it has shifted towards stocks [21][6]. - **Recent Market Performance**: Last week, the money market was stable, risk preference increased significantly over the weekend, resulting in rising stocks and falling bonds. The equity style shifted to growth - oriented, and the stock - bond cost - effectiveness favored stocks. The ten - year Treasury yield rose by 2 basis points to 1.85%, and the one - year Treasury yield rose by 3 basis points to 1.47% [6]. - **Investment Recommendations**: This week, it is recommended to use the equity growth style instead of the bond position, suggesting an allocation of 60% in the Shanghai Composite 50 Index and 40% in the CSI 1000 Index [8]. 3. Industry Recommendations 3.1 Industry Performance Review - This week, the A - share market rose with shrinking trading volume. The Shanghai Composite Index rose 2.9%, the Shenzhen Component Index rose 4.7%, and the ChiNext Index rose 8.1%. Among the Shenwan primary industries, communication, electronics, power equipment, machinery, and petroleum and petrochemicals had the largest increases, while agriculture, forestry, animal husbandry, food and beverage, and beauty care had the largest declines [30]. 3.2 Industry Crowding and Trading Volume - As of October 24, the top five industries in terms of crowding were electronics, power equipment, machinery, computer, and communication, while the bottom five were beauty care, comprehensive, textile and apparel, social services, and steel. The trading volume of the entire A - share market decreased compared to last week [33][34]. 3.3 Industry Valuation and Earnings - This week, among the Shenwan primary industries, communication, electronics, power equipment, machinery, and petroleum and petrochemicals had the largest increases in PE(TTM), while agriculture, forestry, animal husbandry, food and beverage, beauty care, and others had the smallest increases. Industries with high 2024 full - year earnings forecasts and relatively low current valuations include banking, insurance, petroleum and petrochemicals, transportation, and others [38][39]. 3.4 Industry Prosperity - **External Demand**: There were mixed trends. The global manufacturing PMI declined from 50.9 in September to 50.8, and most major economies' PMIs decreased. The CCFI index rose by 2.02% in the latest week, and port cargo throughput increased. South Korea's export growth rate decreased in October, while Vietnam's increased [43]. - **Domestic Demand**: The second - hand housing price decreased in the latest week, and quantity indicators showed mixed trends. Highway truck traffic increased, the capacity utilization rate of ten industries declined from September to October, automobile sales were at a relatively high level, and new - home sales were at a historical low [43]. 3.5 Public Fund Market Review - In the third week of October (October 20 - 24), some active public equity funds outperformed the CSI 300. As of October 24, the net asset value of active public equity funds was 4.2 trillion yuan, slightly higher than 3.66 trillion yuan in Q4 2024 [60]. 3.6 Industry Recommendations - In the de - leveraging cycle, the stock - bond cost - effectiveness favors equities to a limited extent, and value stocks are more likely to outperform. The recommended A + H dividend portfolio consists of 20 A + H stocks, and the A - share portfolio consists of 20 A - shares, mainly concentrated in banking, telecommunications, petroleum and petrochemicals, and transportation industries [64].

Report Industry Investment Rating Not provided in the content Core Viewpoints - The market performance from July 5 to August 3 exceeded expectations, with abnormal financial sector liquidity in June and greater - than - expected fiscal front - loading. The financial sector liquidity peaked around the first week of July and then converged marginally. The government and entity sector debt growth rate reached their highs in July, and the entity sector debt growth rate is likely to decline unilaterally until the end of the year, with a slight expansion in late September or early October [1][39]. - Looking ahead to August, the two major factors affecting asset prices are stable earnings and marginally converging liquidity. As risk preference is an endogenous variable of earnings and valuation, it will decline over time. When risk preference drops, the stock - bond ratio will shift back to bonds, and the equity style will return to value - dominance. It is advisable to focus on bonds and wait for value - type equity assets to show an intervention window [1][12][39]. Summary by Directory 1.全社会债务情况 - As of the end of June, China's total social debt balance was 491.5 trillion yuan, a year - on - year increase of 8.6%. The financial institution (inter - bank) debt balance was 90.0 trillion yuan, a year - on - year increase of 7.6%. The entity sector debt balance was 401.5 trillion yuan, a year - on - year increase of 8.8%. Among them, household debt grew at 2.9%, government debt at 15.3%, and non - financial enterprise debt at 7.9% [14][16][19]. - In June, industrial enterprise profits decreased by 4.3% year - on - year, and the debt balance increased by 5.4% year - on - year. State - owned enterprise profits decreased by 4.0% year - on - year [24]. 2.金融机构资产负债详解 - As of the end of June, the debt balance of broad financial institutions was 165.2 trillion yuan, a year - on - year increase of 7.6%. Bank debt was 134.0 trillion yuan, a year - on - year increase of 6.9%, and non - bank financial institution debt was 31.1 trillion yuan, a year - on - year increase of 10.7% [27]. - In June, the bank's excess reserve ratio was 1.7%, and the money multiplier was 8.62. The year - on - year growth rate of base money supply decreased from 2.8% to 2.0%. The new broad - money supply indicator NM2 showed a similar trend to M2, but with a lower absolute level since 2017 [29][35][36]. 3.资产配置 - From July 5 to August 3, the domestic stock market was bullish and the bond market was bearish, with growth stocks outperforming. The core logic driving the market shifted from liquidity improvement to rising risk preference. The stock market was positively correlated with the Nanhua Composite Index [1][39]. - In June, the year - on - year growth rate of bank bond investment balance was 18.7%, and the growth rate of the central bank and bank's total foreign asset balance was 3.5%. The year - on - year growth rate of the US Treasury balance was 4.0%, and fiscal deposits decreased by $102 billion to $334.6 billion [40][43].

Report Industry Investment Rating The provided content does not mention the report industry investment rating. Core Viewpoints of the Report - China remains in a marginal de - leveraging process, with the goal of stabilizing the macro - leverage ratio unchanged. The large - scale debt resolution reduces local government financing costs and the probability of large - scale defaults and liquidity risks [2]. - The current loose money - market conditions are difficult to sustain, and the peak of the current round of money - market conditions is expected to occur between June 23 and July 4 [2][7]. - The stock - bond ratio favors bonds, and the equity style trends towards value. Currently, long - term bonds have a slightly higher cost - performance ratio than value - type equity assets [6][22][23]. Summary by Directory 1. National Balance Sheet Analysis Liability Side - In May 2025, the liability growth rate of the real - sector was 8.9%, slightly lower than the previous value of 9.0%. It is expected to reach its peak in April, decline to around 8.8% in June, and then gradually decline to around 8% by the end of the year [2][17]. - The money - market conditions of the financial sector were marginally stable and slightly loose last week. Given the marginal de - leveraging of the real sector, the loose money - market conditions are unlikely to continue [2][17]. - The net reduction of government bonds last week was 316 billion yuan, lower than the planned net increase of 218.6 billion yuan. This week, the planned net increase is 575.4 billion yuan. The government liability growth rate was 14.8% at the end of May, expected to rise slightly above 15% in June and then decline to around 12.5% by the end of the year [3][18]. Monetary Policy - Last week, the average weekly trading volume and price of funds increased, and the term spread widened. After adjusting for seasonal effects, the money - market conditions were marginally stable and slightly loose [3][18]. - The yield of one - year Treasury bonds decreased to 1.36% at the end of the week. The lower limit of the one - year Treasury bond yield is estimated to be around 1.3%, the lower limit of the ten - year Treasury bond yield is around 1.7%, and the lower limit of the thirty - year Treasury bond yield is around 1.9% [3][18]. Asset Side - In May, the physical - quantity data weakened compared to April. The government's target for the annual real economic growth rate in 2025 is around 5%, and the nominal economic growth rate target is around 4.9%. It is necessary to further observe whether this will become the central target for China's nominal economic growth in the next 1 - 2 years [4][19]. 2. Stock - Bond Cost - Performance and Stock - Bond Style - Last week, the money - market conditions were marginally stable and slightly loose, but risk appetite continued to decline. Funds flowed more towards short - term bonds, resulting in a continued "bearish stocks, bullish bonds" situation with a value - dominant style [6][21]. - The yields of short - term and long - term bonds declined slightly. The ten - year Treasury bond yield remained stable at 1.64%, the one - year Treasury bond yield decreased by 5 basis points to 1.36%, and the thirty - year Treasury bond yield decreased by 1 basis point to 1.84% [6][21]. - The broad - based rotation strategy outperformed the CSI 300 index by 0.52 percentage points last week and has outperformed it by 6.45 percentage points since July, with a maximum drawdown of 0.0% [6]. - The report recommends a portfolio of 40% dividend index, 40% SSE 50 index, and 20% 30 - year Treasury bond ETF [7][23]. 3. Industry Recommendation 3.1 Industry Performance Review - The A - share market declined with lower trading volume this week. The Shanghai Composite Index fell 0.51%, the Shenzhen Component Index fell 1.16%, and the ChiNext Index fell 1.66% [27]. - Among the Shenwan primary industries, banks, communications, electronics, food and beverages, and household appliances had the largest increases, while beauty care, textile and apparel, pharmaceutical biology, non - ferrous metals, and social services had the largest declines [27]. 3.2 Industry Crowding and Trading Volume - As of June 20, the top five industries in terms of crowding were electronics, computers, power equipment, machinery and equipment, and pharmaceutical biology, while the bottom five were comprehensive, beauty care, steel, coal, and building materials [29]. - This week, the top five industries with increased crowding were electronics, power equipment, communications, machinery and equipment, and computers, while the top five with decreased crowding were pharmaceutical biology, non - ferrous metals, national defense and military industry, automobiles, and textile and apparel [29]. - The average daily trading volume of the entire A - share market decreased from 1.37 trillion yuan last week to 1.22 trillion yuan this week. The industries with the highest year - on - year growth in trading volume were petroleum and petrochemicals, national defense and military industry, electronics, computers, and public utilities [30]. 3.3 Industry Valuation and Earnings - This week, among the Shenwan primary industries, banks, communications, electronics, food and beverages, and household appliances had the largest increases in PE(TTM), while beauty care, textile and apparel, pharmaceutical biology, non - ferrous metals, and social services had the largest declines [34]. - As of June 20, 2025, industries with high full - year 2024 earnings forecasts and relatively low current valuations compared to history include coal, petroleum and petrochemicals, power equipment, pharmaceutical biology, and consumer electronics [35]. 3.4 Industry Prosperity - In terms of external demand, there were mixed trends. The global manufacturing PMI in May fell from 49.8 to 49.6, while most of the disclosed PMIs of major economies in May rebounded. The CCFI index rose 8% week - on - week [39]. - In terms of domestic demand, second - hand housing prices declined in the latest week, and quantitative indicators showed mixed trends. The traffic volume of trucks on expressways increased, and the capacity utilization rate of ten industries showed a slight rebound in May and continued to rise slightly in June [39]. 3.5 Public Fund Market Review - In the third week of June (June 16 - 20), most active public equity funds underperformed the CSI 300. The 10%, 20%, 30%, and 50% weekly returns were 0.4%, - 0.2%, - 0.6%, and - 1.2% respectively, while the CSI 300 fell 0.45% [53]. - As of June 20, the net asset value of active public equity funds was estimated to be 3.41 trillion yuan, slightly lower than 3.66 trillion yuan in Q4 2024 [53]. 3.6 Industry Recommendation - In the de - leveraging cycle, the stock - bond ratio favors equity to a limited extent, and the value style is more likely to dominate. Dividend - type stocks are generally expected to have the characteristics of non - expansion, good earnings, and survival [8][23][57]. - The recommended A + H dividend portfolio includes 20 A + H stocks, and the A - share portfolio includes 20 A - share stocks, mainly concentrated in industries such as banks, telecommunications, petroleum and petrochemicals, and transportation [8][9][57].