Core Viewpoints - The transition of household deposits from "excessive defensive deposits" to "normal deposits" is a two-step process, currently in the first step [4] - The shift from "excessive defensive deposits" to "normal deposits" requires tracking household cash flow statements, with the ratio of new deposits to income increasing from approximately 14% (2016-2019) to 22% (2022-2024) [4][8] - Five macro-level high-frequency alternative indicators are proposed to track the progress of household deposit migration [4][10] Group 1: Deposit Scale - The ratio of household deposits to GDP in China has increased significantly, reaching 112% by the end of 2024, with an estimated excess deposit of around 40 trillion yuan [21][23] - Historical data shows that the average ratio of household deposits to GDP in China from 2010 to 2019 was 78%, with a peak of 82% [21][23] - The current household deposit level is approximately 160 trillion yuan, significantly higher than the expected range of 110 to 120 trillion yuan based on pre-pandemic trends [6][7] Group 2: Deposit Flow - The current macroeconomic challenge is the transition of excessive deposits to normal deposits, which can be accurately tracked through household cash flow statements [34] - The ratio of new deposits to disposable income has increased from 14% (2016-2019) to 22% (2022-2024), indicating a shift towards normal deposits [35][36] - The concept of "excess savings" is rejected; instead, it is defined as "defensive deposits" due to reduced investment spending in a declining asset price environment [9][36] Group 3: High-Frequency Tracking Indicators - The first indicator, the difference between current and fixed-term deposits, shows that a higher current deposit ratio indicates a weaker defensive saving intention [10][42] - The second indicator, the ratio of new household currency to new M2, indicates that a lower ratio suggests funds are flowing more towards enterprises and non-bank sectors, improving monetary turnover efficiency [11][12][44] - The third indicator, the difference between enterprise and household deposit growth rates, serves as a leading indicator for economic activity, with current levels indicating a recovery from the most pessimistic economic phase [13][48] Group 4: Defensive Deposits and Financial Markets - The fourth indicator measures the scale of non-bank institutions' financing from the real economy, which has reached historical highs, indicating a significant flow of household deposits into non-bank institutions [14][51] - The fifth indicator compares household deposits to the market capitalization of stocks, with a current ratio of approximately 1.71, suggesting that household purchasing power is still sufficient to support stock market transactions [16][56]

Group 1 - The core viewpoint of the article suggests that the current economic cycle is improving, with the worst phase behind, indicating a potential recovery in asset prices and investment opportunities [4][5]. - The article highlights that the attractiveness of stocks compared to bonds has significantly increased, driven by government policies that have stabilized the capital market and reduced stock volatility, leading to higher risk-adjusted returns for equities [3][7]. - It notes that the trend of favoring bonds over stocks may be reversing, and investors should start to pay attention to the value of equity investments relative to bonds [3][7]. Group 2 - The article discusses the implications of residents' deposits being utilized more effectively, which could lead to a rise in asset prices and a tightening of monetary policy as a response to prevent excessive capital turnover [3]. - It emphasizes that the most accommodative phase of monetary policy is coming to an end, suggesting a shift in the financial landscape that could affect investment strategies [4]. - The analysis includes data on the financing dynamics of non-bank institutions, indicating a complex interaction between various financial entities and the real economy, which may influence future investment decisions [9].