Industry Investment Rating - The industry investment rating is maintained at "Outperform the Market" [1] Core Viewpoints - The report indicates that interbank liquidity has been higher than the same period last year, with fluctuations in funding rates influenced by various factors including tax periods and asset maturities [4][12] - The report highlights that the liquidity indicators for banks show improvement, particularly in the usage of interbank certificates of deposit, which have been positively affected by recent monetary policy adjustments [5][16] - The report suggests that while short-term deposit rate cuts may tighten the liability side for banks, the long-term outlook indicates a decrease in funding costs, with specific banks recommended for attention [6][30] Summary by Relevant Sections Industry Basic Situation - The closing index is at 4459.7, with a 52-week high of 4670.31 and a low of 3132.76 [1] Interbank Liquidity Performance Review - From June 29 to August 5, the interbank funding center was above last year's level, with rapid fluctuations in rates due to various market conditions [12][15] Monitoring of Bank Liquidity Indicators - The usage of interbank certificates of deposit has improved, with most national banks showing better conditions compared to previous periods [5][16] - The excess reserve ratio was recorded at 1.7% in June 2025, higher than the same period in the past two years, indicating a recovery in liquidity [20][21] Investment Recommendations - The report recommends focusing on specific banks such as Bank of Communications and Chengdu Bank due to expected improvements in their performance [6][30] - It also highlights that some joint-stock banks are likely to exceed performance expectations, suggesting attention to China Merchants Bank, Industrial Bank, and CITIC Bank [6][30]

Core Insights - The Central African States Bank (BEAC) has significantly increased its liquidity injections into the banking system, reaching an average of 12,161 billion Central African Francs (approximately $21.8 billion) per day in April 2025, a 7.8% increase from 11,278 billion Francs ($20.2 billion) three months prior, aimed at alleviating structural liquidity shortages in the banking sector [1][2] Group 1 - The gross reserves of the CEMAC banking system decreased by 11.0% from January to April 2025, dropping by 1,032 billion Francs to only 8,373 billion Francs (approximately $15 billion) by April 2025 [1] - The ratio of free reserves (exceeding the statutory minimum) to statutory reserves increased from 61.7% a year ago to 78.2%, yet this was insufficient to stabilize the banking system [1] - The liquidity deficit in the banking sector worsened from 1,976 billion Francs (approximately $3.5 billion) in January to 3,152 billion Francs (approximately $5.6 billion) in April, indicating a growing funding gap [1] Group 2 - The number of banks facing difficulties in meeting statutory reserve requirements increased from 3 to 5 within three months, highlighting the fragility of financial balance in the regional banking sector [2] - BEAC has utilized all refinancing tools, including increasing the scale of liquidity injection operations and enhancing the allocation through special refinancing windows, to mitigate the imbalance [2] - Although these interventions have prevented a sharp credit contraction, they expose the vulnerability of the banking sector's financial balance, with potential risks to the banks' ability to finance the real economy, particularly small and medium-sized enterprises, if monetary policy support is partially withdrawn [2]

Group 1: Macro Insights - The U.S. non-farm payroll data for May exceeded market expectations, with the unemployment rate stable at 4.2%, indicating a robust job market [3] - The leisure and hospitality sector saw an increase of 48,000 jobs, up from 29,000 in the previous month, contributing significantly to the stability of the employment data [3] - The steady non-farm data reinforces the Federal Reserve's wait-and-see approach, with market expectations suggesting no rate cuts in June and the first potential cut in September [3] Group 2: Fixed Income Market - The convertible bond market continued to recover, with the China Convertible Bond Index recording a 1.1% increase for the week, and a 4.7% rise year-to-date [4] - The performance of the convertible bond market has outpaced the equity market, with the overall index showing a 1.8% change [4] - Key factors influencing the convertible bond market include trade negotiations, fundamentals, and macro policies, with a focus on sectors that boost domestic demand and domestic substitution [4] Group 3: REITs Market - The secondary market prices for publicly listed REITs in China showed an upward trend, with the weighted REITs index closing at 142.42 and a weekly return of 1.74% [5] - The return rates of major asset classes ranked from highest to lowest are: crude oil, convertible bonds, gold, REITs, A-shares, U.S. stocks, and pure bonds [5] - There was a total net inflow of 9.05 million yuan into the market, indicating increased trading enthusiasm [5] Group 4: Liquidity Outlook - In June, credit issuance is expected to increase seasonally, with government bonds maintaining a certain level of issuance intensity [7] - The interbank liquidity is anticipated to remain in a neutral and slightly loose state, with a low probability of tightening at the end of the quarter [7] - Factors such as loan surges, government bond issuance, and the maturity of negotiable certificates of deposit (NCDs) may lead to increased volatility in DR rates compared to May [7]

Core Viewpoint - European regulators are closely examining bank liquidity in response to the potential impact of high trade tariffs imposed by the U.S. on global markets [1] Group 1: Regulatory Actions - UK and Eurozone authorities are monitoring the situation and have not identified any immediate issues [1] - This scrutiny is a standard practice for regulators during periods of market stress, with liquidity being a key focus in recent years [1] Group 2: Market Impact - Global bank stocks faced significant declines last week due to concerns over bad loans and growth slowdowns triggered by the tariffs [1] - Following a major three-day market drop, signs of recovery were observed on Wall Street [1] Group 3: Historical Context - Five years ago, during pandemic lockdowns, economic indicators deteriorated rapidly, leading to liquidity issues in the financial system as companies reduced credit lines [1] - The crisis involving U.S. regional banks and the collapse of Credit Suisse two years ago heightened regulatory concerns regarding bank liquidity [1]