Summary of Conference Call on China Financials Industry Overview - The focus is on the **China Financials** sector, particularly regarding household deposits and investment trends in 2025 and projections for 2026 [7][10]. Key Points and Arguments 1. **Deposit Stability**: - There is an expectation of no significant outflows from existing time deposits due to depositors' preference for low risk and liquidity [1][3]. - Retail deposits grew by **Rmb14.6 trillion**, a **9.7% YoY** increase, despite a decline in deposit yields and a large volume of maturing deposits [2][10]. 2. **Maturing Deposits**: - Approximately **Rmb81 trillion** of retail term deposits are expected to mature in 2026, which is higher than the **Rmb71 trillion** that matured in 2025. However, the amount of higher yield deposits maturing will be lower at **Rmb16 trillion** compared to **Rmb28 trillion** in 2025 [3][22]. 3. **Investment Shifts**: - A partial shift in new household savings allocations is anticipated to support growth in insurance and various investment funds, with deposit growth expected to slow to **7-8%** in 2026 [4][32]. - A **1ppt** slowdown in deposit growth could lead to **Rmb1.6-1.7 trillion** flowing into other investment products, driving double-digit growth in insurance and mutual funds [33]. 4. **Market Dynamics**: - The financial asset yields are expected to stabilize and rebound after years of decline, which will benefit depositors and reduce capital market volatility [5][41]. - The banking sector is projected to rationalize balance sheet growth targets, which may lead to a gradual rebound in loan yields [41]. 5. **Valuation Re-rating**: - A re-rating of financial stocks is anticipated, particularly for banks and insurance firms, as the financial sector returns to a positive development loop [4][5][40]. Additional Important Insights - **Household Financial Assets Growth**: - Household financial assets grew by **12%** in 2025, with major contributions from retail deposits and insurance products [10][16]. - The mix of retail term deposits increased slightly to **73.3%** by the end of 2025 [17]. - **Regulatory Environment**: - The wealth management industry is becoming more prudent in advising households on asset allocation, which is expected to lead to more rational inflows into asset management products [30]. - **Market Depth**: - The current market lacks the depth to absorb significant deposit outflows without causing volatility, emphasizing the bank-centric nature of China's financial system [26][28]. - **Future Projections**: - The overall household financial asset growth is expected to remain above **10%** in 2026, with a modest decline in the share of deposits in total household financial assets [33][34]. This summary encapsulates the critical insights from the conference call regarding the stability and growth prospects of the China Financials sector, highlighting the dynamics of household deposits and investment trends.