Group 1 - The Southern Yi Stable and Steady Income Bond Fund, managed by GF Bank, has raised over 5 billion yuan in just six trading days, marking it as the largest newly issued non-holding period secondary bond fund this year [1] - The success of the fund reflects strong market demand for high-quality low-volatility products and demonstrates the significant market influence of GF Bank's "GF Select" brand [1] - Since its launch in 2021, the "GF Select" fund series has sold over 30 billion yuan across 12 customized funds, ranking in the top two for sales in its category [1] Group 2 - The "GF Select" fund product configuration system began in 2014, utilizing a multi-level dynamic screening mechanism to select outstanding fund products [2] - The fund management team conducts daily quantitative tracking and regular monitoring of public information to ensure the selection of high-quality funds [2] - GF Bank aims to leverage its channel management capabilities and professional custody advantages to support the high-quality development of the public fund industry [2]

Group 1 - The Southern Yiwen Stable Income Bond Fund, managed by GF Bank, has raised over 5 billion yuan in just 6 trading days, marking it as the largest newly issued non-holding period secondary bond fund this year [1] - The success reflects strong market demand for high-quality low-volatility products and demonstrates the significant market influence of GF Bank's "GF Select" brand [1] - Since its launch in 2021, the "GF Select" fund series has sold over 30 billion yuan across 12 customized funds, ranking in the top two for sales in its category [1] Group 2 - The "GF Select" fund employs a multi-tiered dynamic screening mechanism, focusing on long-term wealth growth and adapting to market changes [2] - The fund management team continuously tracks changes and evaluates fund managers' market strategies to select outstanding fund products [2] - GF Bank aims to leverage its channel management and professional custody advantages to support the high-quality development of the public fund industry [2]

Core Viewpoint - The recent weak U.S. non-farm employment data has led to a rebound in gold prices, with market expectations for gold rising significantly due to deteriorating economic growth and inflation outlooks in the U.S. [1][2] Group 1: Gold Price Movement - On August 6, COMEX gold futures opened at $3434.9 per ounce, reflecting a market shift towards bullish sentiment for gold [1] - Citibank raised its three-month gold price forecast from $3300 to $3500 per ounce, adjusting the trading range from $3100-$3500 to $3300-$3600 [1] - The chief commodity analyst at Industrial Bank Research noted that the probability of gold price increases is rising as previous high valuations are being digested and seasonal volatility in U.S. stocks may intensify [1] Group 2: Factors Influencing Gold Prices - The U.S. non-farm payrolls for July added only 73,000 jobs, falling short of the expected 110,000, while June's figures were revised down from 147,000 to 14,000, a downward adjustment of 90% [2] - Concerns over a slowing U.S. labor market have spurred gold price increases following the data release [2] - ICBC Credit Suisse Fund highlighted that the recent rise in gold prices is partly due to heightened expectations for interest rate cuts, as U.S. stock indices typically perform poorly before such cuts, supporting gold prices [2] Group 3: Institutional Outlook on Gold - Following Citibank's upward revision, several institutions expressed optimism about gold prices, with Goldman Sachs maintaining a target price of $3700 per ounce by the end of 2025, citing global central bank gold purchases, recession risks, and weakening dollar credibility as key drivers [3] - DBS Bank's Chief Investment Officer stated a positive outlook for alternative asset investments, particularly in gold, setting a target price of $3765 per ounce for Q4 2025 [3] - The increasing risks and uncertainties, along with ongoing central bank reserve diversification and strong investor demand, are expected to support the gold market [3]

Group 1 - The Chinese securities regulatory authority emphasizes the importance of promoting mergers and acquisitions (M&A) to enhance the investment value of listed companies, indicating a rise in market activity in M&A and restructuring [1] - The A-share market is witnessing accelerated professional integration, with both traditional and emerging industries engaging in M&A, reflecting a sustained increase in market activity [1] - Analysts expect more benchmark M&A cases to emerge in the future, driven by policy support [1] Group 2 - The recent rally in sectors like military and pharmaceuticals has pushed the Shanghai Composite Index above 3600 points, prompting investors to focus on identifying high-potential assets based on valuation and growth prospects [2] - Analysts highlight that sectors such as non-ferrous metals, ultra-high voltage, and power equipment are currently undervalued yet possess better growth potential [2] - The semiconductor equipment and materials sectors are identified as key opportunities in the technology growth direction for the second half of the year [2] Group 3 - Five listed banks reported positive performance for the first half of 2025, with both revenue and net profit showing year-on-year growth [3] - The banking sector is expected to maintain stable growth due to a potential stabilization of net interest margins and ongoing optimization of asset-liability structures [3] Group 4 - There is a growing trend of international capital increasing allocations to Chinese assets, driven by improvements in policy and fundamentals [4] - Nearly 60% of sovereign wealth funds prioritize China as an investment market, and Chinese stocks have become the second-largest overseas investment destination for South Korean investors [4] - Recent data shows that five overseas-listed Chinese ETFs attracted over $2 billion in a single month, indicating strong international interest [4] Group 5 - Hainan Province is set to pilot cross-border asset management policies, enhancing the convenience of cross-border capital flow and supporting the development of a centralized operation center for cross-border funds [5] Group 6 - The China Futures Association has proposed new regulations to address the issue of "involution" in the futures industry, aiming to shift from price competition to value creation [6] Group 7 - The mechanical industry in China is expected to continue its stable growth in the second half of 2025, with key economic indicators projected to grow at around 5.5% [8] - The industry has shown resilience in exports and stable production and sales growth, despite facing challenges such as insufficient demand and profit compression [8] Group 8 - The recent acquisition of Ansys by Synopsys for $35 billion marks a significant event in the EDA industry, expected to enhance market scale and meet customer needs in circuit and physical domains [9] - The acquisition is anticipated to create a substantial market presence, with Ansys holding a 42% market share in simulation software [9] Group 9 - Nine small and medium-sized banks have had their credit ratings upgraded recently, benefiting from regional economic development and capital strengthening measures [10] - Conversely, four small rural banks have seen their ratings downgraded, reflecting varying circumstances across the sector [10] Group 10 - The financial sector is expected to see an increase in social financing in July, with predictions of potential interest rate cuts and reserve requirement ratio reductions by the central bank in the near future [11] - These measures are aimed at reducing financing costs for the real economy and stimulating consumption and investment [11] Group 11 - Local state-owned enterprises are increasingly acquiring A-share listed companies, with 61 companies experiencing changes in controlling shareholders this year, indicating a trend towards resource optimization and economic transformation [12] Group 12 - New floating management fee rate funds are being launched, aligning the interests of fund managers and investors, with fees linked to investment performance [13]

1. Report Industry Investment Rating There is no information provided regarding the industry investment rating in the report. 2. Core Viewpoints of the Report - The bond market showed a situation of "all negative factors priced in" this week. After the high - level oscillation in the first half of the week, influenced by factors such as the extension of Sino - US tariff exemptions, lack of unexpected policies in the Politburo meeting in July, significant corrections in the equity market and commodity prices, and poor July manufacturing PMI data, the 10 - year Treasury bond yield returned to around 1.7%. The news of resuming the collection of VAT on the interest income of some bonds on Friday afternoon pushed the 10 - year Treasury bond yield below 1.7% [2][6]. - The tax system for bond investment in China varies according to different bond types, investors, and income sources. The new tax policy exempts the old bonds of Treasury bonds, local government bonds, and financial bonds from VAT on interest income, while new bonds require banks and other institutional investors to pay 6.34% VAT and asset management products to pay 3.26% VAT [2][6]. - After the tax rate adjustment, institutions may prefer to hold old bonds. The new bond issuance may need to provide sufficient interest compensation. The actual yield of old bonds may be between 1.65% - 1.7%, and the new - old bond spread may be between 5 - 10BP [2][13]. - The central bank may support the policy adjustment to increase the nominal level of domestic bond interest rates and reduce the investment and trading willingness of financial institutions. The finance department may aim to expand the tax source. The policy may increase the annual VAT revenue by up to 140 billion, and the annual fiscal interest payment may increase by about 50 billion [2][3]. - In the short term, the bond market may maintain a volatile pattern. After the new tax policy, there may be a short - term trading opportunity for old bonds, but the market may still face disturbances, and the volatile pattern is difficult to break [2][23]. 3. Summary According to Related Catalogs 3.1 China's Bond Investment Tax System Varies by Bond Type, Investor, and Income Source - **VAT**: Interest income from Treasury bonds, local government bonds, financial bonds, and inter - bank certificates of deposit is exempt from VAT. For other bond types, the actual VAT rate for general legal entities is 6.34%, and for asset management products, it is 3.26%. Capital gains from most bonds are subject to VAT, but public funds are exempt. The actual VAT rate takes into account price - exclusive factors and additional taxes [2][6][7]. - **Income Tax**: Financial institutions' interest income from investing in Treasury bonds and local government bonds is exempt from income tax. Interest income from railway bonds is taxed at a reduced rate of 12.5%. Other bond interest income and capital gains are taxed at 25%. Contractual asset management products are not income tax payers, and the tax is borne by product holders. Personal investment in asset management products is currently tax - free, while enterprises and financial institutions are taxable. Public fund dividends are exempt from income tax [2][8]. - **Impact on Yield Difference**: Tax system differences are an important reason for the yield differences among different bond types in China. For example, the implied tax rate between Treasury bonds and policy - financial bonds has an upper limit of 25% [9]. 3.2 Under the New Tax Policy, the Market's Rush for Old Bonds is Mainly Due to Different Tax Rates Among Institutions - **New Tax Policy**: Starting from August 8, 2025, new - issued Treasury bonds, local government bonds, and financial bonds' interest income will be subject to VAT, while old bonds' interest income remains tax - free [11]. - **Pricing of New and Old Bonds**: Assuming the fair - value yield of 10 - year Treasury bonds is 1.7%, new bonds need to provide sufficient interest compensation. For asset management products, the new bond issuance rate only needs to reach 1.755% to be equivalent to old bonds, while for self - operated accounts, it needs to reach 1.808%. The actual new - old bond spread may be between 5 - 10BP [12][13]. - **Actual Situation**: Banks can invest in asset management products to avoid tax impacts, which may narrow the new - old bond spread. For short - duration bonds, the new bond yield may rise more. The demand for non - tax - adjusted bonds such as inter - bank certificates of deposit and credit bonds may increase, but the positive impact is limited [14]. 3.3 The New Tax Policy Can Increase the Nominal Interest Rate of New Bonds, but Commercial Banks May Bear Higher Tax Costs - **Policy Motivation**: The central bank may support the policy to increase the nominal level of domestic bond interest rates, and the finance department aims to expand the tax source [17]. - **Fiscal Revenue and Expenditure**: In the first year of the policy implementation, the additional VAT revenue may be less than 36 billion. Eventually, the annual fiscal VAT revenue increase may be within 140 billion, and the annual fiscal interest payment may increase by about 50 billion. The difference reflects the tax cost borne by banks and other financial institutions [3][19][21]. - **Future Policy Expectation**: There may be further adjustments to the tax system of asset management products, especially the tax - exemption policy for public fund dividends [22]. 3.4 After Repricing the Existing Bonds, the Bond Market May Still Show a Volatile Pattern - **Short - Term Market Trend**: The bond market may maintain a volatile pattern in the short term due to the lack of incremental policies in the Politburo meeting in July, limited inflation - driving ability of production - restriction policies, and the expected maintenance of a loose monetary policy [23]. - **Impact of New Tax Policy**: After the new tax policy, there may be a short - term trading opportunity for old bonds as their yields may decline by 0 - 5BP. However, the market may still face disturbances such as rising bank financing costs and potential tax policy adjustments for public funds, and the volatile pattern is difficult to break [24]. - **Long - Term Outlook**: A further decline in interest rates may require weaker fundamental data to force a policy shift. There is a possibility that the economic growth rate may decline in the second half of the year, and if combined with central bank bond - buying or interest rate cuts, interest rates may reach new lows, which may occur in the second half of the third quarter [24].

Group 1: Wealth Management Scale - The wealth management scale decreased by CNY 744 billion to CNY 30.92 trillion during the week of July 28 to August 1[1] - In July, the total growth was only CNY 2,469 billion, significantly lower than the historical average of over CNY 10 trillion for the same month[1] - The decline in scale is attributed to ongoing net value decreases and redemption pressures, with short-term and medium-term debt products experiencing maximum drawdowns of 8bp and 6bp respectively[1] Group 2: Leverage Rates - The average leverage level in the interbank market decreased from 107.41% to 107.34% during the week of July 28 to August 1[3] - Non-bank institutions saw a rebound in leverage rates, increasing from 112.10% to 112.34%[3] - Exchange leverage rates also declined slightly from 122.47% to 122.43% during the same period[3] Group 3: Bond Fund Duration - The duration of interest rate-based medium and long-term bond funds decreased from 5.49 years to 5.45 years[4] - Credit bond fund duration reached a historical high of 2.81 years, up from 2.78 years[4] - Short and medium-term bond fund durations decreased to 1.01 years and 1.65 years respectively[4] Group 4: Government Debt Issuance - The planned issuance of government bonds increased to CNY 5,785 billion for the week of August 4-8, up from CNY 5,174 billion[47] - Net issuance of government bonds rose from CNY 2,876 billion to CNY 3,390 billion, primarily due to a significant increase in national bond net issuance[47] - Local government bond issuance for the week of July 28 to August 1 was CNY 3,372 billion, with a net issuance of CNY 2,360 billion[50]

Core Viewpoint - The banking wealth management sector is adjusting its asset allocation strategies in response to declining interest rates, shifting away from bonds and equity assets towards public funds, cash, bank deposits, and non-standardized debt assets [1][4]. Asset Allocation Changes - As of the end of June, the asset allocation of wealth management products remains predominantly in fixed-income assets, while the proportion of bonds and equity assets has decreased. Specifically, the balance of investments in bonds and equity assets was 13.78 trillion yuan and 0.78 trillion yuan, accounting for 41.8% and 2.38% of total investment assets, respectively [2][3]. - The allocation to public funds has significantly increased, with a balance of 1.38 trillion yuan, representing 4.2% of total investment assets, an increase of 0.45 trillion yuan compared to the end of the first quarter [3]. Challenges in Fixed-Income Asset Returns - The average annualized return of wealth management products has declined to 2.12% in the first half of the year, down from 2.65% in 2024, indicating a 0.53 percentage point decrease. The difficulty in obtaining returns from fixed-income assets has increased, with a notable differentiation between allocation and trading strategies [4][5]. - Credit bonds continue to dominate the allocation, comprising 90% of bond investments, with a total holding of 12.79 trillion yuan, which is 38.79% of total investment assets [4]. Market Trends and Future Outlook - The total scale of the banking wealth management market reached 30.67 trillion yuan by the end of June, reflecting a 2.4% increase from the beginning of the year and a 7.54% year-on-year growth. However, the growth rate may slow down in the medium to long term due to declining returns on wealth management products [5][6]. - The pressure on the expansion of wealth management product scales is expected to increase as the advantages of returns, particularly for cash management products, diminish compared to deposits [6].

Core Viewpoint - The recent capital market dynamics show a significant shift in fund flows between equity and bond markets, with a notable increase in equity market performance as the bond market experiences volatility [1][2]. Group 1: Market Dynamics - The stock market has shown resilience, with the Shanghai Composite Index breaking through 3600 points, while the bond market has faced fluctuations, indicating a "see-saw" effect between the two [1][2]. - The bond market has seen a sharp increase in the 10-year government bond yield, rising from approximately 1.65% in mid-July to 1.75% by July 25, reflecting a shift in investor sentiment [1][2]. - Recent net liquidity operations have tightened the market, causing overnight repo rates to rise above 1.65%, leading to a significant tilt in the balance between equity and bond markets [2]. Group 2: Fund Flows and Investment Trends - There is a clear trend of funds migrating from bond markets to equities, driven by improved risk appetite and a shift in market sentiment towards sectors with higher profitability certainty, such as consumer and pharmaceutical stocks [2][5]. - The redemption signals in the bond market were triggered by a decline in net asset values of bond funds, with a cumulative drop of 15.1 basis points over three days, indicating a significant reaction from institutional investors [3]. - The demand for traditional savings products, such as savings bonds, has decreased as investors seek higher returns in the equity market, leading to a notable decline in the attractiveness of these once-popular investment vehicles [5][6]. Group 3: Institutional Behavior - Institutional investors, particularly banks and funds, have been reducing their bond holdings significantly, indicating a proactive defensive strategy in anticipation of rising interest rates [3][4]. - The current market environment has allowed institutions to accumulate floating profits, enhancing their resilience to bond market fluctuations, which has not yet resulted in negative feedback from redemptions [4]. - The trend of investors seeking higher returns has led to increased activity in the large-denomination certificate of deposit market, with many investors opting to redeem their deposits early to invest in equities [6].

Core Insights - The report indicates that the number of investors holding wealth management products increased by 8.37% year-on-year, reaching 136 million by the end of June [1][4] - The average annualized yield of wealth management products fell to 2.12%, down 68 basis points from 2.8% in the same period last year [1][4] - The total scale of the wealth management market reached 30.67 trillion yuan, with a year-to-date increase of 720 billion yuan [2][3] Investor Trends - The number of personal investors increased by 10.29 million in the first half of the year, indicating a strong influx of new investors [1][4] - The risk appetite of individual investors has shifted, with an increase in the proportion of those with higher risk preferences [4][6] Market Dynamics - The gap between the scale of wealth management products and public funds has widened, with public fund assets totaling 34.39 trillion yuan, a year-to-date increase of 1.56 trillion yuan [2][3] - The growth in wealth management products was primarily driven by the second quarter, contributing approximately 1.53 trillion yuan to the total scale [3] Product Composition - Cash management products have seen a significant decline, with a reduction of nearly 1 trillion yuan in the first half of the year, now accounting for 25.79% of open-ended wealth management products [7][8] - The proportion of risk-rated products has shifted, with a notable increase in the share of higher-risk products [6][9] Asset Allocation - Wealth management products have increased their allocation to public funds, cash, and deposits, while reducing exposure to credit bonds [10][11] - By the end of June, the total investment assets of wealth management products reached 32.97 trillion yuan, with a significant portion allocated to bonds [10][11]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report Under the resonance of multiple negative factors such as the rise in risk preference, the sharp rise in the equity and commodity markets, and the central bank's net withdrawal in the open - market operations disturbing the capital price, the bond market fluctuated violently this week. The selling behavior of funds is particularly worthy of attention. The scale of funds' net selling on Thursday and Friday was second only to the redemption tides in late August and early October last year. The performance of bond funds was poor, with over 40% of pure interest - rate bond funds recording negative returns in the past three months. Continued attention should be paid to changes in market risk preference and fund redemption situations [10]. 3. Summary According to Relevant Catalogs 3.1 Overall Sentiment - The bond market vitality index increased, mainly due to the rise in the turnover rate of ultra - long bonds. As of July 25, the bond market vitality index rose 6 pcts to 37% compared with July 18, and the 5D - MA rose 5 pcts to 45% [11]. - Indicators of rising bond market vitality included the trading volume of the active 10Y CDB bond / the balance of 9 - 10Y CDB bonds (the rolling two - year quantile rose from 42% to 72%), the 30Y treasury bond turnover rate (the rolling two - year quantile rose from 16% to 71%), and the median duration of medium - and long - term pure bond funds (the rolling two - year quantile rose from 99.3% to 99.7%) [13]. - Indicators of falling bond market vitality included the excess level of the inter - bank bond market leverage ratio compared with the average of the past 4 years (the rolling two - year quantile dropped from 20% to 5%) and the implied tax rate of 1 - 10Y CDB bonds (the rolling two - year quantile dropped from 57% to 21%) [14]. 3.2 Institutional Behavior 3.2.1 Buying and Selling Strength and Bond Selection - In terms of overall buying and selling strength, the order of net buying strength in the cash bond market this week was large banks > insurance > wealth management > other products > money market funds > overseas institutions and others, and the order of net selling strength was funds > securities firms > joint - stock banks > city commercial banks. For ultra - long bonds, the order of net buying strength was insurance > rural commercial banks > city commercial banks > wealth management, and the order of net selling strength was funds > securities firms > large banks > joint - stock banks > other products [22]. - Different institutions had different main bond types. Large banks focused on 1 - 3Y interest - rate bonds and credit bonds; rural commercial banks focused on 5 - 10Y interest - rate bonds and 1 - 3Y other bonds; insurance focused on interest - rate bonds over 10Y and 7 - 10Y credit bonds; funds focused on interest - rate bonds within 1Y; wealth management focused on certificates of deposit and interest - rate bonds within 3Y; other products focused on certificates of deposit [26]. 3.2.2 Trading Portfolio - As of July 25, the median duration of the full - sample medium - and long - term pure bond funds increased by 0.21 years to 4.38 years compared with July 18. Among them, the median durations of pure interest - rate bond funds and interest - rate bond funds decreased by 0.22 years and 0.04 years respectively, while that of credit bond funds increased by 0.19 years. The median durations of high - performing interest - rate bond funds and credit bond funds changed more significantly, decreasing by 0.48 years and increasing by 0.32 years respectively [35]. 3.2.3 Allocation Portfolio - **Primary market**: The primary subscription demand for treasury bonds and policy - bank bonds decreased overall this week. The weighted average full - market multiples of treasury bonds and policy - bank bonds decreased from 3.25 times to 2.94 times and from 3.36 times to 3.16 times respectively [53]. - **Large banks**: As of July 25, the cumulative net purchase of 1 - 3Y treasury bonds this year reached 4032 billion yuan, higher than the same period last year [59]. - **Rural commercial banks**: This year, the cumulative net purchase of cash bonds was significantly weaker than in previous years, mainly due to the weak net purchase of short - term bonds within 1Y. However, the net purchase of 7 - 10Y and over 10Y cash bonds was higher than the same period in previous years [70]. - **Insurance**: This year, the net purchase of cash bonds and its ratio to premium income were significantly higher than in previous years, mainly due to the sufficient supply of ultra - long - term government bonds. As of July 25, the ratio of the cumulative net purchase of cash bonds to the cumulative issuance of government bonds over 10Y was 27.34%, lower than 35.14% at the end of July last year [81]. - **Wealth management**: From June to July, the cumulative net purchase of cash bonds continued to rise, especially for bonds over 10Y. This week, the duration of net - bought cash bonds in the secondary market increased to the highest level since February 23, 2024 [90]. 3.3 Asset Management Product Tracking - Since July, the increase in the scale of wealth management products was weaker than seasonal. The scale increased by 27.96 billion yuan, far lower than the same period from 2021 - 2024. The wealth management product break - even rate decreased [94]. - Since July, the scale of bond funds increased by 13.41 billion yuan, with a significant slowdown in growth rate, while the scale of equity funds increased by 20.99 billion yuan. This week, the net value of various types of bond funds fell sharply, and over 40% of pure interest - rate bond funds recorded negative returns in the past three months [101].