Core Viewpoint - The significant decrease in household deposits in July indicates a potential shift of funds from savings to other investment avenues, possibly driven by declining interest rates and a desire for better returns [1][4][5] Group 1: Deposit Trends - In July, household deposits in RMB decreased by 1.1 trillion yuan, which is 780 billion yuan more than the same period last year [1] - Non-bank deposits increased by 2.14 trillion yuan, showing a year-on-year increase of 1.39 trillion yuan [1] Group 2: Investment Behavior - The reaction to the news suggests that many believe the stock market's rebound has motivated residents to move their funds into equities, contributing to the market's upward momentum [3] - There is uncertainty regarding how much of the "moved" deposits have actually entered the stock market versus other investment forms [3] Group 3: Economic Implications - The continuous decline in interest rates has led to a lack of trust in savings, prompting residents to seek ways to preserve and grow their wealth [4] - The management's intention appears to be encouraging residents to shift savings into consumption and other economically stimulating areas rather than keeping them in low-interest bank accounts [5] Group 4: Challenges and Concerns - There is a significant gap between the management's hopes for increased consumption and the residents' willingness to invest, as many face financial pressures such as housing loans and rising living costs [5][9] - The forced reduction of insurance product returns alongside lower savings rates may push residents to seek investment opportunities abroad, complicating the domestic financial landscape [5][7] Group 5: Market Stability - For the stock market to be a viable option for residents, it must be stable and not subject to extreme fluctuations that could deter investment [9] - The focus should be on ensuring that investors, particularly retail investors, can profit from the market, which would encourage a more favorable environment for the movement of household deposits [9]

Core Viewpoint - The significant increase in non-bank deposits in July reflects a trend of residents shifting their savings towards financial products, influenced by the recent bullish stock market and declining interest rates [1][2][5]. Group 1: Non-Bank Deposits - In July, non-bank deposits increased by 2.14 trillion yuan, a year-on-year increase of 1.39 trillion yuan, while household deposits decreased by 1.1 trillion yuan, a year-on-year decrease of nearly 0.8 trillion yuan [2]. - From January to July, non-bank deposits cumulatively increased by 4.69 trillion yuan, which is 1.73 trillion yuan more than the same period last year [2]. - Analysts suggest that the increase in non-bank deposits is driven by the end of the mid-year bank assessment period and the recent rise in the stock market, leading to a large-scale return of household savings to financial products [2][5]. Group 2: Money Supply and Liquidity - The growth rate of M2 (broad money) in July increased by 0.5 percentage points to 8.8%, exceeding market expectations of 8.3%, while M1 (narrow money) growth rate rose to 5.6%, marking a significant rebound over three consecutive months [2]. - The narrowing of the M1-M2 spread to -3.2% indicates enhanced liquidity, suggesting that households and businesses are converting time deposits into demand deposits for consumption or investment [3]. Group 3: Capital Market Expectations - There is a strong market expectation that capital markets will become a significant outlet for household deposits, with historical trends showing that each bull market is accompanied by a migration of bank deposits to capital markets [4][5]. - The estimated maturity of fixed-term deposits is substantial, with approximately 105 trillion yuan maturing by 2025 and 66 trillion yuan thereafter, which could lead to significant liquidity impacts if these funds flow into asset markets [4]. Group 4: Monetary Policy Outlook - Despite recent market optimism, July's financial data indicates slow recovery in demand, with new credit showing a negative growth for the first time in 20 years, highlighting the core contradiction in the current economic environment [7]. - The implementation of fiscal subsidy policies is expected to reduce the need for aggressive monetary easing, with analysts suggesting that the probability of interest rate cuts may decrease due to the effectiveness of targeted fiscal measures [8].

Monetary Supply - The broad money supply (M2) increased by 1.1% to 82.48 billion MOP, driven by a 3.2% rise in M1 due to a 4.5% increase in demand deposits, despite a 0.2% decrease in currency in circulation [2] - The composition of M2 by currency shows that the shares of MOP, HKD, RMB, and USD are 32.1%, 46.4%, 6.7%, and 12.8% respectively [2] Deposits - Total deposits in the banking system rose by 2.6% to 139.73 billion MOP, with resident deposits increasing by 1.1% to 80.38 billion MOP and non-resident deposits up by 6.5% to 37.39 billion MOP [3] - The public sector's deposits in the banking system increased by 1.6% to 21.97 billion MOP, with the currency composition being 18.8% MOP, 46.7% HKD, 8.3% RMB, and 24.4% USD [3] Loans - Local private sector loans increased by 2.8% to 51.26 billion MOP, with significant quarterly increases in loans to the "Food and Beverage and Hotel" sector (34.3%) and "Water, Electricity, and Gas Production and Supply" sector (18.6%) [4] - Total loans in the banking system rose by 4.2% to 103.52 billion MOP, with the currency composition being 21.4% MOP, 44.1% HKD, 11.2% RMB, and 20.0% USD [4] Operating Ratios - The loan-to-deposit ratio for local residents increased from 49.3% at the end of May to 50.1% at the end of June 2025, while the overall loan-to-deposit ratio, including non-residents, rose from 73.0% to 74.1% [5] - The non-performing loan ratio decreased to 5.4% [5]