Core Insights - The traditional five-year fixed deposit, once a reliable investment for conservative investors, is gradually being phased out by banks due to declining interest rates and increased early withdrawals [2][4][8] Group 1: Changes in Deposit Products - Over 30% of fixed deposit customers are withdrawing early, resulting in an average interest loss of over 70% [4] - The interest rate for five-year fixed deposits has been reduced, with some banks even removing these products from their offerings [10][12] - The phenomenon of "interest rate inversion" is becoming common, where shorter-term deposits yield higher returns than longer-term ones, indicating banks' concerns over long-term funding costs [6][8] Group 2: Impact on Banking Profitability - The net interest margin, a key indicator of bank profitability, is under pressure, leading banks to adjust their deposit strategies [8][10] - Major banks have seen a decline in net interest margins, with state-owned banks experiencing an 11 basis point drop compared to the previous year [8] Group 3: Shift in Investment Strategies - Investors are increasingly moving their funds towards the real economy and capital markets due to shrinking deposit yields and inflation pressures [12] - A new investment strategy termed "New Three Golds," which includes money market funds, bond funds, and gold funds, is gaining popularity among younger investors [12][14] - The importance of diversified asset allocation is emphasized, moving away from reliance on long-term fixed deposits [16][20] Group 4: Financial Literacy and Caution - Investors are advised to assess their financial needs and avoid blindly choosing long-term deposits, as early withdrawals can lead to significant interest losses [18][20] - The necessity for financial education is highlighted, as investors should be cautious of high-yield products and scams [20][22] - The adage of not putting all eggs in one basket remains relevant, as the space for high-yield long-term deposits continues to shrink [22]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Insights - The report highlights that the new regulations on fund sales fees are expected to benefit wealth management products with diverse offerings and clear customer advantages [8] - The liquidity preference of residents is shifting towards high liquidity products, which is likely to accelerate the growth of wealth management scales [6] - The report indicates a potential reduction in off-market fund transactions, with a shift towards on-market ETF trading or long-term holding of amortized cost bond funds [7] Summary by Sections Industry Trends - The industry has shown a significant increase in the proportion of public funds held in wealth management, reaching a historical high of 4.2% (1.38 trillion yuan) by the end of Q2 2025 [11][12] Regulatory Changes - The new regulations propose to lower the maximum subscription fees for equity, mixed, and bond funds to 0.8%, 0.5%, and 0.3% respectively, while also adjusting the redemption fees for short-term holdings [4][10] - The simplification of redemption fee tiers is expected to impact the willingness of investors to hold funds short-term, particularly affecting bond funds [5] Wealth Management Product Dynamics - Wealth management products with minimal holding periods are gaining popularity, indicating a strong preference for high liquidity among residents [6] - The report suggests that wealth management may reduce reliance on off-market fund transactions and focus more on ETF trading or direct investments [7] Investment Recommendations - The report recommends that wealth management subsidiaries with diverse product offerings and clear customer advantages, such as Industrial and Commercial Bank of China, Agricultural Bank of China, and others, are likely to benefit from the new regulations [8]