Core Viewpoint - After the holiday, foreign and financing funds have returned to the Chinese market, with a notable increase in trading activity and a preference for technology and cyclical sectors, particularly electronics and non-ferrous metals [3][4][5]. Group 1: Market Activity - Market sentiment has significantly improved, with average daily trading volume rising to 2.6 billion and the average number of stocks hitting the daily limit up to 71.6 [3]. - The proportion of stocks that increased in value has risen to 54.1%, with the median weekly return for all A-shares increasing to 0.4% [3]. - Industry trading concentration has continued to rise, with 11 industries having turnover rates in the historical top 10% [3]. Group 2: Fund Flows - After the holiday, foreign capital inflow reached 3.0 billion USD, with northbound trading accounting for 30.5% of total trading volume [4]. - Public funds saw a decrease in new issuance to 870 million, while private fund confidence slightly declined, nearing the highest levels of the year [4]. - The net inflow of ETF funds totaled 37.7 billion over the past four trading days, maintaining a high level of passive trading [4]. Group 3: Sector Preferences - Foreign capital has shown a strong preference for electronics (+3.47 billion) and non-ferrous metals (+2.04 billion), while sectors like household appliances and banks experienced outflows [5]. - Financing activities also favored electronics (+10.85 billion) and non-ferrous metals (+6.58 billion), with a slight outflow in the comprehensive sector [5]. - The top sectors for ETF inflows included non-bank financials (+3.74 billion) and power equipment (+2.89 billion), while communication and computing sectors saw outflows [5]. Group 4: Hong Kong and Global Fund Flows - Southbound capital inflow decreased to 2.65 billion, marking a significant drop since 2022 [6]. - Global capital flows indicate a marginal inflow into developed markets, with the US and China receiving the most inflows [6]. - The overall trend shows a preference for North American funds, particularly in pharmaceuticals and financial sectors, while technology funds experienced outflows [6].

Group 1 - The bond market has been experiencing a continuous decline, leading to significant redemption pressure on certain pure bond funds, with over 20 funds facing large redemptions in the past month [2] - As of September 12, more than 10 pure bond funds have seen their net value drop by over 3% since the beginning of the second half of the year, with some funds experiencing declines exceeding 5% [1][2] - The main reasons for the bond market adjustment include the strong performance of the stock market attracting funds away from bonds, and rising inflation expectations due to the implementation of "anti-involution" policies [2] Group 2 - The 30-year and 10-year government bond futures have seen consecutive declines over the past two and a half months, with the 30-year futures down by 0.89% and the 10-year futures down by 0.19% in the last week [1] - Specific funds such as Huatai Baoxing Zunyi Rate Bond and Minsheng Jianyin Ruixia One-Year Open Bond have reported significant net value declines, indicating a broader trend among long-term rate bonds [1] - Fund companies have adjusted the net asset value precision for certain funds to protect the interests of fund holders amid the ongoing market adjustments [2]

Report Industry Investment Rating No information provided in the content. Core Views of the Report - Since 2025, products such as wealth management, fixed-income plus, and equity have attracted significant funds. Money market funds and bond funds have seen a notable decline in net asset value growth, while fixed-income wealth management products continue to grow due to their yield advantage over time deposits. Insurance premium income growth was high before the reduction of the guaranteed interest rate but has since decreased. Equity and hybrid funds have maintained high-speed growth [1]. - Deposit relocation and stock market rallies often reinforce each other. The current deposit relocation is related to factors such as the reduction of deposit interest rates, regulatory bans on manual interest supplements, and the rise of the stock market. As the equity market continues to rise, deposit relocation accelerated in July [2]. - In the long term, non-bank institutions tend to adjust their asset allocation in a low-interest-rate environment. For example, the proportion of pure fixed-income funds has decreased in the United States, Europe, and Japan during low-interest-rate periods. In China, the proportion of bond and money market funds among all public funds has decreased since 2025 as the absolute level of interest rates has declined and the profitability of bond assets has weakened [3]. - In the short term, the relocation of non-bank funds may slow down periodically. This can be observed from the following perspectives: the relative advantage of stocks over bonds may decrease as the stock market rises; the spread between the 10-year Treasury bond yield and the policy rate has returned to the "normal" range; and an increase in the scale of 30-year ETFs and the long-short ratio of TL positions may indicate a slowdown in non-bank fund relocation [4]. Summary by Relevant Catalog I. Products such as wealth management, fixed-income plus, and equity attract significant funds 1.1 Decreased attractiveness of non-equity assets to funds - Cash management products have limited appeal. During the current deposit relocation period, money market funds have grown more than cash management wealth management products. Since 2025, the yields of both types of assets have dropped to low levels, with cash management wealth management products having an annualized yield of about 1.6% [12]. - The bond market's profitability has declined, but it still offers an advantage over time deposits. Since the end of 2023, bond funds and fixed-income wealth management products have grown rapidly. However, since 2025, the bond market has entered a "triple low" era of low interest rates, low spreads, and low volatility, leading to a decline in the profitability of pure bonds and a slowdown in the growth of bond fund scale. Currently, the annualized yield of pure bond funds is about 2.7%, and that of fixed-income plus funds is about 2.6%, still significantly higher than the time deposit rate of about 1% [12]. - The attractiveness of insurance products has diminished. After the reduction of the guaranteed interest rate in September, the "panic buying" effect has weakened. The market's response to this round of "panic buying" has been muted due to factors such as the establishment of a dynamic adjustment mechanism for the guaranteed interest rate, the exhaustion of consumers' purchasing power from previous rounds of "panic buying," and the decreasing marginal impact of interest rate adjustments on consumers' willingness to move funds in a low-interest-rate environment [17]. 1.2 More funds may flow into the equity market - Equity funds have experienced high-speed growth, and the stock market is attractive to funds. Since September 2024, as the stock market has continued to rise, the net asset value of equity funds has maintained high-speed growth, and the growth rate of hybrid funds has turned positive. The yields of equity and hybrid products have been increasing, and they are expected to attract more funds in the future [22]. - In the future, more funds may flow into the equity market. In a low-interest-rate environment, equity assets are more cost-effective than pure bonds. As the equity market rises, the overall risk appetite has increased, and residents and non-bank funds may flow more into the equity market. Since July 2025, the increase in wealth management products has been lower than in previous years, indicating that more funds have flowed into other non-bank institutions and products. The risk appetite of non-bank institutions has increased significantly, as evidenced by the growth of convertible bond ETFs and the increase in institutional new account openings in the stock market [25]. II. How long will the relocation of deposits and non-bank funds continue? 2.1 Deposit relocation and stock market rallies often reinforce each other - The current deposit relocation is related to multiple factors, including the reduction of deposit interest rates, regulatory bans on manual interest supplements, and the rise of the stock market. Since 2022, there have been multiple rounds of deposit interest rate cuts. After the first four cuts, the last three cuts had a limited impact on deposit relocation. In 2024, the ban on manual interest supplements led to a significant decrease in deposit growth and a large increase in non-bank deposit growth, but the relocation reversed after the standardization of interbank deposit interest rates in November. The rise of the stock market has also driven deposit relocation. In September 2024, non-bank deposit growth increased significantly due to the stock market rally but then declined. In July 2025, the increase in risk appetite at home and abroad led to a rise in the equity market, and institutional funds and deposits moved from pure bonds to fixed-income plus and equity products, resulting in a significant increase in non-bank deposit growth [30][35]. - Deposit relocation accelerated in July as the equity market continued to rise. After the state-owned large banks initiated a new round of deposit interest rate cuts in May, deposit relocation was not obvious in June. However, in July, the combined deposits of residents and enterprises decreased by 2.57 trillion yuan, the highest in the past four years. Resident deposit growth decreased slightly, while non-bank deposit growth rebounded significantly to 15% [36]. - Deposit relocation may continue. Historically, deposit relocation has been significant during major stock market rallies, such as from 2005 - 2007, 2014 - 2015, 2016 - 2017, 2019 - 2021, and since September 2024. Even after the stock market reaches a peak and retraces, deposit relocation usually continues for some time. Since July, the stock market has risen significantly, and if it continues to rise, deposit relocation may persist [37]. 2.2 In the long term, non-bank institutions tend to adjust their asset allocation in a low-interest-rate environment - Non-bank asset allocation adjustment is a typical feature of a low-interest-rate environment. In recent years, as broad-based interest rates have declined, the profitability of fixed-income assets such as bonds has gradually decreased. Driven by factors such as the introduction of policies to stabilize the capital market in September 2024, technological breakthroughs since 2025, and the expectation of "anti-involution" policies, the equity market has continued to break through, and non-bank institutional funds have shifted from pure fixed-income assets to equity and fixed-income plus assets [41]. - Similar trends have been observed in other countries. In the United States, during the two rounds of interest rate cuts from 2007 - 2016 and 2018 - 2021, the proportion of bond and money market mutual funds decreased from a high of 56% in 2008 to about 40% in 2021. In Europe, from 2012 - 2021, the proportion of bond and money market UCITS funds decreased from 45% in 2012 to about 36% at the end of 2021. In Japan, after entering a low-interest-rate era in the late 1990s, the scale of bond and money market funds declined rapidly, and their proportion decreased from a peak of 77% to about 7.0% in March 2024 [41][42][49]. - In China, the scale of bond and money market funds has grown rapidly in recent years, and their proportion among all public funds increased from about 55% to about 65% in 2024. However, since 2025, the proportion has decreased as the absolute level of interest rates has declined and the profitability of bond assets has weakened [49]. 2.3 In the short term, when will the relocation of non-bank funds slow down periodically? - The relocation of non-bank funds may slow down periodically as the equity market fluctuates and interest rates change. This can be observed from the following perspectives: - Stock-bond valuation and bond-credit valuation: As the stock market rises significantly, the relative advantage of stocks over bonds may decrease. As of the end of August, the risk premium of the WIND300 ex-financial index has decreased from more than two standard deviations above the mean to less than one standard deviation below the mean, and the risk premium of the dividend index has decreased to near two standard deviations below the mean. Insurance funds and other institutions may slow down the relocation of funds. Bonds still have a significant advantage over loans, and as the bond market rebounds from a low level, the cost of real economy financing continues to decline, making bonds attractive to banks [52]. - The spread between the 10-year Treasury bond yield and the policy rate: Before 2024, the spread between the 10-year Treasury bond yield and the 7-day reverse repurchase rate fluctuated around 70BP. In 2024, as broad-based interest rates declined, the spread was compressed to about 50BP. From December 2024 to January 2025, interest rates declined rapidly, further compressing the spread. Since 2025, the spread has oscillated between 10BP and 40BP. However, since late July, as the bond market has continued to rebound, the spread has gradually risen to about 45BP, returning to the "normal" range before 2025, indicating that the market has corrected the previously overdrawn expectations, and non-bank funds may slow down the selling of bonds [57]. - The scale of 30-year ETFs and the long-short ratio of TL positions: As the equity market rally slows down and interest rates rise, institutions are increasing their purchases of 30-year ETFs, and the long-short ratio of TL positions is rising. On the one hand, the growth of fixed-income plus products has increased the demand for 30-year ETFs. On the other hand, some institutions may buy 30-year ETFs and TL to hedge against equity market risks. When the scale of 30-year ETFs and the long-short ratio of TL positions continue to rise, it may indicate a slowdown in the relocation of non-bank funds [61].

Core Viewpoint - The stock market is experiencing significant growth, with the Shanghai Composite Index up 12.8% and the ChiNext Index up 22% in 2025, while the bond market is facing challenges, with a 30-year government bond ETF down over 2% year-to-date and a further decline of 4% since June [1][2] Group 1: Market Dynamics - The "see-saw effect" between stocks and bonds reflects a shift in market risk appetite, where funds flow into equities during bullish phases and retreat to bonds during bearish phases [1][2] - The primary determinants of bond market trends are economic fundamentals, including macroeconomic conditions, inflation, and monetary policy, rather than stock market performance [2][3] Group 2: Economic Indicators - Recent economic data indicates a weakening trend, with July's new loans showing negative growth for the first time since 2005 and a decline in social financing year-on-year [2][3] - Despite these indicators suggesting support for the bond market, the bond market continues to decline due to strong stock performance and policy disruptions, indicating a temporary disconnection from economic data [2][3] Group 3: Investment Strategies - In a bullish stock market, the bond market may not present high value, but there are opportunities for tactical trading, suggesting a strategy of buying low and selling high [4][5] - Monitoring the 10-year and 30-year government bond yields is crucial, as bond prices and yields move inversely; rising yields lead to falling bond prices and vice versa [4][5] Group 4: Historical Context - Over the past decade, the long-term trend in China's bond market has been a decline in yields, with the 10-year government bond yield currently around 1.76% and the 30-year yield at 2.06% [5][6] - Historical data shows that current yields are at a low point, but there is potential for further declines, indicating a long-term downward trend in interest rates [6][7] Group 5: Tactical Approaches - For short-term trading, flexibility is key; if yields rise, it presents buying opportunities, while falling yields may prompt profit-taking [6][7] - For long-term investments, considerations include duration selection, risk-return trade-offs, and alignment with market conditions, emphasizing the importance of rational decision-making [7]

Group 1 - The bond market is under pressure due to high risk appetite, leading to a decline in long-term government bonds and significant losses for bond funds, particularly those heavily invested in long-term interest rate bonds [1] - Data from Wind indicates that nearly 100 bond funds have seen performance declines exceeding 1% since August, with over 70% of pure bond funds reporting losses during the same period [1] - Notable bond funds with significant net value declines include Fangzheng Fubang Hongyuan, Huatai Baoxin Zunyi Interest Rate Bond 6-Month Holding, and others, many of which are heavily invested in long-term interest rate bonds [1] Group 2 - Some bond fund holders are opting for redemptions in response to net value adjustment pressures, with specific funds announcing adjustments to ensure that the interests of fund holders are not adversely affected [2] - The A-share market has been performing strongly, with the Shanghai Composite Index surpassing key levels, while the bond market continues to adjust, raising questions about when this adjustment will end [2] - Analysts from Penghua Fund express a neutral short-term outlook on the bond market, suggesting limited risks for rate increases or decreases, and indicating that the current monetary policy environment is relatively loose [2] Group 3 - Short-term expectations for the bond market suggest a range-bound fluctuation due to both bullish and bearish factors, with a focus on eliminating interest rate cut expectations [3] - BoShi Fund anticipates that there will be no significant easing of monetary policy in the short term, with bearish sentiment likely to dominate the market [3]

Core Viewpoint - The bond market is currently facing pressure due to the strong performance of the A-share market, leading to a diversion of funds from bonds to stocks, which is expected to continue in the short term [1][9]. Group 1: Market Performance - On August 18, the Shanghai Composite Index broke through 3700 points, closing at 3727.29 points on August 19, with a slight decline of 0.02% [1]. - The trading volume in the A-share market reached 2.75 trillion yuan, marking the third-highest in history [6]. - Foreign institutional investors showed significant interest in A-shares, with net buying exceeding two times the average for the past four weeks [6]. Group 2: Bond Market Dynamics - The 30-year government bond ETF fell over 1% on August 18, with yields surpassing 2.1% [3]. - Goldman Sachs predicts that the 30-year bond yield could rise to between 2.2% and 2.3% due to the speculative nature of current bondholders [1][9]. - The bond market is experiencing redemption pressure, with significant trading stress reported on August 18 [1][9]. Group 3: Economic Indicators - Recent economic data indicates a slowdown, with fixed asset investment growth dropping to 1.6% from 2.8% [12]. - The real estate sector is showing negative growth in sales, new starts, and investment, contributing to the overall economic slowdown [12]. - Despite the economic challenges, the central bank maintains a stance of moderate liquidity, focusing on structural economic optimization rather than total policy adjustments [12]. Group 4: Investment Trends - There is a notable shift of funds from bonds to equities, driven by low deposit rates and bond yields, making the opportunity cost of investing in stocks lower [9]. - The insurance sector is increasingly entering the equity market, with significant inflows expected in the coming years [10][11]. - Public and private equity funds are seeing new issuance levels higher than last year's average, indicating a potential positive cycle in the equity market [10].

Group 1 - The A-share market has seen a significant increase in trading volume, with the total trading volume surpassing 2 trillion yuan for four consecutive trading days, indicating a strong market sentiment and profitability for investors [1][2][3] - The Shanghai Composite Index closed above 3700 points for the first time, reaching 3728.03 points, marking a 10-year high, with a year-to-date increase of 11.23% [1][3] - New investor accounts in the A-share market have surged, with 1.456 million new accounts opened in 2023, a 36.88% increase compared to the same period in 2022, reflecting a growing interest in equity investments [3][4] Group 2 - The bond market has experienced a significant decline, with government bond futures dropping across the board, indicating a "stock-bond seesaw" effect as the stock market rises [7][8] - Analysts suggest that the current market conditions may lead to a prolonged "healthy bull" market, driven by increased investor participation and favorable policy signals [4][6] - The bond market's yield is expected to stabilize in the short term, with the 10-year government bond yield projected to remain between 1.65% and 1.75%, reflecting a cautious outlook on interest rate movements [8][9]

Group 1 - The A-share market saw a significant increase in trading volume, reaching 2.76 trillion yuan on August 18, with margin financing balances exceeding 2 trillion yuan, marking the fourth consecutive trading day of both metrics surpassing 2 trillion yuan [1] - The Shanghai Composite Index rose above 3700 points, achieving its highest level in nearly 10 years, with a year-to-date increase of 11.23% [1] - In July, 1.9636 million new A-share accounts were opened, a 31.72% increase from June, contributing to a total of 14.5613 million new accounts opened in 2024, representing a year-on-year growth of 36.88% compared to 10.6379 million in the same period last year [1] Group 2 - The bond market experienced a sharp decline on August 18, with all government bond futures closing lower; the 30-year main contract fell by 1.33% to 116.090 yuan, marking the largest single-day drop since March 17, 2025, and a new closing low since March 24, 2025 [1] - The 10-year main contract decreased by 0.29% to 108.015 yuan, while the 5-year and 2-year contracts fell by 0.21% to 105.455 yuan and 0.04% to 102.304 yuan, respectively [1] - The 30-year government bond ETF dropped over 1%, closing down 1.26%, marking three consecutive days of decline [1]

Market Performance - On August 18, the A-share market's trading volume surged to 2.76 trillion yuan, with margin financing and securities lending (two融) balance exceeding 2 trillion yuan, marking the fourth consecutive trading day of both metrics surpassing 2 trillion yuan since August 13 [2] - The Shanghai Composite Index reached 3,700 points, achieving a nearly 10-year high, with a year-to-date increase of 11.23% [2] Investor Activity - In July, 1.9636 million new A-share accounts were opened, a month-on-month increase of 317,200 accounts, representing a nearly 20% growth compared to June [2] - As of July 31, the total number of new A-share accounts opened this year reached 14.5613 million, a year-on-year increase of 36.88% compared to 10.6379 million accounts opened in the first seven months of 2024 [2] Bond Market Reaction - On August 18, the bond market experienced a significant decline, with all government bond futures closing lower [2] - The 30-year main contract fell by 1.33%, closing at 116.090 yuan, marking the largest single-day drop since March 17, 2025, and the lowest closing price since March 24, 2025 [2] - The 10-year main contract decreased by 0.29% to 108.015 yuan, while the 5-year and 2-year contracts fell by 0.21% and 0.04%, closing at 105.455 yuan and 102.304 yuan respectively [2] - The 30-year government bond ETF dropped over 1%, closing down 1.26%, continuing a three-day decline [2]

Group 1: A-Share Market Performance - The A-share market has shown significant performance, with the Shanghai Composite Index surpassing 3700 points, marking a nearly 10-year high and a year-to-date increase of 11.23% [1][7] - The trading volume in the A-share market reached 2.76 trillion yuan, with margin financing balances exceeding 2 trillion yuan, indicating strong investor participation [1][7] - In July, 196.36 thousand new A-share accounts were opened, a 19% month-on-month increase, contributing to a total of 1,456.13 million new accounts year-to-date, a 36.88% increase compared to the same period last year [1][8] Group 2: Bond Market Trends - On August 18, the bond market experienced a significant decline, with the 30-year government bond futures dropping by 1.33%, marking the largest decline since March 2025 [3][10] - The yields on long-term government bonds have risen, with the 10-year government bond yield reaching 1.77% [4][11] - The Ministry of Finance announced support for government bond market-making to enhance liquidity in the secondary market [5] Group 3: Market Sentiment and Future Outlook - Analysts suggest that the current market sentiment is optimistic, driven by strong trading volumes and positive policy signals, with expectations for continued inflow of funds into the A-share market [8][9] - The bond market is expected to stabilize, with analysts predicting that the 10-year government bond yield will remain in the range of 1.65% to 1.75% in the short term [10][11] - The overall economic outlook for the second half of 2025 is expected to remain stable, with potential upward adjustments in economic expectations and continued support for the equity market [11]