CITIC Securities: Total financial data in May continued to be weak, with structural differentiation unchanged, but continued fund activation is giving out positive signals.

CITIC Securities released a research report stating that the total financial data in May continued to be weak, with structural differentiation unchanged, but the activation of funds continued to release positive signals. In terms of social financing, the high base of government bonds led to a smaller year-on-year increase, dragging down the continued decline in social financing, while corporate bond financing continued to increase, and the characteristic of direct financing filling the gap remained unchanged. In terms of credit, the total amount increased slightly year-on-year, with bills showing relative strength for the second consecutive month, and the willingness of enterprises to borrow medium and long-term funds remained weak; the continued support of export sentiment maintained the stability of short-term loans for enterprises, while residential financing demand remained weak. In terms of currency, the year-on-year growth rate of M1 has clearly rebounded, with monthly negative growth in household deposits coexisting with a substantial increase in non-bank deposits, indicating a clear "deposit migration" trend and marginal improvement in the degree of fund activation, possibly related to the increased activity in the capital market. CITIC Securities believes that the current real demand for credit is still at a low point, and the pattern of credit expansion relying on government bonds and corporate bonds has not changed. The repair of the residential end still needs a package of policies to promote domestic demand, and if the improvement in fund activation can continue, it will provide further momentum for the subsequent warming of demand.