CITIC Securities Co., Ltd.: The scale of "deposit migration" will exceed 5 trillion, and it is unlikely to concentrate in the stock market, but rather enter the market indirectly through "fixed income +"

"Deposit Migration" signal appears. According to data from the People's Bank of China, in July, household deposits decreased by 780 billion yuan year-on-year; non-bank deposits increased by 1.39 trillion yuan year-on-year. The data reflects a trend of residents shifting deposits towards financial products, indicating that the "migration" of household deposits may have already begun. Additionally, the year-on-year growth rate "scissor difference" between M2 and M1 has narrowed, reflecting an increase in the liquidity of funds and a weakening of the deposit accumulation phenomenon. Drivers of Changes in Household Allocation Preferences On one hand, since the establishment of the market-oriented adjustment mechanism for deposit rates in 2022, commercial banks have orderly reduced the cost of liabilities through various channels. The compression of returns provided by deposits has weakened their attractiveness to savers; on the other hand, the stabilization of the stock market and a series of support policies have provided stable return support for stocks. This may lead to a shift in funds that originally preferred safe assets, making them more easily attracted to high-cost-performance equity assets. Where is the "migration" of funds headed? ① Insurance: Premium growth, trend of insurance capital entering the market gradually emerging. The yield on the insurance side is higher than deposit rates, driving residents' savings towards insurance products. In recent years, insurance capital has reduced the scale of deposit holdings and increased allocation to equities; additionally, the proportion of insurance capital invested in bonds has also maintained an upward trend. ② Wealth Management: Continuous growth in scale, "fixed income +" gradually favored. The reallocation of deposits triggered by the maturity of high-interest three-year deposits, along with the decline in deposit rates being faster than the decline in wealth management yields, has elevated the relative attractiveness of wealth management products. It is expected that in the third quarter, as the equity market stabilizes and warms up, and bond market interest rates continue to decline, the market's recognition of fixed income + strategies is likely to further increase. ③ Stock Market: Individual investors accelerating account openings. With the stock market recovering, individual investors are entering the market at an accelerated pace. Unlike last year's "924 market," the net increase in this round of market activity has been steadily rising week by week, with funds entering in a more orderly manner. Potential Scale and Impact of Future "Deposit Migration" From the perspective of excess savings, we estimate that excess savings accumulated over 30 trillion yuan since 2018, while the 5 trillion yuan of excess savings formed after 2022 is more likely to become potential funds for consumption and investment in a short time. From the perspective of reallocation of maturing deposits, we estimate that by 2025, there may be over 90 trillion yuan in maturing deposits. Assuming that 5%-10% of these funds seek higher returns, the outflow scale may be between 4.5-9 trillion yuan. The "migrated" deposits are unlikely to concentrate in the equity market but may tend to transition through "fixed income +" type asset management products, which can also achieve "indirect market entry" of funds. Article authors: Mingming, Zhang Licong, Shi Yujie, Source: CITIC Securities Research, Original title: "Debt Market Enlightenment | What Impact Does 'Deposit Migration' Have on Capital Markets?" Risk Warning and Disclaimer The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this, the responsibility lies with the investor