Huatai Securities reviews August financial data: preliminary evidence suggests that residents' deposits may be transferring to the stock market.

The central bank announced the financial data for August 2025 on the 12th. Huatai Securities commented that deposits have been the focus of the market recently, with M1 increasing by 6.0% year-on-year in August, up by 0.4 percentage points from July, continuing to maintain high growth. Huatai Securities stated that they have previously discussed the reasons for the rebound in M1. One reason is the reallocation effect brought about by lower deposit interest rates, leading to some deposits becoming more liquid and flowing into the financial markets and the real economy. Secondly, with the strong performance of equities in August, there was an increase in trading demand and a noticeable activation of deposits. Thirdly, the low base effect from deposit regulation last year still has an impact, which is expected to continue until October. In addition, factors such as foreign exchange settlements, debt conversions, government spending, and shorter corporate payment terms also contribute to the increase in M1. Currently, the high growth of M1 is still significantly affected by the base effect, and it is recommended to focus on its performance after October. M2 increased by 8.8% year-on-year in August, remaining unchanged from the previous month. On one hand, the low base effect from last year has some impact, and on the other hand, the scale of credit growth is not significant, limiting the derivative deposits. In terms of deposit structure, the market is most concerned about the movement of deposits. In August, household deposits increased by 600 billion less year-on-year, while non-bank financial institution deposits increased by 550 billion more year-on-year, preliminarily confirming that household deposits may be shifting towards the stock market. Huatai Securities noted in their publication "Three Perspectives for Judging Fund Entry into the Market" on August 28, 2025, that non-bank deposits are an important indicator for observing whether funds are flowing into the capital market, but they are more of a lagging indicator. The initial rebound in non-bank deposits often indicates a continuation of the bull market. The current rebound in the growth rate of non-bank deposits started in January this year, indicating that the overall liquidity environment in the stock market is ample. Meanwhile, household deposits are more indicative of the potential for funds to enter the market. There are no signs of a large-scale shift at the moment. In the first eight months of the year, household deposits increased by a total of 9.77 trillion, still 120 billion more than the same period last year. It is important to continue monitoring the relative changes in household deposits, and the proportion of liquid assets is also an important indicator.