Friday, May 23

High-Level Insights: 
The People's Bank of China (PBOC) will conduct a 500 billion yuan
MLF operation today with a one-year term. With 1250 billion yuan in MLF maturing this month, this results in a net MLF injection of 3750 billion yuan, marking the third consecutive month of increased renewals.

Overall Sentiment: 
Despite the PBOC's continuous net liquidity injections, the market remains lackluster and lacks momentum. In a deflationary environment, the liquidity injected by the PBOC is not reaching the frontline. A key reason for April's financial data collapse was a sharp drop in loans, as many banks halted lending to export companies to control risks amid the China-U.S. trade war, with limited new loan growth through other channels.
Yesterday, the banking sector led A-share gains with a 1% rise, hitting a new high since 2007. As the PBOC's liquidity accumulates in banks, they hold a slight advantage over other sectors.