have firm confidence and take initiative
2024-09-28
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(li chao is the chief economist of zheshang securities)
the political bureau of the cpc central committee held a meeting on september 26 to analyze and study the current economic situation and plan the next economic work. we believe that based on the analysis of historical patterns, it is very rare to see core decision-makers discussing economic issues in september. this shows that with the short-term fluctuations in the macroeconomic situation, the intensity of driving countercyclical policies has increased, and it also reflects the policy level. pay attention to fundamentals under changes in internal and external environments. as the package of expansionary policies is implemented, it will effectively boost market confidence. from the perspective of major asset categories, the stock market should not be pessimistic. it is recommended to actively seize rebound opportunities. it is recommended to focus on the main line of overall development and safety, focusing on high-dividend dividend assets in the context of asset shortages. in the field of fixed income, there is still room for the bond bull market to continue. it is expected that the 10-year government bond yield will generally show a downward trend after a shock. we remind that only if large-scale fiscal stimulus policies to stimulate aggregate demand are introduced in the future will a logical reversal of the bond market occur. otherwise, it will be difficult for interest rates to rise beyond expectations during the year.
>>1. fiscal efforts ensure expenditure and make good use of debt instruments
the meeting of the political bureau of the central committee emphasized that it is necessary to increase the counter-cyclical adjustment of fiscal and monetary policies, ensure necessary fiscal expenditures, and effectively do a good job in the "three guarantees" work at the grassroots level. it is necessary to issue and make good use of ultra-long-term special treasury bonds and local government special bonds to better play the driving role of government investment. we judge that the fiscal policies that have been deployed need to accelerate the expenditure progress and form a physical workload as soon as possible. according to our calculations, fiscal expenditures from january to august have completed 60.91% of the annual budget progress. in an environment of gradual economic recovery, ensuring the "three guarantees" is still an important direction of fiscal expenditure (for details, please refer to the report on september 21, 2024 "the fiscal revenue and expenditure situation is still severe, and attention is paid to improving the quality and efficiency of policies - august 2024 financial data analysis"). according to our calculations, the cumulative gap in general public budget revenue and expenditure from january to august has reached 2,611.2 billion yuan. if large-scale fiscal stimulus policies are subsequently introduced, the specific selection of policy tools and policy effects still require further observation.
it is worth noting that the ultra-long-term special government bond funds currently used in the "two new" fields have been fully released. in terms of equipment renewal, the national development and reform commission, together with relevant departments, screened out more than 4,600 eligible equipment renewal projects. in the field of equipment renewal, 150 billion yuan of national debt funds have been allocated to the projects in two batches in accordance with relevant regulations and procedures. regarding the trade-in of consumer goods, the national development and reform commission, in conjunction with the ministry of finance, has reasonably determined the scale of financial support based on factors such as the resident population, regional gdp, and ownership of automobiles and home appliances in each region. in the trade-in field of consumer goods, all 150 billion yuan of government bond funds have been released in early august. place.taken together, fiscal, monetary, employment, financial and other policies are expected to work together to achieve the expected goals of economic and social development.
>>2. monetary policy cuts rrr and interest rates
the meeting proposed “lowering the deposit reserve ratio and implementing a strong interest rate cut.” based on the information announced by governor pan gongsheng at the press conference of the state council information office on september 24, follow-up measures will be taken to reduce the reserve requirement ratio by 0.5% + a substantial interest rate cut (a 7-day reverse). repo rate) 20bp monetary policy mix. at the same time, the rrr may be cut again by 0.25-0.5 percentage points depending on circumstances during the year. the higher-than-expected rrr cut and interest rate cut reflect the strong policy demands of monetary policy to actively stabilize the economy and reduce costs for the real sector. looking forward, it is expected that the loan market quotation rate and deposit interest rate will also fall by 20-25bp. overall, this policy adjustment will have a strong boost to both fundamental expectations and risk sentiment.
affected by the interest rate cut announced on september 24, the winning bid rate for the mlf continuation on september 25 has been driven down by 30bp. the operation adopts fixed quantity and price bidding. the central bank also disclosed that the highest bidding rate and the lowest bidding rate this time are 2.30%. 1.90%. unlike the fixed interest rate and quantity bidding of the 7-day reverse repurchase operation, the mlf operating mechanism means that its pricing has more market attributes and no longer plays the role of policy interest rates. the mlf interest rate reduction may be larger or the core is from the perspective of easing the pressure on banks' net interest margins. compared with 7-day reverse repurchase and slf, mlf has a term of one year and a higher interest rate. its larger interest rate reduction can reduce medium-term capital costs for banks and is more conducive to alleviating net interest margin pressure. since the beginning of this year, related operations such as rrr cuts, prohibition of manual interest payments, reductions in policy interest rates, and reductions in existing mortgage interest rates have all been carried out to postpone the decline of bank net interest margins to ensure the sustainability of bank profits in capital replenishment and to provide subsequent bank support to entities. economic sustainability.
>>3. the real estate market has stabilized and the purchase restriction policy has been adjusted.
this meeting made many statements on the real estate market. first, it emphasized "promoting the real estate market to stop falling and stabilize." this is a significant change from the previous politburo meeting, which means that there are new instructions for the development of the real estate market, and real estate policies are expected to increase in the future. .
the second is to emphasize "strictly control the increase and optimize the inventory", which means promoting the destocking of new homes. data from the china index research institute shows that as of july 2024, the national residential "started and unsold inventory" is 2.52 billion square meters. although the scale has declined since 2020, the sales cycle is still extending due to sluggish sales. as of july, it is approximately 3.4 years, which is at the highest level in history, indicating greater pressure to reduce inventory. in the future, decentralization may be promoted from both sides of supply and demand, and there is room for improvement in purchasing and storage policies.
the third is to emphasize "adjustment of housing purchase restriction policies", which means that purchase restrictions in first-tier cities may be further relaxed. since may 2024, purchase restrictions in first-tier cities in beijing, shanghai, guangzhou and shenzhen have been relaxed, but judging from the data on the listing volume and price of second-hand houses, the downturn in real estate has not fundamentally changed. after the meeting proposed adjustments to the purchase restriction policy, it is expected that the purchase restriction policy in first-tier cities in beijing, shanghai, guangzhou and shenzhen will be further relaxed.
>>4. new real estate development model—both renting and purchasing
we will promptly improve land, taxation, finance and other policies to promote the construction of a new model for real estate development. we believe that the core of the new real estate development model in the future will be “accelerating the establishment of a housing system that promotes both renting and purchasing.”
from the perspective of "renting", continue to maintain the "market + security" housing supply system and use this as one of the cores of building a new model of real estate development. it is expected that in the future, various regions will continue to promote "first-hand housing acquisition and storage" and "old-for-new" to support the elastic recovery of the market while taking into account the goal of affordable rental housing. in this process, fiscal and taxation, especially financial policies (affordable housing refinancing is a typical representative) will play a bigger role.
from the perspective of "purchasing", more attention will be paid to improved demand (financial policies are also supportive, especially the reduction of the down payment ratio for second homes), and the supply of good houses will be increased. for the construction of commercial housing, we must strictly control the increment, optimize the stock, and improve the quality. .
>>5. social security, insurance, and financial management increase their entry into the market
this meeting of the political bureau of the central committee emphasized the need to work hard to boost the capital market, vigorously guide medium and long-term funds to enter the market, and open up the blocking points for social security, insurance, financial management and other funds to enter the market. looking back at the statement of "activating the capital market and boosting investor confidence" at the political bureau meeting of the central committee in july 2023, this meeting gave a clear path to boost the capital market. specific ideas for guiding medium and long-term funds to enter the market can be seen from this week china securities regulatory commission chairman wu qing’s speech at the press conference of the state council information office gave early clues. from a system perspective, the focus is to improve the environment for “long-term money and long-term investment”, improve the inclusiveness of supervision of medium- and long-term capital equity investments, and fully implement long-term assessments of more than three years. in terms of methods, guide the positive interaction between the multi-level and multi-pillar pension security system and the capital market, improve the national social security fund and basic pension insurance fund investment policies and systems, and encourage enterprise annuity funds to explore and carry out different types of investments based on the different ages and risk preferences of holders. differentiated investment is expected to form an account management system based on investors' risk preferences in the future to increase investment flexibility. from the perspective of market ecology, the focus is to take multiple measures to improve the quality and investment value of listed companies, guide and improve the stability, growth and predictability of dividends, improve the participation of institutional investors in the governance of listed companies, and enhance the "long-term investment" of "long-term investment" "will.
>>6. steadily advance the reform of public funds
the meeting pointed out that it is necessary to support mergers, acquisitions and reorganizations of listed companies, steadily promote the reform of public funds, and study and introduce policies and measures to protect small and medium-sized investors.
we believe that the key to steadily advancing the reform of public funds is to reflect the political nature and people's nature. the assessment model that placed more emphasis on scale in the past will be changed, and more emphasis will be placed on scale assessment based on profitability. in april this year, the "several opinions of the state council on strengthening supervision, preventing risks and promoting high-quality development of capital markets" pointed out that "establish a fast approval channel for exchange-traded open-end index funds (etfs) to promote the development of index investment. comprehensively strengthen investment research by fund companies capacity building, enriching the investable asset categories and investment portfolios of public funds, and transforming from scale-oriented to investor return-oriented. "taken together, the change in investor return-oriented will help protect small and medium-sized investors, and at the same time, it may promote the direction of public funds. absolute income, pension, and etf transformation.
>>7. stocks continue to rebound, but the bond bull is not over yet
from the 0924 financial policy package to the 0926 politburo meeting, economic issues were rarely discussed. the introduction of a series of favorable policies helped stabilize the economy and improve market expectations.
from the perspective of major asset categories, the stock market should not be pessimistic. it is recommended to actively seize rebound opportunities. it is recommended to focus on the main line of overall development and safety, focusing on high-dividend dividend assets in the context of asset shortages. in the field of fixed income, there is still room for the bond bull market to continue. it is expected that the 10-year government bond yield will generally show a downward trend after a shock. we remind that only if large-scale fiscal stimulus policies to stimulate aggregate demand are introduced in the future will a logical reversal of the bond market occur. otherwise, it will be difficult for interest rates to rise beyond expectations during the year.
this article represents the views of the author only.
