1、 The central bank implemented the RRR reduction and timely confirmed the comprehensive RRR reduction
On 6 December, The central bank announced its decision to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on December 15, 2021 (excluding financial institutions that have implemented the 5% deposit reserve ratio). After this reduction, the weighted average deposit reserve ratio of financial institutions is 8.4%. This is the rapid implementation of the "timely reduction of reserve requirements" proposed by Premier Li Keqiang on December 3, which fully verifies our previous continuous emphasis From the perspective of "the window of RRR reduction within the year has not been closed", in our report on December 3, we firmly saw that the probability of the central bank's RRR reduction replacing part of the expired MLF in December is high, and pointed out that the probability of comprehensive RRR reduction is greater than directional RRR reduction. At present, the judgment has been verified. The core of RRR reduction is that with the increasing downward pressure on the economy, steady growth is the primary goal of current monetary policy. It is timely to deal with the downward pressure on the economy through RRR reduction, and the comprehensive RRR reduction is more convenient for financial institutions to replace the maturity of MLF, which helps to fully support the real economy, including alleviating the downward pressure on the economy and reducing the financing cost of entities.
2、 The goal of reducing bank financing cost is to reduce enterprise financing cost
First, the RRR reduction is to support the development of the real economy. Second, it is to promote the steady decline of comprehensive financing costs. The RRR reduction has released a total of about 1.2 trillion yuan of long-term funds. The central bank said that some funds will be used by financial institutions to return due MLF, and some will be used by financial institutions to supplement long-term funds to better meet the needs of market subjects. We believe that the replacement of partially maturing MLF by reducing the reserve requirement is helpful to reduce the capital cost of the bank's liability side, which is conducive to the transmission to the asset side and reduce the comprehensive financing cost for the entity sector compared with the MLF without reducing the reserve requirement and fully continuing the maturity. The central bank disclosed that the RRR reduction reduces the capital cost of financial institutions by about 15 billion yuan per year, which can promote the reduction of social comprehensive financing cost through financial institution transmission.
3、 In the first quarter of 2022, we need to pay close attention to the stable growth of broad credit
In addition to the central bank's announcement of RRR reduction, the Politburo meeting was held on December 6, which clearly mentioned "striving to stabilize the macro-economic market". We believe that the Politburo meeting has set the tone for the central economic work meeting. With the increasing pressure of economic downturn, important meetings at the end of the year will successively release the policy signal of stable growth. This RRR reduction means that steady growth is the primary goal of the current monetary policy. Superimposed on the fiscal policy, the physical workload and gradual correction of real estate related policies will be formed at the end of this year and the beginning of next year, and the capital demand in the field of manufacturing investment and carbon emission reduction under the new energy + logic will increase greatly. We continue to suggest that we focus on credit relief in the first quarter of 2022, That is, "four arrows at once" to broaden credit: manufacturing loans, carbon reduction loans, infrastructure loans and mortgage loans. We predict that the new scale of social finance in the first quarter of 2022 will reach 11.3 trillion in the current quarter, reaching the peak of quarterly increment of historical social finance, exceeding the level in the same period in 2020. It is expected that the growth rate of social finance will gradually pick up from November, but the current financial data structure is poor, which is only an apparent recovery and the quality is not high. The "four arrows" wide credit in the first quarter of next year will also be accompanied by the improvement and optimization of data structure.
4、 The market has been expected before, which has little impact on stocks and bonds as a whole
After Premier Li Keqiang proposed "timely RRR reduction" on December 3, the market has expected the implementation of RRR reduction. Therefore, we believe that the RRR reduction has little impact on the stock and bond market. We still insist that the yield of 10-year Treasury bonds is expected to drop to about 2.8% at the end of the year, but under the broad credit expectation, its further downward space may be limited, We believe that the yield of 10-year Treasury bonds may rebound after falling to 2.8% and enter a reverse upward process.
5、 Whether the policy interest rate will be lowered depends on the recent dr007 level
For the subsequent interest rate reduction or not, we think we still need to pay attention to the recent dr007 level. The central bank often adjusts the policy interest rate first and then the dynamic price. Therefore, if dr007 continues to be significantly lower than the 7-day reverse repo interest rate with the increase of the central bank's active money supply, the central bank has room to cut the interest rate and "follow the market". On the first few days of December, dr007 remained at a low level below 2.1%, which belongs to the natural performance after the next month. At present, the sample is relatively short and still needs to be observed.
Risk tip: the downward pressure on the economy is higher than expected, disturbing the pace and extent of easing by the central bank.
