event:
The central bank decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on December 15 (excluding financial institutions that have implemented the 5% deposit reserve ratio).
Key investment points:
The RRR reduction came on schedule
On December 3, when meeting with Georgieva of the International Monetary Fund, Premier Li Keqiang said: "we will reduce the reserve requirement in due time, increase support for the real economy, especially small, medium and micro enterprises, and ensure the stable and healthy operation of the economy." On December 6, the central bank decided 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%.
Why is the standard lowered? Why is the standard lowered at this time?
On the one hand, the current RRR reduction is to offset the downward pressure on the economy. In the third quarter monetary policy implementation report, it is pointed out that "it is more difficult to maintain the stable operation of the economy". The challenges are mainly as follows: the external environment is more complex and severe due to the weakening of the momentum of global recovery, the continuing differentiation of recovery caused by epidemic disturbance, and the adjustment of monetary policies in major developed countries, The recovery and development of the internal economy is still constrained by phased, structural and cyclical factors. The RRR reduction is one of the combination of policies to stabilize growth; Secondly, the expiration date of the MLF in December is December 15 (the same date as the implementation date of the RRR reduction), with a scale of 950 billion, which can be properly hedged with the RRR reduction. At the same time, China is "generally controllable inflation pressure" and has the conditions for the RRR reduction. In addition, from the perspective of direction, the real economy, especially green, low-carbon, Pratt & Whitney, microenterprises and other fields, is still the focus of support.
The geometric impact of alignment reduction: the signal significance is greater than the actual significance.
We believe that the signal significance of the RRR reduction is greater than the practical significance: on the one hand, the RRR reduction released a total of 1.2 trillion, which was implemented on December 15 to hedge the 950 billion MLF due on the same day, and the remaining funds are relatively limited; Secondly, the current capital level is relatively loose, and the marginal improvement of RRR on its interest rate may be limited; In addition, the boost to the profit side of financial institutions is also limited, saving the capital cost of financial institutions by 15 billion yuan. Compared with the bank's profit of about 2 trillion a year, the boost is relatively limited.
Investment suggestion: steady growth policy or catalytic valuation repair market
Although the RRR reduction has limited boost to the profit side of the financial sector, the implementation of RRR reduction and the short-term marginal improvement of real estate regulation reflect the gradual force of the steady growth policy. At present, the relatively loose liquidity may be expected to boost the valuation repair market. It is suggested to pay attention to the valuation repair opportunities of the financial, building materials and other sectors. At present, the sub market net rates of securities, real estate, insurance and banks are at the quantile level of undervalued values of 16.28%, 1.76%, 0.69% and 0.29% respectively in the past 10 years. It is suggested to pay attention to the repair opportunities of sector valuation under the loose background.
Risk statement
The epidemic situation is repeated, and the economic recovery is less than expected.
