Event: on December 6, 2021, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the economic work in 2022; The central bank decided to reduce the deposit reserve ratio of financial institutions on December 15.
Core conclusion: the Politburo meeting in December generally continued the expression and tone since the premier's Symposium in November. On the whole, the country's concern about the economy has increased, "stabilizing the macro-economic market" means that the bottom line of economic growth will still be guaranteed; The policy tone is stable and loose, with more emphasis on "soundness and effectiveness", the government pays more attention to improving efficiency and accuracy, and pays attention to special bonds, tax reduction and fee reduction; The RRR reduction has been implemented, which will be good for stocks and bonds, but stocks are better than bonds, and the gem performs best; It is expected that it is difficult to cut interest rates in the short term, but the reduction of reserve requirement will objectively reduce the actual financing cost of enterprises. The policy is inclined to the demand side, emphasizing the expansion of domestic demand. Attach importance to micro market vitality and hard science and technology; Emphasizing a higher level of opening to the outside world and coordinated regional development; It also refers to people's livelihood, employment, childbirth and pension; Double carbon is not mentioned. This time, the general tone of real estate is not changed, but the marginal easing of real estate can be expected.
The country is more worried about the economy. We expect that the economy will still maintain the bottom line of more than 5% next year, and the real GDP may be 5-5.5% year-on-year. This meeting continues the formulation of the premier's Symposium on November 19 and 22, Re mention the "six stabilities and six guarantees" (deleted from 430 and 730 meetings), emphasize "continuously improve people's livelihood and strive to stabilize the macro-economic market", and then consider that the premier's Symposium emphasizes "ensure employment, people's livelihood and market players, implement the cross cyclical adjustment measures planned at the end of the year and the beginning of the year, and promote the economy to climb over the threshold". The Q3 monetary policy report of the central bank is re mentioned "Phased, structural and cyclical factors" and the first mention of "greater difficulty in maintaining stable economic operation" mean that the country is more worried about the economy. However, according to what Vice Premier Liu he said at the 9th China EU Forum on November 30, "it is expected that the annual economic growth will exceed the expected target. We have full confidence in China's economy next year", it is expected that the real GDP this year may be about 8% year-on-year; Despite the great downward pressure on real estate, considering that the potential economic growth rate next year should be about 5.5% and the two-year compound growth rate of GDP this year is about 5%, it is expected that the bottom line of GDP will remain at 5% year-on-year next year, which is expected to be 5-5.5%.
The policy tone is steady and broad, the finance pays more attention to accuracy, pays attention to special bonds, speeds up investment projects and reduces taxes and fees; Monetary policy is stable and loose, the reduction of reserve requirements has been implemented, and it is still difficult to cut interest rates in the short term, but it objectively helps to reduce the actual financing cost of enterprises.
Compared with the 730 Politburo meeting, this meeting added "stability first", continued "seeking progress in stability", deleted "maintaining the continuity, stability and sustainability of macro policies", but added "macro policies should be steady and effective", indicating that the policy has shifted to steady and loose, and strengthened the adjustment of "stability" and "effectiveness". Of which:
1) The fiscal policy continued to "improve efficiency", paid more attention to "accuracy", paid attention to the accelerated release of special bonds and the formation of physical workload, and reduced taxes and fees for small and medium-sized enterprises. Compared with the 730 Politburo meeting, this meeting continued "active fiscal policy should improve efficiency" and added "pay more attention to accuracy and sustainability". It is expected that the fiscal deficit ratio and the scale of special debt may shrink slightly in 2022, but the scale of broad fiscal deficit is expected to remain stable. Financial investment will be more accurate and effective, including adding college debt investment, realizing more physical workload, structural tax reduction and fee reduction for small and micro enterprises, etc. Correspondingly, the special debt work was deployed at the national Standing Committee on November 24, It is required to "speed up the issuance of the remaining quota this year and strive to form more physical workload at the beginning of next year (the tone is stronger than the 730 Politburo meeting's "reasonably grasp the progress of investment in the budget and the issuance of local government bonds, and promote the formation of physical workload at the end of this year and the beginning of next year"); timely promote the commencement of mature projects; issue some quotas in advance according to procedures; pay attention to actual results in the use of funds, strengthen the audit and supervision of investment direction, and stop long-term idle funds ". On November 10, the State Council The general office issued a document to further reduce taxes and fees for small and medium-sized enterprises.
2) Monetary policy is stable and loose. It is expected that liquidity will remain reasonably abundant and structural instruments will become the norm. Compared with 730 Politburo meetings, The meeting pointed out that "prudent monetary policy should be flexible and appropriate" (the Q3 central bank's monetary policy implementation report from the epidemic last year to November 2020 is "flexible and appropriate", and the central economic work conference in December 2020 is "flexible, accurate, reasonable and appropriate", and this report is changed to "flexible and appropriate" again), continuing to "maintain reasonable and sufficient liquidity" 。 Considering the deletion of "general gate" and "no flood irrigation" in the central bank's Q3 monetary policy report, we expect that the monetary policy is loose in stability, the RRR reduction has been implemented, the subsequent liquidity will continue to maintain a reasonable abundance, and the structural support tools supporting small and micro enterprises and green will become the norm.
The RRR reduction is in line with expectations, and it is difficult to cut interest rates in the short term, but the RRR reduction objectively helps to reduce the actual financing cost of enterprises, and pay attention to the impact of RRR reduction on stocks and bonds.
1) Why is the standard lowered? The RRR reduction should be within market expectations. The main reason is that under the disturbance of repeated epidemics and real estate risks, the downward pressure on the economy has increased, the importance of steady growth has become prominent, and policies should strengthen cross cycle regulation; In December, the maturity of MLF is 950 billion yuan, the demand for cross-year liquidity is increased, and the amount of funds required by factors such as fiscal advance next year is large; Before the Fed raises interest rates, it is a better window period for China to relax again.
2) Will interest rates be cut after the RRR reduction? As the central bank pointed out that "the orientation of prudent monetary policy has not changed. This RRR reduction is a routine operation of monetary policy", and the released funds are mainly used to replace MLF and supplement long-term funds, we expect it to be difficult for the central bank to reduce the policy interest rate. At the same time, the central bank pointed out that "the RRR reduction will release a total of about 1.2 trillion yuan of long-term funds, reduce the capital cost of financial institutions by about 15 billion yuan per year, and promote the reduction of social comprehensive financing cost through financial institution transmission", We estimate that the reduced financing cost is 12000 * (2.95% - 1.62%) = 15.96 billion yuan, and the corresponding bank liability end cost is reduced by less than 5 BP. Therefore, it may be difficult to adjust the short-term LPR interest rate, but it should objectively help to reduce the actual financing cost of enterprises.
3) The impact of RRR reduction on stocks and bonds? Taking history as a mirror, the reserve requirement has been reduced for 21 times since 2008. After the reduction, the short-term winning rate of Shanghai Composite Index and Shanghai and Shenzhen 300 is high, and the medium and long-term winning rate has declined, but the increase has expanded. Gem has the best performance in the equity market. The winning rates in the next week, the next month and the next three months are 56%, 69% and 56%, with an average increase of 1.65%, 7.58% and 9.37%; Compared with the stock market, the bond yield seems to be more able to incorporate a certain price in before the RRR reduction. Specifically, the 10-year Treasury bond and the 10-year CDB bond fell by an average of 4.9 and 5.4 BP in the week before the RRR reduction. After the RRR reduction was implemented, the downward space narrowed, and this law is not significant only in 2019. On the whole, the RRR reduction is good for stocks and bonds, but stocks are better than bonds, and the gem performs best.
Emphasize expanding domestic demand and promoting consumption; Attach importance to micro market vitality and hard science and technology; Emphasizing a higher level of opening to the outside world and coordinated regional development; Mention people's livelihood, employment, childbirth and pension; Double carbon is not mentioned.
1) Expand domestic demand, promote consumption and expand effective investment. The meeting focused on "implementing the strategy of expanding domestic demand, promoting the sustained recovery of consumption, actively expanding effective investment and enhancing the endogenous driving force of development". Combined with the premier's Symposium on November 19, which emphasized "driving more employment and increasing residents' income and promoting consumption expansion", it means that the policy begins to tilt from supply guarantee to demand side. 2) Pay attention to the vitality of micro subjects and hard science and technology. The meeting pointed out that "stimulate market vitality, pilot reform of market-oriented allocation of factors, strengthen intellectual property protection, enhance the core competitiveness of manufacturing industry, and strengthen the national strategic scientific and technological force". 3) It emphasizes a higher level of opening to the outside world and coordinated regional development. 4) Pay attention to people's livelihood, employment, childbirth and pension. The meeting pointed out that "social policies should take into account the bottom line of people's livelihood, implement the employment priority policy, promote the implementation and effectiveness of the new fertility policy, and promote the national overall planning of basic old-age insurance". 5) Not mentioning double carbon does not mean that double carbon is not important, but it is expected that a better balance may be formed between short-term double carbon and "ensuring supply and stabilizing price".
The real estate market continues to rectify deviations, prevent risks, and pay more attention to keeping the bottom line.
The general tone of real estate is not expected to be changed, but the marginal easing of real estate can be expected. On the one hand, this meeting deleted the repeatedly mentioned "we should adhere to the positioning that houses are used for living, not for speculation" in 430 and 730 meetings, and did not mention the expressions of "stabilizing land prices, stabilizing house prices and stabilizing expectations", but it is expected that the general tone of "housing is not fried" will be difficult to change. On the other hand, this meeting emphasizes "promoting the construction of affordable housing" and "supporting the commercial housing market to better meet the reasonable housing needs of buyers and promote the healthy development and virtuous cycle of the real estate industry". We believe that on the basis of "two maintenance", we will also pay more attention to the virtuous cycle and strengthen the "survival of the fittest" in the field of affordable housing construction and real estate, In combination with the central bank's Q3 monetary policy report in November, the central bank emphasized "bottom line thinking" to prevent systemic and secondary risks. On December 3, the China Banking and Insurance Regulatory Commission said that "at this stage, we will focus on meeting the demand for first home and improved housing mortgage, reasonably issue real estate development loans and M & A loans, increase support for affordable rental housing, and promote the steady and healthy development of the real estate industry and market", Overall, the marginal correction of real estate will continue, and the marginal easing of personal loans and development loans is expected to continue.
Risk statement
The economic downturn was faster than expected, and the implementation of policies was less than expected.
