Expected temperature rise of RRR reduction

Key investment points

Core view: liquidity will remain reasonably abundant

When the peripheral market was generally callback affected by covid-19 variant virus, A-Shares showed strong toughness. The main A-share indexes rose last week; Among them, the Shanghai Composite Index rose 1.22% this week, with a better performance; Gem index rose 0.28%, the weakest performance. From the perspective of style classification, stocks with low P / E ratio and medium P / E ratio perform better. In terms of industries, most industries rose, and 20 of the 28 major industries rose; Among them, architectural decoration, mining and defense industry ranked the top three; Media, medicine, biology and leisure services ranked the last three. From the perspective of turnover rate, the market activity increased slightly. The turnover rate of large market value represented by the Shanghai and Shenzhen 300 index was 0.48%, and that of small and medium market value represented by the China Securities 500 index was 1.61%. The average turnover on Sunday was about 1112.05 billion, which was basically the same as that in the previous trading week, and the overall trading activity remained unchanged.

The expected rise of RRR reduction or hedging real estate risks. When Premier Li Keqiang met with IMF President georgiyeva in Ziguangge video in Zhongnanhai on the afternoon of December 3, he pointed out that China will continue to coordinate epidemic prevention and control and economic and social development, implement stable macro policies and strengthen pertinence and effectiveness. We will continue to implement a prudent monetary policy, maintain reasonable and sufficient liquidity, formulate policies around the needs of market players, reduce reserve requirements in due time, and increase support for the real economy, especially small, medium-sized and micro enterprises, so as to ensure the stable and healthy operation of the economy. Later on the same day, Evergrande disclosed an announcement that it might not be able to perform its guarantee liability. At the request of Evergrande Real Estate Group Co., Ltd., Guangdong Provincial People's government agreed to send a working group to Evergrande Real Estate Group Co., Ltd. At this stage, the timely RRR reduction is more or less meant to hedge the current real estate risks. The main tone is to do a good job in risk resolution and maintain the stable and healthy development of the real estate market.

RRR reduction does not necessarily mean monetary easing. For the formulation of this timely RRR reduction, it is not clear that the final operation is directional RRR reduction or comprehensive RRR reduction. If it is a targeted RRR reduction, the overall impact on the market will be very limited; If it is a comprehensive RRR reduction, the probability rate can not be understood as easing. Because to reduce the deposit reserve ratio, we should first understand it as a tool of liquidity management, which should be considered more comprehensively. Taking the central bank's RRR reduction of 0.5 percentage points on July 15 this year as an example, the RRR reduction can indeed release 1 trillion yuan of long-term funds and effectively increase the market liquidity. However, at the same time, the subsequent unconventional loan convenience balance has also been reduced by about 600 billion yuan. The quoted interest rate in the loan market has not decreased in the following months. This RRR reduction has not evolved into continuous easing of subsequent monetary policy. In terms of financial markets, the favorable reduction of reserve requirements and the arrival of real estate risks at the same time have led to a small impact on the A-share market. The recent rebound may continue and maintain a large range shock situation.

Suggestions on industry configuration: focus on new energy industry chain, large science and technology, large finance, national defense and military industry and other sectors. As the Federal Reserve officially began to reduce the scale of bond purchase, the boots of liquidity expectation changes will fall, and the fear of "stagflation" will be greatly alleviated with the decline of bulk commodities. The rise in the expectation of standard reduction may not mean the overall easing of China's monetary policy. The risk resolution of some real estate companies is a long-term process, which the government has always attached great importance to, It will not evolve into a systematic risk. Corresponding to the overall liquidity of the Chinese market, it will continue to be reasonably abundant in the near future. We maintain our previous judgment that the current market will still be dominated by structural market. Under the condition that the new variant covid-19 virus has not brought more impact, the probability of a new round of rebound in the market since mid November has not ended. In terms of industry allocation, it is suggested to focus on the key direction of China's economic structure adjustment, such as new energy industry chain, large science and technology, large finance, national defense and military industry.

Risk tips: interest rate fluctuates more than expected, overseas market fluctuates more than expected, economic growth is less than expected, enterprise performance does not meet expectations, other systemic risks, etc.

 

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