Market Review
From February 14 to February 25, 2022, the Shanghai Composite Index fell by 0.33%, the Shenzhen Component Index rose by 1.43%, and the gem index rose by 3.98%. By industry, Shenwan light industry manufacturing / textile and garment / commercial trade / food and beverage index rose or fell by - 0.02% / 1.20% / - 3.40% / - 1.04% respectively, ranking 16 / 12 / 21 / 18 among the 28 Shenwan industry indexes compared with the CSI 300 index of + 0.59 / + 1.81 / - 2.79 / - 0.43pct respectively.
Weekly topic: house price and consumption: wealth effect or crowding out effect?
The wealth effect of house prices profoundly reveals the relationship between house prices, consumption and economy, including positive wealth effect and crowding out effect. The addition of the two effects makes the stimulating effect of rising house prices on consumption appear as an "inverted U-shaped" curve. When house prices rise to a certain extent, house prices will change from promoting consumption growth to inhibiting consumption growth.
In the first half of 2018 and before, there was a significant positive wealth effect on China's house prices and consumption. Due to the long-term nature of wealth effect transmission, the house price index is about 6-12 months ahead of the consumer confidence index. The transmission mechanism of wealth effect in China's real estate market mainly comes from two aspects:
1) consumer confidence. On the one hand, rising house prices can stimulate industrial output and promote economic growth. In 201517, the recovery of the real estate market led to the recovery of production in upstream industries such as steel and cement, and also stimulated the improvement of sales in downstream industries such as furniture and building materials. On the other hand, rising house prices can increase the real income of working people in the real estate industry and the property income of property buyers, and promote the increase of residents' disposable income and income expectation. In 201517, the rise of house prices increased the income of high-income people, and the growth rate of high-end consumption rebounded with the upgrading of consumption.
2) real estate credit leverage. There is an obvious positive feedback mechanism between credit and house price. The rise of house price leads to the increase of real estate yield and net asset value, which leads to credit expansion and the acceleration of bank mortgage issuance. House buyers can obtain more loans from banks to alleviate their credit constraints and increase the current residential consumption. From 2015 to 2016, China's credit volume was at a high level, and the purchasing power of the real estate market continued, which was conducive to the growth of residents' consumption.
Since the second half of 2018, China's house prices have gradually stabilized. However, consumption has always been weak due to the impact of China US trade war and repeated epidemics, and the correlation between house prices and consumption is no longer significant. At present, the trend of house prices under policy regulation is basically stable, and more consumers hold a wait-and-see attitude. At the same time, the house price income of the first tier cities is relatively high. The high house price and high rent inhibit the growth of consumer demand to a certain extent. The crowding out effect of house price on consumption is worthy of attention.
Risk tips
The risk of macroeconomic growth falling short of expectations; Covid-19 epidemic impact; The business condition of the enterprise is lower than the expected risk; Risk of rising raw material prices; Food safety risks; The competition pattern intensifies.
