Under the steady growth policy, the pace of local government special bond issuance has significantly accelerated recently. From January to February 2022, a total of 879.8 billion new special bonds were added across the country, accounting for more than 60% of the amount approved in advance, and the issuance pace was significantly accelerated.
From the perspective of investment orientation, the issuance of special bonds continued to increase in the field of infrastructure. From January to February, the funds invested by special bonds in infrastructure reached 476.9 billion, accounting for 63%, significantly higher than 56% in the fourth quarter of 2021.
From the perspective of regional characteristics, the East is the focus of special bond issuance. From January to February, the scale of special bond issuance in the East accounted for 53% of the country; In terms of the scale of investment in infrastructure, the eastern and western regions are the core of infrastructure development.
Looking ahead, with the sustained efforts of the steady growth policy, the pace of special bond issuance will continue to accelerate. Considering the higher urgency of this round of fiscal advance, it is expected that more than 90% of the amount approved in advance will be issued in the first quarter of this year, and the issuance scale of special bonds in March will reach 434.2 billion yuan. In terms of capital investment, it will continue to focus on the field of infrastructure, form physical workload as soon as possible, and help steady economic growth.
Overseas observation: US 10-year bond yields and inflation expectations rose slightly, while UK and German 10-year bond yields fell; The term spread of interest rates on us 10-year and 2-year treasury bonds narrowed. The asset scale of the Federal Reserve and the Central Bank of Japan increased, while the asset scale of the European Central Bank increased.
Overseas policy: Russian President Vladimir Putin decided to launch special military operations in Donbas, Ukraine, and the president of Ukraine announced the severance of diplomatic relations with Russia; The United States and the European Union imposed severe sanctions on Russia; Los Angeles will no longer require people to wear masks in indoor public places; The British Prime Minister announced that all covid-19 restrictions in England would be lifted; Australia fully opened its border on February 21.
Global assets: most of the global stock markets fell, and the trend of commodity prices was divided. The Dow Jones Industrial Average fell 0.06%; European stock markets generally closed lower, with FTSE 100 in the UK, CAC40 in France and DAX in Germany falling 0.32%, 2.56% and 3.16% respectively. Asian stock markets generally closed lower, with the Shanghai composite index down 1.13% and the Hang Seng index down 6.41%. In terms of commodity prices, the prices of industrial products rose and fell sharply, aluminum and gasoline rose significantly, and coke and rebar fell significantly; Precious metals rose and fell, and Shenzhen Agricultural Products Group Co.Ltd(000061) rose and fell.
Central bank observation: a number of Fed officials said that they would raise interest rates in March; Members of the European Central Bank Management Committee said that the situation in Russia and Ukraine may delay the pace of the European Central Bank’s withdrawal from stimulus policy.
China Watch: since February, upstream: crude oil prices have risen month on month, power coal prices have risen month on month, the average price of coking coal has fallen month on month, and copper and aluminum prices have risen month on month. Midstream: the cement price index fell month on month, the rebar price rose month on month, and the inventory decreased year on year. Downstream: the decline of commercial housing transaction area expanded, the year-on-year growth rate of supply area decreased, the price of pigs fell and the price of vegetables rose. Liquidity: the yield of ten-year Treasury bonds rose.
China’s policy: the four major banks cut the mortgage interest rate in Guangzhou at the same time; Shanghai issued the implementation opinions on further promoting the construction of charging and replacing infrastructure in this city; The national development and Reform Commission and the Energy Administration issued the implementation plan for the development of new energy storage in the 14th five year plan; The State Council approved the implementation plan of the 14th five year plan for the development of urban agglomerations in the middle reaches of the Yangtze River.
Next week’s financial calendar: China’s manufacturing PMI in February (Tuesday); New US nonfarm payrolls in February (Friday)
Risk tip: the implementation of the policy is less than expected, and the repeated epidemic situation is more than expected.
