After the transaction stability is expected, the market gradually tends to be rational, focusing more on the progress of the actual implementation of policies. It may be a matter of time before the policy becomes effective. We are still optimistic about the stock market, especially Hong Kong stocks. Treasury yields may remain low and volatile at the current point.
After the Politburo meeting and the central economic work conference, the implementation of the market in the game policy. After the transaction stability is expected, the market gradually tends to be rational, focusing more on the progress of the actual implementation of policies. Judging from the situation in the last two weeks, the policy has been relaxed in all aspects, but the range is not intense. The stock market rebounded slightly after falling to the level of the Politburo meeting, the bond market yield decreased, and the commodity index increased slightly, which is consistent with the trend of loose policy.
Monetary policy tends to be loose, but the space for interest rate reduction is limited. On December 20, the central bank lowered the one-year LPR loan interest rate by 5 basis points to 3.8%, and the five-year LPR loan interest rate remained unchanged at 4.65%. In addition, recently, the bill interest rate has weakened significantly, breaking a new low in history, and the three-month bill interest rate has also approached 0. After the policy is clear and stable growth, the pressure of bank credit assessment has increased, while the loan demand continues to be weak, and banks are forced to increase the allocation of bills to meet the credit assessment requirements. Therefore, the interest rate of stock bills continues to decline.
As the first quarter of next year will be the peak of real estate enterprises' debt repayment, real estate companies will still face a large liquidity test. The focus of steady growth lies in whether the real estate policy can be further relaxed on the demand side and the intensity of fiscal force. Under the current environment of low interest rate, the supply of credit funds exceeds the demand, and the demand side is more affected by the policy, Therefore, the real estate and fiscal policies are expected to make further efforts, and the space for substantial interest rate reduction is limited. It is more likely to achieve monetary easing and maintain economic stability by means of social financing, especially in the first quarter.
The uncertainty of epidemic development has increased. With the accelerated spread of Omicron around the world, the epidemic has once again become out of control. The daily average number of new cases in Europe has exceeded 420000, and the daily increase in the United States has exceeded 200000 again. At present, the preventive ability of vaccines against Omicron is poor. European countries restart the blockade, and the service industry bears the brunt of the impact. The initial PMI values of the service industry in the United States, Japan and Europe fell in December. In terms of the epidemic situation in China, although the total number of new cases is still rising, the breadth is becoming smaller. It is expected that this round of epidemic situation will come to an end after Xi'an is controlled.
Looking back, we are still optimistic about the stock market. The policy intention to maintain stability has become explicit, and the economy and stock market will continue to repair. A-Shares have little rebound because of the previous small decline, while Hong Kong stocks have more room to rebound because of the previous large decline. Treasury yields may remain low and volatile at the current point.
Risk tip: the economic downturn exceeded expectations, and the epidemic situation exceeded expectations
