Macro balance sheet summary:
The first quarter of the central bank is an important window period for wide currency: the central bank's negative balance sheet shrank in November, affected by the net withdrawal of the open market. After the reduction of reserve requirements and interest rates in December, the current monetary policy is set against 2019. We think there is still room for monetary easing in the first quarter of 2022. At present, although PPI has peaked and fallen, it is still high, and it is difficult to have a rapid decline trend in the short term. Therefore, the current demand of enterprises for cost reduction is still high, and it is necessary to cut interest rates again. Wide currency is the premise of wide credit. In addition, since the market expects the fed to enter the window period of interest rate increase from the second quarter of next year, if China starts easing in the second quarter of next year, there will be great foreign exchange pressure.
The contraction of bank demand slowed down the pace of credit expansion: in November, the scale of balance sheet of commercial banks widened slightly, and the structure of asset side and liability side changed little. The debt of commercial banks to the government stabilized after the marginal improvement in September, but the credit of real enterprises and residents continued to be weak, in line with market expectations. Subsequently, the current credit is still in a stable but not wide stage, mainly due to the low demand for entity financing. In the follow-up, it is expected that the full start of credit easing will need to wait for the further development of infrastructure credit and the improvement of entity credit conditions after currency easing.
On the financial side, infrastructure investment is cautiously optimistic under the financial front force: in November, the growth momentum of fiscal revenue continued to decline, and the expenditure force reached a new high in the year. Looking forward to 2022, there is no doubt about the fiscal front in the first quarter, but we are still cautiously optimistic about infrastructure. The Ministry of finance has issued a special debt limit of 1.46 trillion yuan in advance, superimposing the excess balance of the general public budget in 2021 and the special debt carry forward of government funds of 2.3 trillion yuan, with the strongest financial strength in the first quarter of 22. However, the contradiction between risk prevention and stable development of local governments continues to restrict the leverage ratio of local governments, which has a great impact on the landing of infrastructure investment. We estimate that the growth rate of infrastructure investment will be between 4% - 5% in 2022, which is difficult to improve greatly.
The upstream and downstream profit transmission chain at the enterprise end accelerated: the price at the production end peaked and fell in November, and the profit structure differentiation of industrial enterprises improved. The financing demand of enterprises is still not high, waiting for the start of wide credit. The countercyclical policy has strengthened its support for the economy. However, policy fermentation takes time, and the transmission of wide currency to wide credit is not obvious. Subsequently, as the manufacturing PMI rebounded to the boom and bust line in December, and the scissors difference between PPI and CPI gradually decreased, the supply side has begun to repair, and the supply impact caused by the previous "synthesis fallacy" is alleviating. However, as the demand of real estate investment and consumption related industries continues to shrink, and the epidemic repeatedly disrupts the repair process of domestic demand, the demand contraction continues. We believe that the active destocking cycle of industrial enterprises will continue, and it is difficult for revenue to rebound in the short term.
Residential side: real estate policy releases signals to seek a "soft landing": we expect that real estate sales, construction and real estate investment will further decline year-on-year in the first quarter of 2022, and may enter a negative range affected by the high base. Under the general direction of "promoting the virtuous circle and healthy development of the real estate industry", local regulatory policies may be further relaxed, the real estate credit policy may be repaired, and there will be urban governance. Therefore, after the first quarter of 22 years, various real estate data are expected to bottom up in the middle of the year, and the real estate industry has a high probability of achieving a "soft landing".
