Event: on March 16, Liu He, member of the Political Bureau of the CPC Central Committee, vice premier of the State Council and director of the financial commission, presided over a special meeting of the financial stability and Development Commission of the State Council to study the current economic situation and capital market problems.
The meeting of the Finance Committee responded to the hot concerns of the market and stabilized the expectations of the capital market. The meeting was held at a time when the Shanghai composite index was about to fall below 3000 points after the continuous sharp decline in the A-share market. The meeting responded to a series of market concerns, including macro-economy, real estate, China concept shares, platform economy, Hong Kong market, etc. The spirit of the meeting greatly boosted market confidence. A shares and Hong Kong market rose sharply before and after the news release.
Boost the macro economy and maintain a moderate growth in new loans. "With regard to macroeconomic operation, we must implement the decision-making and deployment of the Party Central Committee, earnestly invigorate the economy in the first quarter, actively respond to monetary policies, and maintain a moderate growth in new loans." The financial data in February was weak, and the market was once relatively pessimistic about the economic situation. In fact, the consolidated financial data in the first two months were not weak, and the economic data in the first two months were also relatively good. The meeting once again stressed that maintaining the moderate growth of new loans means that China will also maintain a relatively loose monetary policy and promote the positive and healthy development of the real economy.
Explore a new development model of real estate. "With regard to real estate enterprises, we should timely study and put forward strong and effective risk prevention and resolution solutions, and put forward supporting measures for the transformation to a new development model." Real estate enterprises, especially real estate enterprises, are still facing great risks when their debts expire. The real estate market is getting colder. The sales in the first two months decreased by 19.3% year-on-year, and the funds in place decreased by 17.7% year-on-year. As China has entered a deep aging society and the process of urbanization has also entered the middle and late stage, the extensive development model of the real estate market in the past can no longer meet the new needs of the times. Now, on the one hand, we should resolve the stock risk, on the other hand, we should explore a new development model, introduce supporting measures in the transition period, and give consideration to risk prevention and stable growth.
Maintain communication between China and the United States and solve the regulatory issues of China concept shares. "With regard to China concept shares, at present, the regulatory authorities of China and the United States have maintained good communication, have made positive progress, and are working to form specific cooperation plans. The Chinese government continues to support all kinds of enterprises to list abroad." In March 2021, the United States implemented the foreign holding company Accountability Act (hfcaa), which stipulates that "from the 2021 annual report, if a company cannot prove that it is not controlled by the foreign government or the U.S. public company accounting oversight board (PCAOB) cannot audit it for three consecutive years, the company will be banned from listing on any exchange in the United States". Due to the conflict between this regulatory policy and Chinese regulatory policy, At that time, a large number of China concept stocks will face the risk of delisting from the US market, resulting in the continuous decline of China concept stocks in the past year. The meeting of the Financial Committee showed that China and the United States regulators are maintaining good communication and may form a regulatory cooperation plan. The risk of forced delisting of China concept shares is reduced, which is conducive to the stabilization of the share price of China concept shares.
Standardize the platform economy and promote orderly development. "With regard to the governance of platform economy, relevant departments should improve the established plan in accordance with the principles of marketization, legalization and internationalization, adhere to seeking progress in stability, steadily promote and complete the rectification of large platform companies as soon as possible through standardized, transparent and predictable supervision, and set up red lights and green lights to promote the steady and healthy development of platform economy and improve international competitiveness." In December 2020, the central economic work conference proposed to "curb the disorderly expansion of capital". After more than one year of governance, the Internet enterprises with monopoly platforms have basically completed the rectification. The next step is to further refine the work and form a standardized and benign development momentum. The policy is not to suppress the platform economy, but to curb some of its bad tendencies. On the whole, it is still necessary to expand the platform economy and enhance the international competitiveness of the platform economy, So as to enhance the overall strength of Chinese enterprises.
Stabilize Hong Kong's financial market and strengthen regulatory communication between the two places. "On the stability of Hong Kong's financial market, the mainland and Hong Kong regulators should strengthen communication and cooperation." The Hong Kong market links overseas and mainland markets, especially after the establishment of the interconnection mechanism between Mainland and Hong Kong, it has a greater and greater impact on the mainland market. The Hong Kong market has become a key link for foreign investors to participate in the mainland market. If the Hong Kong market is unstable, the mainland market will also be affected. Recently, affected by adverse factors such as the Russian Ukrainian war and the expectation of the Federal Reserve to raise interest rates, the performance of the Hong Kong market is weak. Therefore, strengthening communication and cooperation and policy coordination between the regulatory authorities of the two places is conducive to market stability.
Prudently introduce contractionary policies and strengthen policy coordination with financial management departments. "Relevant departments should earnestly shoulder their responsibilities, actively introduce policies that are beneficial to the market and prudently introduce contractionary policies. They should respond to hot issues concerned by the market in a timely manner. All policies that have a significant impact on the capital market should be coordinated with the financial management department in advance to maintain the stability and consistency of policy expectations. The financial commission of the State Council will strengthen coordination and communication in accordance with the requirements of the Party Central Committee and the State Council, and make progress when necessary Line accountability. Financial institutions must proceed from the overall situation and firmly support the development of the real economy. Long term institutional investors are welcome to increase their shareholding ratio. " The meeting of the finance committee made it clear that we should actively introduce policies beneficial to the market and prudently introduce contractive policies, because some policies introduced in education, entertainment, medicine and other industries in the past year have indeed had a great impact on relevant industries, affecting employment and capital markets, which is not conducive to stable economic growth. At present, under the pressure of steady growth, we must carefully introduce contraction policies, maintain the long-term trend of healthy economic development and maintain the stable development of the capital market. At the same time, it is proposed to strengthen policy coordination and strengthen communication and coordination with financial management departments before the introduction of policies. When the current market situation is weak, "long-term institutional investors are welcome to increase their shareholding ratio", and the entry of long-term funds into the market will strongly support the stabilization of the market.
Investment suggestion: A shares rebounded sharply from around 3000 points, indicating that the region is an important support for policy and market, and the probability of market bottom is high. Although the global economy may face problems such as war, stagflation and currency cycle shift this year, the market may still be uncertain; However, the valuation level of A-share and Hong Kong stock market has entered the lowest range in history, and the medium and long-term investment value has appeared, which is a good time for long-term funds to enter the market.
Risk tip: the macro economy is accelerating downward; The implementation of the policy is not as expected; Recurrent epidemic
