The issuance of special bonds highlighted steady growth. Under the target of economic growth of 5.5%, the government has a strong willingness to move forward. More than 10 provinces, including Beijing, Zhejiang, Jiangxi and Hubei, made it clear in their local government work reports that they should ensure a "good start" and steady growth in 2022. Specifically, the amount of new special bonds in 2022 is arranged at a high level of 3.65 trillion, and the issuance is advanced. In terms of investment direction, the basic requirements of the state for the investment direction of special bonds in 2022 and 2021 have remained consistent. However, since the beginning of 2022, some positive changes have taken place in the issuance of special bonds: first, the proportion of special bonds invested in infrastructure has increased significantly since 2022, and second, the proportion of special bonds as project capital has increased significantly.
Wide credit follow-up space is still broad. First, this round of wide credit cycle starts from August to October 2021. According to the historical law, the rising period of a round of credit cycle lasts for at least one year. Second, in order to stabilize employment, it is necessary for China to continue to implement loose monetary policy. From this, we can judge that China will be in the rising stage of the credit cycle until October 2022. On the tools of monetary easing, we believe that the probability of the central bank cutting interest rates is low. On the one hand, the Federal Reserve started the tightening cycle and formed external constraints on China's interest rate cut. On the other hand, judging from the current situation in China, the reason for the weak credit demand lies in the low demand for housing loans, and to solve the drag of housing loans, interest rate reduction is not the most suitable tool. Looking at the RRR reduction, we calculate that the gap of long-term capital reserve in 2022 is 1.5 trillion. After the central bank turned in the profits, the gap is about 500 billion. It is expected to reduce the reserve requirement once in 2022, accompanied by the net withdrawal of MLF.
GDP growth in the first quarter is expected to reach 6%. From January to February, the momentum of China's economic recovery was better. First, the base effect supports the high growth of economic data to a certain extent. Second, on the basis of low base, the policy has been pushed forward, and the endogenous kinetic energy of the economy has been repaired, resulting in a number of data greatly exceeding expectations. Third, the real estate rebounded more than expected under the influence of the increase in net resumption of work and the rise in prices. In March, infrastructure investment is expected to further develop, and the disturbance of the epidemic to consumption may increase. Overall, the growth rate in the first quarter is expected to reach 6%. It should be noted that the good results achieved in the first quarter depend on the base effect. At present, there is still great downward pressure on China's economy. It is not easy to achieve the target of about 5.5%, which requires sustained policy efforts.
Investment suggestion: the positive factors of A-Shares are accumulating, and they are optimistic about the related fields of "steady growth"; In the first half of the year, the risk of the bond market outweighed the opportunity. For the stock market, (I) after early adjustment, the valuation of A-Shares has returned to a relatively low level in history. (II) the meeting of the financial committee of the State Council on March 16 studied the current situation and released a clear signal, which will play an important role in stabilizing market expectations and boosting market confidence. It is suggested to pay attention to the relevant fields of "steady growth", including real estate, digital infrastructure (cloud computing, data center) and dual carbon economy (wind power, photovoltaic and UHV). For the bond market, under the influence of factors such as multiple issuance of government bonds, effective credit extension and cumulative inflationary pressure, it is expected that the yield of 10-year Treasury bonds may remain in the range of 2.8-3% in the first half of 2022.
Risk factors: covid-19 virus mutation leads to vaccine failure; China's policy exceeded expectations.
