Editor’s note: Recently, the covid-19 pneumonia epidemic outside China, International Geopolitics, commodity markets and other variables have increased sharply, bringing new major challenges to China’s economic growth and global economic recovery. The “March 16” meeting of the Finance Committee of the State Council and the “March 21” meeting of the national Standing Committee clearly put forward that targeted measures should be taken to stabilize expectations and stabilize the development of the capital market. Confidence is more valuable than gold. Since March 27, the Securities Times Securities Company China has launched a series of reports on “boosting market confidence and stabilizing the capital market”. Through extensive interviews with institutional figures in the securities industry, fund industry, venture capital industry, experts and scholars, as well as representatives of listed companies and enterprises, we will listen to the voice of the market, gather the wisdom of all parties, gather more consensus and jointly contribute to the stability of the capital market!
Recently, Liu Feng, chief economist of China Galaxy Securities Co.Ltd(601881) securities, received an exclusive interview with Chinese reporters of securities companies on hot issues such as macroeconomic operation suggestions, stabilizing market expectations and zhonggai shares.
Liu Feng said that the main blocking point faced by the current monetary policy is not the problem of liquidity, but more the problem of transmission mechanism and direction. It is suggested to further sort out the loan conditions and channels of small, medium-sized and micro enterprises and prolong the cycle; Increase the investment scale of industrial funds; Optimize the exit mechanism of the capital market and improve the efficiency of capital allocation.
“we need to further clarify the implementation methods of policies and measures, refine the responsible subjects of policies, implement implementation plans and policy tools, so that investors can form clear and stable market expectations.” Liu Feng said
For the development opportunities of the securities industry, Liu Feng said that in order to better meet the new development opportunities, the service scope, service capacity and service level of Chinese securities companies need to be further improved, truly form a professional, legalized, market-oriented and international operation mechanism, reflect value in the process of serving the real economy in an all-round way and build international competitiveness.
optimize the capital market exit mechanism
brokerage China reporter: do you have any policy suggestions for the current macroeconomic operation?
Liu Feng: judging from the economic figures released by the Bureau of statistics in February, the performance of China’s current major macro indicators is still weak. In terms of the three-year average growth rate, the growth rates of industrial added value, investment in fixed assets, total social consumption and export were 8%, 5%, 4% and 16% respectively. Among them, only the growth rate of export and industrial added value was higher than that before the epidemic. Consumption and investment have not fully recovered to the pre epidemic level. The economic recovery is still driven by the rapid growth of industrial fields driven by exports.
However, with the continuous recovery of overseas production capacity, the high growth of China’s exports has dropped. From January to February, exports (US dollars) increased by 16.3% year-on-year and – 33.6% month on month. There is still great uncertainty in the future. Therefore, to achieve the growth target of 5.5%, investment and consumption will be the focus of policy this year.
Figure 1: comparison of growth rate of main economic indicators
Secondly, from the perspective of social financing scale, the proportion of medium and short-term debt of new credit in the enterprise sector is high, which reflects the low long-term financing willingness of enterprises and unstable economic expectations. The medium and long-term loans of the resident sector also showed a negative growth since statistics, reflecting that the housing demand of residents is still low. On the surface, it is affected by a series of regulation and control policies on real estate last year, which leads to the unstable expectation of residents on real estate. The deeper reason may be that the debt pressure of Chinese residents is large, and the expectation of future income stability or growth is weak, which makes the rising space of residents’ leverage smaller and smaller.
Over the past 10 years, the leverage ratio of Chinese residents has increased from 27.3% in 2010 to 62.2% at the end of 2021. The debt ratio of the resident sector has exceeded 60.9% in the eurozone and is close to 66.9% in Japan. Considering that China’s urbanization rate is still lower than that of developed countries, the debt level of the actual urban population is higher.
Therefore, the main blocking point faced by the current monetary policy is not the problem of liquidity, but more the problem of transmission mechanism and transmission direction, which is also the main reason for the weak effect of a series of recent monetary easing measures, such as interest rate and reserve requirement reduction.
To this end, I personally suggest: first, we should re sort out and improve the loan conditions and channels of small, medium-sized and micro enterprises, such as whether new technical means can be used in the evaluation of mortgage, guarantee and credit, whether tax and social security records are taken into account, etc. the loan term and the actual interest rate of loans need to be more flexible to widen the gap.
Second, we should increase the investment scale of industrial funds, improve the right confirmation of capital investment, and improve the support of capital to the real economy.
Third, we should optimize the exit mechanism of the capital market. The delisting rate of China’s stock market is low, which makes it difficult to give full play to the function of discovering the value of the capital market and talking about the advantages and disadvantages, resulting in low efficiency of capital allocation.
Fourth, in terms of the construction of a long-term mechanism to expand domestic demand, we should solve the long-term policy and legal supply of residents who are “able to consume, dare to consume and easy to consume”, that is, to create and increase income, increase employment, unify citizen treatment, such as urban and rural identity discrimination, increase people’s livelihood investment, such as the supply of infrastructure and legal protection such as education, medical treatment and pension, dredge consumption blocking points, remove various restrictions, crack down on fraud and protect consumers’ rights and interests.
cultivate clear and stable market expectations of investors
brokerage China reporter: what are the policy suggestions on stabilizing market expectations?
Liu Feng: the convening of the meeting of the Finance Committee of the State Council has played a timely and effective role in stabilizing social expectations and boosting market confidence. From the good results of the meeting, the current market needs more transparent, open, clear and clear policy signals.
Therefore, national departments need to further strengthen the continuity, stability, consistency and operability of policies at the policy-making level, so as to make the information transmission mechanism timely, accurate and complete. At the same time, the implementation methods of policies and measures need to be further clarified, and the responsible subjects, implementation plans and policy tools of policies need to be refined, so that market investors can form clear and stable market expectations.
In the process of investment and fund-raising of industrial funds, we should adhere to the principles of marketization, legalization and internationalization, and clearly define the ownership, source, income distribution and destination of the property rights of funds and assets, including the ownership subject of the property rights of state-owned funds and assets.
Through legal means, the ownership, use, income and disposal rights of assets and the tax mechanism for property rights and interests are fixed for a long time, and property rights and interests are protected through legislation and law enforcement mechanisms, so that investors can form long-term stable expectations for capital and market.
encourage Chinese enterprises to continue listing abroad
brokerage China reporter: do you have any suggestions on China concept stock?
Liu Feng: on the issue of zhonggai shares, from the perspective of market operation, the requirements of the U.S. market regulatory authorities for zhonggai shares reflect the objective needs of market fairness and strengthening information symmetry, which are not entirely aimed at China, and the relevant requirements have been promoted through legislation.
Therefore, although there are not many choices, we should also clarify the essence of the problem, take the initiative and win acceptable solutions.
Specific operational aspects: first, we need to speed up the return of state-owned holding and sensitive information related enterprises. We can consider acquiring or repurchasing through sovereign funds, or encouraging other market-oriented and industrial funds, equity funds, M & a funds, etc., and actively assist listed companies to return steadily.
Second, for non sensitive market-oriented companies, it is necessary to guide them to carry out information disclosure in accordance with regulatory requirements and normally participate in overseas capital market competition.
Third, we should maintain continuous communication between the regulatory agencies of China and the United States, timely and effectively connect the rules of the bilateral market, timely disclose relevant information to the market, encourage and assist qualified Chinese enterprises to continue listing abroad, transmit Chinese policy information to overseas investors, and stabilize the expectations of overseas capital on China’s capital market.
brokerage service capacity needs to be further improved
brokerage China reporter: what historical opportunities do you think there are for the development of the securities industry?
Liu Feng: China’s financing structure is still dominated by bank credit, and the scale of bond market and stock market is far lower than that of developed economies. With China’s reform entering the deep-water zone, the research and development of core technologies entering the bottleneck period, and the transformation of old and new energy entering the critical period, the risk appetite and bearing capacity of the traditional bank credit system are difficult to meet the financing needs of high-tech development and “specialized and special new” fields. With the implementation of the registration system and new asset management regulations, the scale of the capital market will expand rapidly in the future, and the securities industry will also usher in important development opportunities.
At present, the capitalization rate and securitization rate of China’s economic stock assets are still low, and the operation efficiency of capital and other factor resources needs to be improved. There is still much room for improvement in the market-oriented operation modes such as asset securitization, industrial funds, ABS and REITs funds in the future.
In order to better meet the new development opportunities, the professional service boundary, service capacity and service level of Chinese securities companies need to be further improved to truly form a professional, legal, market-oriented and international operation mechanism, reflect the value in the process of serving the real economy in an all-round way and build international competitiveness.
Figure 2: comparison of financing structures between China and the United States (2021)
