Event:
On April 6, the national Standing Committee deployed economic work. The meeting considered that "the complexity and uncertainty of China's external environment have increased, and some have exceeded expectations", "the downward pressure on the economy has further increased", and decided to adopt fiscal and monetary policies such as social security relief and refinancing to bail out the economy. Although the meeting communique did not explicitly mention the reduction of reserve requirements and interest rates, from the expression of "increasing" the implementation of monetary policy, we believe that the possibility of reducing reserve requirements and interest rates should not be underestimated, and continue to be optimistic about the industrial chain related to real estate.
Key investment points:
The downward pressure on the economy increased more than expected
From the recently released PMI data of manufacturing and service industries, the economy is facing more downward pressure than expected. The impact of the epidemic on the economy is an important source of pressure. We think the export sector may also have hidden worries.
The strength of policy adjustment is controversial
While the national standing committee made it clear that it would support the economy through some structural monetary policy tools such as fiscal deficit expansion and refinancing of the social security budget, it did not give a clear signal in terms of reducing reserve requirements and interest rates, which triggered controversy in the market. We believe that the use of aggregate or even price based monetary policy tools is still necessary when both the short-term output gap and inflation gap may expand downward.
Continue to look at the real estate industry chain
Real estate is still worth looking forward to. With the cooperation of various policies, the deleveraging of real estate enterprises is nearly completed, and the ability to increase liabilities is already available. At present, the market does not pay attention to the possibility of the decline of real estate supply in the second half of the year. We continued to be optimistic about real estate and related industrial chains in April and the second quarter. For the bond market, if the inter-bank market policy interest rate drops and the real estate credit also appears simultaneously, we think the opportunity of short-term bonds may be better than that of long-term bonds.
Risk tip: the policy is lower than expected, the epidemic situation worsens more than expected, and the international geopolitical environment worsens more than expected
