Guotai Junan Securities Co.Ltd(601211) : loose monetary policy and weak overweight policy

Guotai Junan Securities Co.Ltd(601211) comments on the central bank’s overall RRR reduction, pointing out that the overall RRR reduction is only 25bp, which is less than market expectations and operating practices. However, MLF was not replaced in April, and the actual net investment of 530 billion was continued in the same amount, which is in line with the rules. The RRR reduction will directly save the capital cost of banks of 6.5 billion yuan per year and help the cost of bank liabilities decline. We believe that the central bank’s choice of “reserve requirement reduction of 25bp + MLF equal renewal” at this time is a prudent loosening under abundant liquidity. Monetary policy moves slowly in small steps, and there are still loose backhands. In the follow-up, we need to pay more attention to the follow-up of other policies (real estate and Finance).