The central bank lowered the reserve requirement in April. After the National People’s Congress on April 13 mentioned the timely use of reserve requirement reduction and other monetary policy tools, the central bank issued an announcement on April 15 and decided to reduce the deposit reserve ratio of financial institutions by 0.25 percentage points on April 25, 2022 (excluding financial institutions that have implemented the deposit reserve ratio of 5%). In order to increase the support for small and micro enterprises and “agriculture, rural areas and farmers”, for urban commercial banks without inter provincial operation and agricultural commercial banks with deposit reserve ratio higher than 5%, an additional 0.25 percentage point will be reduced on the basis of reducing the deposit reserve ratio by 0.25 percentage point. The RRR reduction released a total of about 530 billion yuan of long-term funds. After this reduction, the weighted average deposit reserve ratio of financial institutions is 8.1%. Compared with the previous 50bp RRR reduction, it is slightly lower than expected, but it may also leave room for follow-up policies. This time, an additional targeted reduction of 25 BP for urban commercial banks without inter provincial operation and rural commercial banks with a deposit reserve ratio of more than 5% is equivalent to the implementation of accurate financial support for small, medium-sized and micro enterprises with great impact of the epidemic. Combined with the previously announced newly established scientific and technological innovation and special refinancing for inclusive elderly care, monetary policy continues to play a dual function in total amount and structure. At present, the RRR reduction has been implemented. In combination with the profits previously handed over by the central bank and the self-discipline mechanism of market interest rate pricing, a meeting was held to encourage the reduction of the floating upper limit of deposit interest rate of small and medium-sized banks. On the whole, we believe that under the condition that the MLF interest rate was not reduced in April, there is still room for the reduction of 1-year LPR interest rate, and 5-year and above LPR may remain unchanged. On the other hand, it is expected that the RRR reduction will still be in the monetary policy toolbox according to the impact of the epidemic on China’s economy and the changes in the overseas situation. Generally speaking, the RRR reduction is conducive to the improvement of risk appetite in the equity market and boost market confidence. After banks reduce the cost of liabilities, it is conducive to the decline of financing costs of the real economy and release economic vitality. For the bond market, easing is not over, but credit easing is also on the way, and the yield of 10-year Treasury bonds may remain low. In terms of recent signals, the “policy bottom” has been further confirmed, but we still need to pay attention to the impact of China’s epidemic on the real economy in the short term.
The market was volatile and consolidated this week. On the disk, coal, food and beverage and commercial retail industries led the increase; Building decoration, building materials and power equipment industries led the decline. The financial data for March released this week showed a good overall performance, and the money supply remained loose. On Friday, the bank released a signal of moderate RRR reduction to help stabilize economic growth and stabilize the macro-economic market. It is expected that the future market will still be dominated by shocks. It is suggested to pay attention to the annual report and the first quarterly report.
Globally, the growth rate of covid-19 epidemic diagnosis continues to slow down. As of April 16, 502 million cases of covid-19 pneumonia had been confirmed worldwide, an increase of 5.83 million cases compared with the previous week, with a decrease of 1.66 million cases on a week-on-week basis and a decrease for several consecutive weeks. South Korea, France and Germany ranked first in the cumulative number of newly diagnosed cases in the week, with 1.04 million cases, 840000 cases and 800000 cases respectively. From the perspective of China, Shanghai is still relatively severe, and some cities in the Yangtze River Delta and Jilin Province are still sporadic. As of April 17th, 3504 Chinese mainland confirmed cases of COVID-19 pneumonia were newly diagnosed, including 2417 cases in Shanghai and 166 cases in Jilin. There were 22512 asymptomatic infections, including 19831 in Shanghai, 376 in Jilin, 90 in Jiangsu and 58 in Anhui. More than 300000 positive infections have been reported in this round of epidemic in Shanghai, nearly 20000 cases have been confirmed in Shanghai, and there are 16 severe cases at present. The logistics pressure has eased, and some enterprises took the lead in resuming work and production.
