Event:
On April 26, president Xi Jinping presided over the 11th meeting of the central financial and Economic Commission to study the issue of comprehensively strengthening infrastructure construction.
Key investment points:
From the previous meetings of the central financial and Economic Commission, the theme of the meeting is often an important direction of economic work in the next stage. The central financial and Economic Commission is a deliberative and coordinating body directly under the CPC Central Committee, which was changed from the former central financial and economic leading group in March 2018. It is mainly responsible for the top-level design, overall coordination and overall promotion of major work in relevant fields. From the theme of the meeting, since its establishment in 2018, the central financial and Economic Commission has held 2-3 meetings every year. The contents discussed and deployed at the meeting are also the main line of China's economic work in the next stage, such as the issue of common prosperity mentioned in the 10th meeting in August 2021, the platform economic development mentioned in March 2021, double carbon work, etc. The meeting took infrastructure construction as the main topic. First, it once again demonstrated the determination of the high-level to stabilize growth this year; Second, it is clear that infrastructure construction will be an important task for China's economic work in the next stage.
Infrastructure construction is the primary focus of this round of steady growth, and it is expected to maintain a high growth rate in the future. Since the pressure on economic growth gradually increased in the second half of last year, the Ministry of Finance and the national development and Reform Commission have repeatedly made it clear to speed up the issuance of special bonds and form the physical workload as soon as possible. Infrastructure construction has become the primary focus of this round of steady growth. According to the Q1 economic data of 2022, the growth rates of fixed investment and infrastructure investment in the first quarter were 9.3% and 8.5% respectively (an increase of 0.4 percentage points from January to February), indicating that the effect of the steady growth policy in the early stage was obvious. From the perspective of the issuance of special bonds in the first quarter, as of the end of March, 1.25 trillion yuan of new special bonds had been issued this year, accounting for 86% of the amount issued in advance, an increase of 1.23 trillion yuan compared with last year. Among them, more than 10 provinces including Inner Mongolia, Liaoning, Heilongjiang and Zhejiang have all completed the issuance of quota in advance. Among them, municipal and industrial park construction and transportation infrastructure construction accounted for a high proportion of special debt investment, 33.26% and 18.53% respectively. Under the guidance of this meeting, it is expected that infrastructure construction in the second quarter will continue to play a primary role in stabilizing growth.
From the project side, safety and security infrastructure projects are an important starting point. The meeting made clear arrangements for infrastructure projects. First, the construction of transportation and water conservancy networks is the main force. Among them, the national Standing Committee has made arrangements for the scale of water conservancy investment this year at the end of March (the annual water conservancy investment can be about 800 billion yuan). Since April, the national standing committee, the national development and Reform Commission, the Ministry of industry and information technology and other high-level meetings and departments have spoken on the issue of ensuring smooth logistics. As an important foundation and carrier of commodity circulation, strengthening the construction of transportation network is not only in line with the requirements of "improving the ability to deal with extreme situations", but also in line with the concept of accelerating the construction of a national unified market. Second, focus on the construction of smart grid, low-carbon energy base, oil and gas and other energy networks. Both the national standing committee meeting on April 20 and Yi Gang, governor of the central bank, mentioned the issues of food production and energy supply in his speeches at the Boao Forum on April 21. Considering that the construction of energy network has realized the dual leverage of "new infrastructure + old infrastructure", which not only provides support for green and low-carbon development, but also forms a guarantee for people's livelihood and national security, the follow-up construction of energy network deserves attention. On the whole, combined with the timing of this meeting and the recent policy layout, transportation, energy and other security infrastructure are expected to be the focus of the next stage.
From the capital side, broaden the financing channels. The meeting showed that we should meet the financing needs of infrastructure construction, broaden long-term financing channels, and guide social capital to participate in the investment and operation of municipal facilities. First, 1.25 trillion yuan of special government bonds have been issued in the first quarter, of which infrastructure related accounts for 65.6%. Under the policy guidance of "completing the issuance of special bonds issued in advance last year by the end of May and the amount of special bonds issued this year by the end of September", the follow-up government bonds can still be renewed for infrastructure projects. Second, since March, the national development and Reform Commission has twice indicated the need to increase credit support, innovate financial instruments, broaden financing channels, and especially create more favorable conditions for private enterprises to participate in the construction of new infrastructure. On April 15, the Shanghai and Shenzhen Stock Exchange publicly solicited opinions from the public on the newly purchased infrastructure projects of public REITs, and stated that it would continue to promote the pilot work of infrastructure REITs. Third, considering that self raised funds are still an important part of capital construction projects, combined with the statement that "on the premise of controllable risk and legal compliance, we should ensure the reasonable financing needs of financing platform companies according to the market-oriented principle, and should not blindly withdraw loans, suppress loans or stop loans, so as to ensure the smooth implementation of projects under construction", it is expected that the financing environment of subsequent local urban investment platforms will improve.
In the stock market, with the continuous efforts of the policy of expanding domestic demand, we should pay attention to the investment opportunities in the infrastructure chain and consumption sector. Reviewing the previous meetings of the central financial and Economic Commission, the theme of the meeting is often an important investment clue in the market in the next stage. Considering that the direction of sustainable development of infrastructure under the promotion of steady growth policy has been determined, the follow-up support policies have successively entered the implementation stage, and the recent steady growth measures on the consumer side have been introduced one after another, the follow-up focus is on two main investment lines: first, the infrastructure chains such as building materials and architectural decoration brought about by the release of rush demand due to the benefit of policy support and the gradual weakening of the impact of the epidemic situation; Second, the consumption sectors such as food and beverage, catering and tourism, hotels, automobiles and household appliances that have fully benefited from the marginal improvement of the epidemic situation.
Risk tips: the situation in Russia and Ukraine worsened again, Sino US relations deteriorated, US monetary policy tightened more than expected, the epidemic in China spread sharply, and the external market fell sharply.
