Since the beginning of the year, China's economy has experienced many twists and turns. First there was the conflict between Russia and Ukraine, and then there was the impact of the epidemic. The external monetary tightening of the Federal Reserve and the internal steady growth were lower than expected. The real estate and consumption expected to stabilize and recover have not seen substantial improvement for a long time, while the export and production originally thought to be highly resilient were rapidly under pressure at a sudden pace in April. Multiple factors superimposed resonance, and the capital market ushered in shock adjustment.
Looking back at the macroeconomic and capital market performance during this period, the main contradiction still falls in China.
At present, the market focuses on three issues: how to solve the supply chain problems in the short term, how to make efforts to stabilize growth measures in the year, and what is the orientation of follow-up industrial policies. The Politburo meeting gave substantive responses to the focus issues concerned by the market. In summary, there are four advantages.
First, it is conducive to production and export. In line with the purpose of "minimizing the impact of the epidemic on economic and social development", the follow-up policy level will actively ensure the smooth transportation and logistics and the stability of the supply chain. Exports and industrial production subject to supply chain constraints in April are expected to be repaired in May.
Second, it is conducive to the restoration of real estate. This Politburo meeting clearly affirmed that the local government has one policy for one city and one policy to loosen the real estate policy, which can be said to be the most positive statement of real estate policy under the framework of "real estate is not fried". The epidemic consumes part of local financial resources. Stabilizing real estate can stabilize local finance. Only when finance is sustainable can policies have enough space, and the economy can calmly face multiple challenges such as employment, growth and prices..
Third, favorable infrastructure investment. The meeting of the Political Bureau postponed the setting of infrastructure, which was positive, which was consistent with the meeting of the central financial and Economic Commission on April 26. This means that the policy orientation of infrastructure investment has changed, and it is no longer a "surplus" investment with disorderly expansion of implicit debt and low return. This also means that the constraint of large-scale infrastructure can be broken in the future, and the imagination of infrastructure investment expansion can be opened.
Fourth, it is beneficial to the Internet platform economy. Compared with this Politburo meeting and the central economic work conference in December last year, the economic tone of the Internet platform has changed significantly. Moreover, this meeting released the acceleration signal of policy promotion, suggesting that the policy uncertainty of Internet platform economy is about to fall.
Over the past period of time, we have witnessed the substantial depreciation of the RMB exchange rate and the return of the Shanghai composite index below 3000 points. It is believed that after the Politburo meeting actively sets the tone, market sentiment will improve significantly. In the follow-up, we will pay close attention to the specific implementation of the steady growth policy and the epidemic situation in China.
Risk tips: 1) inadequate understanding of the intention of the policy; 2) The epidemic development exceeded expectations; 3) Geopolitical risks exceeded expectations.
