I. adhere to dynamic zeroing and minimize the impact of the epidemic on the economy. The meeting stressed that "adhere to dynamic zeroing,... Minimize the impact of the epidemic on economic and social development... Stabilize the production safety situation and maintain the stability of the overall social situation". We believe that the policy of dynamic zeroing of the epidemic before the 20th National Congress will not change in general, but there will be marginal adjustments to stabilize the economy, specifically:
First, the isolation time is shortened. On April 11, the comprehensive group of the joint prevention and control mechanism of the State Council listed eight cities such as Shanghai, Suzhou and Guangzhou as pilot cities to partially loosen the isolation policy for one month, including the adjustment of entry isolation control measures from 14 + 7 to 10 + 7. If the epidemic situation in the pilot cities can be controlled after the isolation time is shortened, it is expected that the policy will be promoted from the pilot cities to the whole country, which will help to restore the flow of people.
Second, promote mutual recognition of logistics and national pass, give priority to the restoration of logistics and ensure the industrial chain and supply chain. In the early stage of the epidemic, some areas took "one size fits all" control measures to persuade the return of trucks from the cities where the medium and high-risk areas are located, resulting in difficulties in the passage of trucks and prominent logistics obstruction in some areas. On April 18, the national teleconference on ensuring the smooth flow of logistics and promoting the stability of the industrial chain and supply chain proposed that sufficient national unified passes should be issued and used, and the nucleic acid test results should be mutually recognized within 48 hours. The logistics industry is connected with production at one end and consumption at the other. It has priority in economic recovery. Making every effort to ensure smooth logistics will help reduce the negative impact on the economy. Third, ensure the operation of urban core functions and safe production. Under the epidemic situation, some enterprises shut down when the epidemic pressure is high. To ensure safe production, it is required to improve the accuracy and effectiveness of epidemic prevention and control. There can be no "simplified" and "one size fits all" treatment of shutdown in one region and field. Ensuring safe production is very important to ensure the operation of urban core functions.
II. Strive to achieve the expected objectives of the whole year, accelerate the implementation of policies, and reduce taxes and fees is the core
The meeting called for "achieving the expected objectives of economic and social development throughout the year and maintaining economic operation within a reasonable range". In terms of policy, it is required to "implement the determined policies and grasp the planning of incremental policy tools". Under the combined impact of the Centennial changes and the epidemic situation in the century, we believe that the need to stabilize the economy has increased, and we need to strengthen macro policies to meet new challenges. The Politburo meeting made it clear that the expected objectives at the beginning of the year have not been given up, and we need to strive to achieve them. In the arrangement of the central economic work meeting, we further clarify the implementation of existing policies and plan incremental policy tools, which will help to further hedge against negative impacts and achieve economic goals. At present, the implementation of the 2.5 trillion tax rebate and fee reduction policy under the disturbance of the epidemic is the key. The implementation of the 1.5 trillion tax rebate policy plays an important role in stabilizing enterprise cash flow and reducing operating pressure. The increment of the follow-up tax rebate and fee reduction policy may be in two aspects: the introduction of relief policies for regions with greater impact of the epidemic, and the increase of relief for aviation, social services, transportation, tourism, hotels, catering and other fields with greater impact.
III. make good use of various monetary policy tools and plan incremental tools
The meeting proposed to "make good use of all kinds of monetary policy tools. We should pay close attention to planning incremental policy tools and strengthen contingent regulation". We believe that there is still much room for subsequent monetary policy, and it is expected that interest rate reduction is still possible. Incremental tools are mainly new refinancing tools. The core purpose of the interest rate cut is to help enterprises rescue and reduce the financing cost of enterprises. Second, reducing the financing cost will also stimulate the loan demand of the real sector. After the central bank reduces the policy interest rate, the LPR will also decline. It is expected that the current period to May 16 is the window period for the central bank to cut the interest rate. Considering the interest rate increase of the Federal Reserve and other factors, the rate cut should not be too large. It is expected to cut the interest rate by about 10bp. We suggest that the balance of payments is more important than the exchange rate, At the end of March, the scale of foreign reserves was $3.19 trillion, which is still a margin of safety from the warning line of $3 trillion. The second quarter is an important observation window of the balance of payments, but it may not disturb the interest rate cut in the short term. Recently, the national Standing Committee and important meetings of the central bank have proposed a number of financial measures to support the real economy. The central bank has created scientific and technological innovation, inclusive pension refinancing, and proposed to increase refinancing in the field of transportation and logistics, support the development and use of coal and enhance energy storage. We believe that this year, the central bank will continue to adopt monetary policy operations similar to those after the epidemic in early 2020, promote credit extension by increasing the amount of refinancing, alleviate the impact of the epidemic Guarantee the main body of the market, and follow-up incremental tools focus on new refinancing.
IV. increase infrastructure construction and expand consumption, with domestic demand as the leading factor
The meeting called for "fully expanding domestic demand, giving play to the key role of effective investment and the driving role of consumption in the economic cycle, and comprehensively strengthening infrastructure construction". The Politburo meeting made it clear that we should continue to strive to achieve the expected goals at the beginning of the year, expand domestic demand is the key, and focus on promoting effective investment and consumption. Among them, we should comprehensively strengthen infrastructure construction, in line with the meeting of the China Finance Committee the day before yesterday, focus on strengthening network infrastructure, industrial upgrading infrastructure, urban and rural infrastructure, and national security infrastructure, and strengthen land, energy use The environmental impact assessment and other guarantees are helpful to the development of infrastructure, maintaining the stability of the economy and employment. We expect that the annual infrastructure investment (excluding power) is expected to exceed 7%, and Q3 is expected to maintain double-digit growth. In terms of consumption, the Politburo meeting called for giving full play to the traction and driving role of consumption in the economic cycle. Consumption is the key link and important engine for unblocking China's great cycle. In April, the national Standing Committee and the State Council Office issued clear guidelines on further releasing consumption potential and promoting the sustainable recovery of consumption, took multiple measures to promote the recovery of consumption, and put forward the support of helping enterprises to bail out and ensuring supply and stable prices on the basis of consumption promotion policies.
V. ensuring employment through market players
The Politburo meeting pointed out that "we should stabilize the market players and implement a package of relief and assistance policies for industries, small, medium-sized and micro enterprises and individual industrial and commercial households seriously affected by the epidemic". In March, the unemployment rate rose to 5.8%. In April, the epidemic situation was severe and the employment market continued to be under pressure. We believe that the focus of future work is to ensure employment by ensuring market players, actively introduce relief and assistance policies, give wage subsidies to enterprises, increase the return of unemployment insurance, alleviate the pressure of enterprise cash flow, and help enterprises pay wages without layoffs. On April 27, the national Standing Committee extended the phased social security policy to all difficult small, medium-sized and micro enterprises and individual industrial and commercial households affected by the epidemic. In the future, a series of relief and assistance policies will be introduced one after another.
Vi. real estate implements policies to support rigid demand and improvement demand due to the city, and optimizes the supervision of pre-sale funds
This Politburo meeting still emphasizes "no speculation in real estate", but the statement on real estate is more specific and positive than the previous central economic work conference. It clearly points out that "support all localities to improve real estate policies and support rigid and improved housing needs" is further strengthened compared with the previous statement of "meeting the reasonable housing needs of buyers", which is in line with our previous view. We expect that in the future, more first and second tier cities will usher in the relaxation of the second set of housing policies, and the purchase and loan restrictions are expected to be further relaxed and effectively boost real estate sales. In terms of the liquidity of real estate enterprises, the meeting of the Political Bureau sent a signal that the supervision of pre-sale funds of commercial housing is expected to be further relaxed in the future. Since Q4 of 2021, Guangzhou, Chengdu, Yantai, Nanjing and other cities have slightly relaxed the supervision of pre-sale funds, which is expected to usher in a larger relaxation within a reasonable range and improve the cash flow of real estate enterprises in the future.
VII. Ensure the smooth operation of the capital market and introduce measures to support the standardized development of the platform economy
In April, the meeting of the Political Bureau of the CPC Central Committee stressed that "we should promote the healthy development of the platform economy, complete the special rectification of the platform economy, implement normalized supervision, and introduce specific measures to support the standardized and healthy development of the platform economy.
”We believe that the biggest expectation difference lies in the implementation of standardized, transparent and predictable industry supervision on the policy side, and the attitude towards the platform economy has shifted from standardization to support. The current special rectification of the platform economy is approaching the end stage, and the industrial policy guidance of antitrust is not fully reformed. It is expected that in the coming period, the keynote of the decision-making level for the rectification of the platform economy is not to suppress and restrict, but to promote its healthy development.
In addition, we judge that the capital market ensures the smooth operation of the capital market from the issuing side and the capital side. First, steadily promote the reform of the stock registration system and open up the blocking points in the issuance link as soon as possible. The core is to build a predictable, full game and full competition market ecology and give full play to the functions of capital formation and resource allocation. Second, attract medium and long-term funds into the market. It is expected that the CSRC will speed up the introduction of relevant systems and rules for individual pension investment in public funds, and encourage and support social security, pension, trust, insurance and financial institutions to allocate more funds to equity assets. At the same time, more facilitation measures will be given to foreign investment to prevent foreign capital from moving out.
VIII. Major categories of assets are still optimistic about the direction of steady growth
The meeting set the tone for steady growth, dispelled concerns and stimulated confidence. We maintained our judgment on the steady growth direction of major assets. The monetary policy continues the combination of "wide currency + wide credit", and continues to be optimistic about the stable growth sectors, such as finance, real estate, construction and building materials. In the future, it will focus on the growth stock opportunities after the US bond yield peaked. For the fixed income market, it is expected that the yield of 10-year Treasury bonds will remain in the range of 2.7% - 2.9%, the peak in the second quarter will be 2.9%, and the Treasury bond yield curve will return to steepening. The platform economy was relatively depressed under the early antitrust measures, but the attitude towards the platform economy at this meeting changed from more norms to support, and was optimistic about the rebound opportunities brought by the marginal shift of regulatory policies.
Risk tip: the evolution of the epidemic again exceeded expectations and impacted the economic fundamentals; The implementation of the policy was less than expected.
