Key investment points:
The economic growth rate in the fourth quarter was better than expected, but the pressure of steady growth remains
Economic growth was better than expected, but the pressure for steady growth remains. The constant price of GDP in the fourth quarter of 2021 was 4.0% year-on-year, which was better than the consensus expectation of wind of 3.8%. The average growth rate in the two years was 5.1%, which was better than 4.9% in the third quarter. We believe that the main reason for the better than expected GDP growth in the fourth quarter is that industrial production has gradually returned to normal from power and production restriction. In addition, the high export boom has not only contributed to the surplus, but also played a certain driving role in production. Manufacturing investment still maintains a high level, but compared with that, domestic demand is still weak, and the pressure of economic growth in the first quarter of 2022 still exists, Measures to stabilize growth will continue.
Industrial production continued to recover. In December 2021, the industrial added value rose to 4.3% year-on-year, the previous value was 3.8%, the average growth rate in two years was 5.8%, and the previous value was 5.4%. From the month on month perspective, although the month on month growth rate of 0.42% in December was slightly weaker than that in the same period of previous years, it was the highest since the second half of the year. Exports still play a significant role in driving production. The export delivery value in December was 1.49 trillion yuan, 15.5% year-on-year, higher than the average growth rate of 13.7% in the second half of the year and 12.7% in the two years.
The growth rate of fixed asset investment is still weak. From the cumulative year-on-year perspective, the growth rate of fixed asset investment in December continued to decline by 0.3 percentage points to 4.9%, with an average growth of 3.9% in two years, which was the same as the previous value, both of which were significantly lower than the level before the epidemic. Structurally, in December, infrastructure investment rebounded to around 0%, manufacturing investment remained strong, and real estate investment was still under great downward pressure.
Optional consumption drag. In December, the total retail sales of social consumer goods fell to 1.7% year-on-year, the previous value was 3.9%, the average growth rate in two years was 3.1%, and the previous value was 4.4%. The actual year-on-year growth was negative, and the month on month growth rate was negative again after July, which was significantly weaker than that in the same period of previous years. Affected by the epidemic, catering revenue has maintained negative growth for two consecutive months. The growth rate of optional consumption is relatively low, while the growth rate of mandatory consumption such as daily necessities is relatively high. At the same time, the growth rate of furniture and household appliances in the post real estate cycle industrial chain is lower, and automobile sales are still negative.
Overall, GDP growth in the fourth quarter slightly exceeded market expectations. However, from the economic data in December, investment and consumption are still weak, and the triple pressure on the economy still exists. This is also one of the reasons why the central bank chose to cut interest rates, reduce real costs and improve expectations. Affected by the drag of real estate and the disturbance of the epidemic situation, The economy may still face some downward pressure in the first quarter of 2022. We think there is still room for follow-up policies. It is likely that the economy will gradually stabilize and recover after the first quarter, showing a trend of low before high.
Interest rate cut boots landed, there may still be room for follow-up
On January 18, the central bank lowered the reverse repo and MLF interest rates by 10bp respectively. On January 17, the central bank launched 700 billion yuan of one-year MLF operation and 100 billion yuan of seven-day open market reverse repurchase operation. The bid winning interest rates were 2.85% and 2.10% respectively, both of which were 10 basis points lower than the previous period. On the same day, RMB 10 billion reverse repurchase and RMB 500 billion MLF expired.
\u3000\u30001. In terms of the range of interest rate cut, a single 10 bp interest rate cut slightly exceeded the market expectation. On January 20, LPR is expected to be reduced simultaneously. It is highly certain that LPR will be reduced by 10 BPs in one-year period. There are some differences between LPR over five years and 10 bps. It is considered that it is more likely to reduce 10 bps. From the real estate investment and sales data in December, real estate is still facing great downward pressure, It is necessary to reduce 10 bp to improve the real estate sales expectation to a certain extent. However, no matter whether the LPR over 5 years is reduced by 5 or 10 bp, the general direction of housing without speculation remains the same.
\u3000\u30002. From the perspective of MLF investment volume, the excess continued to be 200 billion yuan, and a net investment of 90 billion yuan in 7-day reverse repurchase. Near the Spring Festival, the market demand for funds is large. At the same time, it is superimposed on the front of this year’s special bond issuance, which requires the central bank to take care of the stability of market liquidity.
\u3000\u30003. In the future, monetary easing may continue. We believe that the pressure of steady growth facing the economy still exists. We need to maintain loose monetary policy to reduce bank costs, reduce the pressure on bank interest margin, transmit to the real economy and reduce financing costs. Historically, once the interest rate reduction cycle is opened, it is likely to be more than once, but this time it is under the pressure of the Federal Reserve to tighten monetary policy in advance. On the premise that it is still in the taper stage, the capital outflow pressure caused by the narrowing of interest rate spread is relatively small, so the central bank may still cut interest rates again in the first quarter.
\u3000\u30004. The interest rate cut directly benefits the bond market, while for the stock market, the interest rate cut also reduces the cost pressure of the real economy and helps to improve the market risk appetite.
The financing balance decreased. On January 14, the balance of A-share financing was 170.912 billion yuan, a month on month decrease of 4.321 billion yuan; The balance of margin trading was 1809.965 billion yuan, a decrease of 4.8 billion yuan month on month. The balance of financing minus securities lending was 1591.859 billion yuan, a month on month decrease of 3.842 billion yuan.
Net inflow of land stock connect and Hong Kong stock connect. On January 17, the net purchase turnover of land stock connect on that day was 1.707 billion yuan, including 54.933 billion yuan of purchase turnover and 53.226 billion yuan of sales turnover, with a cumulative net purchase turnover of 1649933 billion yuan. Hong Kong stock connect had a net purchase transaction of HK $1.456 billion on the same day, including a purchase transaction of HK $13.309 billion and a sale transaction of HK $11.852 billion, with a cumulative net purchase transaction of HK $2207.589 billion. Money market interest rates fell. On January 17, Bank Of Shanghai Co.Ltd(601229) inter-bank offered rate Shibor overnight interest rate was 2.1130%, down 9.60bp, Shibor one week was 2.1830%, down 3.00bp. The weighted interest rate of pledged repo of depository institutions was 2.0863% overnight, down 11.50bp and 2.1660% a week, down 4.08bp. The 10-year maturity yield of China national debt was 2.7860%, down 0.75bp.
US stocks closed and European stocks rose. On January 17, the Dow Jones Industrial Average closed at 35911.81 points, down 0.56%; The S & P 500 index closed at 4662.85 points, up 0.08%; The NASDAQ index closed at 14893.75, up 0.59%. European stock markets, French CAC index closed at 7201.64 points, up 0.82%; Germany DAX index closed at 15933.72 points, up 0.32%; The FTSE 100 index closed at 7611.23, up 0.91%. In the Asia Pacific market, the Nikkei index closed at 28333.52 points, up 0.74%; The Hang Seng Index closed at 24218.03, down 0.68%.
The dollar index rose. On January 17, the dollar index rose 0.10% to 95.2590. The euro fell 0.03% against the dollar to 1.1412. The dollar rose 0.36% against the yen to 114.6100. Sterling fell 0.20% against the dollar to 1.3651. The spot exchange rate of RMB against the US dollar closed at 6.3466, depreciating by 0.05%. The spot exchange rate of offshore RMB against the US dollar closed at 6.3512, up 0.11%. The central parity rate of RMB against the US dollar closed at 6.3599, up 0.12%.
Gold rose, crude oil rose and Futures Copper rose. On January 17, Comex gold futures rose 0.09% to close at US $1818.90/oz. WTI crude oil futures rose 0.57% to close at US $84.3/barrel. Brent crude oil futures rose 0.5% to close at US $86.49/barrel. COMEX copper futures rose 0.05% to close at US $4.4330/lb. LME copper three-month futures rose 0.26% to close at US $9757 / ton.
