Key investment points:
Event: on January 20, the national interbank lending center authorized by the people's Bank of China announced that the quoted interest rate (LPR) of the loan market on January 20, 2022 was: 1-year LPR was 3.7%, down 10 basis points from the previous period, and more than 5-year LPR was 4.6%, down 5 basis points from the previous period.
Comments: we believe that the 5-year LPR reduction of 5bp reflects and strengthens the strategic direction of trusting the real estate market. On the one hand, this is consistent with historical experience. According to the public news, since the central bank decided to reform and improve the LPR formation mechanism in August 19, based on the relationship between the change of LPR caused by the change of MLF price, the change range of LPR in one-year period is consistent with that of MLF, and the change range of LPR in five-year period is generally half of that of MLF. On the other hand, if the five-year LPR is reduced by 10bp or not, it will cause great interference to the market expectation. If the 5-year LPR is not lowered, the market will mistakenly think that the policy is still a "strike hard" attitude towards real estate; If the five-year LPR is reduced by 10bp, it will make the micro market over interpret the policy and trigger speculation about the significant relaxation of the real estate industry, which is not conducive to the establishment of the long-term mechanism of the real estate market and the general policy of "housing without speculation".
Risk tip: China's economic downturn exceeded expectations; The epidemic evolution exceeded expectations.
