Here is the English translation of the provided text: **Economic Observer Network: A Day in the Life of Reporter Hong Xiaotang.
September 24, 2024.
** The State Council Information Office held a press conference on the financial support for high-quality economic development.
The People's Bank of China, the Financial Regulatory Administration, and the China Securities Regulatory Commission introduced the financial support for high-quality economic development and answered questions from journalists.
At this press conference, several major policies were introduced simultaneously, involving hot topics such as macroeconomic control policies, capital market reforms, and financial regulation, which attracted widespread attention from the market.
Along with the release of multiple stimulus policies, the A-share market rose across the board.
By the close, the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index rose by 4.15%, 4.36%, and 5.54% respectively.
Many interviewed institutions and financial practitioners believe that the new policy combination represents a warming policy attitude, improving market sentiment through a package of stimulus policies and enhancing risk appetite.
The introduction of reserve requirement ratio cuts, interest rate cuts, and structural policies will provide more ample liquidity support for the market, helping to alleviate funding pressure and stabilize market confidence.
Boosting the market, the policies released today mainly involve five aspects: First, the reserve requirement ratio was recently reduced by 0.5 percentage points, and it may be further reduced by 0.25 to 0.5 percentage points depending on the situation within the year; Second, the 7-day reverse repo operation rate (main policy rate) was reduced by 0.2 percentage points; Third, commercial banks were guided to reduce the existing housing loan interest rates to near the newly issued housing loan interest rates, with an expected average reduction of about 0.5 percentage points; Fourth, the minimum down payment ratio for second-home loans at the national level was reduced from 25% to 15%; Fifth, the creation of new monetary policy tools to support the stable development of the stock market.
The unexpected policies one after another have ignited the enthusiasm of market funds to do more.
The A-share market traded a total of 974.76 billion yuan today, with more than 5,100 stocks rising, among which the Shanghai Composite Index rose by 114 points, the largest single-day increase in more than four years.
By the close, the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index rose by 4.15%, 4.36%, and 5.54% respectively.
Financial institution practitioners are all busy digesting and analyzing the changes and imagination space brought to the market by the new policies.
"This press conference is full of sincerity, aiming to promote a virtuous cycle of economic growth through the demand side," said Zhang Yongzhi, Deputy General Manager of the Fixed Income Department of Hua Shang Fund, the central bank announced that it will reduce the reserve requirement ratio by 0.5 percentage points in the near future, providing about 1 trillion yuan of long-term liquidity funds to the financial market, fully providing medium and long-term liquidity funds to support economic development, which is beneficial to comprehensively reduce the financing costs of real enterprises; the central bank has significantly reduced the existing housing loan interest rates, which is helpful to reduce the debt costs of residents, alleviate the credit contraction of early repayment of loans, and at the same time, combined with the demand policy of reducing the down payment ratio of housing loans, while stabilizing the existing stock, it also increases the demand for residents to buy new houses, and the economic cycle is expected to be further opened up.
Pu Yin An Sheng believes that the policy tools introduced this time are diverse, using a combination of various tools, and jointly promoting the high-quality development of the economy and the capital market.
Among them, the two major innovative tools of institutional swap facilities and special re-lending for stock buybacks are of great significance, and are expected to greatly enhance the ability of institutions to obtain funds and increase their stock holding capacity, boosting the performance of the A-share market.
Hong Li Fund believes that although the current macroeconomic fundamentals still face certain downward pressures, the policy attitude has clearly reflected the care for the market.
It is expected that during the policy window period, the valuation level, activity level, and risk appetite of the capital market are expected to usher in a phased repair, but the sustainability of the rebound still needs to continue to track whether there will be further increases in fiscal, consumption, real estate and other related policies, and at the same time, it is also necessary to observe the changes in the economic fundamentals.
Fu Guo Fund said that the concentrated announcement of this time has formed a combination of punches, and the effect is expected to be greater than the sum of single policies, which is beneficial to the stabilization and recovery of the domestic economy.
In terms of the equity market, the improvement of the fundamentals combined with the abundance of funds (reserve requirement ratio cut, interest rate cut, overseas capital inflow, long-term stable funds entering the market) may usher in a relatively strong improvement, and the Hong Kong stock market is expected to benefit more.
In terms of the bond market, the relatively loose monetary policy will still form a boost.
A bank-funded public offering research and investment person said that overall, the new policy combination represents a warming policy attitude, and it is not difficult to see from the content of the meeting that policies will be gradually introduced, which is also the most important factor for the improvement of market risk appetite.
Preliminary analysis shows that the central bank has enhanced the liquidity of the market through a combination of reserve requirement ratio cuts, interest rate cuts, and new monetary policy tools, but the inflection point of the fundamentals still needs to be patiently waited for, and the confidence of the real economy still needs to be gradually boosted.
"As October approaches the Politburo meeting, the market's wait-and-see sentiment on fiscal policy is strengthening.
In terms of real estate, the reduction of housing loan interest rates and the unification of the minimum down payment ratio for housing loans still need to observe the actual stimulation of real estate sales; regarding the central bank's support for real estate inventory collection, the constraint still lies in the expected return of the project.
Under the background of strict control of hidden debts, fiscal appropriations will be stricter, and the scarcity of high-quality projects is the fundamental reason for the difficulty in accelerating the issuance of special bonds this year, and the actual landing effect still needs to be observed."
The aforementioned research and investment person further believes that looking at the market, the stock market will enter a short-term upward moderate growth stage, and the industry that has been oversold before will usher in a chance to catch up, in terms of style, the advantage of small caps is gradually obvious, and the growth style still has an advantage, and the Hong Kong stock market will be more elastic.
For long-term bonds, the expectation of interest rate cuts has been running for a long time, and the landing of good news plus the uncertainty of subsequent policies, the short-term market may enter a consolidation stage.
After the "October 1st" holiday, it is still necessary to observe the situation of the overseas election and geopolitical risks, and the RMB exchange rate is expected to further rise.
Opportunities in the market?
For the impact and benefits brought by the introduction of multiple policies to the future market trend, many industry insiders believe that as subsequent policies continue to be introduced, the market rebound is expected to continue, and the valuation repair of related varieties can be expected.
However, some market people are worried that the current equity market contains more pessimistic expectations, and there is still a lot of uncertainty.
In the view of Hua An Fund, the configuration value of the equity market is obvious, looking for investment opportunities in technological innovation, dividends, domestic demand consumption, and going abroad.
Overall, measures to support the economy and stabilize the capital market are helpful to boost investor confidence.
The current equity market contains more pessimistic expectations, and the risk premium level is one standard deviation higher than the historical average, and the configuration cost-effectiveness of the equity market is relatively high.
"Specifically speaking, there are still investment opportunities in the directions of technological innovation, dividends, and going abroad.
The development of industries such as the digital economy, artificial intelligence, and semiconductors will continue to help high-quality development.
The buyback policy is beneficial to leading companies with stable operations, certain growth, and dividend returns.
In the Hong Kong market, Internet platform companies with domestic demand competitiveness, and in the A-share market, industries such as automobiles, home appliances, and service consumption industries that benefit from domestic demand policies are worth paying attention to.
The wave of intelligence is accelerating the upgrade and going abroad of China's automobile, machinery, and other manufacturing industries."
Hua An Fund further stated.
ICBC Credit Suisse Fund believes that the main contradiction in the current market lies in the expectation of domestic economic growth.
This policy combination is expected to reduce the opportunity costs of enterprises and residents, while introducing incremental funds into the market, which is expected to promote the stock market's repair rebound.
In addition, the direction of overseas liquidity improvement is clear, and it may also provide a good foundation for the market's bottoming out and rebounding.
Hong Li Fund stated that from the perspective of policy introduction, specific measures such as interest rate cuts, reserve requirement ratio cuts, real estate, and capital markets are more beneficial to the economic cyclical sectors that have undergone significant valuation adjustments due to the decline in economic fundamentals, such as finance, real estate chains, consumption, some bulk commodities, and Hong Kong's Hang Seng Technology varieties.
As subsequent policies continue to be introduced, the market rebound is expected to continue, and the valuation repair of related varieties can be expected.
At the same time, it should be noted that there is still a lot of uncertainty, such as the strength of domestic economic fundamentals, changes in private sector expectations, policy shocks after the overseas election, and fluctuations in overseas geopolitical conflicts.
The market reversal still needs to continue to observe more factors at home and abroad.
The aforementioned public offering research and investment person said that looking at the market, the stock market will enter a short-term upward moderate growth stage, and the industry that has been oversold before will usher in a chance to catch up, in terms of style, the advantage of small caps is gradually obvious, and the growth style still has an advantage, and the Hong Kong stock market will be more elastic.
For long-term bonds, the expectation of interest rate cuts has been running for a long time, and the landing of good news plus the uncertainty of subsequent policies, the short-term market may enter a consolidation stage.
After the "October 1st" holiday, it is still necessary to observe the situation of the overseas election and geopolitical risks, and the RMB exchange rate is expected to further rise.
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