The policy support this time exceeds market expectations, and it is expected to support the capital market from both the fundamental and liquidity aspects.
The reserve requirement ratio for deposits is reduced by 0.5 percentage points, the interest rates on existing mortgages are lowered, and the minimum down payment ratio for mortgages is unified.
The creation of swaps for securities, funds, and insurance companies, the establishment of special re-lending, the formulation of "Guiding Opinions on Promoting Medium and Long-term Capital into the Market", the expansion of the reform of long-term investment in insurance funds, and the expansion of the pilot of financial asset investment companies under large commercial banks are all being studied... At the press conference held by the State Council Information Office on September 24, People's Bank of China Governor Pan Gongsheng, Director of the China Banking and Insurance Regulatory Commission Li Yunze, and Chairman of the China Securities Regulatory Commission Wu Qing introduced the financial support for high-quality economic development and announced a series of important measures.
Affected by a series of positive news, the A-share and Hong Kong stock markets turned red across the board that day.
The Shanghai Composite Index closed up 4.15% at 2863 points.
The Shenzhen Component Index rose by 4.36%, the ChiNext Index rose by 5.54%, and the Beijing Stock Exchange 50 rose by 3.23%.
Across the market, 5,165 stocks rose and 160 fell, with 98 hitting the daily limit.
In the Hong Kong stock market, the Hang Seng Index rose by 4.03%.
Morgan Asset Management believes that the continuous introduction of financial policies reflects a positive response to the current economic situation.
Measures such as lowering reserve requirements, guiding interest rate expectations, lowering interest rates on existing mortgages, and introducing new monetary policy tools to support the capital market aim to reduce the financing costs of the real economy, strengthen financial support for the real economy, and stabilize the capital market, providing strong support for high-quality economic development.
"The strength and content of this batch of policy packages from the central bank exceed expectations, and most of the incremental policies expected by the market have been responded to.
The loose monetary policy is likely to inject confidence into the market that has been weak for a long time, and it also reflects the urgency of the regulatory authorities' current policy of stable growth, and it is worth paying attention to the possibility of fiscal policy following monetary policy to increase the intensity."
Geng Jingyun, Chief Macro Analyst of Chuangjin Hengxin Fund, said.
The multi-measure support for the capital market policy package first comes from the central bank.
Pan Gongsheng announced three policies at the press conference: lowering the reserve requirement ratio and policy interest rates, and leading the market benchmark interest rates to fall; lowering the interest rates on existing mortgages and unifying the minimum down payment ratio for mortgages; creating new monetary policy tools to support the stable development of the stock market.
"We estimate that this policy (lowering the interest rate on existing housing loans) will benefit 50 million households and 150 million people, reducing the average annual interest expenditure of families by about 150 billion yuan, which is conducive to promoting the expansion of consumption and investment, and is also beneficial to reducing the behavior of repaying loans in advance, while also compressing the space for illegal replacement of existing housing loans, protecting the legitimate rights and interests of financial consumers, and maintaining the stable and healthy development of the real estate market."
Pan Gongsheng said.
Regarding the creation of new monetary policy tools, Pan Gongsheng said that the first is to create swaps for securities, funds, and insurance companies, supporting qualified securities, funds, and insurance companies to obtain liquidity from the central bank through asset pledge, this policy will greatly enhance the ability of institutions to obtain funds and increase their stock holdings.
The second is to create special re-lending for stock buybacks and increases, guiding banks to provide loans to listed companies and major shareholders, supporting stock buybacks and increases.
In addition, when talking about the creation of a stabilization fund, Pan Gongsheng said in response to reporters' questions that it is under study.
Wu Qing also announced at the meeting that the China Securities Regulatory Commission has taken multiple measures to promote medium and long-term capital into the market and promote a balance of investment and financing.
"By the end of August this year, the total holdings of A-shares by professional institutional investors such as equity funds, insurance funds, and various pension funds approached 15 trillion yuan, more than doubling from the beginning of 2019, and the proportion of A-shares increased from 17% to 22.2%."
At the same time, Wu Qing said that it should also be seen that the total amount of long-term capital in the capital market is still insufficient, the structure is not optimal, and the leading role is not fully played, and the institutional environment for "long-term money for long-term investment" has not yet been fully formed.
In order to further open up the pain points and blockages for medium and long-term capital to enter the market, the China Securities Regulatory Commission and other relevant departments have formulated and will issue the "Guiding Opinions on Promoting Medium and Long-term Capital into the Market", focusing on the goal of "more long-term money, longer long-term money, and better returns", and further promoting medium and long-term capital into the market.
Wu Qing said that the guiding opinions to be issued focus on three aspects: first, vigorously develop equity public funds and promote the public fund industry to steadily reduce comprehensive fees.
Second, improve the institutional environment for "long-term money for long-term investment", increase regulatory tolerance for equity investment of long-term capital, fully implement a three-year long-term assessment, remove institutional barriers affecting long-term investment of insurance funds, and promote insurance institutions to be steadfast value investors, providing stable long-term investment for the capital market.
The third is to continuously improve the capital market ecology.
A variety of measures to improve the quality and investment value of listed companies, improve the supporting institutional arrangements for institutional investors to participate in the governance of listed companies, and at the same time crack down on various illegal and irregular behaviors, shaping a good market ecology for long-term capital to "come, stay, and develop well".
Li Yunze also said that the scale of insurance funds is large, the term is long, and the source is stable, and it naturally has the attributes of patient capital, which will become an important value investor to support the healthy and sustained development of the capital market.
Li Yunze introduced the three measures to continue to support the healthy and stable development of the capital market: first, expand the reform pilot of long-term investment of insurance funds, support other qualified insurance institutions to set up private securities investment funds, and further increase investment in the capital market.
Second, supervise and guide insurance companies to optimize the assessment mechanism, encourage and guide insurance funds to carry out long-term equity investment.
The third is to encourage wealth management companies and trust companies to strengthen the construction of equity investment capabilities, issue more long-term equity products, actively participate in the capital market, and cultivate and expand patient capital through multiple channels.
On the same day, Wu Qing also introduced the key work of the China Securities Regulatory Commission.
He said that the next focus will be to enhance the inherent stability of the capital market, highlight the service to the real economy to rebound and develop well, highlight the protection of the legitimate rights and interests of small and medium investors, and resolutely crack down on illegal and irregular behaviors such as financial fraud and market manipulation.
Subsequently, the China Securities Regulatory Commission will successively introduce policy documents such as "Opinions on Deepening the Reform of the Listed Company M&A Restructuring Market" and guidelines for market value management of listed companies.
Under a series of policy packages, A-shares have ushered in a long-lost rise.
The Shanghai Composite Index closed up 4.15%, returning to 2800 points.
In terms of sectors, all sectors rose across the board, with daily consumption, finance, energy, and materials sectors leading the gains.
The concepts of securities firms, lithium batteries, optical modules, and resource stocks strengthened, with Kweichow Moutai (600519.SH) rising by 8.8%, CATL (300750.SZ) rising by 4.95%, East Money (300059.SZ) rising by 11.46%, and Foxconn (601138.SH) rising by 9.99%.
In the Hong Kong stock market, the Hang Seng Index also closed up by 4.03%, with the concepts of Chinese-funded securities firms and internet medical care leading the gains.
"Last week, the Fed's unexpected interest rate cut opened up room for domestic monetary policy adjustments in the later part of this year.
This time, the central bank announced a 50 basis point reserve requirement cut and related policy measures, reflecting the central bank's supportive monetary policy stance, while increasing the intensity of monetary policy regulation and improving the precision of monetary policy regulation, which is a natural move."
China Europe Fund Analysis, in the third and fourth quarters of this year, although the demand for incremental credit financing has cooled down, it is estimated that at least more than 1 trillion yuan of long-term liquidity is still needed to support.
This time, the central bank announced a 50 basis point comprehensive reserve requirement cut, providing about 1 trillion yuan of long-term liquidity to the financial market.
It effectively alleviated the abnormal state of tight capital and short-term interest rate curve inversion, providing effective support for the real economy.
Wanjia Fund believes that as incremental policies are accelerating the landing process, the possibility of achieving the 5% target for the whole year is increasing, and it is worth looking forward to incremental policies such as relaxing restrictions on first-tier cities and issuing more government bonds.
The reduction of the interest rate on existing mortgages has been implemented as expected, which is beneficial to expand consumption, a significant interest rate cut is beneficial to improve the cost-effectiveness of rent, and reducing the down payment ratio for the second house is beneficial to enhance the ability to buy a house, which is good for the real estate.
"The supply and demand situation of various industries has always been a focus of concern for the stock market.
The above policies are particularly beneficial to improve the supply and demand situation of the real estate and fixed asset investment-related industries, indirectly beneficial to the supply and demand situation of some consumer goods, and ultimately beneficial to promote the reversal of the market's weakness."
Bosera Fund Analysis.
The potential incremental funds mentioned at the press conference have become the highlight that the market is looking forward to.
The State Council Information Office meeting mentioned "creating swaps for securities funds and insurance, and special re-lending for stock buybacks and increases", many industry insiders believe that the funds obtained through this tool can only be used to invest in the stock market, which exceeds market expectations and also ignites the stock market.
"Both tools are directed to support the capital market, with initial scales of 500 billion yuan and 300 billion yuan respectively, and it is expected that there will be more increments later.
The actual implementation still needs to see the willingness of market entities to participate, but this does not prevent market entities from incorporating optimistic expectations into the stock price in advance.
Under the current weak liquidity background of A-shares, the entry of incremental funds is expected to have a positive supporting effect on A-shares."
Hai Futong Fund Analysis.
"Creating new monetary policy tools to support the stable development of the stock market, providing more incremental funds for the stock market, and the quota can be continuously increased according to the usage, and the creation of a stabilization fund is also under study.
This series of policies is beneficial to improve risk appetite and increase investor confidence."
Jing Shun Great Wall Investment Research Team believes.
Hua'an Fund Index and Quantitative Investment Department said that the support strength of this monetary policy exceeds market expectations and is expected to support the capital market from both the fundamental and liquidity aspects.
"The east wind of policy has arrived, and the rebound window for risk assets should be valued."
Gan Jingyun believes that the loose monetary policy and liquidity support tools in the stock market are expected to boost confidence in the equity market.
The reduction of existing mortgage interest rates to promote consumption and the bottoming out of real estate to support steady growth are worth paying attention to.
It is expected that growth expectations will rebound, and the equity market is expected to usher in a rebound window brought by the east wind of policy.
"Currently, the overall valuation level of A-shares is at a relatively low position in the past decade.
Against the background of the continuous recovery of the domestic economy, the Federal Reserve's interest rate cut has opened up space for domestic monetary policy.
Combined with the fiscal policy that may increase its intensity in the second half of the year, the issuance of 300 billion yuan of extra-long-term special treasury bonds, and the comprehensive launch of the 'two new' (new type of infrastructure construction and new type of urbanization construction) policy, the market is expected to stabilize and rebound."
Morgan Asset Management stated that the A-share market, especially the strategic emerging industries that represent new quality productivity, is standing at a new starting point of growth.
With the stable development of the capital market and the gradual improvement of investor confidence, it is expected to become an important force to promote the sustained growth of the economy.
At the industry level, Gan Jingyun suggests paying attention to the opportunities of upstream resources.
"For banks, the reduction of existing mortgages will reduce the bank's interest income.
However, from the speech of President Pan, the reduction of customer early repayments, the central bank's reserve requirement ratio cut, and the symmetrical downward adjustment of deposit interest rates, the impact of this interest rate adjustment on bank earnings is relatively neutral, maintaining the stability of the net interest margin.
For real estate, the bottoming out policy has brought a certain degree of emotional boost to the sector, but whether the real estate fundamentals can stabilize, we believe it still needs to be observed."
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