article 丨Ming Ming Ming Bond Research Team
Report Key Points
Federal Fund rate upper limit and excess reserve interest rate spread further. The Federal Reserve's interest rate resolution stated that the excess reserve rate is set at 2.40%, which is in line with market expectations, but this 2.5% spread from the federal funds rate further expanded from 5BP to 10BP. This reflects the current pressure on the tightening of liquidity in the US financial market.
This time, it may be more important than doing it. Powell's speech is generally biased. First of all, the expression of neutral interest rates once again shows that the Fed rate hike is coming to an end. Previously, when was managing expectations in November, Powell believed that the federal funds rate was very close to the neutral rate (just below); at this press conference, Powell said that the Fed had reached the bottom end of the neutral rate range expectations. Other dovish aspects include believing that there are some risks in the future and believing that inflationary pressures are controllable: Powell mentioned the evidence of weakening economy includes sluggish growth overseas and volatility in financial markets, and the Federal Reserve is also focusing on key sexual risks including Brexit, Italy and the EU negotiate budget. However, Powell did not have a single dove to the end. In terms of monetary policy outlook, Powell still emphasizes uncertainty that the future path to rate hikes will depend on future economic conditions.
China-US monetary policy has gone astray: We believe that the December Fed interest rate meeting may be said to be more important than doing it. Due to the more early expectations management, the market's expectations for interest rate hikes in December have become stronger. Although the speeches of Fed officials have been relatively dovish since November, in order to avoid large fluctuations, the Fed chose to continue hikes in December. It is worth mentioning that although the meeting statement has not changed much compared to the previous one, Federal Reserve Chairman Powell's speech on neutral interest rates, inflation, risks and economic growth at the press conference was relatively dovish. Therefore, although interest rate hikes are actually dovish in the context of the Federal Reserve, the external pressure of the central bank to choose to cut interest rates on the eve of the Federal Reserve's interest rate hikes and set a targeted interest rate cut in the medium term loan facilities has actually weakened. Therefore, we insist that the targeted interest rate cut policy and the continued easing of subsequent monetary policies will open up space for interest rates to decline and maintain the 2019 10-year Treasury bond yield will achieve a 3.0% judgment.
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Beijing time on December 20, 3:00, Beijing time, the Federal Reserve announced the revision of the federal funds rate to the target range of 2.25%-2.50%. This is the fourth interest rate hike of the Federal Reserve this year, and the ninth time since this round of interest rate hike cycle began in December 2015. At the same time, this is also the first interest rate hike in the stock market fell since 1994. The dot chart of interest rate hikes shows that interest rate hikes are expected to be raised twice in 2019. Previously, according to CME's "Federal Observation", the probability of the Federal Reserve raising interest rates by 25BP to the range of 2.25%-2.50% in December this year is 72.3%, the probability of not raising interest rates in December is 27.7%, and the probability of raising interest rates by 25BP in January 2019 is 3.1%. What are the highlights of the interest meeting? What is the pace of subsequent interest rate hikes in the United States? What did Powell say at the press conference? Will domestic monetary policy be tightened? In this regard, we commented as follows:
Federal interest rate meeting results
Meeting content
Judging from the wording of the statement in December, there is not much change from the statement in November. In addition to rate hikes, the Federal Reserve believes that the unemployment rate has changed from a decline in November to a low level, which still conveys a tight labor situation. In terms of economic outlook, although it is believed that the risks of the economic outlook are roughly balanced, there was another turning point in December, and the statement believes that "however, we will continue to pay attention to global economic and financial progress and evaluate its impact on the economic outlook", which is also consistent with the Federal Reserve's downgradation of the U.S. economic growth prospects next year.
The Fed said the labor market continues to strengthen and economic activity has been growing at a strong rate. Average employment growth has been strong in recent months, and the unemployment rate remains low. Household spending continues to grow strongly, while growth in commercial fixed investment has slowed from rapid growth earlier this year. This time, the Fed's statement is roughly the same as November's statement, which is consistent with the previous affirmative attitude towards the economy, but the attitude towards future interest rate hikes has softened to a certain extent. Based on data over 12 months, the overall inflation rate and inflation rate for projects other than food and energy remains close to 2%. Overall, indicators of long-term inflation expectations have hardly changed. The Commission believes that the risks of the economic outlook are roughly balanced, but will continue to monitor global economic and financial developments and evaluate its impact on the economic outlook. Finally, to monetary policy, the Commission determined that some further increase in the federal funds rate target range would be consistent with continued expansion of economic activity, strong labor market conditions and inflation near the Commission's symmetrical 2% target over the medium term. In determining the timing and scale of future adjustments to the scope of the federal funds rate target, the Commission will assess the achieved and expected economic conditions associated with its maximum employment target and its symmetric 2% inflation target. The assessment will include the employment market environment, inflation pressure indicators, inflation expectations, financial data and changes in the international situation.
In terms of economic forecasts, the Federal Reserve lowered its economic growth expectations for next year, and the ECB last week also lowered its GDP growth expectations, reflecting that the global economy is facing a decline in economic growth. The Federal Reserve has mainly lowered its growth expectations for next year, and it expects the U.S. real GDP to grow by 3.0% in 2018, which is 3.1% in September; the U.S. real GDP to grow by 2.3% in 2019, while the forecast in September is 2.5%; the U.S. real GDP to grow by 2.0% in 2020, which is consistent with the September forecast. The Fed's forecast for inflation remained basically stable. For example, the Fed's PCE for the United States in 2020 was 2.1% (also 2.1% in September); the U.S. core PCE in 2020 was 2.0% (2.1% in September), but it is still at the Fed's target value. In addition, the Federal Reserve expects the labor market to continue to be tight, with the Federal Reserve expecting the U.S. unemployment rate to be 3.5% at the end of 2019 (no change from September); the U.S. unemployment rate to be 3.6% at the end of 2020 (the forecast was 3.5% in September, slightly higher).
In addition, the median forecast of Fed officials this time shows that the federal funds rate is expected to be 2.375% (the previous time is expected to be 2.375%) at the end of 2018, the federal funds rate is expected to be 2.875% (the previous time is expected to be 3.125%) at the end of 2020, the federal funds rate is expected to be 3.125% (the previous time is expected to be 3.375%) at the end of 2021, and the federal funds rate is expected to be 3.125%, (the previous time is expected to be 3.375%).
dot chart, the current Fed's vote committee shows that the number of interest rate hikes will fall three times next year to two. Among them, some of the Eagle Card Ticket Committees are worth paying attention to.In September, there were 9 voters who believed that there would still be three or more interest rate hikes in 2019 after the interest rate hikes in December. There were only five people at the moment, and there was no voter who believed that the interest rate hikes would be raised more than three times. This means that the hawks and neutral officials of the Federal Reserve have lowered their forecasts for the number of interest rate hikes next year.
2. The spread between the upper limit of the federal funds rate and the excess reserves further expanded
This Federal Reserve interest rate resolution stated: The setting of the excess reserve interest rate is 2.40%, which is in line with market expectations, but this 2.5% spread compared with the federal funds rate further expanded from 5BP to 10BP. This reflects the current pressure on the tightening of liquidity in the US financial market. We have mentioned in the previous balance sheet reduction report and the top ten financial market outlook that from the perspective of liquidity in the US market, the excess reserve rate (IOER) will face further downward pressure in the future, that is, the interest rate spread with the federal funds rate upper limit will further expand from 5BP. The Fed almost confirmed a rate hike in December this year, and the IOER hike is expected to be less than the federal funds rate cap again. The most extreme case is that as liquidity is reduced, the IOER is further downgraded until it returns to the lower limit of the interest rate corridor. However, this extreme situation may not happen. Therefore, the past Fed's monetary policy operations and the maintenance of interest rate corridors were based on the scarcity of reserves. If the current reserve of nearly two trillion US dollars recovers to nearly zero, it may have a huge impact on liquidity. However, whether it will recover or not, the IOER upwards reflect that the liquidity situation is tightening and further increases financing costs.
Powell's speech also mentioned the issue of liquidity. First, Powell mentioned that he noticed the tightening of financial conditions, which seemed to echo the Twitter of Trump on December 18, "I hope that the Fed people will read today's editorials of the Wall Street Journal before making a wrong decision again. Don't make the market more liquid." In addition, Powell also stated that balance sheet reduction is not a major market interference factor because the scale of balance sheet reduction is small; however, the supply of treasury bonds has pushed up short-term interest rates and repurchase rates, which expresses the reason for the flatness of the yield curve, and explains one of the reasons affecting liquidity.
First of all, in the expression of neutral interest rates, once again shows that the Fed's interest rate hike is coming to an end. Previously, when managing expectations in November, Powell believed that the federal funds rate was very close to the neutral rate (just below); at this press conference, Powell said that the Fed had reached the bottom end of the neutral rate range expectations (have reached the bottom end of range).
Other dovish aspects include believing that there are some risks in the future and believing that inflationary pressure is controllable: Powell mentioned that evidence of weakening economy includes sluggish growth overseas and volatility in financial markets, and the Federal Reserve is also paying attention to key sexual risks including Brexit, Italy and the EU negotiate budget. In terms of inflation, Powell believes that the U.S. inflation is more suppressed than expected as the end of the year. In addition, it also mentioned that the inflation trend has allowed the Federal Reserve to remain patient in the future. We believe this shows that the Federal Reserve will no longer be in a hurry to raise interest rates in the future unless there is great upward pressure on inflation. At the same time, while affirming the gradual growth of wages, Powell expressed his view that he was not worried about the tight labor force, because generally speaking, as one of the two goals of the Federal Reserve, the tight labor market will lead to the Federal Reserve's tightening efforts. However, Powell believes that wage growth does not need to be inflationary; at the same time, the economy has shown that labor participation rates can rise further. We believe that the subtext of the Fed is that the tight labor force will not be transmitted to inflationary pressure through the Phillips curve, and the tight labor market itself will also be alleviated as the labor shortage eases.
However, Powell did not have a single dove to the end. In terms of monetary policy outlook, Powell still emphasizes uncertainty that the future path to rate hikes will depend on future economic conditions. Powell said that uncertainty about policy paths and interest rate hikes are quite high; the current outlook is expected to grow strongly, and the unemployment rate will decline, but if there is a change, the Fed will also adjust its path.In terms of balance sheet shrinkage, Powell believes that balance sheet shrinkage is not a major market interference factor, and this is not dovish. In fact, as for the balance sheet reduction, first, it is to have more ammunition in response to the next crisis, second, it also helps to ease the flattening of the yield curve, third, because the current balance sheet reduction plan is the one with the higher maturity scale and the upper limit of the balance sheet reduction, and as the maturity scale gradually decreases, the balance sheet reduction will also gradually decrease, so in the short term, the possibility of pressing the pause button for the balance sheet reduction is not high.
U.S. economic fundamentals: The current labor market is tight, consumption growth is still strong, real estate data declines
At the Fed's December interest rate meeting, the Fed said that the labor market continues to strengthen and economic activity has been growing at a strong rate. Average employment growth has been strong in recent months, and the unemployment rate remains low. Household spending continues to grow strongly, while growth in commercial fixed investment has slowed from rapid growth earlier this year.
In terms of employment, the number of new non-agricultural employment in November was 155,000, far lower than expected and previous values. The private sector added 161,000 non-farm employment, and the employment market was significantly lower than expected. In terms of income growth, the average hourly wage in the United States increased by 3.1% year-on-year in November, in line with expectations. Rising wages is beneficial to consumption. In terms of unemployment, the U.S. unemployment rate remained at a low of 3.7% in November, the lowest level since 1969. The U.S. labor force participation rate in November was 62.9%, equaling expectations and previous values. Overall, the unemployment rate remained low, wages rose steadily, and the number of employed people was significantly lower than expected. U.S. employment growth slowed in November, mainly due to a harsh climate and a shortage of technology-based talents, which could intensify concerns about the outlook for the U.S. economy and support the Fed's expectations of a decrease in interest rate hikes in 2019. The latest data released by the United States shows that the number of people applying for unemployment benefits in the United States for the first time in a single week on December 13 is worth 206,000 today, with an expected 226,000, and the previous value is 231,000, which is lower than the expected and the previous value. The number of people applying for unemployment benefits in the United States for the first time in a single week on December 6 is worth 231,000 today, 225,000 higher than expected and 234,000 lower than the previous value.
In terms of inflation, the United States' PCE increased by 1.8% year-on-year in October, the lowest growth rate since February. The year-on-year growth rate of the US core price index in October is 1.8% today, expected to be 1.9% and the previous value is 2%. The United States' PCE value in October was 0.6% month-on-month, and expected to be 0.4%. The United States' personal income in October was 0.5% compared with the current month-on-month, and expected to be 0.4%. The actual PCE in the United States in October was 0.4% month-on-month, and expected to be 0.2%. In the third quarter, the personal income of U.S. residents in US dollars increased by $180.4 billion, while in the second quarter, it increased by $180.7 billion, basically the same, creating support conditions for personal consumption expenditure. The US November CPI met expectations. The US November CPI was 2.2% year-on-year, and the core CPI was 2.2% year-on-year, in line with expectations. Previously, CPI in November increased by 2.2% year-on-year; core CPI increased by 2.1% year-on-year, and CPI in November was lower than the previous value, mainly due to the impact of the plummeting oil price. US PPI rose slightly in November, with US PPI rising 0.1% month-on-month in November, higher than expected by 0%, or a sharp decline in energy product prices due to rising service costs. November's PPI rose 2.5% year-on-year, in line with expectations, lower than the previous value of 2.9. In terms of consumption, the United States' retail sales in November are 0.2% from the current month-on-month, expected to be 0.1%, and the previous value is 0.8%. As households purchase electronics, furniture and other products, the upward trend of U.S. consumer spending in November has eased people's concerns about a sharp decline in economic outlook. The total number of new homes started in the United States in November was 1.256 million, with an expected number of 1.228 million, compared with the previous value of 1.228 million, up from the previous month. The new home sales index in the United States in October is worth 544,000, with an expected 575,000 units, and the previous value is 553,000. The new legislation on the Federal Reserve's interest rate hike and U.S. tax deductions have directly affected consumers' ability to pay for home purchases. The U.S. residents' deposit rate fell in the third quarter, with personal savings of $999.6 billion in the third quarter and $105.43 billion in the second quarter. The personal savings rate in the third quarter was 6.4%, while the second quarter was 6.8%, which means that while residents' income is basically unchanged, residents' willingness to deposit declines and consumption increases. In terms of
GDP, the annualized quarterly real GDP in the third quarter was 3.5%, expected to be 3.3%, and the previous value was 4.2%, better than expected but not as high as the previous value, setting the best performance in the same period since 2015. Previously, the annualized quarter-on-month growth rate of US real GDP in the second quarter was revised up to 4.2%, expected to be 4%, and the initial value was 4.1%.
In addition, the United States' industrial output in November is 0.6% month-on-month, expected to be 0.3%, and the previous value is 0.1%. The initial value of the US Markit service industry PMI in December was 53.4, lower than the previous value of 54.7. The US ISM non-manufacturing index rose to 60.7 higher than expected in November. The American Supply Management Association pointed out that the US non-manufacturing industry continued to expand at a slightly faster rate, reflecting strong growth, but concerns about employment resources and the impact of tariffs continued. The final value of Markit service industry PMI in December was 53.4, lower than the forecast of 54.6. The US November ISM Manufacturing Index is now worth 59.3, which is lower than expected by 57.5. Although the manufacturing industry is still in an expansionary state, its growth rate has stabilized, and the growth rate in the future may be under pressure to continue to slow down.
U.S. market performance
After the resolution was announced, the US dollar index once rose to a day's high of 97.082, breaking through the 97 mark, rising more than 0.13% in the day, but it has since given up its gains and is currently up about 0.04%. The 10-year U.S. Treasury yield also rose first and then fell, once rising to 2.855%, but then fell below 2.80%, and once fell to 2.76% after the press conference. The three major U.S. stock indexes quickly turned down, with the Dow falling 1.49%, the Nasdaq falling 2.17% and falling below 6,700 points, the S&P 500 falling 1.54%; Morgan Stanley fell about 1.48%, Bank of America fell nearly 1.19%, Goldman Sachs fell to 1.31%, and Wells Fargo fell 1.83%.
China and the United States have different monetary policies and the same outcome
We believe that the Fed's interest rate agenda meeting in December may be more important than doing it. Due to the more early expectations management, the market's expectations for interest rate hikes in December have become stronger. Although the speeches of Fed officials have been relatively dovish since November, in order to avoid large fluctuations, the Fed chose to continue hikes in December. It is worth mentioning that although the meeting statement has not changed much from the previous one, Federal Reserve Chairman Powell's speech on neutral interest rates, inflation, risks and economic growth at the press conference was relatively dovish. For example, after Powell mentioned that the Fed had reached the bottom of the neutral interest rate range expectations, the yield on the 2-year Treasury bond fell from about 2.67% to 2.63%. Therefore, although interest rate hikes are actually dovish in the context of the Federal Reserve, the external pressure of the People's Bank of China to cut interest rates on the eve of the Federal Reserve's interest rate hikes and setting a set of medium-term lending facilities has actually weakened.
Judging from the targeted interest rate cut by the People's Bank of China, there is still a general decline after the targeted interest rate cut. At present, the downward pressure on the domestic economy is still relatively large, and financing costs must be actually reduced through various policies, so interest rate cuts are the most direct and effective tool. China-US monetary policies have clearly gone astray. We have emphasized before that a country's monetary policy serves its own economy and it is impossible to sacrifice its own economy to meet other countries' policies. Moreover, although the Federal Reserve raised interest rates last night, the U.S. bond interest rates fell sharply and the U.S. stocks also fell sharply. It can be seen that the US economy itself has insufficient motivation and has not brought great external pressure to us to relax monetary policy. In fact, the Fed has slowed down and the differences are short-lived. Next year, a new round of global easing is coming. Therefore, we insist that the targeted interest rate cut policy and the continued easing of subsequent monetary policies will open up space for interest rates to decline, and maintain the 2019 10-year Treasury bond yield to achieve a judgment that 3.0%.
Market Review
Interest rate bond
2018 On December 19, 2018, the interbank pledge repurchase weighted rate generally rose, with overnight, 7 days, 14 days, 21 days and 1 month respectively changing by 4.35bps, -1.6bps, 16.51bps, 17bps and 125.75bps to 2.66%, 2.69%, 3.05%, 3.89% and 3.81%, respectively. The yield on treasury bond maturity fluctuated, with 21.50bps, -1.03bps, 0.05bps and -3.02bps respectively, to 2.70%, 2.92%, 3.06% and 3.34%. The Shanghai Composite Index closed down 1.05% to 2549.56, the Shenzhen Component Index closed down 1.48% to 7418.69, and the ChiNext Index closed down 1.90% to 1268.81.
On Wednesday, the central bank carried out a 40 billion yuan 7-day reverse repurchase operation and a 20 billion yuan 14-day reverse repurchase operation. No reverse repurchase matured on the same day, and the net liquidity injection was 60 billion yuan.
[Dynamic Monitoring of Liquidity] We track market liquidity and observe the "investment and collection" of liquidity since the beginning of 2017.In terms of incrementality, we calculate the total investment based on the scale of reverse repurchase, SLF, MLF and other central bank open market operations, treasury cash fixed deposits, etc.; in terms of reduction, we calculate the total daily liquidity based on the March 2018 comparison with the M0 in December 2016 by 438.88 billion yuan, the cumulative foreign exchange deposits decreased by 447.32 billion yuan, and the cumulative fiscal deposits increased by 556.24 billion yuan. It roughly estimates the liquidity of residents' cash withdrawals, foreign occupation declines and tax loss, and considering the maturity of open market operations, and calculate the total daily liquidity reduction. At the same time, we monitor the expiration of open market operations.
Credit bond
Market interest rate
December 19, bond yields rose in the short term. Among them, AAA's mid-ticket 1Y goes up 3BP, 3Y goes flat, and 5Y goes flat; AA's mid-ticket 1Y goes up 3BP, 3Y goes up 1BP, 5Y goes up 2BP; AA- mid-ticket 1Y goes up 3BP, 3Y goes up 1BP, 5Y goes up 2BP.
Rating Follow
(1) [Taicang Loucheng Hi-Tech Construction: Cancel the issuance of "18 Loucheng Hi-Tech MTN003"]
On December 19, Taicang Loucheng Hi-Tech Construction Co., Ltd. announced that due to the large fluctuations in market interest rates recently, the issuance of "18 Loucheng Hi-Tech MTN003" was cancelled. (Source: Announcement of Taicang Loucheng High-tech Construction Co., Ltd.)
Related bonds: 18 Loucheng High-tech MTN003
(2) [Chongqing Yuxing Construction Investment: Involved in major litigation]
On December 19, Chongqing Yuxing Construction Investment Co., Ltd. announced that it involved major litigation, and the judgment result showed that the company lost the case. The company's second-instance litigation involved was approximately RMB 13.92 million, accounting for 0.17% of the company's net assets at the end of 2017 and 7.00% of the company's net profit at the end of 2017; this lawsuit has not affected the company's debt repayment ability. The company will entrust the handling of the litigation risk, take various feasible measures, and make every effort to protect the rights and interests of investors, and ensure that the rights and interests of all investors are not damaged. (Source: Chongqing Yuxing Construction Investment Co., Ltd. Announcement)
Related Bonds: 18 Su Huihong MTN001
(3) [China Machinery Industry Group: Subsidiary Jinan Casting Forging Machinery Research Institute failed to repay the maturing debt of 285 million yuan]
On December 19, China Machinery Industry Group Co., Ltd. announced that as of the date of the announcement, the principal of the maturing debt of its subsidiary Jinan Casting Forging Machinery Research Institute Co., Ltd. failed to repay the total amount of maturing debt of 285 million yuan. The principal of the newly unpaid debts is RMB 110 million, including RMB 30 million in , Bank of China and RMB 80 million in Minsheng Bank. (Source: China Machinery Industry Group Co., Ltd. Announcement)
Related Bonds: 16 State Machine Bonds
(4) [Yinyi Co., Ltd.: Corporate Bonds have been suspended from the opening of the market on the morning of December 20]
On December 19, Yinyi Co., Ltd. announced that due to uncertainties in major matters, in order to avoid abnormal fluctuations in corporate bonds, the company applied to the Shenzhen Stock Exchange that the corporate bonds "15 Yinyi 01", "16 Yinyi 04", "16 Yinyi 05" and "16 Yinyi 07" have been suspended from the opening of the market on the morning of December 20. (Source: Announcement of Yinyi Co., Ltd.)
Related Bonds: 15 Yinyi 01, 16 Yinyi 04, 16 Yinyi 05, 16 Yinyi 07
(5) [ Beidahuang Agricultural Reclamation Group: The company's controlling shareholder and actual controller have changed]
On December 19, Heilongjiang Beidahuang Agricultural Reclamation Group announced that the company's controlling shareholder and actual controller have changed. (Source: Heilongjiang Beidahuang Agricultural Reclamation Group Announcement)
Related Bonds: 15 Beidahuang MTN002, 18 Beidahuang MTN002, 18 Beidahuang MTN001
(6) [Tianjin Entrepreneurship Environmental Protection Group: Changes in the company's directors]
On December 19, Tianjin Entrepreneurship Environmental Protection Group Co., Ltd. announced that the company's directors had changed. (Source: Announcement of Tianjin Chuangye Environmental Protection Group Co., Ltd.)
Related Bonds: 16 Jinchuang 01, 18 Jinchuang 01
(7) [Xuzhou Jiawang Urban Investment: Changes in personnel of legal representative, general manager, director, supervisor, etc.]
On December 19, Xuzhou Jiawang Urban Construction Investment Co., Ltd. announced that the personnel of legal representative, general manager, director, supervisor, etc. were changed.(Source: Xuzhou Jiawang Urban Construction Investment Co., Ltd. Announcement)
Related Bonds: 16 Jiawang Urban Investment Bonds/16 Jiawang Bonds
(8) [Sanxiang Impression: Senior Management Resignation]
On December 19, the board of directors received a resignation report by the director, general manager and board secretary Luo Xiaoxi . After resigning from the position of general manager and board secretary of the company, Luo Xiaoxi will continue to serve as the company's director, and will continue to serve as the legal representative and chairman of Guanyin Impression Art Development Co., Ltd. (Source: Sanxiang Impression Co., Ltd. Announcement)
Related Bonds: 16 Sanxiang Bonds
(9) [Hai'an Development Zone Construction Investment: Change the purpose of the funds raised by "18 Hai'an Kai Investment CP001"]
On December 19, Hai'an Development Zone Construction Investment Co., Ltd. announced that it would change the purpose of the funds raised. (Source: Hai'an Development Zone Construction Investment Co., Ltd. Announcement)
Related Bonds: 18 Hai'an Kaitou CP001
(10) [Cathay Pacific Leasing: Change the purpose of funds raised by "18 Cathay Pacific Leasing SCP006"]
On December 19, Cathay Pacific Leasing announced that it would change the purpose of funds raised by "18 Cathay Pacific Leasing SCP006". (Source: Cathay Leasing Co., Ltd. announcement)
related bonds: 18 Cathay Leasing SCP006
(11) [ Yingtan City Investment Company: Change the purpose of the funds raised by "18 Yingtan Investment CP001"]
On December 19, Yingtan City Investment Company announced that it would change the purpose of the funds raised by "18 Yingtan Investment CP001". (Source: Yingtan Investment Company Announcement)
Related Bonds: 18 Yingtan Investment CP001
(12) [Nanjing Jiangbei New City Investment: Change the purpose of funds raised by "18 Jiangbei New City MTN001"]
On December 19, Nanjing Jiangbei New City Investment Development Co., Ltd. announced that it would change the purpose of funds raised by "18 Jiangbei New City MTN001". (Source: Nanjing Jiangbei New City Investment Development Co., Ltd. Announcement)
Related Bonds: 18 Jiangbei New City MTN001
Convertible Bonds
Market Review
December 19, the convertible bond market closed at 81.89 points, up 0.03%, and the convertible bond index closed at 102.20 points, down 0.42%. 105 listed tradable convertible bonds, except for Tiehan convertible bonds suspended trading, Shengyi convertible bonds and Gree convertible bonds were sideways, 11 rose and 91 fell. Among them, Dingxin convertible bonds (3.81%), blue-label convertible bonds (0.52%), and Shenglu convertible bonds (0.45%) led the rise, Kangtai convertible bonds (-2.49%), Dilong convertible bonds (-2.14%), and Zhouming convertible bonds (-1.67%). In addition to the 105 convertible bond stocks, except for Tiehan Ecology suspended trading, Henghe Mold, Xinquan Co., Ltd., Shanghai Electric, Gree Real Estate , Xusheng Co., Ltd., and Zaisheng Technology, 8 rose and 90 fell. Among them, Dingxin Communications (6.39%), Shenglu Communications (4.08%), and Mengbaihe (1.97%) led the rise, while Kangtai Biological (-5.60%), Gujia Home Furnishing (-4.78%) and Boschke (-4.57%) led the decline.
Convertible Bond Market Weekly View
Last week, suppressed by underlying stocks, the CSI convertible bond index fell slightly, and beta returns at the individual bond level are still the core force of the market, and the related individual bonds in hot sectors performed well. In recent weekly reports, we have repeatedly discussed the relative cost-effectiveness of convertible bonds under two-way fluctuations in the market. The current trend has not changed significantly. We can continue to judge from neutral positions to positive and proactive strategies. Among them, the relevant targets of low prices and low valuations are still the key areas we are concerned about. Last week, the valuation of convertible bond stocks fell to the low level again against the backdrop of low stock market fluctuations. It is not difficult to find that with the recent increase in new listed targets, the endogenous structure of the market has shown a significant improvement trend. At the same time, the issuance rhythm of the primary market still maintained the previous acceleration trend, and the previously rare white horse stock-related targets have also poured into the market, and the distribution of individual securities industries has been further refined. The allocation value of convertible bonds, as a unique link in major assets, is gradually emerging. However, it is worth noting that from the issuance results, the enthusiasm for market participation of low-rated small-cap targets is still not high. Whether it is the overall wait-and-see sentiment of the market or the concerns about their post-listing liquidity have made investors more cautious about such targets. Therefore, it is expected that the recovery of market sentiment will be a slow process, and the continued decline in the previous benchmark interest rate has indirectly increased the opportunity cost of convertible bonds.On the other hand, the issuance stage of large-cap bank convertible bonds has also been updated. For bank convertible bonds with low underlying stock PB, they may choose to increase the comprehensive coupon when issuing, so it is a good choice for long-term allocation of funds. Back to the present, in the short term, elasticity is the core factor in choosing a bond, and position is the basic way to control risks; in the medium and long term, the potential space determined by price is more important. Overall, we still have a positive attitude towards the future convertible bond market, but the specific position still depends on the transmission efficiency of broad credit. In the short term, it is recommended to layout low-valuation targets and seize the low-price opportunities for newly listed individual bonds. In the medium and long term, the targets with low prices and premium rates are the most important. The specific targets are Dongcai convertible bonds, Sany convertible bonds, Tongkun convertible bonds, Gaoneng convertible bonds, Xusheng convertible bonds, Guozhen convertible bonds, Xinquan convertible bonds, Jingwang convertible bonds, Zhouming convertible bonds, Gujia convertible bonds and bank convertible bonds.
Risk warning: The performance of individual bond-related companies is lower than expected.
Stock market
convertible bond market
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