After a week of collapse and declines in global stock markets, successive major positive news came this Friday (March 13)!
First of all, the market has been looking forward to for a long time to reduce the reserve requirement ratio has finally arrived!
htmlOn the evening of March 13, according to the central bank's website, in order to support the development of the real economy and reduce the actual cost of social financing, the People's Bank of China decided to implement a targeted reserve requirement ratio cut on inclusive finance on March 16, 2020, and targeted reserve requirement ratio cuts by 0.5 to 1 percentage point for banks that meet the assessment standards. This targeted reserve requirement cut released a total of 550 billion yuan of long-term funds.The central bank also issued a written speech by the relevant person in charge:
Question: How can this targeted reserve requirement ratio cut support the development of the real economy?
Answer: This targeted reserve requirement ratio cut releases 550 billion yuan of long-term funds, of which 400 billion yuan of long-term funds were released for banks that meet the assessment standards for targeted reserve requirement ratio cuts in inclusive finance, and 150 billion yuan of long-term funds were released for joint-stock commercial bank that meet the conditions. This targeted reserve requirement ratio cut releases long-term funds effectively increase the stable source of funds for banks to support the real economy, and can directly reduce the interest payment costs of relevant banks by about 8.5 billion yuan each year. Through bank transmission, it is conducive to promoting the reduction of the actual interest rates for loans of small and micro enterprises and directly supporting the real economy. This targeted reserve requirement ratio cut takes into account both active promotion and post-incentives, and the use of market-oriented reform methods to clear monetary policy transmission is conducive to stimulating the vitality of market entities, further giving full play to the decisive role of the market in resource allocation, and supporting the development of the real economy.
Question: What is the specific content of this targeted reserve requirement ratio cut in inclusive finance?
Answer: People's Bank of China has established an annual assessment system for targeted reserve requirement reduction in inclusive finance since 2018, and 0.5 percentage points or 1.5 percentage points discounts for large and medium-sized commercial banks in the field of inclusive finance with loans reaching a certain proportion. Loans in the field of inclusive finance include production and operation loans for farmers, consumer loans for registered poor people, student loans, entrepreneurial guarantee loans, business loans for individual industrial and commercial households, business loans for small and micro business owners, small business loans with a single household credit of less than 10 million, and micro enterprise loans with a single household credit of less than 10 million. The assessment targets include large banks, joint-stock banks, city commercial banks, larger rural commercial banks and foreign-funded banks. Recently, the People's Bank of China completed the 2019 annual assessment. Some banks that met the standard changed from having no reserve ratio discount to getting a 0.5 percentage point reserve ratio discount, while others changed from having a 0.5 percentage point discount to getting a 1.5 percentage point discount. Overall, these banks that met the standard reduced the reserve requirement ratio by 0.5 to 1 percentage point.
Question: What are the considerations for eligible joint-stock commercial banks to reduce the reserve requirement ratio?
Answer: Medium-sized banks represented by joint-stock commercial banks are an important part of my country's banking system. Considering that the People's Bank of China has implemented targeted reserve requirement cuts to qualified rural commercial banks and urban commercial banks last year, all large commercial banks will receive a reserve ratio discount of 1.5 percentage points in this targeted reserve requirement cut. In order to give full play to the positive incentive role of targeted reserve requirement cuts, we support joint-stock banks to issue loans in the field of inclusive finance, and at the same time optimize the "three levels and two advantages" deposit reserve ratio framework, this time, joint-stock commercial banks that receive a reserve ratio discount of 0.5 percentage points will be reduced by another targeted reserve requirement cut by 1 percentage point. At the same time, we require the funds to be used to issue loans in the field of inclusive finance, and the loan interest rate will be significantly reduced, thereby increasing credit support for small and micro enterprises and other inclusive finance. After the announcement of the news that the A50 index futures index rebounded strongly and
lowered the reserve requirement ratio, the A50 index futures turned strongly. As of press time, the intraday increase has exceeded 2%.
6 Yingda Securities Chief economist Li Daxiao believes that this reserve requirement ratio cut has a positive effect on stabilizing the expectations of property income in the capital market, and is a very timely and major favorable policy. It is a timely rain. Coordinated actions with the Federal Reserve, the Bank of England, the European Central Bank, etc. will also have a positive effect on stabilizing global stock markets.
Qianhai Open source Yang Delong believes that this cut in the reserve requirement ratio is conducive to supporting economic development, quickly recovering from the impact of the epidemic, and at the same time boosting market confidence.Against the background of the current continuous plummeting of the external market and insufficient market confidence, the central bank's cut to the reserve requirement ratio is undoubtedly a "timely rain" and will further support the strengthening of the A-share market.
rate cuts may not be far away
CITIC Securities chief fixed income analyst Mingming said that in addition to the reserve requirement ratio cut, rate cuts may not be far away and may be implemented on March 16 (next Monday). Since LPR is already linked to the MLF interest rate, lowering the MLF interest rate to guide LPR is the smoothest way to achieve cost reduction under the market-oriented conditions of interest rates. At the same time, considering the need to hedge the epidemic and the space for interest rate gap between China and the United States, a more appropriate time for interest rate cuts has arrived.
It is worth noting that some analysts believe that the next window period for observing whether the central bank will cut interest rates will be next Monday (March 16).
Because the central bank has formed a normalized mechanism to create new MLFs in the middle of each month, according to previous practice, there may be an MLF operation at the beginning of next week, and whether the MLF interest rate will be lowered again at that time has attracted much attention.
The central bank has lowered MLF 10 BP in February, which has led to a downward trend in the month's LPR quotation. If the MLF "cuts interest rates" again next week, coupled with this targeted reserve requirement ratio cut, it is also expected to guide the LPR quotation on March 20 to continue to decline.
The reserve requirement ratio cuts have been cut in previous reserve requirement ratios
Oriental Fortune Network data shows that since 2012, after the reserve requirement ratio cuts, the probability of the Shanghai Composite Index rising the next day is not high.
After the previous 14 cuts of the reserve requirement ratio, the probability of the Shanghai Composite Index rising and falling the next day just exceeded 50%, but the probability of rising in the 20 trading days after the reserve requirement ratio was 71%. It can be seen that the positive effect of lowering the reserve requirement ratio on the market can only be manifested in the medium and long term.
23 departments jointly released the "peace of mind"
. In addition to lowering the reserve requirement ratio, the 23 departments also jointly released the "peace of mind" to the capital market on the 13th!
htmlOn March 13, the National Development and Reform Commission, the Ministry of Finance and other 23 departments jointly issued the "Implementation Opinions on Promoting Consumption Expansion, Improvement of Quality and Accelerating the Formation of a Strong Domestic Market" (hereinafter referred to as the "Implementation Opinions") to release new benefits to the market.The "Implementation Opinions" proposes to stabilize and increase residents' property income. Stabilize the property income expectations of the capital market, improve the dividend incentive system, and resolutely investigate and punish acts that seriously damage the dividend and dividend rights of small and medium-sized investors. Enrich and standardize residents' investment and financial management products, and moderately expand the issuance quota for treasury bonds and local government bonds to individual investors. Chen Guo, chief strategy analyst at
Anxin Securities , believes that the "Implementation Opinions" is a major signal to promote the healthy development of the capital market and will release more reform dividends, which will help better protect the interests of investors.
Chen Guo said that he is still very optimistic about A-shares. If the market follows the panic decline overseas, it will be a "gold pit 3.0". China is expected to be the first to successfully control the new crown epidemic and become a global example, and the A-share market will also be the first to emerge from the epidemic crisis and become a global example.
He suggested that we firmly buy A-shares. Those with low returns can buy high dividends. Those with slightly higher returns can buy strong domestic demand and medical care, and those with higher returns can buy high growth, and buy new infrastructure with certainty and upward prosperity.
Countries have issued "air ban"
, and the capital markets of various countries have also started a huge rebound in profits. As of press time, the Italian FTSE index 's increase has expanded to 14%. Previously, the Italian Securities and Exchange Commission banned shorting of stocks.
In addition to Italy, countries have also begun to launch "air bans"!
The market is tremendously shocked, and government agencies are urgently aiding the market. The following is a list of countries that have recently issued short-selling bans.
htmlOn February 28, the Turkey benchmark stock index plummeted 10% in the early trading; Turkish regulatory authorities issued a ban to prohibit the market from shorting stocks on the Istanbul Stock Exchange. htmlOn March 9, South Korea's KOPSI index closed down 4.19%; South Korea's Ministry of Finance issued a policy prohibiting shorting of overheated stocks, which lasts for 10 days, and will take effect from March 11. htmlOn March 9, the Indonesian stock market fell by more than 4%; the Indonesian Stock Exchange formulated trading circuit breaker and suspension rules. If the index falls by more than 5%, the circuit breaker will be 30 minutes, and it will take effect on the same day. htmlOn March 13, Spanish market regulators demanded a ban on short selling of 69 stocks.(On the 12th, the Spanish IBEX35 index closed down 14.61%) htmlOn March 13, the Securities and Exchange Commission announced that it would ban shorting of stocks, which will take effect on the same day and apply to 85 stocks. (On the 12th, the Italian FTSE index closed down nearly 17%) htmlOn March 13, the chairman of the Thai Stock Exchange said that the short selling rules will be temporarily adjusted and the measures will continue until the end of June. htmlOn March 13, the UK Financial Conduct Authority temporarily banned some short selling tools and transactions, including prohibiting short selling of stocks. (On the 12th, the FTSE 100 index of the UK fell nearly 11%)On March 13, South Korea will ban stock short selling for six months, and the policy will be implemented from March 16th.
htmlOn March 13, Spanish market regulators demanded a ban on short selling of 69 stocks.When will the stock market stabilize
When will the global stock market stabilize? JPMorgan strategists said that the market will stabilize when fundamentals show signs of improvement, which currently means a decline in the coronavirus infection rate.
The strategist said, "In the current environment, the root cause is the public health crisis, not the leverage or profitability crisis. Therefore, the epidemic must first peak, and then the COVID-19 infection rate in the United States and Europe slows down."
The strategist determined three conditions for the market to bottom out: recession-like asset pricing, capitulation-like selling of investor positions, and signs of the virus being contained. Only in this way can investors predict when the economic growth rate and profit expectations will end.
is for investors' reference only and does not constitute investment advice
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