Original title: how does the central bank's 800 billion RRR reduction package affect the money bag
At the beginning of the new year, the central bank launched a comprehensive RRR reduction package to the market. On January 1, the central bank announced that it decided to comprehensively reduce the reserve requirement by 0.5 percentage points on January 6 and release more than 800 billion yuan of long-term funds. Analysts pointed out that the release of low-cost long-term funds by the RRR reduction is conducive to reducing the capital cost of banks and thus the financing cost of the real economy. The quotation of the new LPR (quoted interest rate in the loan market) is also expected to decline slightly. In the face of the RRR reduction as scheduled, the impact on the stock market, real estate market, bond market and foreign exchange market has become the focus of the moment.
1. Release more than 800 billion liquidity
In order to support the development of the real economy and reduce the actual cost of social financing, The central bank decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on January 6, 2020 (excluding financial companies, financial leasing companies and auto financing companies). The relevant person in charge of the central bank said that the RRR reduction is a comprehensive RRR reduction, which reflects counter cyclical adjustment, releases more than 800 billion yuan of long-term funds, effectively increases the stable capital source of financial institutions to support the real economy, reduces the capital cost of financial institutions to support the real economy and directly supports the real economy.
The comprehensive RRR reduction can hedge the Liquidity Fluctuation Caused by factors such as cash outflow before the Spring Festival. Similar operations were carried out at the beginning of last year. Wen bin, chief researcher of China Minsheng Bank, said that the overall RRR reduction of 0.5 percentage points was in line with market expectations. In view of the gradual maturity of RMB 600 billion reverse repurchase in January, superimposed with tax payment, issuance of special bonds of local governments, cash demand during the Spring Festival and other factors, liquidity pressure appears. On the one hand, the more than 800 billion yuan of funds released through the RRR reduction can meet the above liquidity needs, on the other hand, the release of low-cost long-term funds is conducive to reducing the capital cost of banks, Guide banks to reduce the financing cost of the real economy. It is expected that the quotation of the new phase of LPR will decrease slightly on January 20. The LPR for one-year period is 4.1% and that for more than five years is 4.75%.
It is worth noting that, compared with the data at the beginning of last year, the central bank's RRR reduction has actually been reduced. Previously, on January 4, 2019, the central bank decided to reduce the deposit reserve ratio of financial institutions by 1 percentage point, including 0.5 percentage points on January 15 and January 25, 2019. Lian Ping, director of the industry development research committee of the China Banking Association, told reporters that since 2018, the reduction frequency of the deposit reserve ratio has not been low, and there has been a significant decline in the accumulation. The space for RRR reduction in the future will certainly not be as large as before. From the perspective of the requirements of the prudent and loose policy, the current moderate and flexible adjustment reflects the needs of the counter cyclical policy, At the same time, it is also the requirement of not carrying out flood irrigation policy.
2. A shares are expected to rise further
After receiving the large gift package of the RRR reduction policy, the A-share market ushered in the first trading day of the new year on January 2, and the performance of the A-share market also attracted much market attention. Li Daxiao, chief economist of Yingda securities, believes that the RRR reduction is comprehensive and has strong policy pertinence. The RRR reduction helps to guide the decline of market interest rates. It is a timely rain. It plays a very important role in coping with the demand for cross-year funds and stabilizing economic growth. It will effectively boost market confidence and is also a major positive for the stock market.
In fact, the previous RRR cuts have different effects on the A-share market. Data show that since 2014, The central bank has reduced the reserve requirement 11 times (including the targeted RRR reduction). In the 30 days after the RRR reduction, the stock market fell only twice, and the rest rose. After the RRR reduction was announced on January 4, 2019, the gains of the Shanghai stock index in the first, third and sixth months were 5.5%, 29% and 16.6% respectively, which was better than the previous RRR reductions. However, after the RRR reduction on September 6, 2019, the market fell after the short-term rise, and then maintained a shock pattern for more than three months.
He Nanye, a special researcher of Suning Financial Research Institute, said that on the whole, on the first trading day of the new year, the A-share index has a high opening probability. The "RRR reduction" directly injects liquidity into the market, greatly reduces the difficulty of enterprise financing, is conducive to the bottom recovery of the real economy and is a major positive for the stock market. Meanwhile, on the last trading day of a shares in 2019, the Shanghai Composite Index stood at 3050, which has laid an upward foundation. The RRR reduction is conducive to further stimulate market sentiment and investor vitality, and drive the further rise of the stock market. ".
He Nanye said that from the perspective of the industry, the RRR reduction will be more directly beneficial to banks, real estate, brokers and other stocks. The RRR reduction will release more credit funds for banks, which is conducive to promoting bank liquidity management and expanding credit supply.
3. Positive property market boosts bond market confidence
From the perspective of the bond market, Lian Ping believes that the RRR reduction will play a positive role in activating the bond market and maintaining the controllable risk of the bond market. There is still room for further RRR reduction in the future, which will have a positive impact on the further stable and good operation of the bond market in the future. In addition, the direct impact of the reduction of the reserve ratio on the exchange rate is relatively limited.
As for the property market, Yan Yuejin, research director of the think tank center of E-House Research Institute, analyzed that the follow-up of the RRR reduction policy will bring several more positive effects. First, the real estate financial environment is expected to be further relaxed. On the basis of the three RRR reductions in 2019, the RRR will be reduced for the first time in 2020, further releasing the easing orientation of the financial environment. From the actual situation, the real estate financial environment also needs to change from tight to loose. Especially in the fields of real estate development loans and personal mortgage loans, we need to actively carry out reform. This RRR reduction is not a targeted RRR reduction, so it objectively helps to drive more bank loans into the market, which plays a more positive role in the real estate field. Secondly, the reduction of reserve requirement will drive the reduction of LPR interest rate. With the reduction of LPR basic interest rate, the work of real estate bank loans will also be adjusted, making it possible to further reduce the housing loan interest rate, which not only reduces the house purchase cost, but also makes the work of stock floating loan conversion pricing mode better in March 2020.
In Yan Yuejin's view, according to past experience, the RRR reduction will often bring many new benefits. From the market expectation, people often have confidence in the financial environment in 2020. At this time, the supply and demand sides will be more active, especially in January. From the actual transaction situation, the housing marketing department will be more active and take the reduction of reserve requirements as the breakthrough of marketing. At this time, the inquiry of housing sales and the actual transaction situation will rise. Therefore, it can also be analyzed that house prices themselves are prone to rebound, which should be paid attention to in the subsequent process of market stability.
4. Ease the financing difficulties of small and micro enterprises and private enterprises
In view of whether the RRR reduction is conducive to alleviating the difficulty and high cost of financing for small and micro enterprises and private enterprises, the relevant person in charge of the central bank said that in the comprehensive RRR reduction, only urban commercial banks operating in provincial administrative regions, rural commercial banks serving counties, rural cooperative banks, rural credit cooperatives and rural banks and other small and medium-sized banks have obtained more than 120 billion yuan of long-term funds, It is conducive to enhancing the financial strength of small and medium-sized banks based on the local and returning to the origin to serve small and micro enterprises and private enterprises. At the same time, the RRR reduction reduces the capital cost of banks by about 15 billion yuan per year. Through bank transmission, the actual cost of social financing can be reduced, especially the financing cost of small and micro enterprises and private enterprises.
Wen Bin said that under the requirements that large banks should sink their service focus and small and medium-sized banks should focus more on their main responsibilities and businesses, it is expected that the regulatory authorities will improve MPa assessment to ensure the flow of funds to the real economy, especially increase support for 'agriculture, rural areas and farmers', private and small and micro enterprises.
Tao Jin, a researcher at Suning Financial Research Institute, believes that the role of small and medium-sized banks in serving and supporting the real economy is becoming more and more obvious. In this context, the significance of giving more liquidity to small and medium-sized banks has become greater. Therefore, the intensity and scope of targeted RRR reduction may be expanded, and targeted open market operation tools such as tmlf (targeted medium-term lending facility) will also play a greater role.
5. There is still room for RRR reduction in the future
"This RRR reduction is a hedge against the cash injection before the Spring Festival. The total liquidity of the banking system will remain basically stable, flexible and appropriate, rather than flooding. It reflects the scientific and steady grasp of the countercyclical regulation of monetary policy, and the orientation of prudent monetary policy has not changed." The relevant person in charge of the central bank said.
In terms of monetary policy, the fourth quarter regular meeting of monetary policy also pointed out that we should innovate and improve macro-control, make prudent monetary policy flexible and appropriate, use a variety of monetary policy tools, and maintain reasonable and sufficient liquidity. In the third quarter, this expression was "prudent monetary policy should be moderately loose and tight, and the master gate of money supply should be well controlled".
Without mentioning the word 'gate', we emphasize that monetary policy should be flexible and appropriate and use a variety of monetary policy tools. What signals does this adjustment reveal?
Wen Bin said that without mentioning the general gate, it is mainly a judgment of the current financial situation. The gate mainly restricts the rapid rise of macro leverage ratio. Since last year, China's overall macro leverage ratio has been stable, and the gate is no longer mentioned in the new expression. Tao Jin pointed out that not mentioning the 'gate', reasonably abundant liquidity and flexible and appropriate monetary policy means giving more liquidity to the banking system and the real economy on the basis of further opening up the transmission channels from money to credit, but we must ensure that these incremental funds do not stay in the banking system and do not flow excessively to real estate. On the whole, the strength and direction of monetary policy in 2020 will remain flexible and moderate most of the time, and will be slightly loose to a certain extent.
Wen bin believes that there is still room and necessity for comprehensive RRR reduction in the next stage. Combined with directional RRR reduction, it is expected that there will be room for 2-3 RRR reductions.