Guosheng Securities stated that this report generally continued the statement made since the Central Economic Work Conference, but there are also many new changes, including: more confidence in the domestic economy, less concern about inflation, and the belief that the central bank’s handover of profits is not a “fiscal deficit currency.” The transformation of savings into consumption remains to be seen.
event:On February 24, the central bank released the “China’s Monetary Policy Implementation Report for the Fourth Quarter of 2022” (hereinafter referred to as the “Report”), and set up four columns: “The central bank turned over balance profits to support stable growth”, “Insist on the implementation of prudent currency Policies to stabilize the macroeconomic market”, “Strengthen the financial stability guarantee system to guard the bottom line of systemic risks”, “my country’s resident consumption is expected to recover steadily”.
Core conclusion:This report generally continues the statement made since the Central Economic Work Conference, but there are also many new changes, including: more confidence in the domestic economy, less concern about inflation, and the view that the central bank’s handing over of profits is not “the monetization of fiscal deficits”; The transformation of savings into consumption remains to be seen. Continue to remind: In the important observation period of February and March, based on high-frequency data such as post-holiday construction and real estate, the economy is expected to recover quickly, but monetary easing is still the general direction.
1. In comparison, this report sets the tone for monetary policy, which as a whole continues the statement of the 12.15 Central Economic Work Conference and the 1.4 Central Bank Work Conference, including “a sound monetary policy must be precise and powerful, do a good job in cross-cycle adjustments, and avoid flooding Flood irrigation”, the tone of real estate is still positive.
2. There are also many new changes, including: more worried about the hysteresis and cumulative effects of overseas “interest rate hikes”, more confidence in the domestic economy, less concern about inflation, and a new low in the weighted average interest rate of loans wait. At the same time, pay attention to two columns. The first is to analyze consumption, pointing out that “the factors restricting consumption recovery are expected to ease, and residents’ consumption is expected to recover steadily”, but reminds residents that the conversion of savings to consumption remains to be seen. Handing over according to law will not cause financial overdraft to the central bank”, not “monetization of fiscal deficit”.
3. Specifically, the “Report” has 7 major signals:
Signal 1: The central bank is still not optimistic about the global economic situation, but is more confident in the domestic economy, believing that “the overall recovery is expected in 2023”, but also emphasizes that “the external environment is still severe and complex, and the foundation for domestic economic recovery is not yet solid”, including The hysteresis and cumulative effects of overseas “interest rate hikes”, the domestic epidemic disturbance, the conversion of residents’ savings to consumption remain to be seen, real estate and other issues. Continue to remind: February and March are important observation periods. Based on high-frequency data such as post-holiday construction and real estate, my country’s economy is expected to recover quickly.
Signal 2: The central bank’s concerns about inflation have cooled down, and the global change from “the challenge of high inflation is still severe, and inflation stickiness is still strong” to “there is uncertainty in the magnitude and speed of the fall of high inflation” has been deleted for the domestic ” Attaching great importance to the potential for future inflation to heat up”, emphasizing that “in the short term, inflationary pressures are generally controllable, and insufficient effective demand is still the main contradiction.” Continue to remind: The rebound of CPI and core CPI in 2023 is a general trend, but the substantive inflationary pressure throughout the year is controllable, and it is difficult to restrict monetary policy.
Signal 3: The tone of monetary policy continues the expression of the Central Economic Work Conference, emphasizing that “a sound monetary policy must be precise and powerful”, highlighting “focusing on supporting the expansion of domestic demand and providing stronger support for the real economy”. At the same time, it has continued to use since the Q3 report Other main expressions of the policy include “do a good job of cross-cycle adjustment”, “do not engage in flood irrigation”, “three considerations” (short-term and long-term considerations, economic growth and price stability, internal equilibrium and external equilibrium), “continue to play policy The role of developmental financial instruments”, “Structural monetary policy tools are focused, reasonable and moderate, with advances and retreats”, etc., and “promote a strong recovery of consumption and enhance economic growth potential”. Continue to remind: the current economy is still weakly repairing, easing is still the general direction, focus on expanding credit, widening credit, and cutting RRR and interest rates is still expected.
Signal 4: For real estate, it still emphasizes that “housing should be lived in, not for speculation, and real estate should not be used as a means of stimulating the economy in the short term”, but the overall tone is positive, and further relaxation of real estate is still expected. Continue to remind: stable growth requires stable real estate, especially to avoid a “hard landing” in real estate. In view of the continuous increase in the policy of stabilizing real estate in recent months and post-epidemic recovery, the real estate boom is expected to gradually pick up.
Signal 5: The central bank pointed out that “the weighted average interest rate of loans has reached a new low since statistics”, indicating that the room for subsequent interest rate cuts is relatively limited.
Signal 6: The central bank’s column analyzes consumption, pointing out that “the factors restricting the recovery of consumption are expected to ease, and the consumption of Chinese residents is expected to recover steadily”, but it also suggests that “the uncertainty of consumption recovery still exists”, mainly because “the balance sheet has been impacted, and residents’ deposits Whether it can be converted into consumption remains to be seen, and the complexity of the evolution of the epidemic also needs to be paid attention to.” etc.
Signal 7: The central bank’s column introduces the handover of balance profits to support economic growth, pointing out that “the People’s Bank of China, on the premise of maintaining a healthy and sustainable balance sheet, will turn over profits to the finance in accordance with the law, which will not cause the finance to overdraft the central bank, nor is it monetization of the fiscal deficit “.
Report text:
Signal1: The central bank is still not optimistic about the global economic situation, but is more confident in the domestic economy, believing that “2023However, it also emphasized that “the external environment is still severe and complex, and the foundation for domestic economic recovery is not yet solid”, including the lagging and cumulative effects of overseas “interest rate hikes”, domestic epidemic disturbances, and the conversion of residents’ savings to consumption There are issues to be seen, real estate, etc. Continue to prompt:2Tsukiwa3Month is an important observation period. Based on high-frequency data such as post-holiday construction and real estate, my country’s economy is expected to recover quickly.For the world, the central bank continues to emphasize “increasing downward pressure on the global economy”, believes that “in addition to geopolitical conflicts, energy shortages, and high inflation, monetary policy tightening also has an impact on the economic downturn”, and emphasizes that “the rapid acceleration of major developed economies The tightening effect of interest rates has a hysteresis and cumulative effect, and the drag on global economic growth may exceed expectations.” Newer than Q3), but at the same time still emphasize that “the external environment is still severe and complicated, and the foundation for domestic economic recovery is not yet solid”, mainly because “geographical conflicts are still continuing, the growth momentum of the world economy has weakened, and inflation in developed economies is still high. The interest rate hike has not yet peaked” and other external factors, “the impact of the disturbance of the evolution of the epidemic still needs to be paid attention to, the kinetic energy of the conversion of residents’ savings to consumption remains to be seen, it will take time for the real estate industry to shift to a new development model, and the pressure on local fiscal revenue and expenditure balance continues to exist” and other internal factors, and continue to worry about medium and long-term challenges such as “the dividend of population growth is fading and the green transformation is advancing”.
Signal2: The central bank’s concerns about inflation have eased, and the global change from “the challenge of high inflation is still severe, and the stickiness of inflation is still strong” to “there is uncertainty in the magnitude and speed of the fall of high inflation” has been deleted from the domestic market. The potential for future inflation to heat up”, emphasizing that “in the short term, inflationary pressures are generally controllable, and insufficient effective demand is still the main contradiction.” Prompt to continue:2023YearCPI,coreCPIThe recovery is a major trend, but the substantive inflationary pressure throughout the year is controllable and it is difficult to restrict monetary policy.
> Regarding global inflation: The central bank pointed out that from the experience of high inflation caused by the two oil crises in the 1970s, “the fall of inflation from a high level is a slow process, which takes more than one year and is likely to experience twists and turns” , believes that “the magnitude and speed of the fall in overseas high inflation are uncertain.” The central bank also pointed out that “the prices of bulk commodities such as international energy are still disturbed by geopolitical conflicts” and that “the pressure on the global supply chain has generally eased, but it still faces challenges from some countries’ protectionist measures.”
> Regarding my country’s inflation: On the one hand, the central bank believes that “inflationary pressures are generally controllable in the short term”, the main reason is that “my country’s economy is still in the process of recovery and development, and insufficient effective demand is still the main contradiction. It is expected to remain low in general”; on the other hand, the central bank deleted the Q3 report “highly attaching great importance to the potential for future inflation to rise”, but still emphasized “vigilance of future inflation rebound pressure”, mainly due to “the consumption momentum after the optimization of epidemic prevention and control It may gradually heat up; the accelerated recovery of the labor market may have an impact on future wage changes; high overseas inflation may also be transmitted to the country through production, circulation and other links.” etc. Continue to remind: The rebound of CPI and core CPI in 2023 should be the general trend, but the substantive inflationary pressure throughout the year is controllable, and it is difficult to restrict monetary policy.
Signal3: The tone of the monetary policy continues the expression of the Central Economic Work Conference, emphasizing that “a sound monetary policy must be precise and powerful”, highlighting “focusing on supporting the expansion of domestic demand and providing stronger support for the real economy”.Q3Other main expressions since the report include “doing a good job in cross-cycle adjustment”, “not doing flood irrigation”, “three considerations” (short-term and long-term considerations, economic growth and price stability, internal equilibrium and external equilibrium), “continuous Give full play to the role of policy development financial instruments”,“Structural monetary policy tools focus on key points, are reasonable and moderate, and have advances and retreats”, etc., and “promote a strong recovery in consumption and enhance economic growth potential”. Continue to remind: the current economy is still weakly repairing, easing is still the general direction, focus on expanding credit, widening credit, and cutting RRR and interest rates is still expected.First, like the Central Economic Work Conference, it continues to emphasize that “a prudent monetary policy must be precise and powerful” and requires “focusing on supporting the expansion of domestic demand and providing stronger support for the real economy”; second, like Q3, it continues to emphasize “continuous Give full play to the role of policy-oriented developmental financial instruments”, “Structural monetary policy instruments focus on key points, are reasonable and moderate, and have advances and retreats”, but their positions in the report are clearly ahead of Q3. It is expected that policy-oriented developmental financial instruments will be released in 2023 1. Structural monetary policy tools will be the focus of efforts; third, the new addition of “promoting a strong recovery of consumption and enhancing economic growth potential”, combined with “promoting the reduction of personal consumption credit costs”, indicates that promoting consumption is also the direction of monetary policy. Continue to remind: Monetary easing is still the general direction in 2023, focus on expanding credit, widening credit, and reducing RRR and interest rates are still expected.
Signal4: For real estate, it is still emphasized that “housing should not be speculated, and real estate should not be used as a means of stimulating the economy in the short term”, but the overall tone is positive, and further relaxation of real estate is still expected. Continue to remind: stable growth requires stable real estate, especially to avoid a “hard landing” in real estate. In view of the continuous increase in the policy of stabilizing real estate in recent months and post-epidemic recovery, the real estate boom is expected to gradually pick up.The overall tone of the central bank on real estate is consistent with the Q3 report and the Central Economic Work Conference. On the one hand, it emphasizes that “housing should not be speculated, and real estate should not be used as a short-term means of stimulating the economy.” To meet the reasonable financing needs of the industry, promote industry restructuring and mergers, and improve the asset and liability status of high-quality leading real estate companies.” Relevant policies have also been introduced since November last year. In addition, it has added “doing a good job in housing financial services for new citizens, young people, etc.”, combined with the “Opinions on Financial Support for the Development of the Housing Leasing Market (Draft for Comment)” released on the same day on 2.24, rental housing is also the key to the transformation of the real estate industry in the future. important direction.
Signal5: The central bank pointed out that “the weighted average interest rate of loans has hit a new low since statistics”, pointing to the limited space for subsequent interest rate cuts.The “Report” pointed out that the weighted average interest rate of loans in December was 4.14%, which was 0.2 points lower than that in September, and hit a new low since statistics were available. Among them, the personal housing loan interest rate was 4.26%, down another 0.08 points from September; the corporate loan interest rate was 3.97%, falling below 4% for the first time.
Signal6: The central bank’s column analyzes consumption, pointing out that “the factors restricting consumption recovery are expected to ease, and my country’s residents’ consumption is expected to recover steadily”, but it also suggests that “the uncertainty of consumption recovery still exists”, mainly because “the balance sheet has been impacted, whether residents’ deposits can More transformation into consumption remains to be seen, and the complexity of the evolution of the epidemic also requires attention,” etc.The central bank pointed out that under the influence of the epidemic in the past three years, my country’s consumption has faced three major constraints: “inconvenient consumption, unwillingness to consume, and dare not consume”. In the medium and long term, it is pointed out that “the realization of per capita GDP reaching the level of moderately developed countries in 2035 is inseparable from the important support of the consumption engine, and it is necessary to strengthen confidence and play a good strategic role in promoting consumption growth.”
Signal7: The central bank’s column introduced the contribution of surplus profits to support economic growth, pointing out that “on the premise of maintaining a healthy and sustainable balance sheet, the People’s Bank of China will turn over profits to the finance according to law, which will not cause fiscal overdraft to the central bank, nor will it monetize fiscal deficits.”The central bank pointed out that a total of 1.13 trillion profits will be handed over in 2022, which will be used for “residual tax refunds and increased transfer payments to local governments”, etc., which “play an important role in stabilizing the macroeconomic market”; The realized operating income” belongs to “turning over to the finance according to law”, “it will not cause the finance to overdraft to the central bank, nor is it the monetization of the fiscal deficit”.
The author of this article: Xiong Yuanmu Renwen, source: Xiong Yuan Observation, the original title: “7 Major Signals of the Central Bank’s Monetary Policy Report for the Fourth Quarter of 2022”.
Bear Park S0680518050004
Risk Warning and Disclaimer
Market risk, the investment need to be cautious. This article does not constitute personal investment advice, nor does it take into account the particular investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, opinions or conclusions expressed herein are applicable to their particular situation. Invest accordingly at your own risk.