On October 15, the People’s Bank of China held a financial statistics release conference for the third quarter of 2021. At the meeting, the People’s Bank of China responded to the current financial market hot issues such as Evergrande debt risk resolution, real estate financial policies, liquidity gaps in the fourth quarter, inflation situation, etc. The amount of information is huge!
Regarding the next stage of monetary policy orientation, Sun Guofeng, Director of the Monetary Policy Department of the Central Bank, said that in the next stage, a sound monetary policy will be flexible, precise, reasonable and appropriate, with self-centeredness and steady character as the head, and do a good job in cross-cycle adjustments, and make overall considerations for today and tomorrow. Two-year policy convergence. The People’s Bank of China will comprehensively use a variety of monetary policy tools to maintain reasonable and sufficient liquidity and enhance the stability of the total credit growth. Continue to unleash the effectiveness of LPR reforms, stabilize bank debt costs, and promote a steady decline in the overall financing costs of small and micro enterprises. Give full play to the role of structural monetary policy tools, guide financial institutions to increase support for key areas and weak links such as small, medium and micro enterprises, green development, enhance the flexibility of the RMB exchange rate, and play the role of exchange rate adjustment macroeconomics and automatic balance of payments stabilizers , Guide market entities to establish a risk-neutral concept, strengthen macro-prudential management of cross-border capital flows, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.
Responding to operations in the fourth quarter: MLF and open market operations will be used to smooth out short-term fluctuations
Faced with the macroeconomic situation of increasing downward pressure on the economy in the second half of the year, the market has recently called for a RRR cut. However, Sun Guofeng said in response to the Securities Times reporter’s supplementary issue of the liquidity gap in the fourth quarter that in the fourth quarter, the supply and demand of liquidity in the banking system will continue to maintain a basic balance, and there will be no major fluctuations. Regarding government bond issuance, tax payment, and maturity of medium-term lending facilities (MLF), the central bank will comprehensively consider liquidity conditions and financial institution needs, and flexibly use multiple monetary policy tools such as MLF and open market operations. , Timely and appropriately release liquidity of different periods, smooth out short-term fluctuations, meet the reasonable funding needs of financial institutions, and maintain reasonable and sufficient liquidity. At the same time, the implementation of structural monetary policy tools will also play a certain role in increasing the total amount of liquidity.
Sun Guofeng said that since the beginning of this year, the central bank has implemented a prudent monetary policy, comprehensively using multiple monetary policy tools such as RRR cuts, refinancing, rediscounting, medium-term lending facilities, open market operations, etc., to maintain reasonable and sufficient liquidity and stable currency market interest rates. . In the first nine months of this year, the average interest rate of DR007 was 2.18%, which is very close to the 2.2% reverse repo rate for the 7-day operation of the central bank’s open market. Recently, the central bank has also promoted the reform of the Standby Lending Facility (SLF) operation method, and orderly realizes the electronicization of the whole process, which is conducive to improving the operating efficiency of the Standby Lending Facility, stabilizing market expectations, enhancing the stability of the banking system’s liquidity, and maintaining money market interest rates. Smooth operation.
Sun Guofeng emphasized that in recent years, the central bank has improved the liquidity and market interest rate control framework, increased operational transparency, and stabilized market expectations through consistent monetary policy operations and expectations management, effectively reducing the preventive liquidity requirements of financial institutions, and maintaining currency The total amount of liquidity and excess reserve ratio required for the stable operation of market interest rates continued to decline. In the future, we will continue to pay close attention to various factors that affect the supply and demand of liquidity, maintain reasonable and sufficient liquidity, and guide the smooth operation of money market interest rates around the central bank’s open market operating interest rates, so as to provide a good liquidity environment for high-quality economic development.
Responding to Evergrande’s debt risk: the financial sector will cooperate with the project to support the resumption of work
The debt risk resolution and disposal of Evergrande Group and its impact on the real estate industry have attracted market attention. Zou Lan, Director of the Financial Markets Department of the Central Bank, said that the problems of Evergrande Group are individual phenomena in the real estate industry. After the macro-control of the real estate industry in recent years, Especially after the establishment of a long-term real estate mechanism, the domestic real estate market’s land prices, housing prices, and expectations have remained stable. Most real estate companies have been operating steadily and have good financial indicators. The real estate industry is generally healthy.
Zou Lan revealed that the total assets of Evergrande Group exceed 2 trillion yuan, of which real estate development projects account for about 60%, involving more than 1,000 project subsidiaries as independent legal entities. In recent years, this company has been poorly managed and failed to operate cautiously in accordance with changes in the market situation. Instead, it has blindly diversified and expanded, causing serious deterioration in its operations and finances, and eventually a risk of outbreak. Of the total liabilities of Evergrande Group, financial liabilities are less than one-third, creditors are relatively dispersed, and individual financial institutions have little risk exposure. On the whole, the risk of its spillover to the financial industry is controllable.
Zou Lan said that relevant departments and local governments are currently carrying out risk disposal and resolution work in accordance with the principles of marketization and rule of law, urging Evergrande Group to increase asset disposal, speed up the restoration of project construction, and safeguard the legitimate rights and interests of housing consumers. In this process, the financial department will cooperate with the housing and urban-rural construction department and local governments to provide financial support for the resumption of the project.
Responding to real estate market concerns: guiding banks to accurately grasp and implement real estate financial prudential policies
There was a lot of discussion on real estate issues at this conference. In response to market concerns about whether Evergrande’s debt risk will affect other real estate companies, and even the entire real estate market, Zou Lan said that the recent exposure of individual large-scale real estate companies, financial institutions’ risk appetite for the real estate industry has dropped significantly, and consistent shrinking behavior has appeared. The growth rate of real estate development loans has dropped significantly. This short-term overreaction is a normal market phenomenon. The risks of Baoshang Bank in 2019 and the debt defaults of Yongmei and Brilliance last year have also occurred in the interbank market and the credit bond market. Phenomenon.
At the same time, Zou Lan said that some financial institutions also have some misunderstandings about the financing management rules of the 30 pilot real estate companies in the “third-tier and fourth-tier”, and they are required to not increase the interest-bearing debt balance of the “red file” companies. The misunderstanding is that banks are not allowed to issue new real estate. Development loans: After the company’s sales repayments have repaid the loans, the reasonable new projects that should have been supported cannot get loans, which has also caused some real estate companies to tighten their capital chains to a certain extent.
“In response to these circumstances, the People’s Bank of China and the China Banking and Insurance Regulatory Commission have held a real estate finance work seminar at the end of September to guide major banks to accurately grasp and implement the prudential management policies of real estate finance, maintain the stable and orderly distribution of real estate credit, and maintain the steady and healthy development of the real estate market. Zou Lan emphasized.
Zou Lan said that since the 19th National Congress of the Communist Party of China, the central government has insisted on the positioning of “houses are for living, not for speculation”, insisting on not using real estate as a short-term means of stimulating the economy, and insisting on stabilizing land prices, housing prices, and expectations. Accelerating the establishment of a long-term real estate mechanism, while preventing and dissolving the real estate “gray rhino” risks, and realizing the stable and healthy development of the real estate market, it is also conducive to promoting the transformation of China’s economic structure and high-quality development, and reducing overall financial risks. The central government’s strategy and guidelines on real estate regulation are long-term follow-ups for doing a good job in real estate finance.
In response to media reports about the shortage of personal mortgage loans in some places, Zou Lan said that from the data point of view, the amount of personal housing loans issued in the first three quarters of this year remained stable, matching the amount of commercial residential sales during the same period. Among them, housing prices in a few cities have risen too fast, and personal housing loans are subject to some constraints. However, after the rate of housing price increases and housing prices stabilize, the supply and demand relationship of housing loans in these cities will return to normal.
In addition, recently affected by risk events such as the default of individual real estate companies’ bonds, the price of USD bonds of overseas real estate companies has dropped significantly. Zou Lan said that this is the natural reaction of the market after the breach of contract. At present, relevant departments have paid attention to the changes in overseas real estate companies and the US dollar bond market, and will urge bond-issuing companies and their shareholders to strictly abide by market discipline and rules, and to properly handle their own debt problems in accordance with the principles of marketization and rule of law, and actively fulfill them. Statutory debt service obligations.
“We have noticed that some Chinese real estate companies have begun to repurchase overseas bonds, which reflects their confidence in their own development prospects. It is expected to play a positive role in alleviating market tensions and restoring market confidence.” Zou Lan said.
From the perspective of the domestic bond market, public data shows that the existing scale of real estate corporate credit bonds at the end of the third quarter of 2021 is about 1.16 trillion yuan, and the balance remains basically stable.
Some market participants told reporters that recently, some companies have experienced a liquidity crisis. Affected by this, the market has appeared such as the real estate market is entering a cold winter, the era of “big but not falling” has passed, and the financing of real estate companies is becoming more and more difficult. However, no matter from the recent issuance of debt financing instruments or the balance, there is no obvious abnormal situation. According to public data, the remaining scale of debt financing instruments for residential real estate companies at the end of the third quarter of 2021 was about 380.8 billion yuan, which was basically stable from the same period last year (about 406.9 billion yuan). The real estate financial control policy will maintain continuity and stability under the general principle of “housing to live without speculation”. The bond financing channels of real estate companies will remain stable and unblocked. The main reason for the liquidity problems of individual real estate companies is that they are fast and blind in the early stage. Expansion is not a common phenomenon in the industry.
Response to the macro leverage ratio: the third quarter will remain basically stable
The latest third-quarter financial data released by the Central Bank shows that the current demand for effective financing of the real economy is still weak. However, there are also structural bright spots in new loans. Ruan Jianhong, Director of the Department of Investigation and Statistics of the Central Bank, said that finance has made great progress in supporting new kinetic energy, new industries, and new business forms. The loan momentum is growing well.
Specifically, one is the relatively high loan-acquisition rate of “specialized, special-new” companies. At the end of September, the loan-acquisition rate of “specialized, special-new” enterprises was 71.9%, and the average loan balance per household was 75.82 million yuan.
Second, the loan balance has grown steadily, and the cost has continued to fall. At the end of September, the loan balance of “specialized, special and new” enterprises increased by 18.2% year-on-year, which was 6.3 percentage points higher than the growth rate of all loans. The average loan contract interest rate was 4.52%, which was 0.15 and 0.25 percentage points lower than the end of the previous year and the same period of the previous year, respectively. .
“While the current financial system continues to strengthen its support for key industries and inclusive small and micro businesses, it is also increasing its support for’specialized, special, new’ enterprises. The continuous optimization of the credit structure will promote the high-quality development of the economy.” Ruan Jianhong said.
In addition, in response to the macro leverage ratio, Ruan Jianhong said that since this year, my country has coordinated the promotion of epidemic prevention and control and economic and social development, and has effectively implemented macroeconomic policies. The economy has continued to recover, the financial aggregate has grown steadily, and the macro leverage has remained basically stable. . In the first half of this year, my country’s macro leverage ratio was 274.9%, 4.5 percentage points lower than the end of the previous year. The leverage ratios of non-financial enterprises, government, and household sectors dropped by 3.1, 1 and 0.4 percentage points respectively, all of which declined to varying degrees. . From the perspective of economic recovery and debt growth in the third quarter, it is expected that the macro leverage ratio will remain basically stable in the third quarter.
Responding to inflation: PPI is expected to decline from the end of this year to next year
The latest price data released a few days ago showed that the year-on-year growth rate of PPI (industrial producer price index) exceeded 10%, a record high. At the same time, the national CPI (consumer price index) was mainly affected by the continued decline in pork prices. The scissors gap with PPI continued to expand and set a new record.
Regarding the continuous increase in the year-on-year growth rate of PPI, Sun Guofeng said that PPI may remain high in the near future, but considering that my country is a major producer in the world and has strong economic self-sufficiency, most of the energy supply of enterprises is guaranteed by long-term agreements. The imported impact of rising prices and rising inflation in various countries is controllable, so the PPI remains high in a period of time.
“With the recovery of global supply, the improvement of transportation efficiency and the emergence of a high base effect, PPI is expected to tend to fall from the end of this year to next year. CPI will rise, but it will continue to be within the expected target range at the beginning of the year.” Sun Guofeng said .
Sun Guofeng emphasized that, on the whole, my country’s inflation is generally controllable. In the next stage, the People’s Bank of China will continue to implement a normal monetary policy, with self-centeredness and stability, a stable monetary policy that is flexible, precise, reasonable and appropriate, and grasps the strength and rhythm of the policy to stabilize social expectations.
In addition, the market generally expects that the Fed may start to reduce debt purchases before the end of this year, which will have an impact on China’s financial markets. Sun Guofeng believes that since the beginning of this year, taking into account the changes in the international economic and financial market environment and the possible monetary policy adjustments of major economies, the People’s Bank of China has made forward-looking policy arrangements to reduce the possibility of policy adjustments of central banks in developed economies such as the Federal Reserve. The spillover impact. At present, my country’s financial market is operating smoothly, and the 10-year treasury bond yield is around 2.95%, which is generally at a relatively low level. Cross-border capital flows are basically balanced, and the RMB exchange rate fluctuates in both directions, maintaining basic stability at a reasonable and balanced level.
Source of this article: Securities Times (ID: wwwstcncom), original title: “Heavy! The central bank talks about Evergrande debt risks: financial liabilities are less than 1/3, and risk spillovers are controllable! It also responded to hot issues such as the sharp fall in US dollar debt of real estate companies and inflation.”
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