The spread of the international epidemic has recently spread, and the turbulence in the international financial market has intensified. Is China's financial market able to withstand external market shocks, and what other policy response tools do regulators have?

At the State Council's press conference on March 22, Chen Yulu, deputy governor of the People's Bank of China, Zhou Liang, deputy chairman of the China Banking Insurance Regulatory Commission, Li Chao, deputy chairman of the China Securities Regulatory Commission, and deputy director of the State Administration of Foreign Exchange Leaders of financial supervision departments such as Changneng responded to the above-mentioned hot issues.

The press conference has a lot of information. Let's look at the key information combed by reporters:

It is too early to conclude that the world has entered an economic crisis

Chen Yulu: Recently the spread of the international epidemic has spread, and the turbulence in the international financial market has intensified. The stock markets of European and American countries and emerging markets have dropped by about 30% on average. But it is too early to conclude that the world has entered an economic crisis.

Judging from the actual situation, after the turbulence in the international financial market, China's financial market has withstood the test and has shown a high degree of stability with small fluctuations. At present, China's financial market is operating steadily and normally, and the market is expected to be stable and normal. Macroeconomic policy space and tool reserves are also sufficient.

China's banking and insurance industries have sufficient risk resilience and response resources

Zhou Liang: Generally speaking, the international epidemic will not have much impact on the banking and insurance industries. From the actual situation, the current overall operation of the banking and insurance industry is very stable, and there is no sign that the risk has suddenly erupted.

At the same time, as the situation of domestic epidemic prevention and control further improves, the banking and insurance industry will continue to maintain a good momentum of healthy and stable development.

At the same time, China's banking industry and insurance industry's risk resistance and response resources are very sufficient. include:

The loan loss reserves of banking institutions exceeded 6 trillion yuan, and the coverage ratio of provisions reached 181%;

China's banks have a capital adequacy ratio of 14.6%;

The adequacy ratio of insurance solvency is 247%.

Stock market: A-share market shows strong resilience and risk resistance

Li Chao: Compared with overseas markets, China's financial market is generally relatively stable. The A-share market has shown relatively strong resilience and anti-risk capabilities. The A-share market has relatively small fluctuations and investors' behavior is more rational.

The total amount of leveraged funds in the current stock market has fallen by 80% compared to the peak in 2015.

Through surveys, the resumption rate of listed companies has exceeded 98%, which is higher than the national average. The number of SME employees returning to work in the survey sample exceeded 80%.

Financial markets are reasonably liquid, and stock market valuations are at historically low levels.

Zhou Liang: To deepen the market-oriented reform of the use of insurance funds, under the principle of prudent supervision, insurance companies with higher solvency adequacy ratios and better asset matching conditions will be allowed to base their existing equity investment on the basis of the 30% ceiling. It can also moderately increase the investment proportion of equity assets.

In addition, we will also appropriately add wealth management subsidiaries, establish and improve the third pillar of pension security, actively support direct financing, and work to promote the long-term, stable, and healthy development of China's capital market.

Bond market: 750 billion corporate bonds issued in February did not increase bond market default rate

Chen Yulu: Judging from the current situation, the occurrence of the epidemic has not directly led to an increase in the default rate of China's bond market, and the external shocks of the international financial market turbulence have not brought about huge fluctuations in our bond market.

According to statistics, since February, the scale of default in the bond market has remained at a normal level, and the number of defaulting companies for the first time has significantly decreased compared with the same period last year.

Since the outbreak, the People's Bank of China has instructed the Interbank Market Dealers Association to quickly establish a "green channel" for bond registration and issuance, which facilitates the issuance of corporate bonds, and adopts a variety of means to resolve possible default risks in advance.

In February, the total size of bonds issued by enterprises was 750 billion.

Foreign exchange market: RMB to USD exchange rate is expected to fluctuate around 7: 1

Chen Yulu: Recently affected by the international epidemic, there have been relatively large fluctuations in the international foreign exchange market, and the RMB exchange rate has remained basically stable at a reasonable and balanced level.

It is expected that the exchange rate of RMB against the US dollar will fluctuate around 7: 1 in the future, with depreciation and appreciation, and will continue to float in both directions. The foreign exchange market will run smoothly and the exchange rate expectations will be stable.

Xuan Changneng: On March 12, the People's Bank of China and the Foreign Exchange Bureau jointly issued a document to increase the macro-prudential adjustment parameter from 1 to 1.25, further expanding the space for borrowing foreign debts, and reducing the financing costs of physical enterprises. According to preliminary estimates, this adjustment can support companies in generating tens of billions of dollars in financing scale.

At present, the scale and structure of China's foreign debt are reasonable, and the overall risk of foreign debt is controllable. The scale of corporate borrowings from overseas banks, affiliated companies, etc. is not large, and the proportion of total foreign debts is not high. Increasing macro-prudential adjustment parameters will not cause a large increase in the size of external debts.

Price: expected to fall quarter by quarter in the second, third and fourth quarters

Chen Yulu: The year-on-year increase in CPI in January-February this year has been driven by structural factors and has also added to the impact of the epidemic on supply. As the national economy resumes work and production in an orderly manner, production will gradually keep up, and the supply of goods is gradually improving. Therefore, the overall price situation will gradually ease, and it is expected that there will be a quarterly decline in the second, third, and fourth quarters.

The next stage of monetary policy: continue to advance LPR reform and guide the banking system to properly give benefits to the real economy

Chen Yulu: Mainly grasp five aspects:

First, grasp the intensity, rhythm and focus of monetary policy in stages, and always maintain a reasonable and adequate liquidity. In particular, it is necessary to achieve a basic match between the growth rate of M2 and social financing scale and the growth rate of nominal GDP, and it can be slightly higher.

The second is to give full play to the unique role of structural monetary policy, and guide financial institutions to increase credit support to core enterprises in the industrial chain, as well as small and medium-sized micro, private enterprises upstream and downstream.

The third is to give full play to the role of policy finance. Make good use of the special credit line of the 350 billion yuan policy bank to resume the work and resume production of small and micro enterprises and private enterprises at preferential interest rates, and the key areas of spring ploughing, live pig production, foreign trade, and especially the production of international supply chains Give strong credit support.

Fourth, it is necessary to increase support for small and medium-sized banks to replenish capital and issue financial bonds, and further enhance the overall willingness and ability of commercial banks to provide credit.

Fifth, we must continue to promote the reform of the quoted interest rate (LPR) in the loan market, so as to guide the real interest rate of loans to continue to fall. It is necessary to actively guide the banking system to properly give benefits to the real economy, so that "stable economy" and "stable finance" can achieve a win-win situation.

Source: People's Daily Online-Financial Channel Wang Renhong, Zhang Wenting, Li Nanhua, Shen Jiaping