The full RRR cut will land today! 1.2 trillion yuan of funds entered the market, the stock market and the property market went like this

　　China-Singapore Jingwei, December 15th (Dong Xiangyi) The second reduction in the standard of the year landed today (15th)!

The central bank lowered the deposit reserve ratio of financial institutions by 0.5 percentage points, lowered the funding cost of financial institutions by about 15 billion yuan per year, and released about 1.2 trillion yuan in long-term funds.

New latitude and longitude in the data map

Release long-term funds of about 1.2 trillion yuan

　　The Central Bank announced on the 6th that it decided to lower the deposit reserve ratio of financial institutions by 0.5 percentage points on December 15, 2021.

After this reduction, the weighted average deposit reserve ratio of financial institutions was 8.4%.

　　The relevant person in charge of the central bank said that the purpose of this RRR cut is to strengthen cross-cycle adjustment, optimize the capital structure of financial institutions, improve financial service capabilities, and better support the real economy.

The first is to effectively increase the long-term stable funding sources of financial institutions to support the real economy while maintaining reasonable and abundant liquidity, and enhance the financial institutions’ ability to allocate funds.

The second is to guide financial institutions to actively use the RRR cut funds to increase their support to the real economy, especially small, medium and micro enterprises.

The third is

financial institutions by

, and the transmission of financial institutions can promote the reduction of social comprehensive financing costs.

　　It is worth mentioning that today (15th) there is a 950 billion MLF (medium-term lending facility) maturity, and it faces a peak in government bond issuance and tax payment, and liquidity pressure is relatively high.

The relevant person in charge of the central bank pointed out that part of the funds released by the RRR cut will be used by financial institutions to return the MLF that expires, and some will be used by financial institutions to supplement long-term funds.

　　The central bank emphasized that "the orientation of prudent monetary policy has not changed."

Wen Bin, chief researcher of China Minsheng Bank, also said that the RRR cut is not about a shift in monetary policy, but on the premise of ensuring reasonable and ample liquidity. The support in key areas and weak links such as green development and technological innovation has promoted the economy to climb the hurdles and promote economic operation within a reasonable range.

New latitude and longitude in the data map

Meeting the housing needs of buyers

　　Dong Ximiao, chief researcher of Merchants Finance, told Sino-Singapore Jingwei that the overall RRR cut will help maintain the healthy development of the real estate and financial markets.

The RRR cut will effectively alleviate the credit crisis of some real estate companies and reduce the probability of systemic risks that the real estate industry may cause.

　　The Central Economic Work Conference put forward, “Promote the construction of affordable housing, support the commercial housing market to better meet the reasonable housing needs of buyers, and implement urban policies to promote a virtuous circle and healthy development of the real estate industry.”

　　For home buyers, Dong Ximiao believes that the RRR cut will increase the funding supply of the banking system and help promote banks to better meet the reasonable financing needs of real estate companies and the reasonable housing needs of home buyers.

　　As for the stock and bond markets, Dong Ximiao pointed out that the RRR cut is fundamentally beneficial to the development of the capital market, but the funds released by the RRR cut will hardly flow into the stock market in violation of regulations.

The overall RRR cut will also benefit the bond market.

The RRR cut increases the total amount of currency in the market, the increase in currency in circulation puts interest rates under downward pressure, and the willingness of institutions and investors to convert currency into assets increases. Coupled with capital injections from banks and other financial institutions, bond prices and returns may rise .

　　Galaxy Securities believes that the RRR cut has no direct relationship with the trend of A shares, but the RRR cut has brought upward momentum to A shares.

At present, the market has ample liquidity, and the currency-credit cycle is still relatively loose, which supports the market. Therefore, the market style rotates rapidly and structural differentiation is large.

The sectors that have experienced large declines in the previous period, such as real estate, food and beverages, and computers, have accumulated a certain amount of momentum. The RRR cut will release a strong signal of stable growth, which may provide impetus for the rebound of the sector.

New latitude and longitude in the data map

Institutions: the first quarter of next year or another RRR cut

　　How much room is for RRR cuts or interest rate cuts in the future?

Shanxi Securities believes that historically, once the central bank enters the cycle of RRR cuts, the RRR cuts more than once.

In the second half of this year, the central bank has cut its RRR twice, in line with historical laws.

The first quarter of next year may still be the window for RRR cuts, but whether the RRR cuts will be implemented and when they will be implemented will depend on the fundamentals at that time, including the growth rate, inflation and external markets in the fourth quarter of this year and the first quarter of next year.

　　The Central Economic Work Conference proposed to "increase financing support for the real economy, and promote the increase, expansion, and price reduction of financing for small, medium and micro enterprises."

Tianfeng's macro team predicts that the central bank will mainly use structural monetary policy tools in a short period of time to cut interest rates for small, medium and micro enterprises through low-interest refinancing. The

.

If after the proactive policy in the first half of next year, the downward pressure on the economy remains high, the probability of a full-scale interest rate cut will increase.

(Zhongxin Jingwei APP)

(The opinions in the article are for reference only and do not constitute investment advice. Investment is risky, and you need to be cautious when entering the market.)

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