Author: Du Qingqing
In the last month of 2022, the daily trading volume of A-shares continued to shrink, shrinking from a single-day trillion to a minimum of less than 600 billion within the month, which was almost cut in half.
A reporter from China Business News found that there is a consensus among institutions that the stock market is expected to enter the incremental capital game stage in the new year.
However, the next question is, where does the incremental capital come from?
For this question, in addition to incremental funds such as foreign capital, there may be an answer in the 10 trillion excess deposits.
Since the outbreak, investment, consumption, and exports have all been impacted, and residents' income has dropped significantly below the trend value.
However, the scale of excess deposits of residents hit a new high.
"As of November, the cumulative increase in resident deposits in 2022 will be as high as 14.95 trillion, an increase of about 5 trillion from the previous year, which is a level that has never appeared in the same period in history." The team of Chen Guo of China Securities Construction Investment reported on January 1 say.
According to the calculations of Cheng Qiang, chief macroeconomic chief of CITIC Securities, Chinese residents have accumulated about 10.8 trillion excess deposits since 2019, about half of which will be accumulated in 2022.
Excess deposits of this magnitude are rare.
Some institutional analysts told China Business News that under the epidemic, the income of residents has been impacted, but deposits have still increased significantly. Simply put, it is due to not buying houses, not consuming, and not investing. "In fact, the most obvious thing is 2022. Returning home, unsalable real estate, and reduced consumption under the epidemic, all rushed together.”
Cheng Qiang's team believes that under the neutral scenario, the proportion of excess deposits that may be consumed in 2023 and the impact on various markets, in general, the consumption of excess deposits will have a significant marginal impact on consumption, real estate and equity markets, of which " If 10% is released to invest in the equity market, based on the scale of the free market value of 35.5 trillion yuan in 2022, the equity market will be boosted by about 3 percentage points.”
Stock market capital outflow
On the last trading day of 2022, A-shares ended the year with a daily turnover of 604.064 billion yuan.
Behind the continuous shrinkage of transactions is the substantial outflow of funds.
According to statistics from the Xun Yugen team of Haitong Securities, the net outflow of funds from the stock market in the first 11 months of 2022 exceeded 880 billion yuan, while the net inflow of funds in the whole year of 2021 exceeded 1.66 trillion yuan.
In the first 11 months of 2022, the balance of financing, private equity, and asset management products are all net outflows, and the inflow of public funds is only more than 380 billion yuan, which is far lower than the level of 1.7 trillion yuan in 2021.
The scale of foreign capital inflows is only 55 billion yuan, which has shrunk sharply compared to more than 430 billion yuan in 2021.
"In 2022, under the background of the overall weak market conditions, A-share funds will face certain outflow pressure." Xun Yugen said that looking forward to 2023, driven by the power of residents' asset allocation, as the overall market conditions improve, the incremental funds of A-shares will increase. Expected to return again.
In his view, the capital flow of the stock market is closely related to the market in the short term. With the overall improvement of the profit-making effect of A-shares in 2023, and the trend of superimposed medium- and long-term residents' asset allocation to equity migration continues, A-share funds will return significantly in 2023.
Rapid growth of excess deposits
Chen Guo believes that since 2022, the liquidity supply side has continued to exert strength, but the shrinking financing demand of the real economy and the systemic decline in the risk appetite of the resident sector have led to a large amount of created currency remaining in the banking system as savings, and has not been further transformed into the stock market. Liquidity has formed a situation where the current macro liquidity is abundant, but the market has been greatly adjusted throughout the year.
So how big is this part of savings, especially "excess savings"?
According to Cheng Qiang's team's calculations, Chinese residents have accumulated a total of 10.8 trillion yuan in excess deposits since 2019.
Since 2019, the growth rate of my country's resident deposits has accelerated significantly, especially in the first 11 months of 2022, resident deposits increased by 6.9 trillion yuan compared with the same period in 2021.
This part of excess deposits is mainly due to three reasons: the decline in consumption, the decline in real estate sales, and the return of wealth management products.
Among them, consumption contributed about 4.9 trillion yuan in excess deposits.
Although the income of residents was under pressure during the epidemic, the contraction of consumption was more obvious.
According to its calculations, the income of residents from 2020 to 2022 will be lower than the trend value of 2.4 trillion yuan, 1.8 trillion yuan, and 3.6 trillion yuan respectively, a total of 7.8 trillion yuan less in three years.
In the same period, the retail sales of social consumer goods were respectively lower than the trend value of 4.8 trillion yuan, 2.6 trillion yuan and 5.2 trillion yuan, a total of 12.7 trillion yuan less in three years.
Another source of excess deposits is falling property sales.
"The increase in deposits caused by the reduction in home purchases will mainly appear in 2022. In the first 11 months of 2022, residential sales fell by 28.4% year-on-year. We assume that residential sales in 2022 will fall by 28.5% year-on-year, while the central growth rate is 8.8%. In 2022, residential sales will fall by 6.1 trillion yuan compared with the sales center." Cheng Qiang's team believes that about 50% of residents' house purchase funds come from bank loans, and it is estimated that the excess deposits of residents caused by the decline in real estate sales in 2022 will be about 3 trillion yuan. Yuan.
The financial redemption at the end of 2022 also added a "fire" to excess deposits.
"The return of wealth management products in 2022 mainly occurred during the period of substantial adjustment in the bond market in the fourth quarter, and the estimated scale is about 1.5 trillion yuan." Cheng Qiang's team said that the return of wealth management products began in 2018, when the new asset management regulations were officially issued , the scale of non-standard wealth management represented by entrusted loans and trust loans began to peak and fall.
The total growth of bank wealth management from 2019 to 2021 is about 1.1 trillion yuan lower than that of the central bank, and in the second half of 2022, there will be large-scale bank wealth management redemptions.
He predicts that from 2019 to 2022, financial management will contribute 2.6 trillion yuan in excess deposits.
The stock market is expected to turn into an incremental game
As far as the stock market is concerned, in Chen Guo's view, excess savings indicates that there is no worry about funds, and the core is still the time and slope of confidence recovery.
"At present, the real estate financing policy is gradually liberalized, the epidemic prevention and control measures are continuously optimized, and the domestic demand boosting policy is on the way. Overall, the fundamentals still have short-term pressure, but there is strong certainty of long-term improvement. Once confidence is regained by then, Residents' balance sheets are moving towards repair, and the backlog of excess savings can be expected to flow to the stock market under the improved risk appetite." He predicts that in 2023, concerns about funds will gradually ease, and it is expected to turn into an incremental game.
Cheng Qiang also believes that the excess deposits of residents are mainly caused by the lack of consumption scenarios, the decline of real estate sales and the return of wealth management products. In 2023, it is expected that all industries will improve to a certain extent, which will drive the consumption of preventive savings.
Among them, in the neutral scenario, the accumulated excess deposits in four years are 10.8 trillion yuan. Assuming that 10% of the excess deposits will be released in 2023, or 1.08 trillion yuan, if all the funds are used for consumption, it will increase from about 43.6 trillion yuan in 2022. In terms of the total scale of social consumption, it can drive the growth rate of social consumption by about 1.2 percentage points in 2023; if all of them are used for house purchases, the total sales of commercial housing in 2022 will be 13.9 trillion yuan, which will boost the sales of commercial housing by 7.8% percentage point.
And if it is all used to invest in the equity market, based on the scale of the free market value of 35.5 trillion yuan in 2022, the boost to the equity market can reach about 3 percentage points.
"When the stock market is in an obviously rising bull market, incremental funds tend to enter the market in a large amount; when the broad-based index begins to fall significantly, the stock market funds will obviously flow out; finally, when the stock market tends to fluctuate, the capital side also tends to fluctuate slightly. Tight balance." Xun Yugen said that from the perspective of the bull-bear cycle, the relationship between the capital side of the stock market and the bull-bear cycle is "bull market entry, bear market exit, and tight balance in volatile markets."
He predicts that in 2023, A-share funds will return significantly, and the overall incremental scale is expected to reach trillions.