Is it really hard to buy a cow for a thousand dollars? However, from this mornings information, A shares opened 0.81% higher, there are clear signs of a decline. In the bond market, the 10-year Treasury bond futures opened 0.08% lower due to the generally anticipated cut in interest rates in the early period, and fell into a volatile market.
Despite the complexity of short-term market information, securities researchers remain optimistic about the late market. Especially at the policy level, it is generally expected that there will be a rate cut around September 20. The rate cut is expected to be about 15 basis points. It is believed that the rate cut will further boost market confidence and push A shares to a new high. In the bond market, the good incentive to cut interest rates will be more direct, and the yield of 10-year Treasury bonds fell below 3% has become the consensus of most consolidation researchers.
Macroscopic good combination boxing has not been finished yet
On September 6, the central bank decided to reduce the reserve requirement ratio of financial institutions by 0.5 percentage points on September 16, 2019. This reduction will release about 900 billion yuan of long-term funds.
Statistics show that since 2015, the central bank has implemented 13 benchmarking measures. However, this reduction is different from the previous one. This reduction is a combination of comprehensive reduction + directional reduction. In the past, the reduction is usually in a single way.
However, after the benchmark reduction, the market is paying more and more attention to interest rate reduction. Some analysts believe that interest rate cuts are more direct to boost the real economy than benchmarking. In addition, interest rate cuts are being carried out in other countries of the world. China also needs to maintain a relatively consistent pace with the outside world to hedge against the impact of the external environment.
CITIC Securities: September Interest Rate Reduction
The reduction is generally appropriate, and the 0.5 percentage point reduction does not restrict the further development of the follow-up monetary policy. After the central bank began to promote the reform of LPR mechanism in August, the linkage framework of adjusting the interest rate of LPR by adjusting MLF interest rate has been activated, and now it is the time to adjust.
We judge that if the Fed cuts interest rates in September, the central bank will probably synchronously cut open market interest rates. MLF rates are expected to fall by 10-15 BPs to 3.15-3.2%. At the same time, the central bank is expected to guide one-year LPR rates to fall by 15-20 BPs from the current level, helping to reduce real economic interest rates to further stabilize the economy.
Citigroups benchmark forecast is a partial renewal of MLF due in September and a 5-15 basis point cut in MLF interest rates; LPR is expected to fall on September 20, which means that lending rates in the banking sector may fall faster.
Huatai Securities: Interest Rate Reduction Space at 15BP
Incremental funds are coming
Li Xinjun of Ping An Securities said that according to the official data released by MSCI, the scale of pure indexed fund accounts for about 15% to 20%, active tracking index fund accounts for about 80% to 85%, and FTSE Russell and S&P Dow Jones double-plus code China on September 23. The three major indices can total 40 billion to 70 billion U.S. dollars (discount). About 500 billion yuan) of incremental funds, including passive allocation of 18 billion US dollars, active tracking funds may flow into about 20 billion US dollars to 50 billion US dollars.
The research institutes estimate that the three major indices (MSCI, S&P Dow Jones and FTSE Russell) will bring up to $70 billion (active + passive allocation) of incremental funds, equivalent to nearly $500 billion of RMB.
It is worth noting that some people familiar with the situation told the Chinese journalists of securities dealers that in the near future, funds from the original speculation have been continuously entering the stock market. Recent securities margin balances of some brokerage business departments have been continuously increasing, and there has been a continuous increase of tens of millions of dollars per day in the business departments. Some of the money is the original speculation funds.
With the successive efforts of policy combination, the signals of six stability have been released frequently. Under the positive fiscal policy and more active monetary policy, the optimism of the market has obviously warmed up. For the A-share market, many securities analysts are looking forward to a bigger bull market.
Today, September 9, the market opened sharply higher, up 0.81%, brokerage stocks rose across the board, and the software sector continued to be active.
CITIC Construction Investment Securities: A Share will reach a new high
CITIC Construction Investment Securities, which issued the bull market banner in the first quarter, also reissued that after the merger of interest rates, the central bank implemented the third round of reduction in the year. Credit liberalization and interest rate decline will gradually be realized. Profit bottoms are expected. A shares are expected to reach a new high and achieve the target of 3500 points.
With the coming of the second stage of bull market, securities firms will constitute the best industry. In the long run, Chinas economic development will be directly financed. Capital market reform will also benefit securities firms in the long run. Secondly, interest rates fell, economic restructuring, long-term growth stocks valuation level rose faster, superimposed earnings expectations improved, long-term bullish.
Overall, the team recommends that securities firms and technology be allocated as the top priority, as well as cyclical products such as chemicals and automobiles with reversed dilemmas, adhere to consumer and high dividend products, and achieve a bumper harvest in autumn and autumn.
Haitong Securities: Market Adjustment has been Full
Haitong Securities said that one of the two main conditions for the second wave of bull market rise was clear. The adjustment of the market to enter the second wave of bull market rise needs the resonance of the fundamental and policy aspects. At present, there have been obvious changes in the policy aspects, and the fundamentals are probably catching up with the bottom.
Haitong Securities believes that compared with the policy and basic background of the second bull market rise in history, the Shanghai Stock Exchange Index 2733 points may have begun to enter the second bull market rise. Compared with the adjustment of the first stage of 12 bull markets from June 2005 to December 2005 and October 2008 to 2008, the adjustment time and space of the Shanghai Composite Index since 3 288 points on April 8 have been sufficient.
CITIC Securities: The current round of gains is expected to hit the previous years high
A shares still have upward momentum, and this round of gains is expected to hit the previous years high. Domestic policy easing expectations are clear. In the coming weeks, the European Central Bank, the Federal Reserve and the Peoples Bank of China are expected to cut interest rates sequentially, making global easing clearer. External events and turning points for corporate profits need to be confirmed, but the margin is improving. Four major concerns are gradually clear. A shares still have upward momentum from breaking through to rising trend. The Shanghai Composite Index is expected to hit the previous high in the year.
Bond market bull market will enter a new stage
With the coming of reduction of interest rates, bond yields are more direct. At present, the yield of 10-year Treasury bonds has reached 3.02%, which is one step away from 3%. To break through this threshold, the basic or short-end interest rates need to show a downward trend. At present, the bond market is looking forward to a cut in interest rates. Opening the downward window of long-term interest rates by short-end interest rates, we need to pay attention to whether the MLF renewal due on September 9 and 17 will lower the operating interest rates. Once interest rate cuts come in mid-September, bond yields will hit a new low and the bull market will enter a new stage.
On September 9, the 10-year Treasury bond futures market opened low, down 0.08%, and then started a volatile trend. Thus, the bond market has already lowered ALLINs benchmark expectations. In addition, according to Wind data, a total of 441.5 billion MLFs expired in September, including 176.5 billion on September 7, as the weekend will be extended to Monday (September 9) and 265 billion on September 17. However, from the open operation of the central bank today, it is interesting that the central bank carried out 120 billion yuan 7-day counter-repurchase operation. Today, 176.5 billion yuan MLF expires, and there is no full renewal. The winning rate remains unchanged at 2.55%.
Merchants Securities Collection Team: Bond yield downward direction is clear, but not too optimistic
For bond yields, one is to pay attention to the scale of the reduction in net investment, which can be preliminary answer in the continuation of MLF. The second is when to adjust the policy interest rate after the benchmark reduction. Usually, MLF and 7-day reverse repurchase interest rate change synchronously. The downward space of bond yield depends on the level of short-end interest rate. Policy interest rate cuts are bound to be implemented, but the timing is uncertain in September. One of the reasons is the issue of RMB exchange rate mentioned in our previous report. So the downward direction of bond yields is clear, but the downward margin in September can not be too optimistic by only one downward margin.
Ping An Securities Collection Team: Reducing the Level Reduces the Necessity of Lowering MLF Interest Rate
From the point of view of interest rate consolidation, the need for short-term MLF interest rate cuts does not seem significant. After the LPR market quotation reform, the central bank prefers to reduce the increase of commercial banks rather than reduce the MLF interest rate to reduce the loan interest rate. In fact, one of the important considerations for the central bank to use full reduction instead of full structural reduction is to reduce the increase of LPR quotation by reducing the debt cost of commercial banks, and the reduction itself is also reducing the necessity of reducing MLF interest rate in the short term.
As for the short-term OMO Open Market Operating Rate, we dont think theres much chance of a short-term downturn. This is mainly due to the fact that after the reform of LPR quotation, the transmission mode of monetary policy in China was changed from policy interest rate - money market interest rate - deposit interest rate - overall debt cost of commercial banks - loan interest rate to MLF interest rate - LPR interest rate - loan interest rate, which is the transmission mode of new monetary policy. In the model, the importance of short-term OMO interest rates has declined. Short-term open market operating interest rate will play a part in preventing the bond market from leveraging, and its volatility will be improved.
Haitong Securities Fixed Collection: Stock and Bond Double Bulls Hope to Continue
The most beneficiary of this reduction should be financial assets such as the stock market and bond market. Firstly, the reduction releases a large amount of low-cost funds to financial institutions. Even if the reduction replaces MLF, the financing cost of financial institutions has also decreased, which can support the interest rate of money market to remain at a low level, which is beneficial to the bond market as a whole.
On the whole, the current round is not flooding irrigation, strictly controlling the flow of funds to real estate, and mortgage interest rates do not drop, only targeted to reduce interest rates in the financial market and corporate sector, which means that the real estate bubble is difficult to reproduce, and stocks and bonds are expected to continue.
Expected Stability of RMB Exchange Rate
On September 9, the onshore RMB exchange rate against the US dollar rose slightly, recovering at one time at the 7.12 level, while the offshore RMB against the US dollar fell more than 150 points and missed the 7.12 level. The yuan rose 4 basis points to 7.0851 against the dollar.
According to the latest data released by the State Administration of Foreign Exchange, by the end of August 2019, Chinas foreign exchange reserve was 317.2 billion US dollars, up 0.1% from the end of July and 1.1% from the beginning of the year. Wang Chunying, spokesman for the State Administration of Foreign Exchange, said that in August, Chinas foreign exchange market was in good order and the supply and demand of foreign exchange remained basically balanced. Influenced by global economic growth, trade situation, geopolitics and other factors, the US dollar index rose slightly and the bond prices of major countries rose. The scale of foreign exchange reserve has increased due to exchange rate conversion and asset price changes.
Shen Wanhongyuan Macroscopic: The sharp decline in bond market yields in major developed economies was the main reason for the small increase in foreign reserves in August. The central banks announcement of the reduction is considered to be more a hedging measure against the narrowing of the base currency, rather than an indication that monetary policy will be substantially relaxed and that the pressure on the RMB exchange rate is expected to be limited. Considering the continuous depreciation or the pressure of outflow of foreign debts, which will concentrate on maturity from the second half of 2019 to the first half of 2020, may trigger a negative cycle of exchange rate depreciation-deterioration of balance of payments, it is expected that the central bank will lead the RMB exchange rate to stabilize in the year.
Ping An Securities: Looking ahead, the space for further devaluation of the short-term RMB exchange rate against the US dollar may be limited: first, the RMB has not formed a sustained devaluation expectation; second, the spread of the 10-year Treasury bonds between China and the US currently exceeds 150 BP, which is at a historic high; third, the long-term switching of the US dollar index may occur in 2019. One year, the current dollar index is at a high near 99, which makes it difficult to rise further. Fourthly, there is limited incentive for exporters to hedge tariffs once again, and the exchange rate of RMB against the US dollar is expected to stabilize around 7.20.