Opening stock market in the process of war epidemic: limited market impact, no panic

 Opening stock market in the process of war epidemic: limited market impact, no panic

Secondly, the impact of the epidemic on the economy is structural and limited. The epidemic coincides with the Spring Festival holiday. Traditionally, the Spring Festival holiday has two effects on the economy. On the one hand, catering, transportation, tourism, retail, entertainment and other service industries have become the peak season of sales, which is beneficial to consumption; on the other hand, infrastructure investment, industrial production, export and other industries will stop operation due to the holiday, and they will generally resume work in full after the Lantern Festival.

Due to the need of epidemic prevention, the Spring Festival holiday has frozen the social mobility, which has an impact on the consumption of catering, transportation, tourism, retail, entertainment, etc., has a relatively small impact on industrial production, investment and export, and may have a certain positive impact on online education, e-commerce, video, games, etc. Therefore, it shows structural characteristics, which has a great impact on small and medium-sized enterprises engaged in service industry, and a small impact on A-share listed companies. Therefore, the scope of macro impact is relatively small, but due to its structure, it has a greater impact on small and medium-sized enterprises. From the regional point of view, it mainly has a serious impact on Hubei and has limited impact on other regions.

Even though the impact of the epidemic on the economy is limited and the mood is gradually calmed, the capital market is still subject to another sensitive indicator, namely liquidity. Worry driven selling is easy to cause liquidity tension, so there is a cycle, especially if considering the problems of equity pledge and financing leverage, it may enlarge the selling power, and this may also attract speculators to play the game of four or two thousand catties. On February 3, the central bank made a timely statement that it would provide sufficient liquidity for the market, launch RMB 1.2 trillion reverse repo operation in the open market, and ensure sufficient liquidity supply. The overall liquidity of the banking system is RMB 900 billion more than that of the same period last year. In addition, institutional investors have the responsibility to maintain market stability and avoid participating in speculative activities that create big ups and downs.

It is a short-term behavior for the central bank to provide liquidity support in response to emergencies, increase the intensity of counter cyclical regulation, maintain the reasonable and sufficient liquidity of the financial market, and maintain the stable operation of the money market interest rate. It should not be seen as a fundamental shift in monetary policy due to the epidemic. In addition to Hubei Province, local governments should first strengthen the prevention and control of the epidemic, restore normal social order and market order as appropriate where conditions permit, and support financial and monetary policies to prevent the epidemic from interfering with the overall situation of Chinas economic reform and development.

At the same time, considering the complexity of the supply chain, if the shutdown time is too long, it will not only lead to the overall impact on domestic production and exports, but also impact on the supply of other Asian countries and some global commodities due to Chinas dominant position in the global supply chain, forming an adverse external environment for Chinas economy. Therefore, the key is to control the epidemic before returning to work. At present, China has the ability to achieve this goal, at the same time, a large number of investors are waiting for the opportunity to copy the bottom, which may lead to strategic ups and downs of a shares, there will be no trend deterioration, and investors should be rational.

Source: responsible editor of 21st century economic report: Chen Hequn, nb12679