Why did A-share end dive suddenly? What signals are released? This article is thorough

 Why did A-share end dive suddenly? What signals are released? This article is thorough

Since the middle of the year, the core driving factors of a shares are no longer the economic recovery and policy expectations, but the Sino US friction issue. It is also because of the great uncertainty between China and the United States that the market is difficult to form a long-term expectation. Therefore, the A-share market is in a rather uncomfortable shock pattern at this stage.

There are two main reasons for A-share diving this afternoon

First, the opening of economic business to foreign investors led to the decline of securities companies. In June, China allowed Wall Street investment bank JPMorgan Chase to operate its first fully foreign-owned futures business on the mainland. The financial industry is gradually opening up to foreign capital, and the market may worry about the impact on domestic securities companies. Moreover, the stock market sentiment is biased. On the disk, the technology stocks all callback, the digital currency, UHV, financial technology and other indexes fell sharply, gold stocks significantly callback.

The second is the worry about the marginal tightening of domestic monetary policy. We know that monetary policy has been marginal tightening since the middle of the year. From the current market liquidity point of view, overnight Shibor has recovered more than 2%, and the largest net liquidity recovery in July in the year. Taking into account the policy instruments including RRR reduction, MLF, tmlf and reverse repurchase, the net withdrawal of funds in July exceeded 680 billion.

Just after todays closing, the central bank released the social finance data for July at 16:30, which verified the markets concern: in July, the new social financing was 1.69 trillion yuan, which was significantly lower than the previous value (the previous value was 3.43 trillion yuan). Among them, RMB loans increased by 1.0 trillion, 0.9 trillion less than the previous value.

The two factors that caused the new RMB loans in July to be lower than expected were short-term loans of residents, which increased by 151 billion yuan in the month, with the former value of 340 billion yuan; the short-term loans of non-financial enterprises decreased by 242.1 billion yuan, with the former value of 405.1 billion yuan.

Generally speaking, the decrease of residents short-term loans means that the willingness of general consumption to borrow is insufficient, but the two are not necessarily positively correlated. In addition to the expectation of future income and expenditure prospects, short-term borrowing is also affected by seasonal factors, which tend to show signs of decreasing at the beginning of the quarter and rising at the end of the quarter.

From the consumption data, the total retail sales of consumer goods in July was 3.35 trillion, an increase of 0.15 trillion compared with the previous value, and the decline rate also converged on a year-on-year basis. Therefore, there was no problem with the recovery of total consumption. The decrease of short-term loans of residents in that month was more seasonal. This seasonal factor is related to the repayment cycle of the commercial banking system. Since the new credit reflects the change of stock, the repayment cycle is generally divided into three months and six months, and the first quarter of each year, which benefits from the Spring Festival, belongs to the peak consumption season, so it will cause seasonal changes in the credit stock in the second and third quarters of the year. Seasonal changes in stock mean that monthly increases are adjusted accordingly.

For short-term loans of enterprises, it is generally for the working capital of production and operation. Liquidity is divided into two levels, one is the level of permanent demand, the other is the level of temporary demand. The former can be supplemented by the equity capital of the enterprise, and the insufficient part is met by the medium and long-term loans issued by the bank; the latter is adjusted by the banks short-term loan.

In July, the newly added social finance was 1.69 trillion yuan, which was significantly lower than the previous value (3.43 trillion yuan). The main drag of social finance lies in the decrease of new RMB loans, bill financing, corporate debt and government debt. Although the manufacturing PMI continued to improve in the month, the credit environment did tighten, which corresponded to the increase of corporate bond financing income.

It should be noted that although the local government issued 42.2 billion yuan of new bonds in July, the lowest since this year, it will usher in another peak in August. If the remaining 1.9 trillion yuan of new bonds are to be issued before the end of October, it means that the average monthly issuance scale in the following months needs to reach 800 billion yuan.

In short, the decrease in social loans and new loans in July was due to the marginal tightening of monetary policy, which represented more the willingness of the capital supply side. The reason is that the policy thinking has changed from counter cyclical regulation to cross cyclical regulation. 2% of GDP in the second quarter exceeded expectations. Driven by financial funds, the economy is expected to continue to pick up in the second half of the year. It is preliminarily estimated that the growth rate in a single quarter is more than 6%. The current tightening of the credit environment is not a trend strategic adjustment of the policy level, but just to avoid overheating of the economic rebound, and to leave ammunition for the uncertain environment in the middle and long term.

This article is the exclusive contribution of Netease Research Bureau and does not constitute investment decision.

Netease Research Bureau is a financial and professional think tank created by Netease News. It integrates the original multimedia matrix of NetEase Finance and economics, relies on the wisdom of hundreds of top economists at home and abroad, conducts rational and objective analysis and interpretation on hot topics of economics, and creates a leading financial think tank with attitude. Welcome to contribute (contribution email: [email protected] uff09u3002

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