In November, the Chinese market was extremely unstable.
Ants listed in a hurry to press the pause button, the worlds largest wealth making feast overnight turned into a cloud.
Evergrande and shenfangs reorganization ended, complaining and borrowing from others After all kinds of tricks, we still have to recognize the situation.
These news points to the same signal: the indispensable link of internal circulation is to promote the balanced development of finance, real estate and real economy.
In the next five years or even longer, the top management will resolutely curb the trend of real estate financialization and the trend of capital from real to virtual.
However, at the same time, a credit storm originating from the real economy and sweeping Chinas bond market has also accelerated its fermentation in the near future.
Last week, Yongcheng Coal, a state-owned enterprise in Henan Province, defaulted on its corporate bonds without warning. Whats more, Yongcheng Coal transferred its core assets at will before it broke the contract. A momentum of making up its mind not to repay the debts triggered a huge market shock. The belief of state-owned enterprises collapsed and the heart was cooled.
The central government has never attached importance to capital markets as it is today. As a long-term strategic task, the proportion of direct financing has been repeatedly mentioned by the senior management in different situations. As the main force of direct financing of real economy and an important symbol of Chinas economic modernization, the bond market has shown its original color at this time.
Pile by pile, are staggering risk events, the market is restless. With the deepening of economic adjustment, the more we have to learn to adapt to the emergence of more beyond expectations.
Smooth internal circulation is not easy. However, at present, China is still stable.
In this credit storm, we will also see three major signs of adjustment in Chinas economy.
The first signal is to open the normal of state-owned enterprises default.
Before Yongmei, Ziguang, a joint venture partner of Qinghua department and BMW Brilliance, also burst into thunder one after another.
On Monday, the Tsinghua departments purple light was also revealed by the media that the 1.3 billion private equity bonds issued in 2017 had actually defaulted, and the plan of paying back 100 million first, leaving 1.2 billion to be extended for half a year was aborted.
On Friday, brilliance group announced bankruptcy reorganization. Subsequently, China Securities Regulatory Commission announced special inspection on brilliance automobile group and related intermediary agencies.
The core assets are transferred to the subsidiary company free of charge, and the debt is not paid back.
The AAA rating belief of state-owned enterprises and school enterprises is wavering in the wind and rain, and the credibility of Chinas rating agencies has to be doubted.
The bitter fruit of this wave of state-owned enterprises default was swallowed after the wave of blindly increasing leverage and getting rich four years ago.
Also in this storm, the bond markets structured issuance issued the first penalty. The association of interbank market dealers announced that Jinggong group had directly or indirectly subscribed for its own bonds in the process of issuing, thus disrupting the market order.
On the same day, the Association issued a notice to prohibit such self financing behavior. Such violations have been banned in Shanghai and Shenzhen stock exchanges.
However, these state-owned enterprises in breach of contract have not received any punishment at present. Instead, the financial intermediary institutions have fallen into a bad situation. Instead, they have become the financial supply side reform.
There is still a long way to go for the bond market to integrate with the international capital market.
The second big signal is the acceleration of credit stratification.
So far, the most direct impact is caused by the rising financing cost of enterprises and the decline of local credibility.
On November 20, the yield of one-year onshore treasury bonds reached a two-year high.
The risk sentiment of the credit bond market has been transferred to the interest rate bond market. In addition, the institutional funds are not sufficient at the end of the year, so they can only redeem the liquidity from the national debt market, and the prices of national debt have fallen.
The central bank not only did not relax its monetary policy, but also had the idea of withdrawing from the easing policy, which led to the continuous disturbance of treasury bond yield.
Credit risk is pricing again. The whole bond market is experiencing a sell-off tide. The bond prices of coal enterprises and some AAA state-owned enterprises have fallen sharply. Some have to cancel their bond issuance. Bond funds also show some fear of redemption. Due to the credit differentiation of enterprises, the financing cost of state-owned enterprises with weak qualifications is increasing in the short term.
On the other hand, it is possible that the local governments belief in Gangyu has not been broken, and the good luck of some local governments has been overdrawn.
In Chinas political and business environment, these vicious default events undoubtedly affect the credibility of some local governments, and the weak qualification state-owned enterprises in the region suffer. Including last week in the Qinghai model market rumors, Yunnan city investment bonds suffered a sell-off.
The neighboring provinces of Henan are also afraid of being implicated.
For example, Shanxi. The leaders of Shanxi province came out in time to say that there is no problem with the bonds that the provincial state-owned enterprises need to pay in the near future. The idea of not paying debts has never flashed in my mind. It is natural and proper to borrow money to repay money. This is the gene of Shanxi Merchants. Beautiful words have a little effect on calming market sentiment.
For example, Hunan. There is a document on the Internet, a certain economic and Technological Development Zone is half threatening and half praying that an enterprise within its jurisdiction can not breach the contract. Because of the overall stability of the whole region.
In the future, the regional differentiation will be reflected in the accelerated stratification of credit. The richer the head area is, the easier it is to finance and develop faster. The reason is very simple: money begets money. And where credit is not good, how to borrow capital to develop will become a problem.
The market shock caused by the default has also attracted the attention of the senior management.
According to Peng, the State Council has issued instructions requiring relevant departments to assess the risk situation in the credit market to ensure the stability of the financial market, without spillover effects or cross market or systemic financial risks.
The third big signal, controlling leverage and stabilizing currency, is the next trend.
Lou Jiwei, former Minister of the Ministry of finance, gave a briefing on two points of view, which attracted the attention of the market
First, the debt cycle and business cycle dislocation, we should firmly reduce leverage to prevent debt collapse.
He believed that the accumulation, crisis, recession and recovery of the previous debt cycles corresponded to the prosperity, recession, pause and recovery of the economic cycle. Now the debt cycle shifts to the right, which is out of alignment with the business cycle. The accumulation of debt corresponds to the recession of the economy. However, the high debt ratio makes the space of fiscal policy and monetary policy narrow. We should firmly reduce the leverage to prevent the risk of debt collapse in the later stage.
As of the third quarter of 2020, Chinas macro leverage ratio was 270.1%, an increase of 24.7 percentage points over the end of 2019. This round of debt is mainly driven by enterprises, especially private enterprises. The leverage ratio of the enterprise sector is 164.0%, that of the residential sector is 61.4%, and that of the government sector is 44.7%, which is 12.7%, 5.6% and 6.4% higher than that at the end of 2019.
Second, it is time to study the orderly exit of loose monetary policy.
The basis is that China is ahead in economic recovery, but the pace of exit should be well mastered, and it must be studied early.
The International Monetary Fund has warned that the global economic recovery may be weakening. In contrast, as the only major economy in the world to achieve positive growth this year, the regulatory authorities are optimistic about the future economic expectations.
LPR has not decreased for seven months. Some people even think that the central bank may raise interest rates. However, it is inevitable that the central bank will withdraw from easing.
Zhou Chengjun, director of the Financial Research Institute of the central bank, also said recently that generally speaking, China does not have much space to cut interest rates because the current market interest rate level is lower than the natural interest rate equilibrium level. This will lead to a certain degree of distortion, lead to the allocation of resources to some inefficient areas, and will produce a certain degree of moral hazard.
Even in this credit storm, the central banks position seems to be intact.
When the real economy borrows money, it should also be prepared to not cut interest rates as soon as possible.
On the one hand, China should prevent the debt from getting out of control, and on the other hand, it should prevent inflation caused by easing. This is not a small task.
Of course, the high-level strategic layout has become more and more clear, and security has been placed in a more prominent position as a prerequisite for development. Naturally, there will also be forward-looking countermeasures to deal with the changes in domestic and international situations.
With the deepening adjustment of economic layout, the new development pattern of Chinas dual cycle will accelerate to form. This is the foundation of Chinas response to all changes in the situation.
This article is authorized to reprint the WeChat official account from ID:zgtrend. Smart Valley trend: it serves the capital awakening of a middle class and helps more people get wealth. It is reported that people in the depths of the imperial capital will also turn on the number before going to bed. Policy, change of urban economy Heres the most authentic China, with trend signals that are hard for many to detect.
Source: Zhigu trend editor in charge: Chen Hequn_ NB12679