The full landing is officially scheduled! How big is the impact of 600 billion yuan entering the market?
2023-03-27
Today (27th), the central bank officially implemented the reduction in reserve requirements, which is expected to release 600 billion yuan of medium and long-term funds. According to the central bank's announcement on March 17th, in order to promote the effective improvement of the economy in terms of quality and reasonable growth in terms of quantity, lay a solid foundation for macro policy combination, improve the level of service to the real economy, and maintain a reasonable and sufficient liquidity of the banking system, it is expected to release 600 billion yuan of medium and long-term funds. It has decided to reduce the deposit reserve ratio of financial institutions by 0.25 percentage points on March 27th, 2023. After this reduction, the weighted average deposit reserve ratio of financial institutions is about 7.6%. According to the statistics of Guojin Securities, this reduction in reserve requirement is expected to release 600 billion yuan of medium and long-term funds, with MLF exceeding the limit by 281 billion yuan in the superposition month. In March, a total of nearly 900 billion yuan of medium and long-term funds were invested. Zhou Maohua, a macro researcher at the Financial Market Department of Everbright Bank, said in an interview with the media that the central bank aims to release low-cost and long-term liquidity to the banking system through this comprehensive reduction in reserve requirements, guide financial institutions to increase their support for weak links in the real economy and key emerging areas, optimize the credit structure, and accelerate the recovery of consumption and domestic demand. Wen Bin, Chief Economist of China Minsheng Bank, believes that in the current situation where the cost of liabilities in the banking industry is under pressure and the net interest margin continues to narrow to historical lows, timely reduction of reserve requirements by the central bank can help better stimulate the demand for physical financing, stabilize the economy, reduce costs, effectively alleviate bank debt and operational pressure, and enhance operational stability and risk resistance. How does the stock market and bond market go? Institution: The reduction of reserve requirement supports the stabilization and upward movement of A-shares. The reduction of reserve requirement means that there is more liquidity in the market, which is undoubtedly good for the stock market and bond market. Chuancai Securities pointed out that it is expected that after the implementation of the reserve requirement reduction, the stock market and bond market will usher in positive results, and it can focus on the banking and real estate sectors. For the stock market, lowering the reserve requirement provides credit support for various industries, stimulates economic growth, and the economy is basically in a good situation. This has played a boosting role in the stock market. Moreover, lowering the reserve requirement has also boosted investor confidence. For the bond market, this reduction in reserve requirements has released liquidity funds and injected liquidity into the interbank market. The cost and price of funds have decreased, and the expectation of broad credit has increased, calming the volatility of the bond market in the past period. Zhang Xia, Chief Strategic Analyst at China Merchants Securities, believes that after the outbreak of risk events on the periphery, including Silicon Valley Bank and Credit Suisse Bank, this reduction in reserve requirements is conducive to boosting market confidence. It is expected that the released liquidity is expected to help finance gradually stabilize and recover, supporting the steady rise of A-shares. Zhang Dawei, the chief analyst of Zhongyuan Real Estate, said to Zhongxin Jingwei, "This reduction in the reserve requirement will definitely be beneficial for home buyers, and the mortgage interest rates of most loan buyers will continue to decrease." Zhang Dawei further pointed out that, overall, the current real estate market needs to restore confidence among home buyers, and the market must start from the first and second tier to stabilize. Currently, there has been a slight stabilization in the market from January to February, The market is expecting more easing policies. In particular, first-tier cities need more policies to stabilize the property market. "Lowering reserve requirements can definitely reduce credit costs, but targeted policies need to be improved for first-tier cities. The entire Chinese real estate market must be stable in first-tier cities, especially when improving demand support policies are implemented in order to truly stabilize the market," Zhang Dawei said.
Edit：Hou Wenzhe Responsible editor：WeiZe
Source：economic view
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