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China’s rate cut is here too!

Will the money for real estate flow to the stock market?

China’s “rate cut” is here too!
Will the money for real estate flow to the stock market?

[Related reading]”Reducing interest rates”?

A picture to understand the impact of the LPR cut on the stock market and buying a house Original title: The heavyweight Chinese “rate cut” is also coming!

Will the money for real estate flow to the stock market?
  Source: Oriental Fortune Research Center Against the backdrop of global interest rate cuts, China’s “interest rate cut” is finally here!

On September 20, the Commerce People’s Bank of China authorized the National Interbank Funding Center to announce the loan market quoted interest rate on September 20, 2019. The specific one-year LPR is 4.

20%, LPR over 5 years is 4.


At the top of the list, the one-year LPR fell by 5 basis points, the second consecutive decline, and the LPR over five years remained the same as last month.

  Data source: How did China Currency Network LPR come into being?

  Public information shows that an announcement was issued in advance on August 17, starting from August 20, 2019, the reorganization authorized the National Interbank Funding Center to announce the loan market quoted interest rate at 9:30 on the 20th of each month.Postpone.

  Image source: CCTV Finance Therefore, on September 20, the market ushered in the September loan market quoted interest rate, which is the release of LPR.

  According to the loan market quotation rate formation mechanism after the reform, the loan market quotation and quotation bank should operate the interest rate in the open market before 9 o’clock on the 20th of each month, which mainly refers to the method of gradually increasing the convenience of lending.Interbank lending center quote.

  The National Interbank Funding Center calculates the loan market quoted interest rate based on the arithmetic average after removing the highest and lowest quotes.

  Image source: CCTV Finance downgraded LPR for three reasons. Respondents analyzed that, at least from the perspective of the loan market, lower LPR will have the effect of “like interest rate reduction.”

  From a comprehensive market perspective, there are three main reasons for the one-year LPR quotation rate to continue to fall: First, after the full reduction of the landing on September 16, the bank will reduce the cost of funds on the liability side of the bank and drive LPR pricing lower.

Wen Bin, chief macroeconomics officer of Minsheng Bank, said that the full release of the released funds will help reduce the cost of bank liabilities, and bank quotes may be modestly lower by 5BP.

  Second, in the context of the downward pressure on the current macroeconomic budget, regulators have repeatedly proposed to increase counter-cyclical adjustments, further reduce the financing cost of the real economy, and push the LPR downward.

  Third, after the Federal Reserve announced a rate cut of 25BP on September 19, it also opened up space for China’s monetary 杭州夜生活网 policy.

  Cheng Shi, chief economist of ICBC International, said, “The dollar index is changing at a high speed and the stable operating characteristics of the center are expected to continue to replace the external pressure of the RMB exchange rate, and the growth of the RMB exchange rate is back.

This will also be an open window for national monetary policy. Based on the reformed LPR formation mechanism, it will gradually move towards lowering the decline in loans by reducing MLF interest rates from the fourth quarter of this year.

“Huatai Securities also believes that it is not possible to lower LPR and MLF only in a continuous follow-up.

  Huatai Macro’s Li Chao team stated that the one-year LPR is linked to the MLF interest rate of the same term. This quote adds 90BP to the MLF, and the last time was 95BP. However, we believe that only lowering LPR without downgrading MLF is not sustainable in the long term.

The MLF interest rate was adjusted in advance for a long time, and the amount of investment was strictly controlled. The MLF renewed on September 7 was renewed, and the sequel continued to be reduced on the 17th. We believe that we are concerned about risk, and we are cautious in adjusting interest rates.When the rate is not moving, LPR can only reduce interest rates slightly.

  Why does the 1-year LPR fall without moving for 5 years?

  It may be that the decline in LPR is limited to the one-year period, and the 5-year LPR is not moving. What is the reason?

  Data source: From the perspective of China Currency Network’s comprehensive market, the 5-year LPR does not fall mainly to avoid stimulating the real estate market.

  Congress issued a daily announcement on August 25 that from October 8 this year, the new mortgage interest rate will be formed based on the corresponding LPR in the most recent month as the pricing benchmark, mainly based on LPR over 5 years.

  In other words, the mortgage rate = LPR over 5 years + plus points.

  The 21st Century Business Herald quoted a Beijing-based banking analyst as saying that the five-year LPR offer is mainly linked to mortgage loans in various places. This time the five-year LPR is not reduced to avoid stimulating real estate.

With the successive announcement of interest rates on mortgage loans, the current real credit changes can still be adjusted. The new loan interest rate is basically the same as that of capital, and even rises slightly.

  Huatai Securities also pointed out in its research report on September 20 that the flat 5-year LPR quote reflects the idea of structural restructuring of real estate mortgage interest rates.

  China Securities Journal uses Beijing’s personal housing loan pricing benchmark as an example: the first commercial commercial housing loan interest rate has a discontinuous term LPR + 55 basis points, and the second commercial commercial housing loan interest rate is not equal to the term LPR + 105 basis points.
  According to LPR4 over 5 years.

Based on the 85% level, the minimum interest rate for the first personal housing loan in Beijing is 5.

4%, the second suite is 5.

9%.  At present, most of the banks in Beijing have implemented a mortgage rate of 5%.

39%, two sets of 5.

88%, a slight increase.

This also shows that under the new mortgage interest rate policy, rigor is still the main line of the real estate market.

  Huatai Macro’s Li Chao team also said that China has extended the LPR unchanged for more than 5 years this time, and also released a signal again: interest rates can be cut for China, but it has nothing to do with real estate for the time being!

  How will it affect the stock market?

  For the stock market, the decline in LPR is considered by many analysts to be favorable!

  Guoxin Securities Research Report pointed out that from the historical experience, the A-share market has a mixed probability of ups and downs within one month and three months after the first interest rate cut, and a greater growth probability within six months after the first interest rate cut.

In terms of industry, in the first half of the year after the first reduction of the benchmark interest rate on loans, the real estate and pharmaceutical industries performed relatively well, while the steel and banking industries performed relatively poorly.

  At the same time, from the perspective of logical analysis, LPR interest rate cuts benefit the stock market from three perspectives: one is to ease corporate financial burdens; the other is to stimulate demand, boost economic growth, and improve corporate earnings growth expectations; the third is to boost risk appetite.

  The most obvious is that interest rate cuts benefit the high-debt industry. In addition, active securities trading will also benefit the brokerage sector.

  Huatai Securities also believes that a slight reduction in LPR is positive for the stock market, and the decline in corporate financing costs is beneficial to all industries. It is expected to promote the improvement of market risk returns in the short term, but it is not good for the banking industry. However, because the LPR decline is still small, and the banks are fully protected, it mayWill have an impact.

  Zhang Lei, director of Yuandaxin Securities Research Institute, said that lowering LPR will definitely benefit the capital market, lowering interest rates, corporate costs will fall, and profits will increase. Of course, more funds should be prevented from flowing into real estate.

  How will it affect the bond market?

  As for the bond market, Guoxin Securities believes that the LPR downlink is not a way of reducing open market interest rates.

Policy rates such as MLF still constitute obstacles to continued lower bond yields.

At the same time, LPR guides the decline of loan interest rates and supports the development of the real economy, which is not conducive to the bond market from a fundamental perspective.

  However, Huatai Securities said that the bond market has multiple neutral effects, and the bond market is currently affected by expectations. The 8-month CPI rose to 2.

It is expected that there will be a risk of breaking 3% by the end of the year. The situation in the Middle East is not stable recently. The subsequent uncertainty of oil prices has risen. Lard resonance is still the core risk factor of the CPI. It is expected that the debt market will continue to fluctuate.

  (Reference for senior investors, does not constitute investment advice; the stock market is risky, and investment should be cautious.