Many people may not realize that they are standing at a pivotal turning point in history.
As the last week leading up to the October National Day holiday, which is the final sprint for the national economy in 2024, the central bank announced a series of major policy adjustments regarding currency, real estate, and finance.
China's policy expectation management and fulfillment are quite interesting; when they act, they do so with a super heavy impact, and it's often a multi-pronged approach: On the morning of September 24th, the State Council Information Office held a press conference with the central bank governor Pan Gongsheng, the director of the National Financial Regulatory Administration Li Yunze, and the chairman of the China Securities Regulatory Commission Wu Qing in attendance and making statements.
Policies such as reserve requirement ratio reduction, interest rate cuts, reduction of existing mortgage loan interest rates, and support for the capital market were all introduced.
This means that interest rate cuts, reserve requirement ratio reduction, reduction of existing mortgage loan interest rates, and reduction of down payment requirements are all being implemented at once, with the accelerator pedal pushed to the floor.
This latest official statement and policy expression are quite noteworthy.
Of course, for the current stock and real estate markets, they are considered significant positive signals both logically and in reality.
The stock market situation needs no further explanation, and for the real estate market, data released in September shows that the real estate market is still bottoming out, and those who are trying to catch the bottom are still bleeding.
In the domestic economic environment, there are continuous brewing factors such as perceived tightening, employment pressure, unemployment threats, income uncertainty, and the lack of a growth mainline, and the actual situation is like drinking water, one knows its temperature.
Therefore, in the economic environment and market, the expectation for national policy has also been raised to an unprecedented height.
Coupled with the fact that 2024 is about to enter its final quarter, whether it is to ensure targets or stabilize expectations, reality has put forward a practical demand for the country to exert force in key economic policy dimensions.
On September 24th, the domestic market and economic environment have welcomed policy fulfillment beyond expectations.
This article will be based on the latest policy statements by the central bank leaders at the National Information Office on September 24th, combined with the current domestic economic reality in China, starting from the perspective of respecting common sense and the law, to deeply explore the causal logic and policy demands behind a series of new policy trends, and to conduct a deep, attitude-laden, and well-founded special analysis and discussion on the possible trends and changes in the domestic real estate and stock markets.
Since we are going to talk, naturally, we will not just follow the mainstream public opinion, but talk about something deep, key, and essential.
On the morning of September 24th, the State Council Information Office held a press conference where the main leaders of the People's Bank of China, the Financial Regulatory Administration, and the China Securities Regulatory Commission introduced the situation of financial support for high-quality economic development.
Several major policies were introduced at the same time, with a strong policy force beyond expectations.
The market and public opinion environment had expectations for domestic reserve requirement ratio reduction and interest rate cuts, which are not considered major moves.
However, the reduction of existing housing loan interest rates, down payment ratios, and the central bank lending money to you for stock buybacks and increases, all these moves came out at once, which is beyond expectations.
Specifically: At 9 a.m. on September 24th, the State Council Information Office held a press conference.
The governor of the People's Bank of China, Pan Gongsheng, announced at the conference: First, reduce the reserve requirement ratio and policy interest rates, and drive down market benchmark interest rates.
The reserve requirement ratio will be reduced by 0.5 percentage points in the near term, providing about 1 trillion yuan of long-term liquidity to the financial market.
The central bank's policy interest rate will be reduced, with the 7-day reverse repo operation interest rate reduced by 0.2 percentage points, from the current 1.7% to 1.5%, guiding the loan market quotation rate and deposit interest rate to move down in sync, maintaining the stability of commercial banks' net interest margins.
Second, reduce the existing mortgage loan interest rate and unify the minimum down payment ratio for mortgages.
Guide commercial banks to reduce the existing mortgage loan interest rate to near the newly issued mortgage loan interest rate, with an expected average reduction of about 0.5 percentage points.
The minimum down payment ratio for second-home mortgages at the national level will be reduced from 25% to 15%, unifying the minimum down payment ratio for first and second homes.
Third, create new policy tools to support the development of the stock market.
Create securities, fund, and insurance company swap facilities to support qualified securities, funds, and insurance companies to obtain liquidity from the central bank through asset pledge, which will greatly enhance the ability to obtain funds and increase stocks.
Create special re-lending to guide banks to provide loans to listed companies and major shareholders to support stock buybacks and increases.
In addition to the above policies, the central bank has also introduced the following new real estate financial policies: Extend the term of two real estate financial policy documents.
Previously, the People's Bank of China and the Financial Regulatory Administration introduced the "Financial 16 Articles" and the operational property loan, which played a positive role in promoting the stable and healthy development of the real estate market and resolving real estate market risks.
Among them, the phased policies such as the extension of existing financing for real estate companies and operational property loans were originally due to expire on December 31, 2024.
The central bank and the Financial Regulatory Administration have decided to extend these two policies from December 31, 2024, to December 31, 2026.
Optimize the policy for re-lending for affordable housing.
To further enhance the market-oriented incentives for banks and acquisition entities, the People's Bank of China will increase the proportion of its contribution in the re-lending policy for affordable housing from the original 60% to 100%.
Originally, commercial banks would lend 10 billion yuan, and the People's Bank of China would provide 6 billion yuan.
Now, commercial banks lend 10 billion yuan, and the People's Bank of China provides low-cost funds of 10 billion yuan, accelerating the process of reducing the inventory of commercial housing.
Support the acquisition of existing land by real estate companies.
On the basis of using some local government special bonds for land reserves, research is being conducted to allow policy banks and commercial banks to provide loans to support qualified enterprises to acquire real estate company land in a market-oriented manner, revitalize existing land, and alleviate the financial pressure on real estate companies.
When necessary, the People's Bank of China can also provide re-lending support.
The central bank and the Financial Regulatory Administration are still studying this policy together.
That's the situation, with clear evidence and a clear order.
Different from the mainstream style of blindly promoting good news, from this latest policy statement by the central bank, one can see some economic signals that are worth paying attention to.
The central bank's unexpected policy release actually indirectly indicates that the current problems are indeed quite serious, which is a Chinese characteristic, like a pressure cooker, when the pressure reaches a certain level, it releases a bit.
This time, so much was released, indicating that the pressure is really great.
Why step on the accelerator at this time?
Because the reality of the cold economy cannot be avoided, and it is necessary to exert force to boost the economy.
Several super big gifts, the mainstream interpretation is equivalent to directly printing money and releasing water for the stock and real estate markets, this is actually no problem.
However, the details are not simple.
The turning point of everything is after the US dollar interest rate cut, and the current reduction of existing loan interest rates should only be the beginning.
Next, there will be more welfare red envelopes to stimulate fertility and consumption.
A new high-level cognition can be seen through this trend: without policy support, it is still difficult for the domestic economy to reverse the state of deflation.
1.
For banks, it is better to take the initiative to give up profits and retain high-quality customers, rather than allowing early repayments to cause a lot of profit losses, and also to gain a reputation for "benefiting the people."
To step back, it is better than some people having to choose to stop supplying.
This can not only alleviate the pressure of banks' early repayments but also reduce the repayment pressure on the "mortgage slaves."
2.
The reduction of existing mortgage loan interest rates is not only aimed at saving the real estate market but more importantly, it is to stimulate consumption.
3.
It is better than holding back hard.
Some people say that what's the use of reducing the reserve requirement ratio, banks have money but can't lend it out, and now no one is borrowing.
This view only sees one aspect, and it is necessary to see that reducing the reserve requirement ratio is actually the same as reducing interest rates.
Lowering interest rates is always a good thing, right?
The ultimate return of all logic is still "the situation is stronger than people."
However, since it is in the domestic economic environment of China, the attitude and management consensus of the country play a significant role, right?
Policy benefits, interest rates are falling, and monetary easing has begun, but whether market confidence and expectations can be reshaped, and how long it will take, remains to be further observed.
The most important part of this round of policy benefits is the reduction of existing mortgage loan interest rates.
According to the central bank's calculation: it is expected to benefit 50 million households, with an average annual reduction of family interest expenditure of about 150 billion yuan, which is about 3,000 yuan saved per household per year.
The policy has a more significant effect on first-tier cities: assuming you are now at 4.8%, if it is reduced to 3.8%, and you have a mortgage of 3 million yuan for 30 years, you will save 1,700 yuan per month, and more than 20,000 yuan per year, which is quite considerable.
This can play a certain role in promoting consumption.
In general, this time the central bank has given a lot of sincere and practical benefits in terms of policy, and A-shares have the support of the central bank, and they can be strong for a few days.
However, on the real estate side, it solves the pressure release of existing mortgage loans, and the positive impact on the new and second-hand housing markets requires a transmission time.
Objectively speaking, it is somewhat delayed to introduce such policies halfway through the golden September and silver October.
The real estate market may rebound to some extent in October, but the time for policies to take effect may be significantly staggered.
However, in the long run, it is still that sentence: events and policy will can only change the slope, not the direction.
When asset prices are supported by policies, unless funds flow infinitely or residents re-leverage, they will still return to the original track and continue the original trend.
This logic applies to all economic fields and markets.
The forces and costs required for cycle turning and trend delay are completely different.
From the style of China's national economic management and the latest policy statements, do you think it wants to reverse the cycle?
Or is it to release pressure and alleviate?Here's the translation of the provided text into English: "Or to put it more bluntly: Will people invest in real estate because of interest rate cuts?
How over-supplied is the real estate market?
Are private capitals willing to invest in physical entities, open shops, and factories at will?
If the answer is no, then don't be too ambitious.
It's okay to speculate on market sentiment, but if you really want to make money, you have to go with the flow.
Anyway, let's let the stockholders and those stuck in real estate have a good holiday first.
Live for the moment, right?
At the end of the article, based on the above analysis, I would like to share a few personal thoughts and opinions.
They may not be correct, but they are meant to be a starting point for discussion and reference: First of all, from an emotional and cognitive perspective, it is worth starting to be more optimistic in response to this round of favorable policies from the central bank.
But please note that this change is only in terms of attitude and sentiment, not because of fear of missing out on growth opportunities and wanting to do something specific.
The result of being startled is chasing gains and cutting losses, which means risk outweighs certainty.
Secondly, we need to see some of the uncertainties behind this policy favor.
Take the reduction of existing mortgage interest rates as an example, there are several questions that still need to wait for specific details to be announced: from an average concept, it should be that the higher ones may be reduced more, such as existing mortgages in Beijing; those that are already relatively low will be reduced less.
Currently, it's just the central bank announcing this policy, and the specific adjustment details and timing are left to the commercial banks to discuss and implement.
Looking at last year's uniform discount on existing mortgages, it should be that banks take the initiative to reduce them, so there's no need for everyone to go to the bank specifically.
A lower replacement is unlikely, although the mortgage interest rate has been reduced, it is still a sought-after product for banks, and banks will not easily loosen their grip.
The same goes for reserve requirement ratio cuts and easing towards the financial market.
It's not too late to make plans after seeing the real money take effect.
This is absolutely a well-intentioned suggestion.
Finally, for the current group of real estate and stock market hype, and the views and remarks that stir up market sentiment, we need to maintain a certain level of stability and a clear mind.
Real estate is still in the ICU, so don't expect an injection of stimulant to go straight to the nightclub and start drinking heavily.
The interest rates on bank deposits must be ahead of this series of so-called benefits, and this order of logic must be seen clearly.
In general, the good signals and official statements are indisputable, but in extraordinary times and special situations, some things should wait until the trend is clear before taking specific actions.
This is the most basic pragmatic and reliable cognition that all individuals, families, funds, and enterprises want to go through the cycle.
The short-term bearish view, risk avoidance, staying away from speculation, and the long-term firm optimistic judgment and cognitive viewpoint remain unchanged."
