【Investment Talk】Ministry of Finance announces: A wave of policy benefits has come! Capital Markets Slow Bull Futures?

Friends, weigh the news! Ox sir let everyone interpret!

State Council news held a press conference on October 12 (Saturday) at 10 a.m., introducing the relevant heads of the Ministry of Finance“Increasing Fiscal Policy Recycling Power and Promoting High-Quality Economic Development”The relevant situation.

The release will be met with a sharp rise in the A-share index and a slight loss of 3200 pointsHigh Inland and Overseas ConcernForeigners generally expect a multibillion-dollar fiscal “grand package” to inject more confidence into the physical economy and capital markets.

First of all, what is reverse cycle adjustment?

The key words of the conference were “Magnification” and “Recycling Adjustment” of fiscal policy. Reverse cycle adjustment means that the government, depending on the stage of the economic cycle, uses policy tools and measures to smooth the volatility of the entire economic cycle and to further promote economic development.

In the Financial Policy Toolbox, policy tools such as ultra-long term special government debt, local government project debt and financial assistance, interest rates, taxes are used more widely to achieve the best results, of course, and more fully managed.

What benefits does publishing unleash?

During the press conference, Minister of Finance Lan Vian said,Central government has more room to raise debt and deficitOn the basis of accelerating the implementation of the established policies, the Ministry of Finance will focus on stable growth, expansion of internal demand, and risks of diversification.Recent introduction of a number of targeted incremental policy measures。 There are currently four main arrangements:

In summary, there are several advantages:

One is to propose a massive increase in the debt limit in place of local governments' stockpile of intangible debt. This isLargest Measures to Support Debt Levels in Recent Years, will greatly reduce pressure on local governments and allow local governments to devote more resources to supporting economic development.

Second, the issuance of special government bonds to support state-owned large banks will supplement core tier one capital. ThisGood for the country's six major banks, giving banks more money to support the physical economy also has a stable effect on the financial system.

Three isAllow special funds to be used to purchase stock homes or land to support a steady decline in the real estate market。 This is similar to the reverse operation of “selling land”, which can help the real estate industry to get out of trouble. Similar to the share buybacks of listed companies, it helps the active second-tier market and stabilise housing prices.

Four are a variety of policy tools still under study, central financeThere is also more room for debt raising and deficit enhancement。 Although the Treasury leadership has not explicitly disclosed the scale of the fiscal stimulus, it leaves plenty of room for imagination, meaning fiscal “leverage” could continue to amplify.

According to the analysis, important issues such as the increase in the national debt and the increase in the fiscal deficit exist, the question of “statutory procedure” must be adopted by the General Assembly of the National People.More fiscal stimulus is already on the line, while controlling market expectations, Avoid hitting the combination punches once and triggering a big collapse of the market.

What is the impact on capital markets?

Most market participants, according to Bloomberg surveyChina projected to add $2 trillion in fiscal stimulus by 2025.

Although the finance ministry did not directly give a specific scale of the stimulus, butSending positive policy signals, introduced a number of concrete incremental policies, with new benefits for resolving local debt and supporting the real estate market.

Overall, China's macromonetary and fiscal policy has undergone a major reversal, as can be seenRelated Departments Determined to Boost Capital Markets。 At the same time, officialAvoid the Capital Markets InsaneIn the future, it is possible to lead the market to a more favorable development through gradual release of policy benefits.

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