At present, the broad market belongs to slow or long bulls; Interest rate adjustment of existing housing loans helps promote consumption; Technology may make today's public debt less of a problem |

Macro vision

The risk of negative CPI increase may have been released

Xie Yunliang is the chief macro analyst of Cinda Securities

The July CPI fell into negative growth territory as we expected, the first year-on-year decline since February 2021. The negative increase in CPI is mainly due to the fact that the downward trend of the current pig cycle has not ended, coupled with the base effect brought by the same period last year, the entire pig price dragged down more year-on-year. We believe that there is deflation in the economy, but there is no deflationary reality, the current CPI year-on-year decline is a phased phenomenon, the risk of negative CPI growth may have been released, and it is expected that the CPI will slowly recover, or rise to nearly 1% at the end of the year. We conclude that the CPI bottomed out and rebounded with the following logic: First, oil prices may have passed the stage of the largest year-on-year decline. Second, the overcapacity of the industrial sector has shown signs of easing the suppression of industrial consumer prices. Third, it is necessary to pay attention to the obvious recovery of core CPI, excluding food and energy prices.

Fiscal policy in the second half of the year: what to focus on?

Chen Xing is the chief analyst of Caitong Securities

In the second half of the year, the two main themes of fiscal policy are stable growth and risk prevention. From the perspective of stable growth, first, in terms of finance and taxation, the policy has been released, and the next step is to emphasize implementation. Second, in terms of special bonds, it is required to complete the issuance by the end of September, and it is expected that the monthly issuance will exceed 600 billion yuan in August and September, and the issuance will be accelerated. There is still room for steady fiscal growth. On the one hand, there is still a quota for the issuance of government bonds and local bonds, totaling more than 2.7 trillion yuan. On the other hand, both government bonds and local governments have a balance limit. In addition, if fiscal reinforcement is needed to expand domestic demand, similar fiscal tools (policy bank credit, development financial instruments) can also be used, and the net financing of government bonds and PSL can be tracked to determine whether it is strong. Risk prevention has been paid attention to since the end of last year, mainly because land transfer is weak, which drags down local financial resources. Judging from the changes in the statements of recent important meetings, it is expected that the introduction of the debt reduction plan may be accelerated.

RMB trend in the second half of the year

Zhang Ming Deputy Director of the Institute of Finance, Chinese Academy of Social Sciences, Deputy Director of the National Finance and Development Laboratory

As the exchange rate of the renminbi stabilizes against the US dollar, we cannot expect the external environment to weaken, but must start from internal factors.

Internally, with the weakening of the base period effect, the domestic economic trend in the second half of the year largely depends on the trend of macro policies. At present, the endogenous recovery momentum of the domestic economy is weak. There are a series of recent indications that the Chinese government is still planning a series of macro policy measures, and the possible convening of the Third Plenum of the 20th Central Committee at the end of this year and the announcement of a new round of reform and opening up plans are expected to be important factors affecting expectations.

Based on the above considerations, it is expected that the main factors that will dominate the trend of the RMB against the US dollar in the second half of the year are still internal factors. In the optimistic scenario, if all the above policies are implemented, the exchange rate of RMB against the US dollar will bottom out and recover, reaching 6.6-6.8 by the end of the year; in the pessimistic scenario, due to changes in the external environment, it is expected that the exchange rate of RMB against the US dollar will be around 7.2 at the end of the year.

How does the RMB perform in the global foreign exchange market?

Ming Ming Chief Economist of CITIC Securities

Since the beginning of this year, as the Fed's interest rate hike has gradually come to an end, the dollar index as a whole has shown volatility and decline. In this context, the performance of non-US currencies is clearly differentiated, with major European currencies performing better, some resource exporters and Asian currencies weakening. For the renminbi in the same period, it has weakened to varying degrees relative to most currencies, indicating that its weak operation is still due to internal factors, including monetary policy and domestic economic fundamentals.

Looking forward, although there may still be disturbances in the short term US economic data and the Fed's monetary policy, the RMB exchange rate may fluctuate, but as the policies on macroeconomics, capital markets and exchange rates continue to increase in the second half of the year, the market is expected to stabilize and rebound the domestic economy, and the RMB exchange rate in the medium and long term is expected to be firmly supported by fundamentals.

The way public debt maintains intergenerational balance

Peng Wensheng is Chief Economist of CICC

The key to assessing whether the expansion of public debt is sustainable is whether it is fair to increase the debt service burden of future generations. We can imagine two ways to maintain intergenerational balance.

The first balancing act is technological progress, and technology in 20, 30 years may make today's debt not a problem, that is, the cake is bigger, and the distribution between generations is not a zero-sum game, so the expansion of public debt is relatively sustainable.

If technological progress is insufficient, the second way to balance is inflation, the government prints money to dilute its debt, inflation rises, interest rates rise, financial asset valuations fall, so although the older generation benefits from distribution through social security, the value of the financial assets it holds declines, giving benefits to the next generation, and debt sustainability is also guaranteed.

Real estate insights

The impact of the interest rate adjustment of existing mortgages is geometric

Huang Wentao is the chief economist of CSC Securities

Reducing the existing housing loan can help banks reduce the phenomenon of prepayment; It can reduce residential housing loan expenses and repair residents' balance sheets; As of June, the balance of personal housing loans of financial institutions was 38.6 trillion yuan, and if the interest rate of existing housing loans was reduced by 10BP, it would reduce interest expenses by about 40 billion. The formation of a policy combination with Article 20 will play a supporting role in consumption; Further reduce the dependence of residents' balance sheets on the real estate market.

The boost in the real estate market may be a reference to the Silicon Valley bank treatment model

Li Wei is the Associate Dean of Economics at Cheung Kong Graduate School of Business

The market economy respects the autonomous business decisions of each market entity, but the other side of the coin is that these business entities need to be responsible for their own actions.

If there is no discipline, it is not in line with the laws of market economy to enjoy the dividends of development when the market is good, and to seek the rescue of public resources when it is in crisis.

In order to minimize the threat of real estate to the entire economy and finance, we should actively take measures to "guarantee the handover of buildings" and take measures to restructure the debt of developers, but we also need to consider whether we can let the equity value of developers who risk other people's money to zero, as the US did with Silicon Valley banks, and let their executives go.

Existing mortgage interest rate: how to adjust? What is the impact?

Zhonghua Liang is the chief macro analyst of Haitong Securities Research Institute

Compared with the recent statement of the central bank from "encouragement" to "guidance", we believe that the adjustment of the interest rate of residential stock housing loans may gradually land. The current weighted average strike rate for existing mortgages is around 4.8%. In fact, in the long run, we believe that the most fundamental thing is to establish refinancing channels for mainland residents, so as to improve residents' bargaining power and truly protect the reasonable interests of residents.

If the interest rate of existing housing loans is adjusted, the most direct impact is to play a positive role in supporting consumption. Because for the residential sector, it is equivalent to reducing the cost of debt, reducing the monthly payment expenditure of residents, and the marginal has a certain supporting effect on consumption.

Market pips

At present, the broader market is still in the early stage of the bull market, which belongs to the category of slow bulls or long bulls

Yang Delong is the chief economist of Qianhai Open Source Fund

As a bellwether of the market, brokerage stocks have performed brilliantly recently, and even set off a wave of ups and downs in some trading days. The rise of brokerage stocks often means an increase in market confidence, which is also a symptom of the continuation of the subsequent market. For us to do value investing, the key is to grasp the long-term trend of the market and not be fooled by short-term fluctuations. We can judge that the current market is still in the early stage of the bull market, which belongs to the category of slow bulls or long bulls, and the duration may reach about 3-5 years. Therefore, this is not a short-term trend, but a long-term trend. Once the trend is set, we can simply buy good stocks or funds without getting too entangled.

Overseas observation

The main reason for the downgrade of the US sovereign credit rating this time is the loose fiscal discipline of the United States

Zhou Hao is the chief economist of Guotai Junan International

Fitch has repeatedly threatened to downgrade the U.S. sovereign rating. The main reason for this downward adjustment is the loose fiscal discipline in the United States. Judging from market forecasts, it is only a matter of time before the US fiscal deficit increases further, and the debt problem is also amplified in a high interest rate environment.

Fitch's downgrade of the US sovereign credit rating is mainly based on the following reasons: First, the government's governance capacity is weakened, and the medium-term fiscal challenges are greater. Over the past 20 years, the ongoing debt ceiling standoff and last-minute resolutions have highlighted the continued deterioration of U.S. governance standards and eroded confidence in U.S. fiscal management. Second, the government deficit continues to rise, and the general government debt burden continues to increase. Third, the Fed's interest rate hike will gradually take effect, and the United States will fall into recession.