The Shanghai Composite Index regained the 2900 mark, how much impact will the RRR cut have on A-shares?
On the afternoon of January 25, the three major A-share indexes continued to rise, with the Shanghai Composite Index breaking through the 2,900 mark and the Shenzhen Component Index breaking through the 8,800-point mark.
Wind data shows that 4,900 stocks rose, and nearly 100 shares rose by the limit.
The concept of the first concept stock set off a rising tide.
What is the impact of the RRR cut on A-shares?
The People's Bank of China announced on the 24th that it has decided to reduce the reserve requirement ratio of financial institutions by 0.5 percentage points from February 5, 2024, and by 0.25 percentage points each from January 25, 2024. The agency pointed out that the RRR cut will release a large amount of liquidity and become an important factor supporting the market at the current stage.
Guosheng Securities said that the central bank lowered by 50 basis points, which exceeded expectations, indicating that the monetary policy to support the real economy has increased significantly, and released the central bank's determination to promote economic stability and improvement. At the beginning of the year, the central bank lowered the reserve requirement ratio and increased the implementation of monetary policy, boosted market confidence, and helped accelerate economic recovery. As for the impact on the capital market, judging from the performance of the Shanghai Index over the years, there is generally no obvious upward or downward effect on the stock market, but since 2019, the central bank's RRR cut has shown an obvious positive effect on the stock market.
China Securities Construction Investment pointed out that it is expected that the liquidity pressure will weaken after the RRR cut, but there is still a possibility of RRR reduction within the year. In the medium term, the main line of the current stock and bond market is the strength of the stable growth policy and whether the liquidity hedging is greater than expected. The timing and magnitude of the RRR cut slightly exceeded market expectations, and a series of favorable policies in the stock market superimposed the RRR cut, which also helped the stock market to stabilize. Looking forward to the monetary policy in 2024, it is expected that the RRR and interest rate cuts are only the first step of counter-cyclical adjustment, and the MLF interest rate and deposit rate are expected to be gradually lowered in the future.
Haitong Securities pointed out that the RRR cut may mean that the policy will be strengthened, which is conducive to catalyzing the start of the market. Structurally, we will focus on big finance in the middle of the stage and the growth of white horses in the medium term. Banks and brokerages with low valuations and fund allocations are expected to benefit. In the medium term, the growth of white horses may be dominant, and specific attention will be paid to two aspects: on the one hand, hard technology manufacturing represented by electronics. It is necessary to pay attention to the following three areas: first, electronics in the context of the rebound of the semiconductor cycle, second, digital infrastructure and data elements that may benefit from fiscal efforts, and third, AI applications under policy support and technological breakthroughs. On the other hand, there is medicine. At present, the valuation and fund allocation of the pharmaceutical and biological sector are still at a low level, and the valuation of pharmaceuticals and the holdings of public funds and other institutions are expected to be balanced in the future.
How to go in the future?
Guosheng Securities pointed out that the recent positive factors continue to superimpose: first of all, the macro policy, the management listened to the report on the operation of the capital market and work considerations, and proposed to vigorously improve the governance and investment value of listed companies, and build a valuation system for listed companies with Chinese characteristics; secondly, in terms of liquidity, the central bank will reduce the deposit reserve ratio by 0.5 percentage points on February 5, or will provide liquidity to the market by 1 trillion yuan; Finally, in terms of micro incentive mechanism, the management study considers including market value management in the performance appraisal of the person in charge of the central enterprise to promote the valuation to accelerate the repair. It is worth noting that at present, the number of broken net shares in the market has increased significantly, and at the same time, the equity risk premium of Wind All A has approached the five-year average of +2 times the standard deviation, indicating that the long-term allocation in the market is cost-effective. In the context of gradual improvement of internal and external factors, the market may usher in a long window period. Strategically, it is recommended to allocate varieties with annual report performance and economic recovery, as well as dividend assets with medium and long-term incremental funds.
Guolian Securities pointed out that in the short term, the growth style often prevails after the RRR cut, and after the problem of negative feedback of this round of over-falling liquidity is solved, the market may be able to return to the normal track in a relatively stable liquidity environment. In addition, in the process of previous rounds of market reversals from the bottom, monetary easing is a leading indicator, which helps to temporarily repair the market's risk appetite. The first wave of the market at the bottom is usually characterized by the rebound of over-falling varieties, and the statistical law shows that the growth style is often dominant after the RRR cut, and the two short-term logics support the short-term repair market of growth stocks. After the over-bearish rally brought about by liquidity repair is over, the medium-term trend of the market still depends on whether macro expectations can be reversed.