On the afternoon of July 1, the central bank announced the borrowing operation of treasury bonds, affected by the relevant news, treasury bond futures dived across the board in the afternoon, and at the same time, A-shares accelerated their rise, and high-dividend stocks became the focus of capital chasing.
On July 1 (Monday), the central bank announced that in order to maintain the stable operation of the bond market, on the basis of prudent observation and evaluation of the current market situation, it was decided to carry out treasury bond borrowing operations for some primary dealers in the open market in the near future.
The central bank's treasury bond borrowing operation refers to the treasury bond borrowing activities carried out by the People's Bank of China for some primary dealers in the open market in order to maintain the stable operation of the bond market. Such actions are usually decided after careful observation and assessment of the current market situation. In this way, the central bank can provide liquidity to the market and ensure the stability of the bond market.
Treasury bond futures fell across the board //
After the news was released, Treasury bond futures dived across the board.
Ultra-long-term treasury bond ETFs fell sharply, with "Bosera SSE 30-year Treasury Bond ETF" falling 1.04% and "Pengyang China Bond - 30-year Treasury Bond ETF" falling 1.11%.
Treasury bond futures continued to decline, with the 30-year main contract falling more than 1%, the 10-year main contract falling nearly 0.4%, and the 5-year main contract falling more than 0.2%.
At the same time, the yield of interbank interest rate bonds weakened, the 230023 yield of 30-year treasury bond active bonds turned up 0.15bp to 2.4250%, and the yield of 10-year treasury bonds "narrowed 240004" to 2.2200%.
The Central Financial Work Conference proposed that the monetary policy toolbox should be enriched and the central bank's open market operations should gradually increase the purchase and sale of treasury bonds. At the Lujiazui Forum on June 17, Pan Gongsheng, governor of the People's Bank of China, said that the People's Bank of China is strengthening communication with the Ministry of Finance to jointly study and promote implementation. This process as a whole is gradual, and the rhythm of treasury bond issuance, term structure, and custody system also need to be studied and optimized simultaneously. It should be noted that the inclusion of treasury bond trading in the monetary policy toolbox does not mean that quantitative easing is to be carried out, but rather that it is positioned as a channel for the delivery of base money and a liquidity management tool, which can be bought and sold, and is comprehensively matched with other tools to jointly create a suitable liquidity environment.
Pan Gongsheng pointed out that the rapid development of the financial market has also brought new challenges to the central bank. The risk event of Silicon Valley Bank in the United States enlightens us that the central bank needs to observe and evaluate the situation of the financial market from a macro-prudential perspective, correct and block the accumulation of financial market risks in a timely manner, and pay special attention to the maturity mismatch and interest rate risk of some non-bank entities holding a large number of medium and long-term bonds, maintain a normal upward slope yield curve, and maintain the positive incentive effect of the market on investment.
According to the analysis of CITIC Securities, there is no legal obstacle for the central bank to buy and sell treasury bonds in the secondary market, which is a conventional monetary policy tool. Before the 2008 financial crisis, the Federal Reserve would also buy and sell Treasury bonds and repurchase operations at the same time. Among them, treasury bond trading is mainly used to release and recover long-term liquidity, while repo operations are used for short-term liquidity adjustment. The PBOC's Treasury bond trading is likely to be more similar to the Fed's pre-2008 regular monetary policy operations than the QE operations after the 2008 financial crisis. The biggest difference is the magnitude of the Treasury bond traded. The PBOC's treasury bond trading order will be much lower than that of the US QE operation, and while increasing the purchase of treasury bonds, it will appropriately reduce the operation of other monetary policy tools such as MLF to ensure that the overall base money supply remains at an appropriate level. Central bank purchases of Treasury bonds may weaken the role of MLF in the provision of base money.
GF Securities also pointed out that the central bank's trading of treasury bonds through open market operations is a monetary policy tool, which can be a means of realizing QE and MMT, but it does not necessarily correspond to QE and MMT. QE (quantitative easing) mostly appears in the form of the central bank's purchase of treasury bonds, stocks, MBS in the secondary market, etc., which is a means to further relax financial conditions after the traditional policy space is consumed, generally corresponding to zero interest rates and an extremely loose monetary and financial environment. MMT (Modern Monetary Theory) holds that the government creates money through fiscal spending, the goal of government taxation is to promote the issuance of money, and the government's finances are not bound by the balance of payments, and its goal is to achieve full employment; As long as full employment is not achieved, fiscal and monetary expansion will not have the side effect of inflation, but will contribute to the expansion of real growth, which is generally simply understood as the monetization of fiscal deficits.
Wang Jiaqiang of the Bank of China Research Institute also pointed out in April this year that increasing the central bank's purchase of treasury bonds as an operational tool is also to adapt to the changes in the current situation, and has certain advantages in terms of liquidity, such as improving the flexibility of capital investment, and the central bank decides whether to buy and sell cash bonds according to the economic situation and market development to adjust the quantity and price, which directly affects the operation of the money market and the bond market. At the same time, it is conducive to improving the transmission efficiency of monetary policy, treasury bonds are assets with relatively high credit ratings, and its yield is a pricing anchor of the market, which has an impact on the prices of various assets such as bonds and funds.
Dividend assets continue to be sought after //
On July 1, the banking and coal sectors continued to rise, and Industrial and Commercial Bank of China and China Shenhua continued to hit record highs.
According to incomplete statistics, a total of 3,887 A-share listed companies have disclosed the 2023 cash dividend plan that has been implemented or will be implemented, and the proposed dividend amount has reached 2.23 trillion yuan, a record high, of which banks, coal and other sectors are the main force of dividends. Up to now, 19 A-share listed banks have distributed cash dividends in 2023, with a total dividend amount of 139.893 billion yuan.
Industrial Securities pointed out that from the medium and long-term perspective, dividend assets will still constitute an important main direction. On the one hand, under the investment with a high winning rate, it is necessary to pay attention to the "new bottom asset" attribute of the dividend sector. On the other hand, high prosperity is still scarce, which has also become an important background for the market to focus on dividends. In addition, even after the rally, the dividend yield of the current dividend sector is still high and is still expected to be driven by incremental capital allocation.
Tang Xueqian, fund manager of Huabao Dividend Select Mix, said that the characteristics of the underlying assets of dividends are still clear, and the new "National Nine Articles" will lay the foundation for the long-term healthy development of China's capital market, and the strategic allocation value of dividend assets is also further enhanced.
Talking about the reason why the dividend strategy has attracted much attention this year, Tang Xueqian said that on the one hand, the macro environment has fluctuated greatly in the past two years, and in the market with high short-term uncertainty, dividend assets with a clear cash return rate and strong defense are more likely to be favored by funds; On the other hand, the decline in the risk-free rate of return has compressed the overall rate of return of fixed income assets, superimposed by factors such as asset shortage, and many long-term funds will focus on dividend assets.
In Tang Xueqian's view, the current short-term macroeconomic outlook remains to be seen, although the long-term remains optimistic, but the rhythm of short-term macro forecasting is still a difficult point in the year, and the market game will remain fierce under the frequent disturbance of internal and external economic and geopolitical factors. In a volatile market environment, dividend assets tend to be mature and have lower valuations, they are generally more resilient to declines and are relatively less exposed to fluctuations in the economic cycle.
"Short-term up and down fluctuations are normal, and the dividend sector is no exception." When it comes to the recent slight pullback in the dividend sector, Tang Xueqian believes that at the current point in time, the overall allocation environment has not changed much, and the characteristics of the underlying assets of dividends are still clear.
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