On October 14, the concept of chemical debt stocks rose sharply at the open, and Cinda Real Estate (600657. SH), Everbright Jiabao (600622. SH) and other multi-share daily limits. On the news side, the Ministry of Finance recently said that it intends to increase the debt limit of a larger scale at one time, replace the stock of implicit debts of local governments, and increase efforts to support local governments to resolve debt risks.
Intensify efforts to resolve local debt risks
Recently, the Information Office of the State Council held a press conference on "strengthening the counter-cyclical adjustment of fiscal policy and promoting high-quality economic development".
According to the Ministry of Finance, since the beginning of this year, the Ministry of Finance has consolidated the responsibilities of local entities and implemented various debt measures in accordance with one province and one policy. In addition to the local government debt limit of more than 2.2 trillion yuan in 2023, the central government will allocate another 1.2 trillion yuan in 2024 to support local governments, especially high-risk areas, in resolving existing debt risks and clearing arrears of enterprises.
In order to alleviate the pressure on local governments to reduce their debts, in addition to continuing to arrange a certain scale of bonds in the new special bond limit every year to support the resolution of existing government investment project debts, it is planned to increase the debt limit of a larger scale at one time to replace the stock of local government implicit debts, and increase efforts to support local governments to resolve debt risks.
CITIC Securities pointed out in the research report that the debt will further reduce the pressure on local government debt, and there may be a greater force in the future to introduce a debt policy, and the debt problem is expected to be solved, greatly reducing the pressure on the government, freeing up more resources to protect people's livelihood and promote development.
Remarkable results have been achieved in the work of debt resolution
In July last year, the Political Bureau of the Central Committee of the Communist Party of China proposed that "it is necessary to effectively resolve local debt risks and formulate and implement a package of debt reduction plans", raising the importance of debt reduction to a new height.
At present, the work of debt conversion has achieved phased results, and the activity of urban investment transactions in many regions has decreased significantly. At the end of 2023, the number of hidden debts included in the government debt information platform nationwide has decreased by 50% compared with the 2018 map.
In terms of provinces, according to the data of the Ministry of Finance, by the end of 2023, the growth rate of government debt balances in 11 provinces hit the lowest level in the past five years, including Beijing, Shanghai, Zhejiang, Guangdong and other economically developed regions, among which the growth rate of government debt balances in Beijing and Shanghai has dropped to single digits. Taking Shanghai as an example, the balance of government debt at the end of 2023 was 883.23 billion yuan, an increase of only 3.44% compared with the end of 2022 and an increase of more than 15% at the end of 2022.
Analysts believe that this year's support for chemical bonds should be the largest in recent years, compared with the scale from 2015 to 2018, the scale of follow-up chemical bonds is expected to reach more than 10 trillion yuan.
The work of resolving the debt has begun
The Ministry of Finance's statement on chemical bonds will directly benefit urban investment real estate stocks and asset management companies (AMCs).
Brokerages generally believe that AMC has more room for imagination. At present, financialized debt has become an important means of resolving local debts, and AMC companies are expected to directly benefit, on the one hand, the income side will benefit from the increase in the disposal of non-performing assets, and on the other hand, the asset quality of non-performing assets on the asset side will also improve in the process of economic recovery. At present, a number of AMC companies have participated in the work of debt reduction.
Judging from the performance of the disk, some funds have been the first to intervene in the concept of debt stocks last Friday. Among them, Yunnan City Investment rebounded for 2 consecutive days, up 19.2% cumulatively, and once rose to the daily limit today; Everbright Jiabao pulled to the daily limit at the end of last Friday, and today's call auction has a one-word daily limit. As of noon on the 14th, Cinda Real Estate, Everbright Jiabao, Yinbaoshan New and other shares rose to the limit.