Economic recovery signals appear after the holiday liquidity more relaxed A shares are expected to “spring bloom”

2022-08-03 0 By

The Hong Kong stock market is off to A good start in the Year of the Tiger. Meanwhile, the domestic economy will also bloom in the spring. The measures to cut taxes and fees and expand effective investment introduced before the Spring Festival will ensure the smooth operation of the economy in the first half of the year, and the profits of listed companies are expected to maintain growth.Market participants pointed out that despite the uncertainties of the global epidemic, the central bank may further open its monetary policy toolbox under the tone of keeping the word stable, and the relatively loose monetary policy environment is conducive to the rise of risk asset prices.Predictive signal, the economy rebounded on the stock market has a strong positive boost short-term economic data showed, in preparation for the games, the Chinese New Year shutdown and more disease recurrence, under the influence of factors such as January manufacturing purchasing managers’ index (PMI) remain within the range of expansion, and has been for three consecutive months at a good level, the recovery of vision signal has emerged.Economic and financial data for January are also expected to exceed expectations, providing a strong positive boost to the stock market.In addition, surplus grain will hit a new high in 2021. According to preliminary estimates, the carryover and surplus funds of the Central Budget Stabilization Fund and local governments will exceed 1.4 trillion yuan at the end of 2021, reaching a multi-year high. This will provide sufficient financial guarantee for a good start in the first quarter of this year.In 2021, the Central Economic Work Conference listed “to ensure the intensity of fiscal expenditure, accelerate the progress of expenditure” and “moderately advance infrastructure investment” as one of the important tasks in 2022. In terms of projects, there is sufficient project reserve in 2022, so the new and old infrastructure is expected to make joint efforts to boost the economy in the first quarter.The National Development and Reform Commission (NDRC) said recently that it would move the policy focus forward appropriately, make early arrangements, start early, and produce results as soon as possible, and promptly introduce and implement a series of policy measures to expand domestic demand strategy.We will appropriately advance infrastructure investment, accelerate the progress of the 102 major projects planned for the 14th Five-Year Plan, and implement as soon as possible the special local government bonds issued in the fourth quarter of last year into specific projects. We will promptly issue the allotted quota and strive to generate more physical work in the first quarter.Real estate policy effect appeared gradually, the market is expected to stabilize the central working conference stressed that must adhere to a house is to live, not to fry, strengthen the expected to guide, to explore new development model, insist on hire purchase, speed up the development of long rental market, promoting the construction of affordable housing, better meet the needs of buyers and reasonable supporting commercial housing market demand for housing,Urban policies to promote the virtuous cycle and healthy development of the real estate industry.Since the beginning of the year, various real estate demand end policy relaxation programs have been introduced, Qingdao, Jinan, and other cities to relax provident fund loan conditions.Anhui province has become the first province in China to explicitly encourage lower down payments for home purchases.In addition, high-quality real estate private enterprises have recently started to issue corporate bonds, and the financing of the real estate industry shows signs of overall recovery.With the gradual effect of the policy, the real estate market is expected to stabilize.Market participants pointed out that during the 14th Five-Year Plan period, China will vigorously develop the construction of affordable housing, which is expected to form a new driving force for real estate investment and fixed asset investment.Notably, the Bank of England raised interest rates in a rare succession over the Lunar New Year holiday to contain surging price pressures, while the Federal Reserve is expected to start its current rate hike cycle in March.However, it is unlikely that domestic monetary policy will turn in the short term, and China may be the only major economy in the world to maintain loose monetary policy in 2022.First of all, after the epidemic, the domestic economy and the European and American economic cycles are out of alignment, the monetary policies of China and the US are not necessarily synchronized, and there is no obvious inflation in China.In addition, in the face of pressure on the domestic economy, the central bank is expected to maintain a moderately loose monetary environment and stabilize the broader economy.From the perspective of market performance, the Spring Festival of this year overlanced with the end of January, and there were more short-term disturbance factors. However, under the careful care of the Central bank, the market capital surface was very stable, the interest rate center of the money market moved down correspondingly compared with the previous stage, and the market expectation was very stable.Though the Spring Festival after the central bank reverse repurchase due to natural repaid, but due to the large amounts of cash proceeds will make the amount of liquidity in the banking system is increased, and after the first week bonds due amount is bigger, also can increase the part of liquidity, so the overall liquidity supply is relatively more, market financing area will be more easy than before, which is more common after Spring Festival.A share market short-term bottom or has formed before the Spring Festival, A share market appeared A round of obvious adjustment, in the case of continuous decline in the market, the space for further decline is limited.In addition, domestic policies to stabilize growth will hedge against the negative impact of tighter overseas liquidity.Statistics show that as of January 29, 2022, the overall disclosure rate of all A-shares reached 54%.Listed companies forecast A good year-on-year growth in net profits in 2021, with A median of 50.4%, so the valuation level of the A-share market is still attractive globally.All aspects of evidence shows that the current A – share market has formed A short-term bottom, the post-festival rebound can be expected.(Credit: Financial Union)