The Central Bank's Interest Rate Cut Is Intended To Boost Market Confidence.

In November 21st, the central bank cut interest rates, and the global market responded immediately, and very "classic": commodity currencies, including gold, rose instantly at about 100 points, but on that day the US dollar index closed at the highest point this year, and the non US currencies differentiated. The signal from the market is that the Central Bank of China has cut interest rates asymmetrically, which can boost market confidence in the short term, stimulate the global inflation moderately, and indirectly stimulate the global economic recovery, which is conducive to the further strengthening of the US dollar in the medium and long term.

The interest rate cut by the Central Bank of China is a follow-up to targeted easing. It combines with a series of macroeconomic control measures earlier to convey information to the market, boost confidence in commercial banks' support for the real economy and investors' confidence in the A share market.

The background of the interest rate cut is that it is difficult to contain the downward trend of China's economy. The local debt and the bad debt rate related to housing are likely to rise sharply before the end of the year. The circulation of money has encountered "intestinal obstruction", and the phenomenon of "currency backlog" has become more and more serious. The market interest rate has been running at a high level for a long time. It is the biggest highlight of this interest rate cut that decision-makers make accurate judgments on macroeconomic situation.

Stimulating confidence is not a strong stimulus. The central bank is very cautious in exploring the new monetary policy under the "new normal". In the future, it will take a step further. But one thing must be clear: the current economic environment is not very healthy, and the Chinese economy needs strong growth. Deepening reform and economic transformation require stable economic environment. The "new normal" of the economy does not mean tolerating the downward trend of the economy. Through asymmetric interest rate reduction, testing market confidence, testing the real demand of financial institutions and real economy for currency flow, and finding out the "monetary environment under the new normal", there will be further action in the near future. The purpose of the rate cut is obvious. It is to digest the pains brought by the economic transformation and deepening reform to the traditional economic mode and provide support and confidence for the strong economic growth next year. The interest rate cut is not to expand investment, especially real estate investment. On the contrary, the main body of interest rate reduction is the real economy, especially the real economy with market demand. Financial institutions should make an effort to ease the dilemma of "financing difficulties and financing expensive" in the real economy, and use the benefits of cutting interest rates in the transformation and deepening reform.

Since July, the domestic bond market interest rate continued downward, the interest rate cut, the credit market interest rate downlink obstacles finally broken, it marks the risk-free rate of return cycle officially launched in full. When the central bank cut interest rates at the end of the year, the policy makers issued significant signals: the introduction of Shanghai and Hong Kong links, the increase of state-owned enterprises reform, and a series of measures aimed at boosting the A share market.

At present, the macro-economy continues to descend, but the policy signals are very positive. In the second half of the Shanghai Composite Index up to 20%, it is to see whether the data clears the stock market funds or the policies and increase the investment in the stock market. The key lies in confidence, while the continuous reform dividend and the decision to cut interest rates are the confidence of the market. It shows that the 2500 point is not the top of this year. Policy makers hope that the bull market will boost the whole market for the next year's macro-economic operation. confidence By stabilizing the economy, stabilizing the market and increasing reform efforts, in turn, we will promote a healthier and more balanced economy. The author believes that the favorable policies promulgated in the second half of this year, such as directional reduction, comprehensive interest rate reduction and actively promoting the marketization of interest rates, will be the direction for economic transformation and A share market upward.

The interest rate cut is on the surface. commercial bank There is a negative effect. Theoretically, the overall profit of commercial banks will be reduced by around 40 billion yuan. However, due to the fact that the ability to resist risks in the real economy is strengthened, the pressure of commercial banks' loan non-performing ratio is eased, which is beneficial to improving the potential risks of the banking balance sheet. In this regard, market investors should be able to see clearly. More importantly, interest rate cuts will not be one time, "future." Drop accuracy "The door has been opened, commercial banks have increased loans moderately, the financing cost of real economy has been reduced, and macroeconomic systemic risks have been effectively alleviated, thus forming a virtuous circle. Therefore, this interest rate cut is a good medium and long-term interest for blue chips, including bank shares. I expect bank shares will not become a stumbling block for A shares because of this asymmetric interest rate cut. Instead, it will become the mainstay of the A share market with new emerging manufacturing industries and emerging consumer industries, including power and utility industries, which are in line with economic transformation.