CMB Macro: Three Reasons to Look at the Loose Fundamentals

Jinshi data news on February 28, CMB macro research report pointed out that looking ahead, the probability of a loosening funding environment around the ‘Two Sessions’ is relatively high: First, credit expansion may be coming to an end rapidly. In the short term, the momentum of credit expansion may slow down, leading to a significant reduction in the consumption of excess reserves. Second, the Central Bank’s attitude is quietly changing. With the approach of the ‘Two Sessions’ and the increased Fluctuation in the bond market, the demand to stabilize the Capital Market is gradually increasing. Whether it is ‘further opening up (private) stock, bond, and loan financing channels’ or ‘expanding the scale of private enterprise bond financing,’ it requires a loose Liquidity environment to cooperate. In addition, to maintain the effectiveness of the Intrerest Rate corridor mechanism, the Central Bank also has the incentive to support the funding environment returning to a normal level. Third, the ‘Two Sessions’ may provide an opportunity for state-owned large banks to alleviate the ‘debt shortage.’ For the market, there is a possibility of another ‘steep bull’ in the yield curve around the ‘Two Sessions,’ and the current focus is on seizing the investment opportunities of short-term bonds and certificates of deposit.