PBOC RATE CUT IN FOCUS
China: PBOC announced a combination of policy easing steps to support the real economy
PBOC governor Pan Gongsheng announced a set of policy easing measures, including a 20bp primary policy rate cut, a 50bp RRR cut and a 50bp interest rate cut on existing mortgages. The rare simultaneous cut of policy rates and RRR, the relatively large magnitude of cuts and the unusual guidance on further policy easing indicated policymakers' growing concerns over growth headwinds. In our view, this signals a new round of policy easing ahead to support the real economy.
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24 Sep 2024 | Research | Economics - Xinquan Chen and others
China Musings: Better late than never
On Sep 24, the PBoC, together with the CSRC and NFRA, jointly held a press conference, announcing a package of policy stimulus measures that span across monetary policy, property, and equity market cohorts. These measures could in aggregate inject close to Rmb2tn to the banking/financial system. Chinese assets reacted positively to the policy news: HSCEI/CSI300 rallied 5%/4% and CNY/CNH strengthened 0.4% vs. the USD to end the day.
25 Sep 2024 | Research | Portfolio Strategy - Kinger Lau, CFA and others
Asia Views: The Fed opens the door, and the PBOC walks through
The People's Bank of China announced a combination of monetary easing steps. These included: a 20bp repo rate cut and a 50bp RRR cut (double the usual increments), a 50bp reduction to rates on outstanding mortgages (which could reduce households' interest payments by 10-15bp of GDP), and lending measures to support the equity market. While the actions were modest individually, and we expected several of them to occur before yearend, the cuts were larger than our forecasts and the equity market measures were a surprise.
25 Sep 2024 | Research | Economics - Andrew Tilton and others
Equity implications: China Real Estate Developers (Yi Wang) | China Banks (Shuo Yang)
Watch: China Macro, Strategy & Trading: Views post monetary easing [Replay]
Following the recent PBOC high-profile monetary easing (i.e., a 20bp policy rate cut, a 50bp RRR cut and a 50bp interest rate cut on existing mortgages, among others), we expect more policy easing through the remainder of this year and next year.
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27 Sep 2024 | 12:20am| 8pg| Research | Economics-Lisheng Wang and others
FROM OUR ECONOMISTS
China: GS Economic Indicators Update: September
23 Sep 2024 | 9:41pm| 14pg| Research | Economics-Lisheng Wang and others
China Matters: Mind the Speed
22 Sep 2024 | 10:42am| 10pg| Research | Economics-Hui Shan and others
CREDIT STRATEGY views
Global Markets Daily: In Ensuring Macro Stability, China's Leverage Rises (Ho)
28 Aug 2024 | 7:44pm| 8pg| Research | Economics-Kenneth Ho
KEY EQUITY VIEWS
China Real Estate Developers: Are Shanghai and Shenzhen markets bottoming out?
2 Aug 2024 | 3:21pm| 10pg| Research | Equity-Yi Wang, CFA and others
China Real Estate Developers: Third Plenum takeaways: Reforms may be gradual and long-term positive
24 Jul 2024 | 2:54pm| 11pg| Research | Equity-Yi Wang, CFA and others
China Property Monthly Tracker
China Property Monthly Tracker: Completions fell further and ASP deterioration accelerated; "Golden September" likely difficult to achieve
16 Sep 2024 | 11:53am| 9pg| Research | Equity-Yi Wang, CFA and others
- Stock HighlightsNew World Development (0017.HK): 2HFY24 review: CEO change; gearing rose, dividend suspended; Sell27 Sep 2024 | 7:57am| 9pg| Research | Equity-Gurpreet Singh Sahi, CFA and othersH World Group (HTHT): 2Q24 preview. Guidance likely to be met despite softer RevPar trend. Capital return by late-July a catalyst12 Jul 2024 | 7:29pm| 12pg| Research | Equity-Simon Cheung, CFA and othersH World Group (HTHT): 2Q24 First Take - EBITDA above expectation on better margin. 3Q24 guidance inline with our lowered estimate20 Aug 2024 | 10:50pm| 12pg| Research | Equity-Simon Cheung, CFA and othersChina Overseas Grand Oceans Group (0081.HK): Softer growth/return profile among SOEs; down to Neutral post outperformance and reduced TP upside10 Jul 2024 | 5:19pm| 12pg| Research | Equity-Vicky Li and othersH World Group (HTHT): A step-up in capital return including DPS and share repurchases as flagged. Buy23 Jul 2024 | 8:57pm| 9pg| Research | Equity-Simon Cheung, CFA and others
- Industry HighlightsEurope Insurance: Management Meeting Takeaways: Allianz, Generali, Zurich, Munich Re, Phoenix and Prudential26 Sep 2024 | 9:14pm| 13pg| Research | Equity-Andrew Baker, CFA and othersPulp & Paper: No Shortage of Pulp Supply News; Good Pulp Buying in China in Sep27 Sep 2024 | 11:12pm| 8pg| Research | Equity-Marcio Farid and othersChina Property Weekly Wrap: Week 38 Wrap - Transactions sharply lower in both primary and secondary24 Sep 2024 | 7:04am| 16pg| Research | Equity-Yi Wang, CFA and othersChina Travel, Leisure & Transportation: Golden Week demand likely to be resilient. Better base in 4Q24. Prefer TCOM, Galaxy, Sands, H World and COSCO Shipping Energy23 Sep 2024 | 10:40pm| 34pg| Research | Equity-Simon Cheung, CFA and othersHong Kong Banks' asset quality: Lessons learned from the AFC14 Sep 2024 | 2:50pm| 33pg| Research | Equity-Gurpreet Singh Sahi, CFA and others
China Property Risk Monitor
China Financial Services: Property Risk Monitor IV: mortgage prepayment risk, likely moderating 2023 loan growth; d/gr retail banks
2 Mar 2023 | 8:21pm| 31pg| Research | Equity-Shuo Yang, Ph.D.
China Financial Services: Property Risk Monitor III: A multi-year loss digestion cycle
17 Oct 2022 | 11:58pm| 51pg| Research | Equity-Shuo Yang, Ph.D. and others
China Financial Services: Property Risk Monitor II: Mortgages, household borrowing and consumer finance
21 Jul 2022 | 12:22am| 48pg| Research | Equity-Shuo Yang, Ph.D. and others
China Financial Services: Property Risk Monitor I: Credit size, losses, vulnerabilities and margin of safety
21 Jul 2022 | 12:17am| 69pg| Research | Equity-Shuo Yang, Ph.D. and others
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China Credit Conundrum: A Multi-Year Timeline to Restructure China Property Sector Debts Unlike previous China property sector downturns, the latest downturn that began in 2021 has not seen policymakers revert to significant policy easing to reflate the sector. In our view, “this time is different” in terms of the policy response which represents a structural change in the outlook for the sector. We expect near-term policies will be concentrated on addressing the "flow" credit issues by ensuring sufficient credit flow to meet project completion needs, and will gradually shift towards handling the "stock" problem – namely, the excess inventory currently sitting on developers' balance sheets. |
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China Real Estate: REITs: C-REITs: On the way to a US$2-3tn asset class Listed C-REITs' aggregate market cap of US$10bn (with 3-month aggregate daily trading value of ~US$40mn) is still at a nascent stage (less than 1% of global REITs market cap). To address multiple challenges that the country is facing, the continuous promotion of C-REITs to cover more strategic assets is needed. We expect C-REITs to accelerate their development in coming years and potentially grow aggregate market cap to US$2-3tn (or c.20% of today's A share market cap) that can not be ignored anymore.
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Top of Mind: China’s Congress: an inflection point? The 20th Party Congress of the CCP promises to be one of the most significant events in China’s modern history, not only because President Xi is widely expected to secure a rare third term, but also as it comes amid the country’s slowest pace of growth in decades. Whether the Congress marks an inflection point for economic policy, and what that means for growth and markets, is Top of Mind.
Click here for the full report. |
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China: Investing under a new regulation regime (Part 4): A US$60tn property dilemma We see property directly and indirectly impacting ~15% of listed company profits via the financial, construction, consumption, and wealth-effect channels. We reduce our 2022 EPS growth forecast for MSCI China from 13% to 7% on lower property growth impulse but it could fall to -15% if our economists' bear case prevails. |
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FEATURED MEDIA
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Research Unplugged: China for Global Investors: Strong Exports Hide Weak Domestic Demand27 Jul 2024 | 1:41am| Equity Research
RELATED ANALYSTS
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Yi Wang, CFA | Shanghai China Property yi.wang@ghsl.cn +86 21 2401-8930 |
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Vicky Li | Shanghai China Property vicky.li@ghsl.cn +86 21 2401-8926 |
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Hui Shan | Hong Kong Chief China Economist hui.shan@gs.com +852 2978-6634 |
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Kenneth Ho | Hong Kong Credit Strategy kenneth.ho@gs.com +852 2978-7468 |
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Kinger Lau, CFA | Hong Kong Chief China Equity Strategist kinger.lau@gs.com +852 2978-1224 |
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Shuo Yang, Ph. D. | Hong Kong China Financials shuo.yang@gs.com +852 2978-0701 |