TF SECURITIES: Policy reinforcement leads the way in finance. Currently, the policy is not a complete package of measures

According to the information obtained from the Zhitong Finance APP, TF Securities released a research report stating that with policy reinforcement and financial leading, the current policies do not represent a comprehensive package. The Political Bureau meeting on September 26 proposed to increase the intensity of counter-cyclical adjustments in fiscal and monetary policies to ensure necessary fiscal expenditures. The institution believes that the counter-cyclical policies, with a complex decision-making process, may be rolled out in October, with intensified efforts in Q4 to achieve the early-year targets.

Key Points from TF Securities:

Event Introduction

On September 24, 2024, the State Council Information Office held a press conference to introduce the relevant situation of financial support for high-quality economic development. During the press conference, leaders from various levels announced the introduction of a series of heavyweight policies to increase the control intensity of monetary policies, further stabilize economic growth, and enhance high-quality development.

Gradual Opening of Monetary Easing

Of particular interest in this policy package is the simultaneous implementation of reserve requirement ratio cuts and interest rate cuts, exceeding market expectations. On the day of the press conference on September 24, PBOC Governor Pan Gongsheng announced multiple monetary and real estate support policies, including: 1. Reduction of the reserve requirement ratio. The People's Bank of China announced a 0.5 percentage point reduction in the reserve requirement ratio in the near future, providing approximately 1 trillion yuan of long-term liquidity to the financial market; 2. Reduction of policy interest rates. The 7-day reverse repurchase operation rate was lowered by 0.2 percentage points from the current 1.7% to 1.5%; 3. Addressing the previously high market expectations for existing home loans, the PBOC announced a reduction in existing home loan rates and a unified minimum down payment ratio for home loans; 4. Introducing new monetary policy tools to support the stable development of the stock market.

New Proposals for Mergers and Acquisitions

On the evening of September 24, the CSRC issued the "Opinions on Deepening Market Reform of Mergers and Acquisitions of Listed Companies," with main contents including: 1. Supporting listed companies in transitioning and upgrading towards new productive forces; 2. Encouraging industrial integration by listed companies; 3. Further increasing regulatory tolerance; 4. Improving the efficiency of the restructuring market transactions; 5. Enhancing the service level of intermediary institutions; 6. Strengthening supervision in accordance with the law. This is also the first time that the CSRC has issued separate opinions on mergers and acquisitions. Regarding the introduction of patient capital that the market is concerned about, Chairman Wu Qing stated that the "Guiding Opinions on Promoting the Entry of Medium and Long-Term Funds into the Market" will be issued in the future. The main measures proposed include: 1. Vigorously developing equity public funds; 2. Improving the institutional environment for "long money, long-term investment"; 3. Continuously improving the capital market ecosystem. This is also the second mention of vigorously developing equity public funds after the "New Nine Measures" in April.

Increased Importance of Banking and Insurance Institutions

Compared to the People's Bank of China and the CSRC, the new policies of the China Banking and Insurance Regulatory Commission focus more on introducing long-term funds. Director Li Yunze stated that based on the previous Shanghai pilot, the scope of financial asset management companies under large commercial banks will be expanded to 18 cities, with relaxed restrictions on amounts and proportions, while optimizing the assessment mechanisms of corresponding institutions. In addition, with the approval of the State Council, China Life Insurance and New China Life Insurance will promote the establishment of private equity securities investment funds. It is expected that there will be more large insurance capital joint ventures to establish private equity funds in the future, bringing more long-term capital to the equity market Key Points 2.0: With policy reinforcement and financial leadership, the current policies do not represent a comprehensive package. The Political Bureau meeting on September 26 proposed to increase the intensity of counter-cyclical adjustments in fiscal and monetary policies to ensure necessary fiscal expenditures. TF SECURITIES believes that the decision-making process for the complex counter-cyclical policies may be rolled out in October, with intensified efforts in Q4 to achieve the year's initial goals.

Risk Warning: Global monetary easing falling short of expectations; policy implementation falling short of expectations; escalation of geopolitical conflicts; increased uncertainty in the U.S. presidential election