速读：COMMENTS ON CHINA MONETARY POLICY REPORT Q1 2023：MONETARY POLICIES COPE WITH COMPLICATED SITUATIONS WITH MILD CHANGES

2023-05-25 00:45:30 来源：兴业证券股份有限公司

Investment Highlights

Highlights of China Monetary Policy Report Q1 2023:

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1)The report, relatively optimistic about China’s economic fundamentals, said the economic growth was “better than expectations”, and problems such as temporarily rising momentum of M2 in the economic recovery as well as temporarily weak inflation readings would likely improve with the economic recovery.

2)The People’s Bank of China (PBOC) elaborated the thoughts of monetary policies. With more and more uncertainties of external conditions, the monetary policy could go appropriately closer to “robust intuition” and cope with complicated situations with mild changes, which means the PBOC would cherish monetary policy moves, making the interest rate reduction less likely to happen in the short term.

3)And the PBOC was more concerned about the Silicon Bank Event and its follow-up impacts, and China will probably expedite the construction and improvement of its financial regulatory system.

When it comes to the bond market, it is likely in the period of chasing the rise and magnifying the volatility.

The unsolved asset shortage, weak economic fundamentals from a month earlier, and marginal relaxation of capital prices since this April combined led to less obvious deterioration of trading structure, and the follow-up bond market will likely continue to contract multiple spreads and grab lowlands of valuations.

Despite that the market is in the period of chasing the rise, the market fluctuations will likely amplify and investors will become more anxious, due to trade aggregation.

Apart from the contraction of spreads for interest bonds, we suggest paying attention to strategies for short duration and investment opportunities of secondary perpetual bonds with three-to-five-year duration.

As for the treasury bonds and futures, the strategy for TS contract has become mature and the cross-period price difference is expected to further be shrank due to asset shortage, and investors could participate in the strategy of short-selling cross-period price difference.

Potential risks

unexpected monetary policies; unexpected real estate policies; more-than-expected fiscal spending

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