Directional De-alignment in Central Bank Portfolio De-alignment First Implement

Today, for the first time, the directional alignment of the central bank portfolio has been implemented. In September, the central bank announced that on September 16, it would reduce the reserve requirement ratio of financial institutions by 0.5 percentage points (excluding financial companies, financial leasing companies and auto financing companies). In addition, an additional 1 percentage point reduction in the deposit reserve ratio for urban commercial banks operating only in provincial administrative areas was implemented twice on October 15 and November 15, with each 0.5 percentage point reduction. The central bank said in September that the comprehensive reduction and directional reduction would release about 900 billion yuan of long-term funds, including 800 billion yuan on September 16 and 100 billion yuan on October 15 and November 15.

Some analysts told Securities Daily that the purpose of the reduction was to smooth the transmission of monetary policy and increase financial support to the real economy. The simultaneous implementation of alignment and directional alignment also shows that the intensity of counter-cyclical adjustment has increased significantly. Directional downgrading of city commercial banks will help alleviate the current liquidity stratification and contraction of city commercial banks'liabilities, so as to better support private small and micro enterprises.

The central bank keeps the monetary policy loose and moderate while increasing the intensity of counter-cyclical adjustment. At the third quarter regular meeting of the Central Bank's Monetary Policy Committee, it was proposed that macro-control should be innovated and improved, counter-cyclical regulation should be strengthened, macro-policy coordination should be strengthened to form a joint force. Steady monetary policy should be relaxed and moderate, and the general gate of money supply should be properly handled without "flooding". From the recent open market operation of the central bank, it is also reflected. On October 14, the Central Bank announced that the total liquidity of the banking system was at a reasonable level and no reverse repurchase would be carried out on that day. Yesterday, there was no reverse repurchase and MLF expiration in the open market, so the open market realized zero-put and zero-return. After the Eleventh Holiday, the Central Bank suspended the operation of the open market continuously. Last week, reverse repurchase expired at 320 billion yuan, and the open market recovered 320 billion yuan. Fan Ruofeng, a researcher at the International Finance Research Institute of the Bank of China, said in an interview with the Securities Daily earlier that since mid-late September, the central bank has intensified its open market operations and released more liquidity to hedge the impact of cross-seasonal disturbances.

Looking from the overall fund level this month, Haitong Securities Research and Report predicts that the fund will be tight in October. Last week, the central bank suspended the operation of the open market and the fund level was stable. Looking forward to the mid-and late October, the open market has neither reverse repurchase expiration nor MLF expiration; on October 15, the targeted reduction of the release fund is about 50 billion yuan; on October 24, the tax payment period is about 70 billion yuan to 800 billion yuan, and the tax payment fund gap is about 70 billion yuan to 800 billion yuan. It is expected that the central bank will stabilize the capital surface through reverse repurchase, MLF, TMLF and other operations. It is worth noting that on October 14, the Shanghai Interbank Offer Rate (Shibor) rose in the whole period except that Shibor dropped 0.10 BP to 2.9510% in 9 months, indicating that the capital has converged. Overnight Shibor reported 2.555%, up 34 BP; 7 days Shibor reported 2.6510%, up 6 BP; 14 days Shibor reported 2.495%, up 0.9 BP.