Opinion: With the continuous contraction of macroeconomic data since the fourth quarter, under the tone of stable growth, increasing policy stimulus may be the next focus. At the same time, the Politburo meeting set the overall goal of next year's economic work and pointed out the direction for the specific arrangements for the upcoming economic work conference. On the whole, the relatively positive policy may bring further support and boost to the market, and we will also see another "policy bottom", which will also be the ultimate "policy bottom" in the past three years!
At the beginning of the month, we proposed: "After the first RRR cut in July 2021, the A** market ushered in the first policy bottom of this cycle. In the following two years, the ** Economic Work Conference, the Financial Stability Committee Meeting, the Epidemic Optimization Policy and this year's Politburo meeting all released a positive policy base, and the overall policy combination can be regarded as the bottom. However, the real estate market is sluggish and the demand is sluggish, the economic recovery is still weak, from the perspective of stable growth, we have expectations for the year-end economic work conference. And this may also become another policy bottom for the market during the year. "The core reason for this is that the macroeconomic data since October has been weak, especially the PMI has fallen back into the contraction range for two consecutive months, and the expectation of a weak economic recovery is still there. Under the tone of steady growth, the demand for the current policy stimulus may gradually increase.
Judging from the tone set by the Politburo meeting just held, the tone for next year's economy is actually relatively positive, and at the same time, it also reflects the firm determination to stabilize expectations and boost confidence. According to reports from the financial community, the Politburo of the Communist Party of China held a meeting on December 8. The meeting pointed out that next year, it is necessary to persist in seeking progress while maintaining stability, promoting stability through progress, establishing first and then breaking down, strengthen counter-cyclical and cross-cyclical adjustment of macroeconomic policies, and continue to implement a proactive fiscal policy and a prudent monetary policy. Specifically, fiscal policy mentions moderate strengthening, quality and efficiency improvement, while monetary policy mentions flexibility, moderation, precision and effectiveness. Obviously, on the fiscal front, the increase in counter-cyclical and cross-cyclical adjustment may become the main line. On the monetary side, there are more positive signals, which may indicate the possibility of further easing next.
It is worth noting that if these policies are further deployed in the next economic work conference, then the last "policy bottom" of the year may be presented, and this may also be the ultimate "policy bottom" in the past three years. As we said earlier, after the first RRR cut in July 2021, the A** market ushered in the first policy bottom of this cycle. In the following two years, the ** Economic Work Conference, the Financial Stability Committee Meeting, the Epidemic Optimization Policy and this year's Politburo meeting all released a positive policy base, and the overall policy combination can be regarded as the bottom. The last major economic meeting of the year, with the expectation of the release of active policies, is likely to become the ultimate "policy bottom" of this cycle under the trend of overall economic recovery and expected continued recovery.
Under the ultimate "policy bottom", the "market bottom" is close at hand. Hong Kong's generally referred to the "policy bottom" actually refers to the overall "policy mix bottom" of the last macro policy tone and release, and after the policy release, the fundamentals and liquidity as a whole and the boost to the market, with the gradual recovery of market confidence, the market bottom will soon come. Therefore, under the stimulus and boost of a number of previous policies, the upcoming economic work conference is expected to continue to be positive, ushering in the "policy bottom" at the same time, and bringing a positive role in promoting the formation of the market bottom of this round.
In short, with the economic recovery but the overall recovery is weak, the expectation of increased policy stimulus is gradually increasing. As the Politburo will set the tone of the economy and the expectation that there will be specific arrangements for economic work, we may once again see the so-called "policy bottom", and this may be the ultimate policy bottom of the "policy combination bottom" in the past three years, or will bring important support and boost to the formation of the market bottom in the later stage. Therefore, for investors, although the current market downturn, it is not a pessimistic moment, but at the time of the improvement of the macro situation at home and abroad and the low valuation of the first self, we should gradually be optimistic, and see the long-term investment value of the market, do a good job in strategic allocation and sowing on dips, and look forward to the final harvest under the overall improvement of the domestic economy and the resonance of the improvement at home and abroad!