The information is "off the charts."

On September 24th, the State Council Information Office held a press conference on the financial support for high-quality economic development.

The People's Bank of China Governor Pan Gongsheng, the Director of the National Financial Regulatory Administration Li Yunze, and the Chairman of the China Securities Regulatory Commission Wu Qing made significant announcements, with over ten major policies being introduced.

These include lowering reserve requirements, interest rates, existing mortgage loan interest rates, and down payment ratios.

They also introduced new monetary policy tools to support the capital market, increased core tier-one capital for six large commercial banks, appropriately relaxed restrictions on the amount and ratio of equity investments by financial asset investment companies, supported other qualified insurance institutions to establish private securities investment funds, and issued guidelines for promoting medium and long-term capital into the market and six measures to promote mergers and acquisitions.

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After the policy release, affected by multiple benefits such as reserve requirement cuts, interest rate cuts, and existing mortgage loan interest rate reductions, the bond market interest rates rose overall, the stock market became active and increased, the real estate chain strengthened across the board, and the RMB exchange rate remained stable with a slight rise.

The policy has played a significant role in boosting market confidence and stabilizing market expectations.

A comprehensive market analysis suggests that as policies gradually take effect and their impact continues to be released, it is expected to effectively stimulate domestic demand and stabilize credit levels, helping the economy to recover steadily.

Supporting A-shares, the policy impact is immediate and exceeds expectations with reserve requirement cuts and interest rate cuts on the horizon, the first creation of structural monetary policy tools to support the capital market, reduction of existing mortgages, and six measures to promote mergers and acquisitions.

A package of policy combinations has been launched, fully committed to stabilizing growth and boosting confidence, supporting A-shares.

The impact of the policy is immediate.

On the 24th, the three major A-share indexes rose significantly with increased trading volume.

By the close, the Shanghai Composite Index rose by 4.15%, the Shenzhen Component Index rose by 4.36%, the ChiNext Index rose by 5.54%, and the North Index rose by 3.23%, with the total market turnover reaching 974.4 billion yuan, an increase of 421.6 billion yuan from the previous day.

More than 5,100 stocks in the two markets rose.

At the press conference that day, the central bank took the lead in announcing policy benefits, exceeding market expectations.

In terms of reserve requirement cuts and interest rate cuts, the reserve requirement ratio will be reduced by 0.5 percentage points in the near future, providing about 1 trillion yuan of long-term liquidity to the financial market; this year, depending on the condition of market liquidity, it may further reduce the reserve requirement ratio by 0.25 to 0.5 percentage points; the central bank's policy interest rate, that is, the 7-day reverse repo operation interest rate, will be reduced by 0.2 percentage points, from the current 1.7% to 1.5%, while guiding the loan market quotation interest rate and deposit interest rate to move down synchronously, maintaining the stability of commercial banks' net interest margins.

The Chief Economist of China Minsheng Bank, Wen Bin, believes that the simultaneous implementation of reserve requirement cuts and interest rate cuts strengthens policy coordination and maintains interest margin stability.

The reserve requirement cut can release more sufficient long-term liquidity, which can smooth out excessive fluctuations in funds during the peak period of government bond supply, and strengthen the coordination of monetary and fiscal policies.

In addition, at present, domestic demand is insufficient, and prices are operating at a low level.

With the weakening of external constraints, policy interest rate cuts and LPR reductions help to reduce actual financing costs, promote faster demand repair, and achieve the annual economic growth target.

In addition to the long-term liquidity funds released by reserve requirement cuts and interest rate cuts, the central bank has created structural monetary policy tools to support the capital market for the first time, which has attracted widespread attention.

First, it has newly established a special re-lending tool for stock buybacks and increases by major shareholders, aimed at supporting listed companies to repurchase and major shareholders to increase their holdings of stocks, stabilizing the capital market, with the first phase amounting to 300 billion yuan; second, it has created a swap facility for securities, funds, and insurance companies to maintain the stability of China's capital market and boost investor confidence, with the first phase amounting to 500 billion yuan.

Qualified securities, fund, and insurance companies are supported to use bonds, stock ETFs, and CSI 300 constituent stocks and other assets as collateral to exchange for high-liquidity assets such as government bonds and central bank bills from the central bank.

Liu Tao, a senior researcher at the Guangkai Chief Industry Research Institute, believes that this indicates that the central bank is guiding financial institutions to strengthen credit investment in various aspects of the capital market in a market-oriented manner, which is conducive to further stabilizing and boosting the development confidence of the capital market.

In response to the current issues of insufficient total amount and suboptimal structure of long-term capital in the capital market.

Li Yunze introduced at the press conference that the reform pilot of long-term investment by insurance funds will be expanded, supporting other qualified insurance institutions to establish private securities investment funds, and further increasing investment in the capital market.

"Financial asset investment companies under large commercial banks have already met the conditions for expanding the pilot.

We will work with relevant departments to study expanding the pilot scope from the original Shanghai to 18 large and medium-sized cities with active technological innovation such as Beijing, appropriately relaxing the restrictions on the amount and ratio of equity investment, increasing the ratio of on-balance-sheet investment from the original 4% to 10%, and increasing the ratio of investment in a single private fund from the original 20% to 30%."

Li Yunze said.

Wu Qing stated that the CSRC will issue guidelines on promoting medium and long-term capital into the market in the near future, focusing on promoting medium and long-term capital into the market from three aspects: vigorously developing equity public funds; improving the institutional environment for "long money, long investment"; and continuously improving the capital market ecosystem.

The convergence of domestic and foreign monetary policy cycles has reduced the external pressure on the basic stability of the RMB exchange rate.

On September 18th, the Federal Reserve announced a rate cut of 50 basis points, which was the first rate cut since the Federal Reserve started raising rates in March 2022.

With the convergence of domestic and foreign monetary policy cycles, the external pressure on the basic stability of the RMB exchange rate has been significantly reduced.

Looking at internal demand, financial data has been relatively weak this year, with residents' willingness to leverage being weak, and actual interest rates remaining high in an environment of low inflation readings.

A significant interest rate cut helps to strengthen the counter-cyclical adjustment effort.

Ming Ming, the Chief Economist of CITIC Securities, believes that from the external environment, after the Federal Reserve's interest rate cut, the interest rate spread between China and the United States has gradually narrowed, and the RMB exchange rate has strengthened overall.

The goal of stabilizing the exchange rate has alleviated the constraints on loose monetary policy, and there is more room for interest rate cuts in China.

A person close to the central bank told First Financial that the RMB exchange rate has a solid foundation for maintaining basic stability.

Macroeconomically, the exchange rate is fundamentally determined by the economic fundamentals.

The central bank's policy combination has provided precise and effective support for the real economy, which will further consolidate and enhance the trend of China's economic recovery.

Microeconomically, the supply and demand in the foreign exchange market have recently become more balanced.

The foreign exchange income and expenditure data published by the State Administration of Foreign Exchange show that the cross-border income and expenditure of enterprises and individuals and other non-bank sectors have changed from a deficit in the early period to a surplus of 15.3 billion US dollars in August.

The aforementioned person stated that the central bank will continue to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

The central bank has repeatedly emphasized the determination of the market in the formation of the exchange rate and maintains the flexibility of the exchange rate.

This is not only conducive to the exchange rate's role in regulating the macroeconomy and the automatic stabilizer of international payments but also helps to improve the autonomy of monetary policy.

At the same time, the central bank's attitude towards preventing the risk of exchange rate over-adjustment is also very clear.

In dealing with various exchange rate fluctuations, the central bank has accumulated a lot of experience and formed a rich toolbox, capable of preventing the formation of a single-sided consistent expectation and self-fulfillment, and capable of dealing with any exchange rate fluctuations.

Pan Gongsheng emphasized that market participants should view exchange rate fluctuations rationally, and enterprises should focus on their main business.

The central bank's exchange rate policy position is clear and transparent, adhering to the market's decisive role in the exchange rate market, strengthening expectation guidance, forming a single-sided consistent expectation in the foreign exchange market, and maintaining the RMB exchange rate at a reasonable and balanced level.

Policy "top-level" support, easing bond market tension.

Recently, the bond market trend has been divergent.

On the 24th, long-term bonds and super-long-term bonds "turned green", with the active bond interest rate of 10-year government bonds rising by 1.45 basis points (BP) to 2.0490%, and the active bond interest rate of 30-year government bonds rising by 4.5 BP to 2.1825%.

Since mid-August, due to factors such as the loss of bank deposits and the large issuance of government bonds, the fluctuation of the money market has increased, and the overnight interest rate has climbed from 1.6% to 1.7% to close to 2.0%.

Pan Gongsheng stated that the decline in Chinese government bond interest rates was due to several factors: the central bank's guidance of market interest rates through policy interest rates, the slow supply of government bond issuance in the early period, and some factors such as the weak risk awareness of small and medium-sized financial market institutions, exacerbating the situation, and the herd effect.

At present, the government bond yield curve, as an important price signal, still has problems such as insufficient pricing at the far end and insufficient stability.

The central bank's risk warning on long-term government bond yields and strengthening communication with the market is to curb the systemic risk that may be hidden in the herd effect leading to a one-sided decline in long-term government bond yields.

"At present, China's long-term government bond yields are hovering around 2.1%, and the level of government bond yields is the result of market formation.

The People's Bank of China respects the role of the market.

At the same time, there is no doubt that it has created a good monetary environment for China to implement an active fiscal policy."

Pan Gongsheng stated that the conditions for the central bank to buy and sell government bonds and inject base money through the secondary market have gradually matured.

Currently, the People's Bank of China has included the purchase and sale of government bonds in the monetary policy toolbox and has begun trial operations.

In market analysis, monetary policies such as reserve requirement cuts will help alleviate the current tension in the bond market's money supply.

In fact, the market has long expected the introduction of policies such as reserve requirement cuts, interest rate cuts, and reductions in existing mortgage loan interest rates.

However, what surprised the market was the simultaneous introduction of the three major policies, and each policy support has taken the "top-level" support strength at this stage.

Xiao Jinchuan, a fixed-income analyst at Huaxi Securities, believes that the interest rate cut of 20 to 30 BP far exceeds the previous normal interest rate cut of 10 BP, which also made the bond market perform a "good news exhausted" trend of long-end interest rates first down and then up on the 24th.By the end of September, the net financing quota for government bonds was only 1.5 trillion yuan left for the year, about 2.3 trillion yuan less than the same period last year.

Last year in September, only a 25BP reserve requirement ratio reduction was implemented, whereas this year's reserve requirement ratio reduction released about 1 trillion to 1.5 trillion yuan more funds than last year.

Xiao Junchuan believes that, taking into account the allocation and occupation of funds, if the additional quota for government bonds within the year does not exceed 3 trillion yuan, the overall funding pressure in the fourth quarter of this year will be less than that of the same period last year.

The housing market policy package is coming, which will benefit 50 million families.

Previously, the interest rate spread between existing and new housing loans continued to widen, and the market has long called for a reduction in interest rates for existing housing loans.

On September 24, Pan Gongsheng announced that the central bank plans to work with the financial regulatory authority to introduce five real estate financial policies.

First, guide banks to reduce the interest rates on existing housing loans.

Second, unify the minimum down payment ratio for housing loans to 15%.

Third, extend the term of two real estate policy documents.

Fourth, optimize the re-lending policy for affordable housing.

Fifth, support the acquisition of existing land by real estate companies.

What impact will the housing market policy package have on the real estate industry?

It is reported that the central bank plans to guide banks to adjust the interest rates on existing housing loans in batches, reducing the interest rates on existing housing loans to a level close to that of newly issued housing loans, with an expected average decrease of about 0.5 percentage points.

This reduction is expected to benefit 50 million families and 150 million people, with an estimated annual reduction in family interest expenses totaling about 150 billion yuan.

Pan Gongsheng stated that banks reducing the interest rates on existing housing loans is beneficial for further reducing borrowers' mortgage interest expenses, promoting the expansion of consumption and investment, and also beneficial for reducing the behavior of early repayment of loans; at the same time, it can also compress the space for illegal replacement of existing housing loans, protect the legitimate rights and interests of financial consumers, and maintain the stable and healthy development of the real estate market.

It is worth noting that the central bank has also expanded the central bank's funding support ratio for affordable housing re-lending, increasing the ratio from 60% to 100%.

On May 17, the central bank established a 300 billion yuan re-lending fund for affordable housing, supporting local state-owned enterprises to purchase unsold commercial housing that has been completed for use as allocated or rental affordable housing.

The re-lending adopts a "loan first, borrow later" and quarterly issuance model, where financial institutions first issue loans to eligible borrowers, and then apply for the corresponding re-lending funds from the People's Bank of China at the beginning of the next quarter.

The central bank issues re-lending funds at 60% of the principal of the loans issued by financial institutions.

CRIC Real Estate Research believes that under the original model, the remaining 40% of the loan principal and risk need to be borne by commercial banks themselves.

This time, raising the central government's funding support ratio to 100% means that the central bank will provide full funding support, reducing the capital costs and lending risks of commercial banks, which is conducive to enhancing the enthusiasm of commercial banks for loan issuance, and thus accelerating the progress of local state-owned enterprises' inventory collection.

The China Index Academy believes that this will help increase the scale of commercial bank loans, and will have a certain positive impact on local inventory collection.

However, it is worth noting that the current local inventory collection process is relatively slow, and the difficulty in matching the collection price, the high cost of funds for local state-owned enterprises to collect inventory, and the mismatch of supply and demand are key influencing factors.

The current central bank's interest rate reduction can also reduce the cost of inventory collection for state-owned enterprises to a certain extent, and factors such as collection price and supply-demand mismatch may still require more supporting policies in the short term to help local governments accelerate the inventory collection process.