Lee Chickey, author of the documentary/New waves opinion leader (Bkopleader)
High-level credit debt and interest-rate varieties will continue to benefit from this cycle of asset avoidance, and hedging strategies will remain relatively better strategies.
Following the introduction of policies targeting equity and business, bonds have been suppressed by fears of a return to risk and a reversal of credit effects, with a slower rate of return and adjustments.
We believe, however, that this is only short-term fluctuations, with interest rates remaining in the next two quarters, and bonds remain the preferred option for large asset configurations.
The core argument is that if the policy mix of “demand control in the real estate does not relax the credit of small business enterprises” does not change, the market may turn back to “assets” in 2015-2016.
The two ends of the asset liability for 2015-2016 are the case of a steady recovery in social cohesion and the creation of high-yielding assets in the real economy.
However, the broad-based expansion of the Fund, starting with fiscal pairs, plus a high turnover of capital, has led to faster expansion of the financial institutions’ liabilities and sustained liquidity pressures on financial institutions (figure 1).
At present, the end of the liability is bound by a broad fund, with expansion rates not comparable to those of the past, but the quality, volume and speed of asset expansion cannot be compared.
The asset ends can create two main subjects of high-yielding high-quality assets: neither real estate nor capital is there room for significant expansion.
Soil expansion
Sales are everything. As long as sales are backed up, the high turnaround model of the house business “taken land - fast-starter - fast-tracking, fast-starter” can be maintained, with sufficient increases in high-quality assets such as mortgages, non-targeting and credit.
However, no sales exist. Stockpiles are slower down, banks are higher, and the logic of low stock-supporting is quickly skewed.
We do not look at the expansion of land production, and the logic is that the marketing landscape cannot be sustained. Specifically, there are two points:
First, the logic of a secondary price gap needs further consideration. In hot spots, prices for new housing can be controlled by statistical data, but second-hand home markets are market prices that are real supply and demand, which are higher than price limits.
As a result, after 2017, when more and more hot spots have adopted price-limiting initiatives, new gloves have been introduced, and the marketing of housing enterprises has been supported.
However, the logic of this dividend needs to be revisited. At the supply end, more than a year, more and more housing sources are entering the second home market from the new home market, even when the supply pressure for the second home has been accumulated, but when it is released.
At the demand end, more tenants and newly-requipped house buyers are faced with: (a) 5.7 per cent of mortgage interest rates (and are still rising); and (b) regulation will continue, with the real estate market going to down the expected mix, and will choose to wait for further declines in house prices or for a downward adjustment of mortgage interest rates. In the short and medium term, demand is weakened.
Changes in the supply and demand sides of the two ends will result in a more refrigerated market for second-hand houses, a narrowing of the price of one-to-two houses, and a direct impact on the sale of warders.
Secondly, squatters are recurred. The squatters were converted to a three-pronged divesting unit, which had resulted in waning demand for just and improved housing.
However, if the proportion of squatters converted to monetization declined, the population expected a decline in future income (figure 4), with more leverage and more cost, and the size of new home sales in three-way cities was difficult to sustain.
We estimate that if the proportion of shanty-ups to 4.6 million squatters in 2019 and the proportion of monetized settlements are reduced to 40 per cent, next year the national area of residential sales will be 90 million square metres below 2018, with a significant weakening of marketing in 2016 and 2017. (figure 5)
If the expansion of land is not expected, the demand for the cycle of steel, cement construction, etc., which is downstream from the industrial chain, coupled with the fact that the environmental limit is no longer one size fits all, and that the heating season will require a supply-side expansion space for marginal de-release, the supply and demand for the cyclical goods will gradually be uneven, and the three-year-old city of cattle will be crushed.
Inadequate availability of capital funds
Another widely recognized need for cyclical goods — build-up, although a number of policy documents have been produced, the following four factors have made it difficult to expand effectively.
First, non-target financing remains limited. The new regulations, article 55 against trust corridors and the new lending regulations have had a greater impact on low-rated cities relying on non-targeted financing, with limited access to capital.
Secondly, hidden debt pressures are significantly bound by local expansionary infrastructure. At present, there is no authoritative data on the size of hidden debt, but agencies estimate a large scale.
Taking into account the report of an official think tank, we believe that the local finance platform debt at the end of 2017 was approximately 3 billion yuan, while the then city debt stock was only 710 million.
At an average rate of 7 per cent, this block will require interest of $2.1 trillion, or 9.1 per cent of local government general public budget expenditures and government funds expenditures for 2017.
Once again, local debt is not in conformity with “life-long accountability”, and local officials are less motivated to build. According to our research, local and urban debt repayments are now being given priority, particularly in urban areas, and new projects are not positive.
Finally, activation of capital investment requires a combination of land finance and a credit acceleration for land. This requires the expectation of flat price stability and escalation, but it is clearly contrary to the current policy base.
In contrast to historical experience, there is still a high risk-free rate of return, a lack of building prices and a lack of a basis for rising prices, and credit accelerations are difficult to start.
In the context of weaker capitalization and expansion of land, we cannot expect the manufacturing industry to have sustained expansionary power, to bring about substantial economic shocks and to provide financial institutions with sufficient quality assets.
If this year’s manufacturing investment and private investment are dismantled, two of the most rapid increases can be found mainly:
The upper stream benefits from the supply side reform cycle industries; 2) downstream new manufacturing industries such as computers, telecommunications electronic equipment and electrical machinery and appliances.
The former are, as noted above,