citic securities Wang Deyong
matter:
On December 5, the Central Economic Work Conference made it clear that China will implement a tight monetary policy in 2008. The central bank then decided to raise the deposit reserve ratio by 1 percentage point from December 25 to 14.5%. This is the 10th time that the central bank has raised the deposit reserve ratio this year, and the reserve ratio has once again hit a record high.
Comments:
Increase deposit reserve Rate, industry monetary tightening
The government has bid farewell to the prudent or moderately tight monetary policy that has been implemented for many years, and China has entered an era of monetary tightening. More than 50% of the capital in the real estate industry comes directly or indirectly from banks, and this pattern has never changed. This increase in the deposit reserve ratio has an indirect impact on the real estate industry, that is, a large amount of liquidity is recovered through the currency multiplier, thus affecting the scale of real estate development loans and mortgage loans.
The capital source of the real estate industry is facing structural adjustment
In the short term, the tight monetary policy undoubtedly increases the current capital pressure of real estate enterprises. We expect that banks will appropriately reduce loans to real estate enterprises, appropriately restrict the issuance of mortgage loans to high-end commercial housing, and at the same time stop the use of fake mortgages to obtain bank funds, use various means to avoid the high down payment and high interest rate of the second housing, and apply for mortgage loans at a false assessment price. But even in the short term, this tension does not mean that the industry capital chain is broken. More than half of all social loans have taken houses and land as collateral. Taking into account the lessons of Hong Kong and Japan, the government is not happy to see the decline in the value of collateral caused by the decline in house prices.
In the long run, we believe that the source of funds for the industry will undergo structural adjustment, and the capital chain of real estate enterprises will not be a major obstacle. On the one hand, real estate enterprises will continue to expand the capital market, trust investment funds and other direct financing channels; On the other hand, real estate development loans and mortgage loans are expected to continue to rise and fall. Housing mortgage loan is an important high-quality asset of commercial banks. In recent years, the non-performing rate has been around 1% - 2%. From the perspective of international comparison, Hong Kong's current housing mortgage loans are equivalent to 140% of GDP, accounting for 20% of the bank's domestic and foreign currency loans. Although the scale of housing mortgage loans in China has risen all the way, the proportion of domestic and foreign currency loans in banks and GDP is still low. As long as investors are confident in the direction of market-oriented reform of banks, there is no reason to be overly pessimistic about the issuance of future housing mortgage loans.
In addition, we believe that the factors determining the fundamentals of the industry have not changed significantly. In the long run, there is less than one complete set of housing per household, land supply is tight, demographic dividend, urbanization and other factors are irreversible; In the short term, in the first 10 months of 2007, the national real estate sales area was almost twice the completed area, the real interest rate was negative, and the national house price rose 15% year on year. In 2008, despite the industry's financial constraints, the high level of prosperity will continue.
Monetary policy has almost lost its independence, and the exchange rate mechanism is still conducive to the prosperity of the industry
The tight monetary policy not only reflects the central government's concern about overheated investment and rapid price rise, but also includes the helplessness of the monetary policy authorities under the exchange rate system of "small quick run and slow appreciation". The slight long-term rise of the RMB exchange rate is similar to an invitation to domestic and foreign capital to appreciate China's assets, and real estate is more popular as an investment without technical barriers. The high growth of foreign exchange funds made the central bank's monetary policy almost lose its independence. Monetary policy can restrain the scale and direction of bank credit, but it cannot control domestic and foreign funds to enter the real estate industry or purchase properties by various means to share the feast of China's asset appreciation.
It's a challenge and an opportunity
Increasing the deposit reserve ratio is conducive to the survival of the fittest in the industry. First, the policy of raising the deposit reserve ratio did not exceed the consensus expectation of the industry, and many first tier and second tier listed companies have passed the negotiable securities Market refinancing, introducing partners and other means to expand the source of funds. Second, listed companies are more likely to be favored by banks because of their good credit standing and large scale. Third, a large number of project oriented companies are short of funds, and the expansion of larger companies will be more like a fish in water.
Continued regulation is inevitable, and the industry is growing steadily
The keynote of monetary policy in 2008 has been determined. We expect that in Shenzhen and other areas where housing prices have risen too fast this year, the growth rate of housing prices will decline in 2008. The adjustment in some areas does not mean the reversal of industry prosperity. We believe that the real estate industry will enter the "five high pattern" of high house price, high land price, high debt, high threshold and high prosperity, and maintain the industry's investment rating of "stronger than the big city". Under this pattern, excellent enterprises will have faster turnover, more stable scale expansion, more mature financial strategies, more dispersed geographical and product layout, and more reliable performance growth.
Sina statement: The content of this article is purely the author's personal view, only for investors' reference, and does not constitute investment advice. Investors operate accordingly at their own risk.
