What is interest rate cut?
What is the qualitative difference between RRR cut and interest rate cut?
Cutting the reserve requirement ratio (RRR) only releases the margin of commercial banks and increases the supply of funds in the market, which is conducive to stimulating the production link;
Cut interest rates – it will not increase the amount of market funds, but can change the investment of funds.
The main effects are as follows: by reducing the return of central bank deposits, funds are forced to enter the market outside the bank, which improves the activity of trading, and reduces the cost of loans and improves the competitiveness of products.
A so-called rate cut means that banks use adjustments to alter cash flows.
When banks cut interest rates, it pays less to keep money in the bank, so the rate cut will cause money to flow out of the bank and deposits to become investments.
Such as cut the reserve ratio, that liquidity is more than cut the reserve ratio and interest rate are two different things, cut the loan interest rate did not fall, cut the reserve ratio.
For example, the demand reserve is 20 percent.
If a bank has $100 million in deposits, it can make $500 million in loans.
Now, by lowering the reserve requirement ratio to 10 percent in a few years, banks can lend $1 billion.
Lowering the reserve requirement ratio frees up funds for banks to lend.
Lower interest rates mean lower interest rates on deposits and loans, which can stimulate investment.
Because it doesn’t make money to put it in the bank.
Overall, interest rate cuts have substantial benefits for the long-term development of the stock market.
According to the analysis of relevant experts, the following sectors may be affected in the short term: 1. Blue chip stocks, real value stocks, low price-earnings ratio stocks, high send stocks.
Interest rate reduction is conducive to further highlight the blue chip, real value of the charm of the stock.
In particular, a large number of blue chip stocks with a price-earnings ratio of less than 30 times, real value stocks, dividend payout, compared with the after-tax interest on bank deposits, highlights the advantages.
In particular, blue chip stocks, real value shares, shares converted to additional shares, compared with the after-tax interest on bank deposits, its charm to multiple calculation.
Investors can refer to the annual report has been announced, the choice of outstanding performance, low price/earnings ratio, dividend is more, especially to send shares into more “white horse shares”, rational investment.
2. Real estate stocks, insurance stocks and other “interest-sensitive stocks” mentioned above are referred to as “interest-sensitive stocks” in Hong Kong, especially real estate stocks. Interest rate cut is conducive to reducing the burden of people buying real estate by installment, mobilizing people’s demand for house purchase and reducing the burden of real estate developers.
“Rate cuts” and “expectations of rate cuts” have also helped the insurance industry.
However, deposit rates have been cut less than lending rates, which has helped and hurt banks.
Reduce the bank deposit and loan spreads increase the pressure on bank profits;
It also makes it harder for banks to collect deposits.
However, increased lending and economic recovery and growth have boosted banks’ business volumes, which has helped banks’ profits.
Overall, for bank stocks, the long-term effect remains positive, while the short-term effect depends on whether money is in demand.
3. The reduction of bank interest rate on national bonds and corporate bonds not only highlights the investment value of stocks, but also the investment value of national bonds with an annual interest rate of 2.95% or above and no profit tax.
The after-tax interest rate for a one-year fixed deposit is 1.584%, an increase of 1.366%.
In particular, the deposit rate was cut by only 0.25 percent, and there are expectations of a rate cut.
This is good for the slow bull market in Treasuries and corporate bonds.
From the perspective of “estate stocks”, the bear market in 2007 led many institutions to invest in Treasuries.
It can be said that the government bond has been “Zhuang”.
For the same reason, corporate bonds are likely to be tapped.
4. Expand domestic demand concept stocks.
From the perspective of lowering the “two interest rates”, easing macroeconomic policy is no longer a problem, but something that is being implemented.
Its focus is to overcome the adverse impact of the continued slowdown in world economic growth on development, maintain sustained economic growth and the rapid and healthy development of the national economy.
In this way, in a broad sense, steel, cement, building materials, electricity and other “domestic demand expansion concept stocks” also have the opportunity to become the beneficiaries of the “sustained, rapid and healthy development of the national economy”.
In the long run, there is the possibility of excavation.
Once the above – mentioned stocks through the disk incremental capital intervention to be confirmed, we should seize the opportunity.
The impact of RRR cut RRR cut is one of the central banks.
The reduction in the reserve requirement ratio indicates that liquidity has begun to be gradually released.
The RRR cut has had a limited impact on the property market.
The first is a cut in the reserve requirement ratio, which is good for the property market but hardly saves it.
This is good news for the real estate market, which is still in a deep regulatory environment. The reserve reduction is only a hedge against the risk of a hard landing, which is not good news.
But policy is no panacea for future economic conditions.
Investors still focus on Omicron, two factors may guide the market theme.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
