Today, at a press conference held by the State Council Information Office, Pan Gongsheng, the Governor of the People's Bank of China, announced the reduction of existing mortgage loan interest rates and the unification of the minimum down payment ratio for mortgages. This move is aimed at guiding commercial banks to lower the interest rates on existing mortgages to a level close to that of newly issued mortgages, with an expected average decrease of around 0.5 percentage points.
In addition, the reserve requirement ratio and policy interest rates will be lowered to drive interest rates downward, with a reduction of 0.5 percentage points, providing long-term liquidity of 1 trillion yuan. Depending on the market liquidity conditions throughout the year, there may be further reductions of 0.25 to 0.5 percentage points. The policy interest rates of the central bank will also be reduced, with the 7-day reverse repo rate being lowered by 0.2 percentage points. This is intended to guide the loan market报价 interest rates and deposit rates to move downward in sync, maintaining the stability of the net interest margin for commercial banks.
Following the introduction of this series of policies, I have observed discussions on forums, Weibo, and WeChat groups, with opinions varying on the impact. Some argue that it is most beneficial for the real estate sector, others for consumption, and some for ordinary people buying homes with loans. While all these perspectives have merit, I believe their impacts are limited or do not directly address the root of the issue.
For instance, let's consider the impact of reducing existing mortgage interest rates on promoting consumption. At today's meeting, Governor Pan stated that the reduction is expected to benefit 150 million people, reducing household interest expenses by approximately 150 billion yuan per year.
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Do you know what the total annual retail sales of consumer goods in the country is? The answer is 47,149.5 billion yuan.
1,500/471,495 = 0.32%, so even if we assume that people spend all the saved 150 billion yuan on consumption (which is practically impossible), the overall boost to society's consumption would only be 0.32%, which is truly a drop in the ocean.
So, what do I believe is most favored by today's series of policies? The answer is: high-dividend stocks.
If you carefully review all the policy content announced today, you will find that these policies all point to one thing: the downward space for risk-free interest rates has been further opened up.
For high-dividend stock strategies, the most important influencing factor is the spread between the dividend yield and the risk-free interest rate. Today, the central bank has lowered the core 7-day reverse repo rate to 1.5%. Since banks need to maintain a stable net interest margin after reducing existing mortgage interest rates, it was also mentioned at today's meeting that bank deposit rates will be further lowered in the future, with the one-year fixed deposit rate heading directly towards 1%.
At the same time, our capital market, especially the Hong Kong stock market, still has a large number of high-dividend stocks with a dividend yield of over 5%. These high-dividend stocks cover various sectors such as banks, oil, coal, operators, highways, etc., which are extremely attractive to insurance, social security, and long-term investment institutions. As for some consumer stocks, their dividend yield was less than 1% at the peak of the bubble in 2021. After three consecutive years of decline, their dividend yield is now between 3-5%. Therefore, I make the following judgment: the future reversal of consumer stocks may not be due to their performance being particularly good, but rather because their falling stock prices make their dividend yields increasingly attractive. Alternatively, they may accelerate the increase in dividend yield through higher dividend payout ratios or share buybacks, leading to a reversal in their stock prices.So from this perspective, today's series of policies are favorable for all stocks with dividend yields far higher than the current risk-free interest rates.