On the morning of September 24, the State Council Information Office held a press conference, where the Governor of the People's Bank of China, the Director of the China Banking and Insurance Regulatory Commission, and the Chairman of the China Securities Regulatory Commission introduced the relevant situation of financial support for high-quality economic development and answered questions from reporters.

At the meeting, the contents related to monetary policy became the focus of attention for the capital markets. According to the Governor of the People's Bank of China, the future monetary policy tools to be introduced include, but are not limited to: reducing the deposit reserve ratio and policy interest rates, lowering existing home mortgage rates, unifying the minimum down payment ratio for home mortgages, and introducing new stock support tools.

The new round of policies indicates that the central bank adheres to a supportive monetary policy stance. During the press conference held by the State Council Information Office on September 5, the Director of the Monetary Policy Department of the People's Bank of China mentioned that 'policy adjustments such as reserve requirement ratio cuts and interest rate cuts still need to observe economic trends' and 'based on the economic recovery situation, target achievement, and specific issues facing macroeconomic operations, we will reasonably grasp the intensity and pace of monetary policy regulation.' Now, facing the new changes in the economic situation, the central bank has timely implemented countercyclical adjustments, effectively supporting the improvement and high-quality development of the economy. The further strengthening of monetary policy is consistent with the repeated mention by the central bank of 'adhering to a supportive monetary policy stance.'

Real estate and capital markets are key areas of concern for policymakers. Unifying the minimum down payment ratio for home mortgages and introducing new stock support tools are important tools in this round of policy implementation, highly relevant to real estate and capital markets. Since 2024, the real estate industry has been experiencing a liquidity crisis, and the stock market has fallen again after a rapid rebound at the beginning of the year. Therefore, the goals of alleviating and mitigating real estate risks and activating the capital markets still require policy support. Specific policies tailored to specific issues reflect the flexibility, moderation, precision, and effectiveness of the new round of stimulus policies.

We believe that the capital markets are likely to reach a turning point around the National Day. After the Shanghai Stock Exchange Composite Index peaked in May, it entered a phase of partial adjustment, falling from the high of 3174 to around 2700 recently. In the current situation where some economic indicators are slightly below expectations, policy is the most variable that investors should pay attention to. The intensification of monetary policy is the beginning rather than the end of this round of policy combination. Looking ahead, we believe that there is still room for action in fiscal and real estate policies. Large-scale equipment upgrades, consumer goods replacement, existing home inventory storage, and local debt risk mitigation are potential policies worth investors' attention. A-shares have become more attractive in valuation after the previous adjustments. With further policy intensification and improved economic expectations, confidence in the capital markets is expected to rebound.

Author: You Zhongyuan, Macro Researcher at Jufang Financial Research Institute, a subsidiary of Jiufang Zhitou (09636)