Qu Hongbin: Effective Demand Is Not Enough. Loose Policy Is Very Necessary.

On November 13th, the Statistics Bureau released a new batch of October economic data in the afternoon. In October, the scale industrial added value increased by 7.7%, the electricity generation increased by 1.9%, and the total retail sales of social consumer goods increased by 11.5% compared with the same period last year. Qu Hongbin, chief economist of HSBC Greater China, believes that the data still show that the current effective demand is insufficient, and further easing policy is very necessary.

Data also showed that in addition to the growth rate of investment, the consumption growth rate in October also dropped slightly, the growth rate dropped slightly from 11.6% last month to 11.5%, while the October export growth rate released by the customs earlier this month dropped to 11.6% over 15%. In terms of industrial economy, the industrial added value increased by 7.7% in October, down 0.3 percentage points from the previous month. This growth is second only to the 6.9% lowest in six years in August, the lowest in the year.

Some experts said the data reflected the current situation. economic growth Still facing downward pressure. Many experts also said that the policy of steady growth still needs to be sustained.

However, Wang Yuanhong, chief economist of the Ministry of economic information of the state information center, said that this year's economic growth can achieve about 7.5% of the target. "This figure can be 7.4% or 7.3% or even 7.2%. There is no problem. Just like prime minister Li Keqiang said before, GDP is higher and lower, and the key is employment. Now Employment objective It has been over fulfilled, and the economy is running smoothly. "

HSBC Greater China chief Economics The economic activity figures for October were lower than expected. The total retail sales of consumer goods increased by 11.5% over the same period last year, and the growth rate of industrial production dropped to 7.7% as the growth rate of mining and manufacturing industries slowed down. Fixed asset growth slowed to 15.9% year-on-year, despite a slight rebound in real estate investment. This data still shows that the current effective demand is insufficient. Combined with the inflation data released the previous day, the negative economic output gap is obvious. "We still believe that further easing policy is necessary."

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In the first half of this week, the market experienced severe oscillations, and the volume could be dramatically enlarged. The seesaw effect between the market capitalization companies and the small and medium capitalization companies formed the market.

We believe that the market trend basically validates our previous judgement. The important solar terms such as Li Dong have already reflected the influence of the market in the past history, and B shares have shown consistently the leading indicators since last week. What needs to be clarified now is the direction selection after the oscillation.

For the market, it is noteworthy that on the one hand, the central bank provides liquidity to banks through new tools to support the demand for credit and social financing, and continues to guide interest rates downwards to continue easing signals. On the other hand, the government has made repeated efforts to guide the reform of the system. The November 17th Shanghai and Hong Kong exchanges that will open the gate have made short-term funds for this doubt regroup and even introduced global institutional investors.

In view of this, the medium term market of B shares should not be over, but in the short term, it is necessary to sort out a "time for space" through consolidation, which is expected to continue upward after a strong concussion.