On March 5, the 14th National People's Congress held its third session, during which Premier Li Qiang delivered the "Government Work Report." This report involves multiple significant messages, particularly focusing on important statements regarding the Capital Markets, which are outlined in the following five aspects.

Firstly, for the first time, "stabilizing the Real Estate and Stocks market" has been included in the overall requirements of the "Government Work Report."

Secondly, deepen the comprehensive reform of investment and financing in the Capital Markets, vigorously promote the entry of medium- and long-term funds into the market, and strengthen the strategic power reserves and mechanisms for stabilizing the market.

Thirdly, reform and optimize the system of Stock issuance and listing as well as M&A.

Fourthly, optimize and innovate structural MMF policy tools to more effectively promote the healthy development of the Real Estate and Stocks market, and enhance support for Technology innovation, green development, boosting Consumer spending, as well as private and small micro-enterprises.

Fifthly, accelerate the development of a multi-tiered Bonds market.

Sell-side research chief Analysts are uniformly Bullish on this "Government Work Report."

CITIC SEC's chief economist Ming Ming expects that with the overall strength of macro policies further increased compared to last year and the dual Bullish support of "promoting the healthy development of the stock market with greater efforts," the stock market is likely to continue its upward oscillation trend.

GF SEC's chief analyst Liu Chenming believes that the two sessions report basically continues the tone of the Central Economic Work Conference, with increased fiscal deficits to boost domestic demand, the central bank supporting the real estate and stock markets, and the incremental scenarios under AI technology narratives continuously acting as catalytic agents for improvement in the capital market environment.

Zheshang's macro joint chief Liao Bo pointed out that the government's work report proposed to "stabilize the real estate and stock markets," reflecting the central government's significant determination to support the capital and real estate markets.

Huachuang SEC's chief economist Niu Bokuun stated that the statements regarding the capital market in the government work report clarify the three major directions for deepening reform, which are of great significance for enhancing market functions, optimizing resource allocation, and stabilizing market expectations.

Debang SEC's research institute director and chief economist Cheng Qiang indicated that the setting of targets such as GDP and CPI reflects the overall requirements of stabilizing expectations and stimulating vitality, and the significant efforts in counter-cyclical adjustment measures will ensure continuous recovery and improvement of the economy.

Ming Ming: The pace of lowering the reserve requirement and interest rates may be advanced.

In terms of macroeconomic goals, Ming Ming pointed out that this is based on practicality, balancing needs and possibilities. The economic growth target is set at around 5% for 2025, which is necessary for stabilizing employment, preventing risks, and benefiting people's livelihoods, and this reflects many favorable conditions supporting economic growth, such as institutional advantages, a super-large-scale market, a complete industrial system, and rich human talent resources.

In addition, Ming Ming expects that the fiscal pace will be somewhat advanced this year, supporting a mild pickup in the economy at the beginning of the year; monetary policy will continue with a tone of "moderate easing," and the pace of lowering the reserve requirement and interest rates may be advanced; further positive support signals for real estate will be released; insisting on resolving debts during development, and developing while resolving debts; the resolution of risks in key areas remains the focus of policy.

Regarding the judgment of major asset classes, Mingming stated that since the beginning of the year, the economy has been running on a stronger trend, and investors' pessimistic expectations for a continuous economic downturn have begun to reverse. It is expected that under the support of the overall increase in macro policy strength compared to last year and the dual bullish support of "promoting the healthy development of the stock market with greater strength," the stock market is likely to continue its upward oscillation. Cyclical sectors and large technology sectors may be the important main lines for the stock market's performance going forward; the monetary policy's tone of "moderately loose" has been reaffirmed. Considering that there has been a significant adjustment in the bond market since February, it is expected that the bond market is gradually emerging from the headwind period. If the liquidity situation remains loose or expectations for interest rate cuts and reserve requirement ratio cuts heat up again, interest rates are expected to return to a downward channel.

Niu Bokun: Clarifying the three main directions for deepening reform of the capital market.

Niu Bokun believes that first, the "Government Work Report" emphasizes the policy direction of promoting long-term capital into the market since the new "National Nine Articles," proposing new expressions to strengthen "strategic reserve forces" and the "construction of stabilization mechanisms." It is expected that in the future, state-owned capital such as social security funds may build a kind of "stabilization fund" under a clearer policy framework, further enhancing the market stabilization capacity and preventing systemic risks.

The "reform and optimization of stock issuance and listing and merger and acquisition systems" will further improve the market ecology from the financing end, accelerating the cultivation of new productive enterprises. By optimizing the issuance and listing system, quality enterprises can be better supported to enter the capital market, enhancing the overall quality of the market. The optimization of the merger and acquisition system will help enterprises achieve optimal resource allocation through market-oriented means, promoting industrial upgrading and innovative development.

Accelerating the development of a multi-level bond market will better meet the diverse financing needs of enterprises, especially the expansion of innovative varieties such as technology innovation bonds and green bonds, providing low-cost capital support for the real economy. The new "National Nine Articles" for 2024 has proposed to improve the fundamental system of the bond market. In the future, through interconnection mechanisms to introduce foreign capital and enrich derivative tools, it will further improve the construction of a multi-level bond market, providing differentiated financing support for the real economy.

Liao Bo: Boosting consumption is of utmost importance.

Liao Bo believes that the "Government Work Report" has set the overall economic tone for the year, emphasizing the need to use precious funds judiciously, with boosting consumption being of utmost importance. In particular, the clear signals of a "more proactive" fiscal policy show that promoting consumption is closely linked with benefiting people's livelihoods and increasing future growth momentum, enabling residents to consume, to feel secure about spending, and to be willing to consume.

First, the GDP growth expectation target for 2025 is set at around 5%, reflecting a trend of stabilization and improvement in the fundamental economy.

Secondly, the fiscal policy is more proactive, coordinating various fiscal funds such as revenue and Bonds to ensure the fiscal policy continues to be effective and more powerful.

Thirdly, setting the CPI at around 2% is a direction for efforts rather than controlling it below the target value.

Fourthly, the government work report proposes to stabilize the Real Estate and stock markets, reflecting the central government's strong determination to support Capital Markets and the Real Estate market. In terms of the Capital Markets, the central bank is expected to innovate macro-prudential policy tools in response to the evolving situation, promoting continuous economic recovery and maintaining financial stability.

Liao Bo expects the regulatory authorities to properly leverage the functions of the Capital Markets to assist the healthy and high-quality development of private enterprises and to focus on maintaining the stability of Capital Markets. It is particularly worth noting the incremental tools and products in areas such as equities, bonds, and REITs, which revolve around a series of policy measures such as the "Eight Guidelines for the Star Market" and the "Six Guidelines for Mergers and Acquisitions," serving the construction of a modern industrial system.

Yuan Chuang: Macroeconomic policies are becoming more proactive and effective.

Yuan Chuang, General Manager of the Research and Development Center at Caixin Securities, stated that the "Government Work Report" is a comprehensive and systematic deployment made under the backdrop of China's current high-quality economic development being solidly promoted, the smooth transition of old and new driving forces, continuous tackling of key areas with self-control, rapid evolution of a new round of technological revolution, and increasingly complex global trade and geopolitical landscape.

Yuan Chuang pointed out that the policy objectives are steady and pragmatic, adhering to the general tone of seeking progress while maintaining stability, making price targets more realistic; the macroeconomic policy is more proactive, with fiscal policy being more aggressive, and monetary policy appropriately relaxed to effectively prevent and resolve risks in key areas; industrial policy is targeted, comprehensively expanding domestic demand, accelerating the construction of a modern industrial system, and stabilizing the Real Estate and stock markets.

Yuan Chuang believes that Real Estate and Capital Markets are the main asset allocation directions for residents' wealth in China, and "stabilizing the Real Estate and stock markets" will be an important lever for stabilizing social expectations, stabilizing the economic landscape, and preventing and mitigating risks. The foundation for the A-share market's steady and long-term development will be further solidified, and the Capital Markets will play a greater role in promoting a virtuous cycle between capital and industrial development, driving technological innovation and industrial structure transformation, as well as increasing residents' wealth.

Liu Chenming: Strengthening Finance, Promoting Technology-driven Nation

Liu Chenming, Chief Analyst of Zheshang strategy, believes that the core points of the government work report from the Two Sessions in 2025 are summarized as follows:

First, the general tone of ‘seeking progress while maintaining stability’ continues from the Central Economic Work Conference, with a GDP target of around 5% and a deficit rate target of around 4% which meets expectations.

Second, the primary task for 2025 is determined to 'expand domestic demand', especially addressing the 'Consumer shortfall'.

Third, develop new productive forces according to local conditions, with the 'technology narrative' centered around the digital economy and advanced manufacturing becoming more tangible.

Fourth, in terms of Capital Markets reform, firstly, from the demand side, 'long-term funds entering the market', particularly mentioning 'strategic force reserves' and 'market stabilization mechanism construction'; secondly, from the supply side, 'optimizing IPOs and mergers and acquisitions'.

Fifth, regarding new models in Real Estate, compared to the Central Economic Work Conference, firstly, new 'reduction of restrictive measures' has been added; secondly, giving local authorities greater autonomy for acquiring existing housing and 'broadening the range of guaranteed housing refinancing'; thirdly, improving the new generation of 'safe, comfortable, green, and smart' housing standards.

Sixth, in population fertility policy, concretizing community Retirement and mentioning 'issuing child-rearing subsidies'.

Seventh, in terms of State-owned Enterprise Reform, specifically mentioned is the "establishment of an evaluation system for state-owned enterprises to fulfill their strategic missions."

Cheng Qiang stated that the goal setting reflects the overall requirements of stabilizing expectations and stimulating vitality.

Cheng Qiang indicated that this year the government will promote domestic economic and capital circulation through significant leverage, thereby expanding total demand. From the perspective of the overall policy arrangement, significant counter-cyclical adjustment measures will ensure the economy continues to recover positively. Moreover, the GDP target is set at around 5%, and the CPI target is set at around 2%, balancing needs and possibilities.

Cheng Qiang stated that in the past few years, affected by various factors domestically and internationally, China has been constrained by mismatches in supply and demand relationships, leading to a low overall price level. This is not conducive to forming positive expectations in society, making the promotion of a recovery in the low overall price level a top priority in macroeconomic regulation. Therefore, in the overall policy arrangement, on one hand, the increase in strength and effectiveness of fiscal and monetary policies will focus on expanding domestic demand, especially consumption; on the other hand, deepening supply-side structural reforms will continuously address the structural contradictions in consumption supply, focusing more on high-quality supply to lead and create demand, thus improving the overall supply and demand relationship and promoting a recovery in the low overall price level.

Luo Zhiheng: The fiscal policy is becoming more proactive.

Luo Zhiheng released a research report stating that this government work report contains many new contents:

Regarding the judgment on future situations and risks, it points out that the external environment is becoming more complex and severe, while also highlighting China's advantages in systems, markets, industries, and talents. Overall, it is a coexistence of strategic opportunities and risks, with a persistent long-term positive trend.

In terms of economic targets, the GDP growth target remains at "around 5%" for the third consecutive year; the CPI growth target is adjusted from "around 3%" to "around 2%", which essentially changes the original inflation ceiling to a price level target, accelerating the reasonable rebound of prices.

In terms of macroeconomic policy, fiscal policy has become more proactive, with the deficit rate reaching around 4% for the first time. Development is prioritized, the structure of fiscal expenditure is optimized, the central government is leveraging its position, and the central deficit accounts for a historically high proportion of the total deficit; monetary policy remains moderately loose, with timely reductions in reserve requirements and interest rates to promote a decrease in overall financing costs in society, thereby enhancing the accessibility and convenience of financial services.

Regarding the Real Estate market and Capital Markets, there are clear statements to "stabilize the real estate and stock markets", "promote the healthy development of the real estate and stock markets with greater effort", "sustain efforts to halt the decline and stabilize the real estate market", and "deepen the comprehensive reform of investment and financing in the Capital Markets, vigorously promote the entry of medium and long-term funds into the market, strengthen the reserves of strategic forces, and build mechanisms for market stabilization."

Editor/rice