CPI year or shift to positive inflation expectations push up bank performance

Not out of the industry expected, May CPI, PPI data again both negative.　　According to figures released June 10 by the National Bureau of Statistics, the two indicators fell 1.4% and 7.2% respectively in May year-on-year. It is noteworthy that the CPI after 4 consecutive months of decline, year-on-year decline has narrowed slightly by 0.1%, if the elimination of the 1.5% factor, the May CPI actually Rose 0.1%.　　But the PPI decline has widened 0.6% per cent.　　Data released on that day also showed that in May, 70 large and medium-sized cities in the country's housing sales fell 0.6% Year-on-year, the decline was 0.5% lower than April, but the chain rose 0.6% per cent, the increase is 0.2% than April. "While asset prices are starting to rise and domestic inflation expectations are rising, there is little likelihood of short-term inflation because overcapacity remains serious."　　"One authority close to the central bank said.　　Lianping, chief economist at the bank, said that in view of the uncertainty of future economic stability, "central banks ' monetary policy will remain basically stable in the two quarter, but it does not rule out some fine-tuning in the open market operation". The September CPI fell by 0.1% in May year-on-year, compared with April, while the year-on-year decline widened by 0.1%.　　1-May Cumulative, the total level of household consumer prices fell 0.9% year-on-year.　　The first half may have been a foregone conclusion, as food prices continue to decline will lead to a continued fall in the CPI, including living in the short-term difficult to improve non-food prices, CPI, PPI "double negative" posture in the next few months may still continue. As for the PPI decline, Tang Jianwei, senior macro analyst at the research department, argues that the financial crisis is still increasing the impact of the global real economy, and that demand for industrial goods is still on the decline; due to the weak export, some domestic production enterprises will be the product by export, exacerbated the situation of domestic industrial products oversupply　　And then restrain the rise of PPI in China. The PPI downward usually pulls down the CPI, but Lianping says "the CPI inflection point is approaching". The reason is that the July warping factor will be significantly weakened, which makes the CPI negative growth may be greatly weakened. The previous CPI was negative to a large extent by the tail factor. Second, food, housing and other consumer goods prices will continue to rise, and oil prices are likely to rise again, non-ferrous metals and other resource prices are also rising.　　He expects the CPI to be around 0.5% this year. Wei Fengchun, Chief macro analyst at Citic Investment, predicts that the CPI will shift from September to positive, with more than 2% in November-December and a full-year inflation rate of around 0.5%.　　Given the price level in the first quarter of this year, the price-cutting factor in the first quarter of next year will have a lot of pressure on inflation. However, in the context of the negative gap in China's GDP output, the price rise is difficult.　From China's historical experience, GDP and CPI have a very stable relationship, when the economic growth rate between 6.9% to 8.4%, the CPI will only be between 1% to 2% hovering.　"The key factor is that domestic and foreign effective demand is difficult to rebound quickly in the short term, overcapacity is still very serious." "The authorities close to the central bank said. He thinks the CPI inflection point is likely to emerge in September, but China will not have inflation in the short term. "If inflation is defined as CPI exceeding 5% for 3 consecutive months, there will be no inflation for 1-2 years, and if the CPI is 3%, inflation will have to come into the second half of next year."　　"He expects inflation to be between 0.5% and 1% a year."　　Beware of rising asset prices while consumer prices are still negative, inflation expectations are driving prices and equities higher, leaving many in the industry worried that asset price bubbles may be coming again. On the same day, the Shanghai Composite Index climbed to 2816, rising 1%, pushing the depth of the rally to 932, up 1.2%.　　Have risen by more than 40% per cent earlier this year. "Future asset prices will continue to rise faster, and central banks should be alerted." "Lianping said.　　He suggested that asset prices should be included as one of the central bank's key reference factors in monetary policy formulation. In May this year, a senior central bank official said at a meeting that the task of the central bank's monetary policy was to keep the value of the currency stable and to promote economic growth. Currency stability includes both internal and external.　　The central bank's focus is on internal, that is, "inflation, mainly measured by CPI, remains at a relatively low and acceptable level". He said it was not directly based on asset prices, but that the central bank set policy to focus on asset markets. The central bank's principle is that monetary policy should be implemented in favor of asset price and asset market stability. "Interest rates are too low or too long for interest rates to remain too low, which can cause bubbles in asset markets."　　"What the central bank can do is prepare ahead of time to reduce the impact of the bursting of the bubble on the real economy," he said. Gold, the bank's wealth management expert, said the current inflation mechanism has changed a lot. As a result of the rapid development of globalization, the general competitive product supply capacity in a significant increase, which makes the global consumer prices are generally stable, and the core CPI more stable. In this case, it is still a problem to define inflation according to past standards.　　He suggested that the central bank should consider the price of investment goods and the prices of assets when formulating monetary policy. The central bank's focus on the CPI as the main indicator of inflation is because it is closely linked to the consumer's eventual consumption, which can affect the overall economic performance of residents ' lives, business investment and economic growth, the official said.　　Asset prices have limited impact.　　Banks will benefit from inflation expectations lianping said that the moderately loose monetary policy of the central bank would not change at least three quarters before the economic growth was not stable, and that "there was no need to adjust interest rates and reserve ratios recently" but would make some fine-tuning through open market operations. But he said the current inflationary expectations would benefit banks. First of all, the rebound in prices will improve the performance of enterprises, profits increased, resulting in increased demand for corporate loans. In this case, the ability of the bank to negotiate will be improved, lending rate will be rebounded, andAt the same time, the loan risk declined correspondingly.　　Second, inflation in the long run will cause the central bank to raise interest rates, which in turn will raise bank spreads.　　In the first quarter of this year, the average net interest margin for listed banks was 2.35%, down 67BP from 2008, and 80BP lower than in the first quarter of 2008. Inflation expectations and renewed demand for deposits will provide the impetus for the restoration of net spreads in the medium term.　　Everbright Securities is expected to May CPI will turn upward, and in August to be positive, so the three-quarter deposit demand trend will be established. Everbright Securities Bank analyst Kim Scales said that as net spreads were fixed, the year-on-year growth in bank performance would remain stable in the two quarter and accelerate from three to 10%.