确保政策落实以稳定市场和预期。

EnsurePolicyImplementation toStabilize Market and Expectations AnalystHE Kang, PhDSAC No. S0570520080004SFC No. BRB318hekang@htsc.com+(86) 21 28972202 Huatai Research 13 May 2025│China (Mainland) Quick Take AnalystSUN HanwenSAC No. S0570524040002SFC No. BVB302sunhanwen@htsc.com+(86) 21 2897 2228 Our core views On7May,theStateCouncilInformationOfficeheldapressconferenceintroducing a‘comprehensive financial policy package to stabilize the market andexpectations.’In our view, the statements regarding quasi-stabilization funds areconstructive. Coupled with signs of improvement in China-US economic and traderelations, this may reinforce the lower bound of equity indices and supportriskappetite. From a style perspective, we believe the policies encouraging medium-tolong-term(M/LT)capital inflowstend to favor large-cap heavyweight stocks in themedium term. Sector-wise, sci-tech innovation and consumption were once againconfirmedaskeypolicyfocuses.Wemaintainourmedium-termallocationpreference for dividends + domestic demand + tech, witha slightly more positiveshort-term stance. Focus 1: Rate&RRR cuts exceededinvestor expectations in timingRate cuts included: 1) a 10bp cut to policy rates, guiding LPR and deposit rates lower; 2) a 25bp reduction in structural tools such as relendingand PSL rates; 3) a25bp cut in personal housing provident fund loan rates. Reserve requirementratios (RRRs) were cut by 50bp, with those for auto finance and financial leasingcompanies temporarily reduced to 0%, improving the RRR system. Our interpretation: In aggregate, the‘double cut’should have a neutralimpact on equities.With discount rates already near historical lows and broadfinancingconditionsaccommodative,thepolicypacemodestlyexceedsexpectations, though the magnitude is in line. Marginal incremental impact islimited.Structurally, financials and property may benefit directly. For banks, themove could ease net interest margin pressure. For property, these measures arelikely to create room for lower commercial loan rates and reduce the costsassociated with urban village renovation and inventory housing acquisitions. Focus 2: Multiple relending tools launched, policy stance proactiveRelending tools included: 1) RMB500bn relending facility for service consumption and eldercare; 2)RMB300bn increase in agriculture and small business relendingquota; 3) tech innovation and equipment upgrade relending facility expanded toRMB800bn. Our interpretation:All three tools align with the policy directions set at thePolitburo meeting and were largely expected. We note two points: 1) Targetedsupportareashighlightpolicypriorities–livelihood,techinnovation,anddomestic demand;2) Basically, these tools expand existing quotas, with actualusage depending on real economy demand,reflecting a flexible approach toexternal uncertainty. Focus 3: quasi-stabilization fundstoreinforce market bottomlevelThe PBoC and China Securities Regulatory Commission (CSRC) pledged full support for Central Huijin Investment’s role as a quasi-stabilization fund operator,with the PBoC to offer ample relending support. Additionally, two equity marketsupport tools–stock swap facility and share buyback relending–were mergedwith a total quota of RMB800bn. We summarize three marginal changes in sharebuyback relending: 1) maximum loan term extended from one to three years; 2)minimum own fund ratio for listed companies’buybacks lowered from 30% to 10%;3) certain state-owned capital operation platforms included in the scope of support. Our interpretation:These measures underscore a firm commitment to reinforcingrecovery momentum in the equity market. Ample tools are in place toanchor thelowerboundofindicesandsupportriskappetite.Structurallongopportunities remain viable. Focus 4:M/LTcapitalre-emphasized, new mutual fund rulelaunchedOn insurance funds: 1) The pilot scope for long-term insurance investmentis tobe expanded, with RMB60bn planned in new approvals; 2) Risk weight for insurers'equity investmentis tobe further lowered by 10%. On mutual funds, the‘ActionPlantoPromoteHigh-QualityDevelopmentofMutualFunds’wasofficiallylaunchedafter the press conference, focusing on: 1) optimizing the fee structurefor actively managed equity funds; 2) strengthening alignment of interests betweenfund houses and investors; 3) enhancing investor services; 4) improving equityinvestment scale and stability of mutual funds; 5) advancing strong regulation, riskprevention, and high-quality development in an integrated manner. Our interpretation:These measures couldfurther increase the scale andshare of M/LT capital (eg, insurance funds, mutual funds) in the market,improving equity investor structure. Based on policy direction and the preferencesof M/LT capitals,underweighted index-heavy names are likely to benefit onthe margin. Risks: 1) greater external disruptions than we expect; 2) delays in domestic policyimplementation or recovery pace. Disclaimers Analyst CertificationI/We, HE Kang,