The building and building materials sector outperformed the market slightly within the year. However, due to the close correlation between the sector and the macroeconomic outlook, while the market’s concerns about the economic downturn intensified, the sector also experienced a declining downtrend and did not stop falling until the last two trading days. Analysts believe that the favorable real estate sales data in the first half of the year and the two interest rate cuts are an important factor to promote stability of the plate, with the policy adjustment and fine-tuning, the industry structure of the market or worth the wait.
Within a period of less than one month, the central bank cut interest rates twice in succession, including the ** benchmark interest rate cumulatively cut interest rates twice by 0.56 percentage points. The unravelling of monetary policy will undoubtedly directly benefit building and building materials industries that are closely related to capital-intensive industries. However, in the A-share market, the performance of the construction and building materials sector on the first trading day after the two interest rate cuts made people feel that investors have lost interest in building construction materials stocks.
On June 7, the Central Bank announced for the first time this year that the benchmark interest rate was lowered on the following day. On June 8, market participants’ expectation of the rise in the real estate sector and the building and construction materials sector fell. The Shenwan building and construction materials sector fell by 0.44%. Larger than the former. Analysts believe that the interest rate of the first interest rate cut for the construction and building materials sector is certain. The reason why the two major sectors have fallen is because the interest rate cut is covered by the market's growing concern over the downturn in the macro economy.
The economic data released in May after the interest rate cut was better than expected, giving the market a certain amount of reassurance. So on the day of the second interest rate cut on July 6, the interest rate cut interest gradually emerged, and the SWS building materials index rose by 3.38%. So, what are the concrete manifestations of the interest rate cut for the building materials industry? China Everbright Securities strategist Zeng Xianyi believes that the two interest rate cuts are beneficial to the construction materials sector in the following three aspects. First, rate cuts can ease the debt pressure of construction materials companies. The asset-liability ratio (integrated method) of the construction and building materials industry ranks second only to the financial services industry, up to 75.90%, in the SW industry. According to the first-quarter report data, the long-term loans of listed companies in the building and building materials sector total 329.298 billion yuan. The two interest rate cuts can save construction costs of 1.844 billion yuan for construction materials, equivalent to 14.9% of the total net profit of all listed companies in the industry attributable to shareholders of the parent company in 2011.
Second, two consecutive interest rate cuts will be conducive to investment in infrastructure, water conservancy, and real estate industries. In May, the completed amount of fixed asset investment increased by 20.10% year-on-year, which has been declining for 25 consecutive months. With the increase in the intensity of monetary policy control, this value is expected to bottom out and the demand for building materials industry as a downstream industry is expected to increase.
Finally, as the demand for steady growth heats up, corresponding to the rate cut, the supporting fiscal policy is also expected to be launched. In addition to the appropriate increase in infrastructure investment, building materials to the countryside may also increase efforts to stimulate the cement and other building materials industry. The price of coal with a higher correlation with cement prices fell back in the previous period, which also contributed to the increase in cement gross margin.
Within a period of less than one month, the central bank cut interest rates twice in succession, including the ** benchmark interest rate cumulatively cut interest rates twice by 0.56 percentage points. The unravelling of monetary policy will undoubtedly directly benefit building and building materials industries that are closely related to capital-intensive industries. However, in the A-share market, the performance of the construction and building materials sector on the first trading day after the two interest rate cuts made people feel that investors have lost interest in building construction materials stocks.
On June 7, the Central Bank announced for the first time this year that the benchmark interest rate was lowered on the following day. On June 8, market participants’ expectation of the rise in the real estate sector and the building and construction materials sector fell. The Shenwan building and construction materials sector fell by 0.44%. Larger than the former. Analysts believe that the interest rate of the first interest rate cut for the construction and building materials sector is certain. The reason why the two major sectors have fallen is because the interest rate cut is covered by the market's growing concern over the downturn in the macro economy.
The economic data released in May after the interest rate cut was better than expected, giving the market a certain amount of reassurance. So on the day of the second interest rate cut on July 6, the interest rate cut interest gradually emerged, and the SWS building materials index rose by 3.38%. So, what are the concrete manifestations of the interest rate cut for the building materials industry? China Everbright Securities strategist Zeng Xianyi believes that the two interest rate cuts are beneficial to the construction materials sector in the following three aspects. First, rate cuts can ease the debt pressure of construction materials companies. The asset-liability ratio (integrated method) of the construction and building materials industry ranks second only to the financial services industry, up to 75.90%, in the SW industry. According to the first-quarter report data, the long-term loans of listed companies in the building and building materials sector total 329.298 billion yuan. The two interest rate cuts can save construction costs of 1.844 billion yuan for construction materials, equivalent to 14.9% of the total net profit of all listed companies in the industry attributable to shareholders of the parent company in 2011.
Second, two consecutive interest rate cuts will be conducive to investment in infrastructure, water conservancy, and real estate industries. In May, the completed amount of fixed asset investment increased by 20.10% year-on-year, which has been declining for 25 consecutive months. With the increase in the intensity of monetary policy control, this value is expected to bottom out and the demand for building materials industry as a downstream industry is expected to increase.
Finally, as the demand for steady growth heats up, corresponding to the rate cut, the supporting fiscal policy is also expected to be launched. In addition to the appropriate increase in infrastructure investment, building materials to the countryside may also increase efforts to stimulate the cement and other building materials industry. The price of coal with a higher correlation with cement prices fell back in the previous period, which also contributed to the increase in cement gross margin.
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