First, confidence in the bond market stems from the weak economy. Market investors hope that the government will increase economic stimulus to drive the economy to bottom out. However, according to the experience in the past few years, as far as investment is concerned, the growth rate of government-led infrastructure investment has been maintained at a relatively high rate of about 20% since 20 1 1. However, it is difficult to hedge the decline of private sector investment such as manufacturing and real estate, which makes the decline in investment a very significant drag on economic growth in the past few years. In the long run, supply-side reform is the only way for the domestic economy to de-capacity and de-leverage. However, in the short run, the promotion of supply-side reform also means that private sector investment is difficult to rebound and has become an important drag on the economy. If we add in the pattern that trade is difficult to recover greatly and consumption declines slowly, the pressure of economic growth in 20 16 will remain enormous.
Secondly, although the task of stabilizing economic growth in 20 16 depends more on fiscal policy, the easing of monetary policy is still indispensable. Judging from the current price, although CPI is still above 1%, PPI, which can better reflect China's economic supply and demand situation, has been negative since March 20 12, showing obvious deflation. We believe that in the process of economic de-capacity and de-leverage, the pressure of deflation is far greater than that of inflation, which means that the easing of monetary policy in 20 16 is still imminent. Due to the escort of monetary policy, bond assets will also be the least affected by the depreciation of RMB exchange rate.
20 16 bond market continues to improve. Under the general trend of downward interest rate, it will be more critical for the bond market to guard against credit risk. 20 15 has been a year of frequent credit events. With the gradual advancement of supply-side reform, it is expected that credit events will break out more frequently in 20 16. Investors need to strengthen the bottom-up research on credit bonds, reduce the allocation ratio of high-yield bonds, and nip in the bud.