Log in to the Sina Finance APP and search for [Information Disclosure] to view more evaluation levels. Special topic: 2026 Financial Street Forum Annual Meeting. From October 20-22, by the Huangpu River in Shanghai, the 2026 Sustainable Global Leaders Conference returns. Nobel Prize and Turing Award winners will share the future and trends of technology on site, and the internet-famous professor who "rescues" people from anxiety and the era of involution, Macfarlane, will have a live dialogue with Xiang Biao! Limited spots available, first come first served. Let us join together for the sustainable appointment! [Click to register] Source: CICC Point of View. CICC Research. On October 19, the 2026 Financial Street Forum Annual Meeting opened in Beijing, and CICC's macro and industry teams provide a joint interpretation for you.
Table of Contents
Macro: Monetary policy signals from the Financial Street Forum. Strategy: The Financial Street Forum releases positive signals, helping market confidence recover. Fixed income: The impact of the interest rate anchor transition. Foreign exchange: Exchange rate policy continues, and cross-border investment and financing convenience is expected to improve. Banking: Financial signals from the Financial Street Forum. Non-bank finance: Preventing risks, deepening reform, and promoting high-quality development of non-bank institutions.
Macro: Monetary policy signals from the Financial Street Forum
In our earlier report "How to View Strengthening Rate Cut Expectations?" [1], we proposed that the central bank may, while keeping the LPR unchanged, promote the decline of some newly issued loan rates linked to DR (Depository Institutions Repo Rate) by "changing the anchor" of the policy rate and maintaining low funding rates, while keeping existing loan rates linked to LPR stable and reducing the impact of concentrated repricing of banks' existing assets on net interest margin. The speech at this Financial Street Forum further clarified the reform direction of "changing the anchor," and related liquidity tools and market opening measures also provide support for policy transmission.
First, open market operations are shifting to overnight, and low funding rates are expected to obtain a clearer policy anchor. Governor Pan Gongsheng pointed out in his speech that DR001 has in fact become the target rate for monetary policy regulation, and the next step will be to "study the timing" to switch the maturity of the main open market operation instruments to overnight, accordingly establishing the overnight operation rate as the main policy rate, so that the operation maturity is more consistent with the actual regulatory target [2]. According to our earlier report statistics, after the National Day holiday, the centers of DR001 and DR007 had fallen below 1.30% and 1.35%, respectively, both lower than the 1.40% 7-day reverse repo rate. Combined with recent liquidity injections, we judge that the "anchor change" may be combined with the continuation of low funding rates, stabilizing expectations for market financing costs and creating a certain rate-cutting effect on the money market and bond market.
Second, loan rates are gradually introducing DR as a pricing benchmark, which helps reduce some new financing costs and also helps domestic and overseas investors and institutions better understand the stance of China's monetary policy. Governor Pan Gongsheng proposed in his speech to promote loan pricing from relying relatively solely on LPR to a more diversified pricing benchmark. Some enterprises with stronger financial capacity may negotiate with banks to choose DR001 or LPR, while LPR will continue to serve as an important pricing benchmark for small enterprises and personal loans. Changes in funding rates can thereby be transmitted more directly to related loans. While LPR remains unchanged, new loans linked to DR still have room for price reductions, while existing loans linked to LPR do not need to be adjusted accordingly. Considering that the bond market had already priced in relatively strong rate cut expectations, the support for funding conditions from the adjustment of the operational framework may not necessarily drive long-end yields further down. The official Chinese name of LPR is "Loan Market Quoted Rate," and its English name Loan Prime Rate is usually understood as the loan rate for the best customers. A well-known overseas consulting company's report in September this year one-sidedly interpreted the fact that most newly issued loan rates in China are lower than or equal to LPR as systematic low-priced credit [3]. In fact, we believe that loan rates in reality are jointly affected by factors such as funding costs, maturity, and credit risk, and the phenomenon of temporarily falling below LPR should not be overinterpreted. Introducing the transaction-formed DR benchmark helps more clearly present the relationship between base funding costs and loan spreads, improving pricing transparency and international comparability.
Third, "changing the anchor" on the loan side requires more stable funding rates, and new liquidity tools provide institutional safeguards for this. When more corporate loans are linked to DR, short-term liquidity disturbances may more directly affect the interest payment costs of the real economy, so the central bank needs to pay more attention to overnight rates operating smoothly around the policy rate. This expansion of the scope of application of the Standing Lending Facility (SLF) to include domestic foreign-funded legal-person banks, and the clarification that national banks apply the same arrangement, achieves full coverage of domestic depository financial institutions, helping improve the availability of temporary liquidity support and strengthening the guidance of the interest rate corridor on funding prices. At the same time, the proposed liquidity support tool for large redemptions by non-bank institutions will be activated in specific scenarios where asset management institutions face group liquidity risk and the bond market experiences a negative "redemption-selloff" loop, and will require meeting macro-prudential conditions and providing high-grade collateral [4]. We believe the two tools respectively strengthen routine liquidity management of the banking system and liquidity protection for non-bank institutions under stress scenarios, helping reduce the spread of localized funding tightness to the bond market and improving the stability of interest rate regulation.
Fourth, market interconnection and two-way opening are advancing simultaneously, helping reduce transaction costs and improve the convenience of RMB asset allocation. Interconnection between the interbank and exchange bond markets will facilitate cross-market bond issuance and trading, reduce transaction friction and liquidity differences caused by market segmentation, and improve price discovery. Smoother market connections will also help strengthen the transmission from policy rates to bond prices. In the foreign exchange market, the central bank plans to pilot allowing 8 Chinese and foreign RMB overseas clearing banks to conduct proprietary trading in the domestic interbank foreign exchange market. This connects with previous reforms: in June this year, the central bank authorized 6 domestic banks to use the platform of the China Foreign Exchange Trade System to conduct offshore RMB foreign exchange trading in the Shanghai Free Trade Zone [5]. From domestic banks participating in offshore trading to overseas clearing banks participating more deeply in the onshore market, two-way opening helps enrich trading entities, improve RMB liquidity and risk management conditions, and promote integration of onshore and offshore markets. In addition, in June this year, the People's Bank of China established a repo tool for overseas central banks, which received widespread attention and welcome. Foreign RMB clearing banks are an important part of the RMB cross-border clearing network, and the People's Bank of China plans to include them among the tool's support recipients, which will help foreign clearing banks better serve overseas RMB business. Looking ahead, the core of future interest rate trends remains the strength of fiscal policy, especially whether fiscal policy can effectively drive a recovery in nominal demand. "Changing the anchor" and improving liquidity tools will help maintain low and stable financing costs, while fiscal policy simultaneously affects real demand and government bond supply. If next year's new fiscal spending is strong and funds are deployed quickly, promoting improvement in household and local cash flow and driving a recovery in demand and prices, then even if short-end funding conditions remain loose, the downside space for long-end rates may be constrained, and larger government bond supply will also test financial institutions' capacity to absorb it; otherwise, the result would be the opposite.
Strategy: The Financial Street Forum releases positive signals, helping market confidence recover
On October 19, the 2026 Financial Street Forum Annual Meeting opened in Beijing. [6] With the theme "Openness, Cooperation, Inclusiveness - Building a New Ecosystem for Global Financial Development Together," People's Bank of China Governor Pan Gongsheng, National Financial Regulatory Administration Director Ding Xiangqun, China Securities Regulatory Commission Chairman Wu Qing, and State Administration of Foreign Exchange Director Zhu Hexin attended the annual meeting and delivered keynote speeches. From the perspective of the capital market, we believe this forum released positive signals in areas such as improving the monetary policy framework, capital market reform, financial market stability, and expanding opening up. Against the backdrop of recently cautious investor sentiment and insufficient incremental funds, related measures are expected to enhance market liquidity, stabilize market expectations, and boost investor confidence.
Improving monetary policy transmission and liquidity support mechanisms will provide support for the smooth operation of financial markets and the deepening transformation of the real economy. Central bank Governor Pan Gongsheng proposed the following policy measures in his speech [7]: 1) Advancing interest rate marketization reform. First, study the timing to adjust the maturity of the main open market operation instruments to overnight, and correspondingly adjust the main policy rate to the open market overnight repo rate; second, promote diversification of loan pricing benchmarks, allowing eligible enterprises and banks to negotiate and choose DR001 or LPR as the benchmark for floating-rate loan pricing, and continue to improve the LPR quoting mechanism; third, gradually replace deposit and loan benchmark rates with market-based interest rate indicators. The market had previously paid close attention to the policy rate anchor change. We believe the core of the policy rate anchor change lies in improving the interest rate regulation and transmission mechanism. Due to different operation maturities, the interest rate levels before and after the switch should not be directly compared. Whether it brings additional easing still requires observing the central bank's subsequent operations. 2) Supplementing liquidity support tools. It is proposed to establish a liquidity support tool for large redemptions by non-bank institutions to ease the mutually reinforcing pressure of bond market redemptions and selloffs under specific scenarios; expand the scope of application of the Standing Lending Facility (SLF) to include domestic foreign-funded legal-person banks, and clarify that national banks apply the same operational arrangements. Related measures will help enhance the financial system's ability to cope with liquidity shocks. 3) Facilitating cross-border allocation of RMB assets. Promote the implementation of interconnection between the interbank and exchange bond markets, plan to pilot allowing 8 Chinese and foreign RMB overseas clearing banks to conduct proprietary trading in the domestic interbank foreign exchange market, and include foreign RMB clearing banks in the support scope of the repo tool for overseas central bank-type institutions. Related measures will help reduce cross-market trading barriers, improve overseas RMB liquidity support, facilitate overseas institutions' allocation of RMB assets, and enhance the international appeal of China's financial market. 4) Increasing support for technology finance. Issue the "Guiding Opinions on Financial Support for Building the Beijing (Beijing-Tianjin-Hebei), Shanghai (Yangtze River Delta), and Guangdong-Hong Kong-Macao Greater Bay Area International Science and Technology Innovation Centers," promote greater support and pilot programs for relending, the bond market "technology board," and cross-border investment and financing policies, while also improving financial services for the AI industry and steadily promoting the application of AI in the financial sector.
Affirming the allocation value of Chinese assets and releasing positive signals around stabilizing the market, attracting long-term funds, and deepening reform. CSRC Chairman Wu Qing emphasized [8] that the supporting conditions and basic trends for China's economy to move toward new and better development and long-term improvement remain strong, and proposed adhering to the principle of stability first and making every effort to maintain the safety and stability of the capital market. The policy arrangements mainly include six aspects: 1) Improving the market stabilization mechanism and encouraging buybacks and increases in holdings. Strengthen domestic and overseas risk monitoring and policy tool reserves, pay attention to new risks such as overseas leveraged products linked to individual A-share stocks; encourage qualified listed companies to increase buybacks and holdings to maintain market stability and enhance investor confidence. 2) Promoting the entry of medium- and long-term funds into the market. Improve long-cycle assessment mechanisms, expand the sources, channels, and entry methods of medium- and long-term funds, deepen public fund reform, and announce that on the same day it will approve the registration of the first batch of 18 active ETFs. Related arrangements will help improve the conditions for long-term funds such as insurance funds and pensions to enter the market, and broaden incremental funding sources for the market. 3) Deepening financing-side reform. Implement reforms of the STAR Market and ChiNext, improve the inclusiveness of issuance, listing, and merger systems, and release in due course the revised administrative measures for securities issuance registration of listed companies and supporting rules; steadily advance the Beijing Stock Exchange 50 ETF, new share market value subscription for the Beijing Stock Exchange, innovative evaluation standards, and optimization of New Third Board tiered management to better meet the financing needs of innovative enterprises. 4) Improving the quality of listed companies and the competitiveness of securities institutions. In the first half of 2026, the net profit of listed companies increased by 19.5% year on year, with dividends and buybacks reaching RMB 2.1 trillion during the year. Going forward, it will promote the introduction of regulations on supervision of listed companies, improve corporate governance and information disclosure mechanisms, support securities companies in accelerating integration through mergers and acquisitions, and accelerate the building of world-class investment banks. 5) Strengthening constraints on illegal share reductions and investor protection. Improve penalty rules for illegal reductions, refine identification standards, and introduce guiding opinions on advance compensation in the securities market; prepare to establish a fund industry operation monitoring center, issue safety and compliance application standards for artificial intelligence in the securities and futures industry, strengthen risk monitoring, regulate market order, and protect investor rights. 6) Expanding capital market opening. Improve the convenience of QFII investment, support domestic and overseas institutions in developing indices and products related to Chinese assets, encourage foreign institutions to operate in China and participate in innovative businesses; promote coordination between the mainland and Hong Kong markets, and accelerate the inclusion of RMB stock trading counters and REITs in Stock Connect. Looking ahead, positive signals are increasing, opportunities at the current position outweigh risks, and we are not pessimistic about the market outlook. In our October 15 report "Short-Term Headwinds Are Strong, Waiting for Positive Signals," we pointed out that external disturbances and funding pressure overlap, and the short-term market is waiting for positive signals, but domestic fundamentals and medium-term logic have not changed, and the A-share market is still expected to continue its long-term, steady progress trend. This forum's arrangements around the market stabilization mechanism, investment-side reform, and liquidity support released positive policy signals to the market, helping stabilize market expectations and boost investor confidence. Among them, the non-bank liquidity support tool proposed by the central bank will help ease bond market redemption and selloff pressure and reduce risk transmission to other markets; the CSRC's proposals to encourage buybacks and increases in holdings, strengthen constraints on illegal reductions, promote long-cycle assessment, deepen public fund reform, and broaden funding entry channels are expected to improve the conditions for long-term funds such as insurance funds to enter the market and ease funding pressure in the market. Moreover, after earlier adjustments, the medium-term cost-effectiveness of overall A-share valuations has improved. As of October 16, the forward price-to-earnings ratio of the CSI 300 was only 10.98 times, significantly lower than major global markets (the forward P/E ratios of the S&P 500 / Nikkei 225 / European indices / MSCI UK / Indian indices were 18.87x / 19.13x / 13.95x / 12.11x / 19.09x, respectively), while the dividend yield of the CSI 300 was about 2.82%, significantly higher than the 1.65% yield on 10-year government bonds, and the equity-bond cost-effectiveness was above the historical average. In addition, after a relatively long period of adjustment since the third quarter, the structural overvaluation problem in A-shares has improved substantially. The ChiNext Index P/E ratio (TTM) has fallen back to 31.9, at the 15.8% historical percentile since 2015. In terms of performance, A-share listed companies' results in the first half of this year continued to outperform investor expectations; we believe overall performance growth in 2026 is expected to be the best in nearly five years. The supporting logic for A-shares from the reconstruction of the global monetary order and the technology narrative has not changed. Previous adjustments have already fairly fully reflected the adverse effects of multiple recent unexpected imported risks and challenges, and there is no need to be pessimistic about the medium-term trend of the A-share market. At the allocation level, return to a "barbell structure." In our October 12 report "Return to a Barbell Structure?", we noted that in an environment of limited aggregate growth elasticity, the coexistence of structural high prosperity and increased volatility in market risk appetite, a "technology + dividend" barbell structure is expected to become an allocation choice that balances profit growth elasticity, shareholder cash returns, and portfolio stability. Specifically, focus on two main lines. 1) Areas where third-quarter performance growth improves quarter on quarter: for example, some upstream non-ferrous metals and technology hardware benefiting from high AI prosperity and overseas demand. 2) High-dividend assets: domestic long-end interest rates are at historically low levels, listed companies overall maintain dividend yields and dividend scale, and during periods of high investor wait-and-see sentiment, high-dividend sectors once again become an important choice for capital allocation. Chart: Summary of some policy statements at the 2026 Financial Street Forum Annual Meeting. Source: National Financial Regulatory Administration, China Securities Regulatory Commission, People's Bank of China, Securities Times, CCTV Finance, etc., compiled by CICC Research Department.
Fixed income: The impact of the interest rate anchor transition
People's Bank of China Governor Pan Gongsheng attended the 2026 Financial Street Forum Annual Meeting and delivered a keynote speech [9]. At this Financial Street Forum, central bank Governor Pan Gongsheng mentioned several policy measures to be introduced soon. Some measures had already been mentioned and prepared by the central bank previously, such as establishing a liquidity support tool for non-bank institutions and promoting the implementation of interconnection between the interbank and exchange bond markets. Among them, regarding the liquidity support tool for non-bank institutions, the central bank this time clarified that the purpose of the tool is to establish a bond market stabilization mechanism and set the activation scenario as when asset management institutions face group liquidity risk and the bond market experiences a negative redemption-selloff loop. It also stipulated that operations with the central bank must meet macro-prudential requirements and provide high-grade collateral, to prevent distortion of financial market pricing, avoid creating a bailout illusion, and maintain market discipline. While announcing new measures, Governor Pan also responded to issues of recent market concern, especially the transformation and improvement of the monetary policy framework, which the market closely watched. In fact, in recent years the central bank has continuously carried out multiple rounds of optimization of the monetary policy regulation mechanism, especially at the price level, successively strengthening the effectiveness and precision of interest rate regulation guidance through measures such as clarifying the 7-day reverse repo as the policy rate, downplaying the policy rate color of other tools including MLF, and building a narrow interest rate corridor based on temporary positive and reverse repo operation rates. On the basis of earlier framework optimization, the new direction mentioned by the central bank this time focuses more on "convergence" at three levels.
First, convergence between the policy rate and the ultra-short-end rate commonly used by the market. The central bank mentioned this time that it will "adjust the maturity of the main open market operation instruments to overnight in due course, and the open market overnight repo rate will accordingly become the main policy rate." Since open market operations became routine, the 7-day reverse repo operation has been the central bank's most commonly used high-frequency injection tool, and the 7-day reverse repo rate was previously explicitly set as the policy rate. However, in interbank market repo financing, the proportion of overnight repo transactions is significantly higher than that of reverse repos of other maturities including 7 days, with the overall proportion reaching more than 90%. To better match the maturity structure of actual market business and policy tools, at the Lujiazui Forum in June this year [10], the central bank mentioned adding temporary overnight reverse repo operation instruments in due course, and thereafter conducted overnight reverse repo injections at seasonal disturbance points such as mid-month and month-end. In terms of interest rate regulation as well, the narrowed temporary overnight positive and reverse repo rate corridor mainly acts as guidance for the market overnight reverse repo rate, namely DR001. As Governor Pan stated, DR001 has in fact become the target rate for monetary policy regulation. We believe that further switching the commonly used policy injection tool from 7 days to overnight and setting the overnight repo rate as the main policy rate can better achieve effective alignment between policy injections and actual market business, helping further improve the precision of policy rate regulation.
Second, convergence between loan rates and policy rates and bond rates. For a long time, China has had a situation in which loan, money, and bond rates run in parallel. As early as 2019, to improve the effectiveness of monetary policy price transmission, the central bank promoted interest rate convergence. At that time, the MLF rate was used as a linking hub, affecting money and bond market rate changes on one end, while on the other end LPR quoting was set as a spread over the MLF rate, and loan rates were managed through LPR. However, after the policy rate color of MLF faded, there had been no clear guidance on how loan rates could again be linked to the policy rate and other market rates such as bonds. This time the central bank again mentioned promoting reform of the loan rate pricing benchmark, clearly shifting from relatively single reference to LPR pricing to a more diversified pricing benchmark. The market had already expected this transition plan. In previous monetary policy execution reports [11], the central bank also mentioned promoting banks to explore diversification of loan pricing benchmarks and clearly stated that loans priced with reference to DR001 had already been implemented. This time the central bank again mentioned that "some enterprises with strong financial capacity may, after negotiation with financial institutions, independently choose the interbank overnight repo rate or the loan market quoted rate as the benchmark for floating-rate loan pricing." On the bond market side, the central bank also stated simultaneously that "the pricing benchmarks of bonds and financial derivatives may also consider the interbank overnight repo rate as an option." It can be seen that DR001 has now become a new linking hub for convergence across multiple markets.
Third, convergence of deposit rates. In the past, the central bank's regulation of deposit rates was mainly through setting deposit benchmark rates, supplemented by self-discipline mechanism constraints. The link between deposit rates and market-based rates was not close, and deposit rate adjustments often lagged changes in bond and money market rates, posing certain challenges to banks' net interest margin and the effectiveness of monetary policy transmission. To better give play to the role of the market in interest rate decisions and at the same time strengthen the linkage between deposit costs, the core liability cost of commercial banks, and asset-side rates, the central bank stated that it will gradually phase out deposit and loan benchmark rates and publish average deposit rates of various maturities as a reference for bank deposit pricing. Overall, at this Financial Street Forum, the central bank's optimization of the policy mechanism for the next stage still mainly focuses on continuously improving the interest rate regulation mechanism, further clarifying that the future overnight reverse repo operation rate and DR001 will serve as the core link between the central bank's policy and the money market, bond market, and deposit and loan markets. In the past, under the operating model of convergence among multiple market rates, adjustments in rates on various asset sides were often not synchronized, and adjustments in asset-side and liability-side rates also showed some mismatch. This "derailment" of interest rates to some extent weakened the effectiveness of policy regulation and could even trigger idle fund circulation such as low-interest loans being redeposited as high-interest deposits. The unsynchronized reduction of deposit rates and money market rates also contributed to some extent to bank deposits flowing to non-bank institutions, amplifying the instability of bank liabilities. We believe effective interest rate convergence is undoubtedly more conducive to giving play to the function of monetary policy interest rate regulation. It can also better unify the financing costs of the real sector across different markets through interest rates, reduce the possibility of risk-free arbitrage, improve the efficiency of fund use, and more efficiently support the repair of the real economy.
For the subsequent bond market outlook, since mid-to-late September, with the support of central bank liquidity injections, money market rates have generally operated at low levels. The recent average of DR001 has once again approached the low point of May. Combined with the central bank's over-rollover of outright reverse repos, this has marginally strengthened market expectations for monetary easing. From historical data, DR001 still has some downside space compared with the lows during the subprime crisis and the pandemic. Considering that the repair of the real economy still faces certain challenges and structural contradictions such as insufficient effective demand still exist, we believe monetary policy may still need further easing to offset growth pressure. With the central bank's switch of the policy rate anchor, there is still room for synchronized cuts in the future overnight policy rate and DR001.
Comments