The “New 10 Measures for Financing” is undoubtedly a key word on the market recently. On Wednesday, in order to alleviate the problem of high financing costs, the State Council executive meeting introduced 10 measures, once again releasing the signal of speeding up the financial reform.

An analyst pointed out that the improvement of the liquidity will bring the sources of flowing water into the bulk commodity market. The factors such as the increased commodity supplies of the enterprises and consumption, the falling costs for holding commodities and the funds flowing into the commodity market from other channels will be conducive to the smooth operation of commodity prices. 

“Why is the river so clear? Because it has sources of fresh water.” On November 19, the executive meeting of the State Council proposed 10 measures such as improving the flexibility of the indicator of loan-to-deposit ratio, speeding up the introduction of the plan for the reform of registration system of stock issuance, supporting cross-border financing and accelerating market-oriented reform of interest rate, in a bid to alleviate the problem of high financing costs. It is estimated that if the non-deposit inter-financing institution deposits were not included into the general deposits, theoretically a maximum credit of RMB7.4 trillion would be released.    
“According to the New 10 Measures, reducing the financing costs for the enterprises is still the focus of the work of the government in the future, and especially in the context of economic transformation and unsuitable large-scale investments and fiscal stimulus, reducing the financing costs for the enterprises and stimulating the enterprises’ profits, we will achieve economic stability through supply and provide buffering time for the dividends of reform to drive the rebound of demand,” said Cheng Xiaoyong, assistant director of the Financial Research Institute of Baocheng Futures, adding that as for the commodity market, on the one hand, the profits of the enterprises will be improved as a result of the declining costs of funds; on the other hand, the decline of risk-free interest rate could drive the reduction of costs for holding the commodities. Therefore, the commodity market will benefit to a certain extent.

At present, in the macro-environment of downturn for the bulk commodities, most of the enterprises involved in bulk commodities meet with the difficulties in financing, and the industry reshuffle is inevitable possibly. "If quality enterprises can move the monetary lever without the financing restriction, the integration and the adjusting speed in the industry are likely to be easier, which is undoubtedly beneficial for bulk commodity market,” said Sun Yonggang, an analyst of Everbright Futures.

In addition, the added funds flowing from other channels will also contribute to the rise in commodity prices. According to the analysis of Cao Yanghui, senior director of the research institute of Nanhua Futures, with the increased market liquidity, the risk-free interest rate, the credit interest rate, and the yields of financial products, etc. are also likely to decline, possibly resulting in more funds flowing into the commodity market and pushing up commodity prices to some extent.

"At the psychological level, the New 10 Measures shows the intention of the relevant departments to boost the domestic economy and introduce favorable policies, playing some role in warming the market sentiments,” said Li Wenjing, an analyst of Industrial Futures, adding that in addition, in terms of the contents, the New 10 Measures will push the “water” released by the central bank previously to flow into real enterprises, increasing the continuity of production while increasing the supplies of commodities and expanding demand for materials while expanding the commodity consumption. It is conducive to the stable operation of the commodity prices.