Ye Tan: The Stock Market Shocks &Nbsp; The Spanition Is Long And Painful.

The overly optimistic attitude towards China's economic restructuring will be hit by the market.

China's economic structure is in a period of deep adjustment, with real estate and banking sector falling, while new industries have not yet kept up, and business ethics have not been established.

In terms of the banking sector, the valuation of listed banks is so low that it seems as if overnight, bank shares have become market outcast. Why do investors abandon bank shares collectively? According to WIND statistics, the weighted average price earnings ratio of A shares is 9 times, the lowest since 1996, which is lower than that of the market after the subprime crisis.

The weighted average PB of A share banks is 1.86 times, the lowest since 1996, slightly higher than 1.85 times the most pessimistic in 2008. As of the end of 5, due to the continued decline in the weight sector such as finance and real estate, the overall static P / E ratios of the two major index stocks were lower than 1664 points, which were 18.83 times and 17.63 times respectively, and the overall valuation of Shanghai and Shenzhen 300 shares fell by more than 13% over the same period.

From the perspective of capital market performance, China's financial institutions and real estate companies are experiencing crises. Not only because of the market's fear of refinancing and the new real estate policy, but because the credit will continue to shrink, the banks will be in a downward cycle for the past two years, with a decline in profits and a rise in non-performing loans. In order to replenish capital, they will continue to obtain capital from the capital market. Although the reality is that the A share market gains in bank shares, the cash dividend yield has reached a higher level, and the four major banks of the industry, construction, China and trade have expected the cash dividend yield to reach or close to the highest historical value in 2010.

When the investment window of bank shares was listed on the A share market, they were stripped of bad loans and relaxed to the market. However, due to excessive credit, they need to be refinancing, showing the weak competitiveness of these financial institutions. In view of the large number of non tradable shares and the low cost ownership structure of large enterprises in China, dividends from these companies will not bring much benefit to ordinary investors, and refinancing will bring real wealth deprivation.

The collective abandonment of bank shares by Chinese securities investors reflects the market's pessimism about future monetary mobility. In the face of the panic market, the banks did not hesitate to announce refinancing, and the regulators approved the bank's refinancing plan in order to resolve bank risks as soon as possible. In May 27th, the SFC approved the application of Bank of communications refinancing, allowing banks to raise funds through rights issue in Shanghai and Hongkong by no more than 42 billion yuan. 5 days ago, the Securities Regulatory Commission approved the issuance of 40 billion yuan A shares of convertible bonds by the Bank of China.

During the "two sessions" this year, Dong Wenbiao, chairman of Minsheng Bank, said, "now we should not think about refinancing. We all want to lose face. How can we open our mouth?" Mr. Dong Wenbiao's disgrace means that the bank's profit model is disgraceful. Basically, it is a way to profit by credit expansion, deposit and loan differences, growth by scale expansion, and risk by capital market and government assistance.

The same is true of real estate stocks. Some believe that property stocks are in the bottom. In fact, real estate stocks are not the problem of the real estate sector, but the problem of revaluation since the high valuation of land and high housing prices is gone forever.

Real estate reform is the main battlefield of China's economic reform. As I said, real estate reform is not successful. In the real estate market, there are basically three major directions for reform: first, the growth of China's GDP, domestic demand and government's financial resources no longer rely on real estate, but on spanformation industries. Second, along with the above reforms, the reform of real estate taxes and fees has become an important part of China's tax and fee reform. Sooner or later, the property tax will be introduced, and sooner rather than later. Third, after the Chinese economy goes out of the brick cement castle, the valuation of real estate will turn from investment products to investment and consumer goods valuation system, from the valuation of the dream rate to the income and cost performance valuation.

Disappointingly, it seems that the new economy can not play a leading role in the stock market. A few of the high quality GEM listed companies have been fired, and valuations need to be found at the bottom with the tight money. And some new energy, high-tech enterprise scandals, such as the re IPO of a IT company, on the eve of the first listing, the company announcement revealed that the company self check found that the number of patents has expired as many as 12. In addition, there are 6 changes in the application of patent for inventions, of which 2 have been authorized, and 4 have been accepted for trial. However, the Prospectus has been disclosed as a real trial and accepted. Is such a big mistake the company's core competitiveness in terms of IT after its listing?

The spanformation of manufacturing industry is an urgent need for China's economy. However, the purple sand pot incident in the US reveals that some big manufacturing enterprises are fighting for market share by hook or by crook. Their business credit and business ethics are crisp.

The shock of the stock market is a preview of China's economic structural spanformation. It should be fully prepared for the long and painful spanformation. A short rebound can not inject illusory market dreams and the growth of the Chinese economy in the next 30 years into the real economy. Despite the pain, it is necessary for the Chinese people to pay close attention to this spanformation. This is the foundation for China's reform and development in the next 30 years.