Li Yujia: The Foundation Of The Bull Market Needs To Be Strengthened.

In the recent A share market, the Shanghai Composite Index rose to nearly 2800 points from the low point of 2050 in July, rising by more than 35%, not only breaking through the 2444 high point in early 2013, but also breaking the downward trend line since 3478 o'clock, and the bull market sentiment is deeply rooted in the hearts of the people. And the willingness of investors to enter the market has also been astonishing. In recent days, the total volume of two cities totaled more than 500 billion yuan has been maintained. The number of new stock accounts in two cities has broken through 200 thousand for seventh consecutive weeks. The fund's investment has not been weakened. By the end of October, the fund account has increased by 4 million 830 thousand households over the past year.

At present, the biggest driving force for the bull market is the risk-free rate of return. Since 2010, the state has begun to tighten money and credit supply, but the demand for long term real estate investment and local project investment funds is rigid. Due to rising housing prices and soft budget constraints, housing enterprises and platforms have high interest bearing capacity. Therefore, the shadow banks, which are dressed in the market of interest rates, are popular. Housing enterprises successfully bet on local governments' intolerance of falling house prices, the implicit guarantee of local financing platform, and the "rigid payment" of shadow banking is not broken for a long time. As a result, the shadow bank interest rate became a risk-free interest rate, and the funds abandoned the stock market, causing the stock market to bear 5.

The release of this year's "No. 43" means that the functions of government financing and guarantee functions of the platform should be stripped completely. The implementation of the new budget law means that we should completely eliminate the "soft budget constraint" of local governments, and the funds will start to circumvent the financing platform, and the "rigid payment" will be broken. Since April, there has been an increasing number of incidents of breach of trust products. And the real estate market continues to decline, the relevant trust products to raise funds become more and more difficult, the market risk-free rate of return has begun to decline, the "baby class" product yield fell to less than 4%. After the risk-free rate of return has declined, the risk appetite has picked up and the capital has started to return to the stock market.

This year, the drop in risk-free rate of return is, in fact, the result of the central bank's active operation. The real estate market is down and the "rigid payment" is broken. In order to avoid liquidity constraints in June 2013 and reduce short-term interest rates in order to get through the transmission channels of monetary policy, thereby reducing the medium and long-term interest rates, and solving the "financing difficulties", "financing expensive" and supporting "steady growth" of the real economy, the central bank has been playing a net role in the open market this year. Therefore, the risk-free rate of return is largely the result of the central bank's initiative.

In November 17th, the release of "financing ten" aimed at reducing financing costs in all directions caused a small liquidity strain. Although the industry blamed it on the "pressure to pay" caused by the adjustment of deposit size and the superposition of IPO frozen funds, there was no difference in essence with the liquidity tension in June 2013. In other words, the creation of a new form of shadow banking, the transfer of funds to the government infrastructure and financing platform, resulting in a mismatch of time, there is a wave of funds, liquidity risk began to break out.

Tightening local debt is the task of reform in 2014, and the financial authorities do not dare to neglect it. Capital evasion of city investment bonds and platform financing, causing local governments to suffer from both sides. This year, capital construction investment has increased by 20%, and local supporting investment has been under great pressure. However, the overall tightening has made it difficult for local governments to integrate new funds and face up to 20% of the stock debt at the end of the year. As a result, banks with the same soft constraints set up 2 of shadow banking, such as guarantee letter, financing lease, equity investment and P2P, to bridge the above loan demand.

Despite the ample supply of funds in the inter-bank market and the decrease in interest rates, bank financing is still in the equity market which is connected to local financing platforms and infrastructure investments. Not only is the problem of "financing difficulty" and "financing expensive" in the real economy unsolved, but there is no obvious progress in the issue of local soft ties and debt risks.

drive equity market The second factor of strength is the reform of dividends. For a long time, the Shanghai and Shenzhen stock markets have been dominated by industries such as steel, coal, machinery and banks. Due to institutional reasons, over the years, the old mode has been more stimulating and less innovative. First, the bank loans have been explicitly helped. After that, the shadow banks have been secretly helping, especially since 2008. Instead of deleveraging, the old mode has borrowed more domestic demand and increased market leverage. This year, real estate investment has dropped from over 20% to 12%. This is a positive signal, which means Old mode The source began to leverage, which led to the traditional manufacturing industry began to leverage, to capacity, PPI for 33 consecutive months of negative growth. The so-called "breaking the old and building the new", and breaking the ice, this is the stock market "cage cage for birds" brings infinite reverie, new mode no longer need to go overseas financing, valuation will rise step by step.

However, the transition to "new normal" and switching to "new mode" are far from smooth. Under the economic and financial environment of "three phase superposition" and the steady growth of reform, the old production capacity and leverage can not be quickly changed. Recently, China and the global economy are showing signs of weakening again, in November. Chinese manufacturing industry Official PMI and HSBC PMI also declined while official PMI declined for the 4 consecutive month and hit a new low of 8 months. The deflation intensified in the short term and the pressure on the downward pressure of the economy was great. In addition, the "9. 30" mortgage new deal as soon as possible to promote the main urban property market in October rebounded 20%~50%, but the national property market in the first 10 months of the transaction is still down 7.8%, the decline narrowed by nearly 0.8 percentage points, which means that the property market differentiation further intensified, the supply of excess two or three lines, three or four cities of the property market to stimulate the lack of flexibility. In November, the property market in major cities did not continue to boom in October, and the market stimulus period shortened and the effect weakened. Besides oversupply, the high cost of financing (the cost of housing and taxes and fees) was the main reason.

Recently, the industry has been calling on the real estate market not only to be unable to leverage, but also to maintain steady growth. It is expected that under the direction of the promotion fee, the policy of stimulating the property market will be introduced in the future, including tax relief, interest reduction and so on. Let the giant 7 times the stock market value play a cushion role in the transition to the "new normal" and switch to the "new mode". If the real estate deleveraging is slowed down or even suspended, the manufacturing industry can not take the initiative to "capacity" or "leverage", and the dividends of reform will not come smoothly.

In the short term, under the double low pattern of "low inflation and low growth", the loose monetary policy channel has been opened, coupled with the high expectation of infrastructure investment, and a relatively loose monetary environment. The risk-free interest rate will remain low. At the same time, market sentiment has been stimulated, and the earning effect will attract funds to enter continuously. After 5 years of long bear, the stock market's compensation power is relatively large, and enthusiasm is fully released. Short term stock market strength is a big probability. However, short term strength is not a bull market. At present, the strong stock market is the result of capital push, especially in the short run of the property market, such as squeezing out capital, lowering the threshold for entering the market, lowering the margin of stock index futures trading, opening up new credit accounts and relaxing the margin financing. However, the financing costs remain high, the real economy is still weak, the old mode of deleveraging and the capacity to shoulder heavy responsibilities, the institutional foundation of the bull market has not yet been consolidated, and the recent speculative property of retail investors has come back again, which is a bad sign.