From the perspective of the annual K-line, the Shanghai Composite Index has been stuck halfway up the mountain for most of the past 14 years, and the peak of 6124 points in October 2007 is far away; From the perspective of monthly K-line, the box has fluctuated for more than 19 months since July 2020, and the upper and lower parts are still at a loss. Prudent judgment, the current so-called policy dividend is more individual market, and the valuation may still decline as a whole in the pattern of stock game.
deleveraging of the property market will face A-share
“This year is a year of backwater. It’s either dead or alive. There’s no middle state.” Yu Liang, chairman of Vanke, recently said frankly that the real estate industry is currently in the “black iron era” (a tragic but endless period in Greek mythology), and the real estate industry has entered the stage of de financialization. According to wind data, as of February 16, 61 A-share real estate enterprises have disclosed performance forecasts for 2021, including 26 losses and 14 declines.
Surprisingly, in 2021, the sales area and sales volume of commercial housing in China increased by 1.9% and 4.8% year-on-year respectively. The higher sales growth rate than the sales area means that house prices are still rising, but the increase is narrowing. The main reason for the default of some private real estate enterprises is not the decline of house prices, but the operation of high debt + high turnover, which encountered a policy red light and was unable to borrow the new to repay the old, giving birth to a cash flow crisis.
Prudent judgment, the national property market will follow the old path of A-Shares in a few years and enter the market dominated by stock game and structural differentiation. There are roughly three indicators to judge the top or bottom of the property market cycle. Whether the company’s share price, product price and company profit have reached the top or bottom successively. The current situation of the property market is short-term or peaking, which is still far from the bottom. The profit of real estate giants has long been at a high level in the first half of last year, but the stock price of real estate giants has long been at a high level in the first half of last year.
Similarly, listed in Hong Kong, real estate giants Evergrande and China Resources Land have close medium-term net profits in 2021, but their stock prices are cold and hot, with a decline of 94.86% and 6.4% respectively compared with the historical peak. Their total market values are 22.05 billion yuan and HK $275.6 billion respectively (as of Thursday, the same below). At present, the deleveraging speed of real estate enterprises has not yet reached the regulatory expectation, and the wave of asset fracture sale has not yet arrived. However, the supporting army has been recruiting and storing grain. Regulators closed the door of high leverage and opened the window of M & A. On January 26, the central enterprise China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) and the local state-owned enterprise Jianfa real estate issued 1.29 billion yuan and 1 billion yuan of M & A bonds respectively.
steady growth does not depend on the property market, but on infrastructure?
On July 30, 2019, the high-level set the tone of “not using real estate as a short-term means to stimulate the economy”. Recently, the central bank and the Ministry of housing and urban rural development once again stressed that the policy of non speculation in housing has remained unchanged. Even if the global epidemic slows down the potential growth rate of China’s economy, driving housing investment has not yet entered the toolbox of macro stable growth.
The valuation freeze period of real estate stocks is less than one year, and the involution survival of A-Shares has long been the norm. Over the past 14 years, the Shanghai Composite Index has been short of cattle and long of bears. Most of the time, it barely maintained the monkey market shock of jumping up and down in the box.
The main reason is that the main tone of stock market regulation has accelerated to regulatory transparency (predictable) and stock index marketization (non intervention), from “reducing unnecessary intervention in trading links” proposed on October 30, 2018 to “building systems, non intervention and zero tolerance” proposed in June 2020, It shows that the rise and fall of stock index is no longer a tool for macro-control (fine-tuning policy bias is to intervene in soaring and ignore sharp falls), and the overall valuation (liquidity premium) fell.
It is inferred that the decline in the prosperity and valuation of the property market may be a long trend. According to the prediction of Shenwan Hongyuan Group Co.Ltd(000166) research analysts, real estate related investment and sales will decrease by 5.4% and 9.1% year-on-year this year, which is expected to drag down the overall economy by 1.2 to 1.6 percentage points. Obviously, when excavating the concept of “stable growth”, the market eliminated the theme driven by real estate and chose the old infrastructure sector with low valuation and long-term oversold. In the past 60 trading days, although the construction industry rose by 16.63%, ranking the second among the 56 industry indexes of tongdaxin, the latest closing still shrank by more than 47% compared with the peak in 2015.
the medium and long-term dividend return of A-Shares will be close to that of H shares
The huge selling pressure brought by the listing of restricted shares is the culprit of the long-term downward valuation of A-Shares on the main board. On October 16, 2007, when the Shanghai Composite Index hit 6124 points, the circulation market value of A-Shares on the main board of Shanghai Stock Exchange on that day was 6.1 trillion yuan, which rose to 39899.9 billion yuan on Thursday, an increase of 5.54 times. On Thursday, the Shanghai Composite Index closed at 3468 points, down 43.37% from 6124 points. The circulation right of A-share market means that the original shareholders enter the stage where chips can be exchanged for cash. Why does the A-share market not rise and individual stocks jump up? The average A of the Shanghai stock market is 16.55 times that of the Shanghai stock market, and the median price earnings ratio of the Shanghai and Shenzhen 4650 A shares is 42.22 times.
The full implementation of the registration system is the number one task of stock market supervision this year. The date of the boot landing is approaching, and the impact is unknown. The acceleration of IPO is inevitable, the cash out tide of restricted shares will be expanded, and the shell resources will enjoy scarcity, and the pricing dividend will be weakened day by day.
Statistics show that from 2018 to 2021, the total number of newly listed enterprises was 105, 203, 437 and 524 respectively, showing an increasing trend year by year; The average initial P / E ratio was 21.53 times, 33.98 times, 38.47 times and 35.78 times respectively. The current point of the Shanghai composite index is equivalent to the level at the beginning of 2018. The annual transaction volume in 2021 is 1.83 times higher than that in 2018. The main reason for the non increase of transaction increment is that there are too many profit distributors and the valuation decreases (just like there are too many swindlers in the casino and not enough fools).
On Thursday, the Hang Seng ah share premium index closed at 138 points, leaving room for decline from the bottom of 88.7 points at the end of July 2014. In the face of the macro background of medium and long-term economic slowdown and the regulatory background of the full implementation of the registration system, the decline of A-share valuation will be the norm, or the current blue chip H-share and bad stock fairy share. Optimistic, the medium and long-term dividend return of A-Shares will be close to that of H shares, and the survival of the fittest will be accelerated, which will contribute to high-quality economic development.
