Looking back on the 30-year history of a shares, there have been two bull markets, from 1996 to 2000 and from 2006 to 2007. In 2015, it was mainly driven by funds.
At the end of 2018, the rosefinch fund proposed the bear cow transition, because at that time, high-quality companies were already good and cheap, and the monetary environment gradually turned to loose in 2019.
Since 2020, the basic institutional construction of the capital market has been further accelerated. Therefore, we judge that the rising market since 2019 is likely to deduce in the direction of the third bull market.
Facts have proved that the “bull market of a few companies” has long come. In the past two weeks, it even led the Shanghai Composite Index to break through 3400 points until there was a correction in the past two days. But we believe that this time, the capital market is most likely to form a slow bull trend, because there are differences, there is a slow bull.
the importance of capital markets is unprecedented
First, China’s capital market is the product of reform. Thirty years later, the capital market has further shouldered the important task of deepening reform.
Specifically, firstly, as a bridge between investors and financiers, the capital market can realize the optimal allocation of resources. Those enterprises that represent the future development direction, have core competitiveness and aggressive management can obtain more capital and resources to help the transformation and upgrading of the whole national economy. The capital market can also promote the reform of state-owned enterprises, and its active opening can also promote the internationalization of RMB.
Secondly, the capital market will also replace real estate and shoulder the mission of wealth redistribution, which is not only more efficient and fair, but also conducive to resolving stock risks. The process of residents’ savings moving is accelerating.
At the same time, we see that China’s capital market is accelerating towards maturity. At this year’s Shanghai Lujiazui Finance & Trade Zone Development Co.Ltd(600663) forum, vice premier Liu he proposed the nine word policy of “building a system, non intervention and zero tolerance”, which made it clear that we should improve the basic systems such as information disclosure, issuance and delisting, strive to enhance transaction convenience, market liquidity and market activity, improve the system to encourage medium and long-term capital to carry out value investment, and better protect the interests of investors. When talking about “realizing the new vision”, chairman Yi Huiman of the CSRC predicted that in the post epidemic period, global liquidity filling and even flooding is a high probability event. All major financial markets may face the problem of asset side together, and the competition of high-quality listed companies will be more intense. In this regard, China’s capital market should play more roles.
this time, you are most likely to walk slowly
Before the outbreak, China’s economic growth had been adjusted to a level basically matching its potential growth capacity. After the epidemic, economic fundamentals have gradually improved.
According to the latest economic data, China’s GDP grew by 3.2% in the second quarter, a sharp rebound from – 6.8% in the first quarter. The resumption of work, production, business and city was accelerated. In June, the industrial added value was 4.8%, which has basically returned to the level before the epidemic. On the demand side, except for tourism, catering and petroleum products, consumption increased positively in June; Investment indicators such as new construction of commercial housing, infrastructure construction and PPI all stabilized and rebounded; Import and export also increased positively in June.
The overall health of the A-share market. At present, the price earnings ratio of the whole market is about 21 times, which is near the historical median since 2010, lower than the S & P 500 index (26 times PE). Compared with the yield of ten-year Treasury bonds, it has a risk premium of nearly 2 percentage points, which is also close to the historical median. Since 2016, at the macro level, as the growth rate of consumption began to exceed that of investment, China’s economy has transformed into a consumption driven economy; At the meso level, due to industry integration or industrial characteristics, the market share and profits of each industry began to concentrate on the head companies; At the micro level, a number of companies with industrial and even international competitiveness appear one after another. Therefore, excellent companies in the good track can get rid of the negative impact of the downward economic growth, benefit from monetary easing and downward interest rates, and improve their valuation. At present, the free circulation market value of consumer growth companies has exceeded that of traditional industries such as finance and real estate, occupying a dominant position and promoting qualitative changes in the market structure. From this point of view, the overvalued sector has certain rationality, which is not simply caused by cyclical factors or style hugging behavior, but the trend for a long time in the future.
However, at the same time, there are obvious differences in market structure, and the PE in the industry with the highest and lowest valuation is about 40 times different. This reflects the change of economic structure to a certain extent, but it also contains some risks. In this case, the best way to digest structural risk is to believe in the power of the market, return to the origin of value discovery, and hand over the function of value discovery to the market. Further accelerate the improvement of institutional arrangements such as registration system, delisting, class action and T + 0 trading, and cancel the price limit. Combined with the improvement of economic fundamentals, the market can effectively digest structural risks and usher in a new bull market amid differences.
the rapid and deep adjustment of the market will not reverse the bull trend
On February 27, 2007, after several months of doubling, the Shanghai Composite Index fell more than 8% a day. The market adjustment should be similar to that. Although the index has not been as high as 07, the stock price increase of some companies has been doubled, and the stimulus of stock return has been overlaid, overcoming the growth of the next two or three years or even long time, forming a structural bubble. The rapid clearing of share prices of some companies shows that the market maturity has been greatly improved, Shanghai Junshi Biosciences Co.Ltd(688180) from the highest opening price of 220 on the first day to the closing price of 126 yuan on the next day is almost unprecedented.
In the next stage, both risky assets and hedging assets are likely to enter a shock period. Considering that China’s economic recovery and improved corporate profits are conducive to the rise of the A-share center, the changes in structure may be greater than the fluctuations of the stock index. From the perspective of rosefinch fund, it is a leading company in the fields of passenger cars, aviation, securities companies, military industry and bulk industrial products. Compared with the Internet, electronic communication, lithium battery, electric vehicle, medicine, agriculture, consumption and other sectors, the cost performance has been improved in stages.
In the long run, most of the leading companies in many fields that lead and benefit from China’s economic transformation and upgrading have been deeply integrated with the capital market. The market value of equity assets of these companies has a large space, and the increase of their market share has an increasing impact on the overall market and index. In recent years, while overseas funds continue to increase the allocation of RMB assets, the proportion of financial assets allocated to Chinese household assets is also entering an accelerated inflection point. After the baptism of 2019, the slow bull market pattern is expected to be more stable in the future, including 2020. Jung once said that our external situation is the outward projection of our inner world. The so-called “suffering casts brilliance” is also a choice and belief in a sense. Integration into the torrent is the only choice!
(China Securities Network)
