The deep warning of the "big slow bull" in the United States on A shares

Stimulated by the Federal Reserve's extremely loose policy, US stocks are thriving globally, but now, all this is no longer the case.

In the past year, the Shanghai Composite Index has risen by 94.34%, ranking first in the world. Although the U.S. stock market is still rising moderately, it is far behind the fiery Chinese stock market. In the past year, the Dow rose 11.38%, the S&P rose 14.31%, and the Nasdaq rose 24.21%.

Especially since the beginning of this year, the U.S. stock market seems to be exhausted. The Dow was up just 1.62%, the S&P was up 2.32%, and the Nasdaq was up 5.81%. The Dow and S&P even entered the list of the world's worst-performing stock indexes this year. At the same time, the Shanghai Composite Index rose by 26.26%, ranking seventh in the world.

The Federal Reserve decided to withdraw from the last round of quantitative easing program in October last year - the program has increased the Fed's balance sheet by $ 4 trillion, and is currently preparing for the return of ultra-low interest rates close to zero in June this year or later normalization.

Economists have repeatedly emphasized that the basis of stock market trends lies in the performance of the real economy. They believe that the improvement of the real economy will improve the performance of listed companies, boost investor confidence, and the stock market will naturally rise. However, the experience of US stocks shows that the decisive factor in its trend lies in the Federal Reserve.

However, as China gradually liberalizes the restrictions on foreign investors entering A-shares, the Chinese stock market will continue to rise, and may even accelerate its rise. According to Jamie Perrett, director of FTSE, an index service provider, the current weight of China's stock market in the FTSE All-Worldex-USIndex excluding the United States is 4.8%. Once A-shares are fully open to international investors, their weight is expected to double to more than 10%.

Coincidentally, according to a survey by Bloomberg News, nearly half of fund managers in Greater China plan to increase their positions in A shares.

According to Bloomberg’s survey of 11 fund managers investing in A shares, 45% of the respondents said they would increase their investment in A shares in the second quarter, and they were bullish about the future of the Chinese stock market; more than 80% of the respondents believed that the Shanghai Composite It means that after reaching the 4000-point checkpoint, it will continue to attack. One-third of the respondents said that their A-share holdings are close to full and will continue to be held; only 20% of the respondents plan to reduce their positions in A-shares and increase their positions in H-shares.

Secondly, people in developing countries, especially people in China, began to get deeply involved in the world economy, and got a systemic opportunity, and the gap between China and the West was quickly bridged.

Looking at national boundaries, the United States has changed from a country with dominant international influence, but the main body of economic activities is still confined to the country, to a country that has close contacts with the world in both real economy and financial sense.

The above influences have profound implications for China. In fact, the success of the economic and social changes driven by the slow bull market in the U.S. capital market is precisely because China joined the globalization system dominated by the U.S. in the 1990s. Otherwise, in the case of the stagnation or decline of traditional local industries in the United States, it is impossible for industries such as retail and logistics to prosper-because these industries need the supply of manufacturing.

But the growth of a system buries factors of destruction. When China grows into an economic system on par with the United States, China itself will evolve into the situation of the United States in the early 1980s. Many of the problems China is facing today, such as the international political environment, aging population, industrial upgrading, large-scale enterprise reform and development strategy, can be related to the major changes experienced by the United States in the 1980s and 1990s.

For example, the positive impact of the American slow bull on its financial system, the formation of currency hegemony and the pricing power of domestic financial assets, and the interactive support for the US pension system can help China find a new order in the international financial order and shape its influence. The problem of power corresponds to the problem of how to manage and grow China's national wealth (pensions, etc.) under the background of aging.

The United States started in the 1980s, and the globalization that prevailed in the 1990s can also be combined with China's state-owned enterprises' mixed ownership reform, China's overcapacity industries to explore ways out in other regions that have entered the initial stage of industrialization in the world, and China's large private enterprises' "going out" strategy Contrasted with issues such as choice - we should think about China-led globalization.

In fact, many of the contents are propositions that people in the financial circles in China should take the initiative to put forward.Putting the historical experience and lessons of the United States aside, and discussing China's issues on their own, in the final analysis, it is because too many Chinese financial professionals have habitually regarded others as "superior" under the discourse system shaped by others. Don't dare to make analogies.

In the next few years, China may experience a parallel outbreak of historical phenomena in different periods of the United States at the same time, especially many phenomena in the United States in the 1980s and 1990s.

For example, in the 1960s the United States used the capital market to conduct diversified acquisitions and "buy profits" (conglomerate), in the 1980s the United States used leverage to carry out mergers and acquisitions of large enterprises, and in the United States after the 1990s, the exit channels of the capital market opened up. The phenomenon of accelerating innovation in information technology and other industries, the phenomenon of US companies setting up overseas production bases or cultivating overseas suppliers to transform into multinational companies, forming a global industrial chain, and the phenomenon of US financial institutions entering overseas through mergers and acquisitions...Things of similar nature It may appear in China at the same time in the next ten to twenty years and become a new trend.

Seeing these trends clearly will help investors make strategic choices about asset allocation; for business operators, it will help them seize strategic opportunities; They took advantage of the situation and turned the positive trend driven by the capital market into an opportunity for the sustainable growth of national wealth, and even turned the positive trend of the capital market into our momentum in the international game.

For these trends to be realized, an unavoidable condition is that China's capital market must embark on the path of a slow bull.

But blue giant investment analysts believe that A-shares do not live in a vacuum. A series of realities tell us that there will be no slow bulls in China's A-shares.

May wish to take a look at 2014, the total financing of the A-share market was 724.9 billion yuan, the profit may exceed 2.5 trillion yuan, but the dividend may not exceed 100 billion yuan. This reflects a market situation. Generally speaking, the management of listed companies thinks that it is better to spend money in their own hands than to give it to shareholders. As long as money is not given, this is the current situation of A-share listed companies.

Therefore, even if all A-share shareholders made money in the past year, they were making money from each other, earning the money that everyone expects listed companies to make in the future, and not making too much to allocate funds to A-share listed companies. Current earnings generated by the real economy.

The key is that the Chinese market does not have long-term funds. Only when the long-term rational large capital side has a game with the listed company, the listed company does not pay enough dividends and the price-earnings ratio cannot increase, and the capital side votes with their feet, can a pattern of listed companies honestly pay dividends be formed. The entry of long-term funds into the market and the dividend distribution of listed companies are a chicken-and-egg relationship. If

does not have stable dividends, how dare long-term funds enter? Similarly, if there is no long-term capital, how can a listed company pay dividends honestly? Listed companies do not pay dividends, investors can only rely on self-hypnosis in anticipation of future profits, buying more and selling more to chase concepts.

So the rise and fall of mature markets mainly depends on macro data, including the growth of future corporate profits, while the rise and fall of the Chinese market mainly depends on the number of new accounts, that is, capital. Macro data has a certain range, and funds come and go very quickly, so the fluctuations of natural fluctuations are also large.

Apart from the structural problems within the stock market, what cannot be ignored is the external environment. If China's economy maintains a growth rate of about 8%, there are actually a lot of investment opportunities of about 10-15% in the fixed income market.

China's financial market structure is very special, that is, most of them are state-owned institutions, and China's financial culture is also very special. In order to maintain social stability, risks in fixed income products are basically not allowed. Regardless of bank wealth management products or trust products, rigid redemption actually exists.

If there is a risk-free 10% that can be earned, why are investors willing to obtain 10% of the unstable income? An annualized stock index return of 10%-15% will only withdraw a large amount of funds from the stock market and make it unsustainable. Only an expected return of more than 30% can make the stock market sustainable.

From the financial point of view, slow cattle cannot sustain at all. This is the reality in China.

JPMorgan China A-share fund manager Yu Zhenwen said that the Chinese government continues to offer stimulus policies, not only will the reform dividend continue to ferment, but the economic system will also become more stable, which will help attract long-term funds to settle in.

Prudential China Small and Medium-sized Fund Chen Yiting said that the Shanghai Stock Exchange may consolidate within 3 months, but the A-share correction is a buying point, because the monetary policy is stillJust relax, don't think it will be too much downgrading.

Yang Huiyuan, manager of HSBC China A-Share Convergence Fund, said that if the activity of retail investors is used as a leading indicator of funds, the former is close to a historical high.

However, Lin Hongli, general manager of Fubon Investment Trust, said that the Shanghai Composite Index may reach 4,800 points this year; if it wants to return to the high point in 2007, it needs the cooperation of global conditions, such as the United States cannot raise interest rates too quickly.

And Chen Yiting of Prudential is obviously more optimistic: after the Shanghai Stock Exchange reaches 4000, it will be a new starting point, and 4000 is only an intermediate milestone. 2007 was bigger.

Deutsche Bank believes that this round of bull market is entirely attributable to macro-policy regulation. There are four factors that can end this round of bull market: rising CPI, obvious signs of economic recovery, credit crisis, and prudential regulation.

In fact, when Xiao Gang, chairman of the China Securities Regulatory Commission, attended the listing ceremony of the SSE 50 and CSI 500 stock index futures in Shanghai recently, he reminded investors, especially new investors, to fully assess the risks of investing in the stock market.

Xiao Gang said at the ceremony: "When participating in stock investment, one must remain rational and calm, and must not be misled by views such as "I would rather buy the wrong one than miss it". We must fully estimate the risks of the stock market, invest prudently, do what we can, do not follow the trend, and do not miss out. Blindly follow.”

Although China’s economy has continued to grow by 8% in the past ten years, it has always been a cyclical market with alternating bulls and bears, and the stock market has shown a roller coaster ride. The stock index has risen more than 20% in the past three months, and it seems to have entered the "mad bull" stage again. This makes people think of the stage from 2007 to 2008, so recently another organization put forward a new concept: "slow cow".

Looking forward to a bull market in a bear market, fearing a "mad bull" in a bull market, and looking forward to a "slow bull" and "long bull". This is the mentality of investors in the current A-share market.

In fact, the U.S. capital market has experienced a 30-year "big slow bull" that has had a major impact on the world's economic and social structures.

Co-founder of Baiyi Enterprises Research, an observer of economy, industry and finance Jian Jian previously published an article in the Shanghai Securities News, saying that understanding the 30-year "big slow bull" in the US capital market is of great significance to the Chinese capital market .

The biggest change in the U.S. capital market in the 1980s was the entry into the "big slow bull" market, which became the basis for the continuous expansion of U.S. national wealth, as well as the basis for various accompanying economic and financial operations, and even the realization of U.S.-led globalization. The foundation to start and succeed.

The U.S. can become a center that affects the world in terms of capital market and financial system. Its structure was gradually formed in the 1980s and 1990s. Major changes in key financial elements during this period are the basis for realizing the above structure. It is precisely such a simple change that has established the 30-year slow bullish capital market behavior rules (bull market thinking) in the United States, and also laid the foundation for the success of investment masters such as Buffett and Peter Lynch.

In the long-term slow bull market, the price-earnings ratio of representative companies in the United States, especially outstanding (growth) representative companies in each period, is not low. The creation of wealth in the US capital market mainly relies on the creation of market value brought about by the continuous rise of stock prices.

Big Slow Bull first drove the deepening of the capital market, and the financial market also expanded rapidly. The capital market has been rising steadily for a long time, implying that this country has the best and most worthwhile companies to invest in. Bonds issued by powerful companies are also something investors are willing to subscribe to, and flexible and relatively cheap sources of financing capital also make it easy to repay the bonds. Pushing back from this, investors are gradually willing to subscribe for the bonds of the countries where these companies are located-US Treasury bonds.

Therefore, the strength of the capital market drives the deepening of financial markets such as bonds, forming a positive cycle of subscription willingness. This provides deep legitimacy for the United States to maintain its currency hegemony in the world, so the United States has both currency hegemony and "capital market pricing power".

If you think back to the 1970s, when the U.S. capital market was in a downturn, it was also the period when the U.S. real economy was weak, the currency was weak, and the US dollar’s ​​post-war status as a world currency was at its most precarious.

In the 1980s, once Slow Bull started, even though there were no bright spots in the real economy of the United States at that time, the economic threats of the Federal Republic of Germany and Japan were not so strong (the trade contest between Japan and the United States in the 1980s was eye-catching, but the U.S.China's momentum became more and more courageous as it fought), and it was completely dispelled by the 1990s. In the final analysis, this was related to the invisible strength brought about by the positive cycle of the capital market.

The "capital market pricing power" is very important. Without this systematic power obtained in the 1980s, no one would have recognized the whole set of new capital market rules introduced by the United States on Internet companies in the 1990s. The second impact of

is that Slow Bull enables American pension funds and other institutional investors that embody public interests to interact more deeply with the capital market, further deepening the socialization of company ownership.

This will cause two effects. First, on the whole, these institutional investors representing the public have deeply enjoyed the wealth creation (market value expansion) brought by Slow Bull. The value of financial wealth held by the public is maintained.

On the other hand, thanks to the support of institutional investors such as pension funds, there have been several waves of capital operations in the United States since the 1980s that have had a huge impact on the ecology of large companies in the United States and other countries, and capital operation experts have gained great power . The third impact of

is the support for emerging industries represented by information technology, especially Internet companies, which most people talk about. This is indeed the biggest positive impact of Big Slow Bull on the real economy. The long-term prosperity of the U.S. capital market has supported IPOs and even mergers and acquisitions, which provides sufficient exit channels for technology venture capital.

The history of venture capital investment in the United States is not long. It was just tested in the 1950s and early 1960s. At that time, the United States was like China in the early 21st century. All industries were booming, especially various industrial manufacturing industries.

The investment targets of early venture capital companies (mostly individual partnerships) were concentrated in fine chemicals and specialized manufacturing industries, and the expected profit-making method of exit was also mergers and acquisitions by large industrial companies.

The bull market of the 1960s, which peaked in 1968, gave these early investors the first systematic and generous returns by giving newly listed electronics and software companies extremely high price-earnings ratios, which has since formed a demonstration.

As a result, venture capital was established one after another, and at this time Silicon Valley also formed its core with the semiconductor and electronics industries as the core. In the 1980s, driven by household microcomputers, upstream components, and operating systems, a community was formed.

Venture capital really shined in the 1990s. Compared with software and other sub-industries in the 1980s (they can usually grow by selling software, except for the earliest investment, they don’t really need venture capital. Companies such as Microsoft didn’t have much before they went public. Venture capital), the Internet industry that emerged in the mid-1990s was unable to make a profit during most of the growth period, and had to continue to raise funds. Venture capital is the most suitable support force.

The slow bull market formed in the United States in the 1980s just provided a suitable exit channel for this investment model. Since the mid-to-late 1990s, the U.S. capital market has provided technology-based companies (internet, communications, biomedicine, and other industries, including Chinese Internet companies) with IPO opportunities, ranging from 60-200 per year at peak times to 10-20 at low tides.

However, due to Slow Bull, already listed companies such as Microsoft, Cisco, Google, etc. have become companies with strong capital capabilities, and are very active in mergers and acquisitions (often stock-for-share mergers and acquisitions). Every year, the number of mergers and acquisitions in the technology industry ranges from 300 to as many as 500. This is essentially indirectly absorbing new companies into the capital market. In this way, the exit of venture capital is very smooth, and there is no "barrier lake" phenomenon in my country's IPO queue; at the same time, because this mechanism allows both venture capital and business founders to make money, their motivation for innovation is extremely high.

Therefore, since the 1960s and 1970s, the United States has developed all the way from semiconductors, electronics, computers, communications, the Internet, and mobile Internet—the information industry, which can be described as thriving in the economy. industry of life.

But it needs to be pointed out that not everything is wonderful here. The biggest problem has emerged after the Internet era, and that is the problem of "fictitious market value". The fourth influence of

is mutual support with the globalization process of American companies. This is mainly reflected in the fact that American companies got rid of the passive situation in the 1970s. A considerable number of companies turned into global companies in a deep sense, grasped the opportunities in other parts of the world, supported their profit growth, and strengthened the rationality of the slow bull market. .

1970In the present era, the United States was in trouble at home and abroad, and its companies were suffering under the stagflation situation, and they had to face the competition from the Federal Republic of Germany and Japanese companies. In the 1980s, after the United States got out of the predicament, it first explored the way of continuing mutual investment between developed countries (mainly the United States invested in Europe), but the electronics and other industries have begun to transfer to my country's Taiwan and other regions.

In the 1990s, the "two-end extension" model, that is, the production end developed to an outsourced production model, and the consumer end was sold to the world (mainly developed countries) became more and more obvious: first, the production base was transferred to Mexico through the North American Free Trade Agreement, and then to the Southeast Asia and later Chinese transfers.

In this profound enterprise ecological transformation, the adaptability of different industries is very different.

On the one hand, the relative status of steel, cement, glass, machinery and other industries (represented by the states along the Great Lakes) that used to be the symbol of American industry has greatly declined. Some industries such as steel have almost disappeared. Only the automobile industry has taken advantage of China’s rise , relying on the huge profits of joint ventures in China to continue to grow.

On the other hand, since the 1980s, new companies in consumer retail and logistics have emerged, such as Wal-Mart and FedEx, and old consumer companies such as Coca-Cola have evolved into mature multinational companies. These emerging companies, together with growth companies such as information technology, have become the new blue chips in the slow bull market in the United States.

Furthermore, financial transactions themselves began to be globalized, and financial markets around the world, such as London and Hong Kong, China, were connected to each other—this was only beginning in the 1980s and formally formed in the 1990s. At the same time, it also opened up capital markets in developing countries, such as Southeast Asia and India.

Combined with the promotion of political and economic figures such as Al Gore and Thomas Friedman in the 1990s advocating "information superhighway + globalization", a scene of "prosperous globalization" that people are familiar with today finally appeared in the middle of the 1990s. It was built later.

From the perspective of the social field, the economic chain effect brought by the big slow cow has profoundly restructured the social structure.

First of all, social differentiation is accelerating. In the United States, people who benefit from the above-mentioned major influences, such as middle and senior managers of multinational companies (globalization impact), successful entrepreneurs and venture capitalists in information technology (information industry impact), investment banks, Various funds, private equity fund operators (influenced by financial markets and large-scale mergers and acquisitions) and the political and economic elites who support them have become successful people in the past 30 years.

On the other hand, traditional blue-collar workers who cannot enter high-paying growth industries with low education (including those low-level employees who have worked in growth companies such as Wal-Mart and FedEx since the 1980s) have difficulty getting opportunities for advancement and become Groups that will ultimately be supported by the pension system (the big slow cow makes this system still affordable). (SSE blog, author: Han Yang) (Alpha Works, WeChat official account: alpworks)