Zhang Xia of China Merchants Securities: abundant liquidity leads to price rise of high quality assets

category:Finance
 Zhang Xia of China Merchants Securities: abundant liquidity leads to price rise of high quality assets


Chinas economy is a typical dualistic structure. The total market value of traditional industries is about 35 trillion yuan. The total market value of the traditional industries, represented by medicine, electronics, food and beverage, and computer, is 43 trillion yuan. The emerging industries have surpassed the traditional industries. Chinas economic structure has changed greatly, which is reflected in the structure of the stock market, the pharmaceutical industry and banks The stock market is also dualistic. It is worth considering whether to buy traditional industries, science and technology or consumer medicine. At present, investors are enthusiastic about emerging industries. The valuation level of emerging industries is consistent with the highest level in 2017, which is relatively high. Overall, the valuation is still a little expensive, reaching 67 times.

Under the principle of unlimited monetary expansion, the total amount of global currency is constantly increasing, and the total number of high-quality and good growth properties of assets remains unchanged, resulting in unlimited monetary assets chasing limited assets, and the price will increase infinitely. The same is true for Chinas real estate.

The U.S. dollar is the global currency. As the general tap of the global economy, the U.S. began to print money when it was in crisis and continued to over issue money. China cant print money indefinitely like the Federal Reserve. The central bank uses reverse repurchase, MLF, PSL, SLF and tmlf to first give money to banks, which provide money to the real economy in the form of loans, and reduce the deposit reserve ratio.

Since then, the United States is also releasing water, China has also put a lot of water, money in the overspread, and do not allow speculation in houses, money will enter the stock market. When the common people saw that the money was overspending, they put the surplus money into the active partial equity funds, resulting in a significant rise in consumption, science and technology, and medicine, because 75% of the active partial equity funds were in the distribution of consumption, science and technology and medicine. At present, this process has not yet ended, and public funds have been bursting frequently. When the funds earning effect is not obvious, the process will come to an end.

Chinas economy is still improving. Affected by the epidemic situation in the first half of the year, Chinas economy has shown negative growth, and has improved significantly since June and July. Many investors are concerned about what time the stock market index peaked. Zhang Xia thinks that if Alipay yields above 3%, we must be careful that the interest rate level of the whole society is very high and liquidity is very tight. In addition, the banks credit growth rate is obviously going down, and the enterprises profit growth rate will turn down. We should be particularly careful. At this stage, we are in the process of moving from liquidity driven to fundamental driving, and the bull market process is not over.

At present, the cumulative growth rate of infrastructure projects in the first area is 114% year-on-year, double the same period last year. Second, investment in manufacturing industry. From January to June, the growth rate of industrial land area in 100 major cities increased by 15% year on year, which was a relatively high growth rate, and the investment in manufacturing industry improved significantly. The third is real estate, which has improved significantly recently. There are three major driving forces for investment. Infrastructure, real estate and manufacturing industries are all moving upward. The economic situation will be significantly improved. The traditional finance and cycle will also rise. It will no longer be a simple liquidity holding consumption, technology and medicine.

The above describes the so-called dual model of Chinas economy. Chinas economy is two-dimensional, with traditional infrastructure on the one hand, and traditional real estate related fields. In the long run, the growth rate tends to be zero in the long run. It is difficult to raise the valuation, which can only be driven by economic improvement. In addition, the global currency is oversubscribed, and the over issued currency will chase the limited high-quality assets. The technology stocks of the United States and the consumer, pharmaceutical and electronic companies in China are all high-quality assets, which will usher in continuous incremental funds. In the future, Zhang Xia believes that there will still be two parallel lines, one is the recovery of Chinas traditional economy, and the other is the global currency over issuance. These two factors are in common. When the liquidity begins to shrink, the economic growth rate will also decline, and when the interest rate level is very high, we should pay attention to the possible large-scale adjustment of the index. Zhang Xias core view is: now the index is in the process of healthy upward, and there may be more opportunities behind, but this process has passed for a period of time. If the economy is very good and liquidity is tightened, the opportunities of the stock market will obviously decrease, which may be after the first quarter of next year. Source of this article: Ren Hui, responsible editor of NetEase Finance and Economics_ NBJ9607

The above describes the so-called dual model of Chinas economy. Chinas economy is two-dimensional, with traditional infrastructure on the one hand, and traditional real estate related fields. In the long run, the growth rate tends to be zero in the long run. It is difficult to raise the valuation, which can only be driven by economic improvement. In addition, the global currency is oversubscribed, and the over issued currency will chase the limited high-quality assets. The technology stocks of the United States and the consumer, pharmaceutical and electronic companies in China are all high-quality assets, which will usher in continuous incremental funds.

Zhang Xias core view is: now the index is in the process of healthy upward, and there may be more opportunities behind, but this process has passed for a period of time. If the economy is very good and liquidity is tightened, the opportunities of the stock market will obviously decrease, which may be after the first quarter of next year.