A Shares Strengthened: Last Year, Relying On The God Of Wealth This Year, Relying On God Of Wealth.

2015

The profit growth rate is actually decreasing, and after the deduction of non recurring gains and losses, the overall deficit level has risen sharply.

In the first half of 2015, the sharp rise of the stock market mainly depended on the continuous reduction of interest rates by the central bank. Although the main purpose of lowering interest rates was to solve the problem of financing difficulties, it was also for steady growth, but it further strengthened the trend of economic detraction to virtual economy.

Therefore, some people call the short bull market in 2015 "buffalo", that is, the stock market bubble formed by water injection.

This year's fiscal expenditure is so great, why does the fiscal deficit account for only 3% of GDP, or 2 trillion and 180 billion of the fiscal deficit?

One of the factors that led to the sharp fall in A shares in the second half of last year is the expected increase in US dollar interest rate, the two of which is the continued depreciation expectation caused by RMB exchange rate reform.

At the end of 8 and the beginning of this year, the two exchange rate cut last year not only led to a sharp fall in A shares, but also a sharp fall in European and American stock markets, when the central bank repeatedly stressed that the fall in the stock market was not related to China's exchange rate reform.

As the Federal Reserve raised interest rates in December last year, A shares also rebounded and were interpreted as landing boots for higher interest rates.

Next month, the Fed's interest rate rises again, and it is estimated that interest rates will continue next year. A shares are actually losing money and interest rates.

So, in this context, why are A shares strong?

A shares strengthened: last year, relying on Yang Ma, this year by God of wealth.

There are many factors that affect the stock market trend, such as interest rate level, profit growth rate, capital flow, and the scale of stock supply that represents the attitude of regulators.

The Fed's interest rate rise is bad for A shares because the interest rate increase leads to capital outflow, pressure on domestic currency depreciation and interest rate passive increase. Therefore, it will make negative effects on A shares from two directions of liquidity and interest rate.

However, there are many factors that decide the trend of A share, or other factors have greater influence on the stock market.

What are the other factors? First, the size of the IPO represents a significant reduction in the attitude of regulators. Now the IPO scale is only about 80000000000 in the first half of this year, although the scale of refinancing is about 1 trillion and 300 billion.

Because the main traders in China's stock market are retail investors, retail investors are sensitive to IPO and are not sensitive to refinancing. Therefore, slowing down of IPO rhythm, delayed registration system and no mention of strategic emerging boards can reflect the intention of regulators to protect the stock market, and help to restrain suppliers in the supply and demand relationship of stock market.

In 2016, the stock market went up and down under the unfavorable circumstances of raising interest rates and rising interest rates. The most explanatory reason was that the fundamentals of the enterprises improved and profits increased.

So what is the reason behind the rise in profitability? Is China's cyclical rebound in the economy? Obviously, it is not so optimistic that the general forecast of the GDP growth rate of the major sellers' institutions in 2017 is lower than that in 2016, indicating that the macroeconomic fundamentals have not fundamentally improved. From the micro and middle level, the improvement of corporate earnings is probably related to the increase in fiscal expenditure this year.

For example, passenger car sales have increased sharply this year, and the growth rate has reached 13% in the first three quarters. One important reason is that the country has imposed a half purchase on vehicle purchase tax for small displacement passenger cars since 1 last October.

Of course, tax incentives are only a form of fiscal effort, and fiscal effort is more of a way of increasing spending. The first 10 months of this year saw a year-on-year growth rate of nearly 20% of infrastructure investment, far exceeding the growth rate of investment in real estate and manufacturing, indicating that financial support for infrastructure investment was unprecedented.

At present, all major cities are building subways, and high-speed rail, high-speed railway and airport infrastructure projects are supported by huge input from the central and local governments.

At the same time, the investment growth rate of state-owned enterprises in fixed assets in October was more than 20%, indicating that state owned enterprises took the government's credit as endorsement and increased leverage to contribute to steady growth.

Usually right

The definition refers to the total deficit in the general public budget and the government budget, which is essentially a narrow fiscal deficit.

The difference between the central budget stabilization regulation fund and the different methods of settling fiscal funds in past years, and whether the funds raised by local governments to issue special bonds should be counted as income.

For example, the use of the surplus funds left over by local governments in the past years has been accumulated in the past years, not the current fiscal revenue, and the use of these funds for government expenditure should be included in the financing projects that make up for the deficit.

In addition, the funds raised by local governments to issue special bonds are counted as revenue in the budget of the government funds, and the funds obtained from issuing other government bonds are regarded as financing items to make up for the deficit, which is also not in line with the basic logic.

In addition, the local government's industry guidance fund and the state funded part of PPP should also be considered as a generalized deficit. In addition, the NDRC targeted the issuance of long-term special construction bonds through the National Development Bank and the Agricultural Development Bank, and set up a special fund for infrastructure construction. In fact, it should also be considered as a generalized deficit.

In short, the broad budget deficit will far exceed the current official deficit level. Some people estimate that the deficit rate in 2016 is about 5-6%.

Real estate boom benefited from residents plus leverage, and the sharp increase in sales increased investment growth.

Therefore, there was no sustained decline in the economy in 2016. The main reason was that the government, state-owned enterprises and residents together increased leverage.

The financial strength began in 2015, and the actual fiscal deficit in 2014 was lower than the budget deficit. Therefore, fiscal policy was positive in name and not positive in reality. In 2015, the actual fiscal deficit was calculated at 3.4% of our caliber, and the official caliber of more than 2.4% was very positive; in 2016, the positive fiscal policy could be described by "the power of flood".

The actual fiscal expenditure is so huge that the huge expansion of the liabilities of the government and the state-owned enterprises and residents will inevitably correspond to the sharp expansion of the asset side. Part of the asset expansion is the expansion of corporate profits, which constitutes the main reason for the rise in corporate profits this year.

Of course, the increase in corporate profits is also the contribution of the central bank, that is, the downward trend of interest rates in the first three quarters of this year, which is also the result of the monetary easing policy of the central bank. This makes the financial cost of the enterprises significantly decrease, and the most profitable one is the state-owned enterprises, because the funds acquired by state-owned enterprises are relatively low and are more sensitive to the change of interest rates.

Next year: the overall pressure will increase and local opportunities will remain.

I think it is necessary to have a broad vision to judge the general trend. No matter what is Hilary or Trump, what TPP, what Italy referendum and interest rate increase several times are put into the long history of history.

Trump can not change the decline of the US economy. Similarly, China's economy will also surpass the US in the way of growth and decline in the future, because the US growth rate is even lower.

When China's economic growth reached a high level in 2010, neither the property market nor the stock market experienced a general trend of inflation.

Before 2010, the national property market growth rate has outperformed the M2 growth rate. Since 2010, M2 has doubled, and the average increase in the national property market is less than 50%. However, the North Guangzhou Shenzhen should win M2.

Over the same period, the A share board lost more than M2, but the gem greatly outperformed M2.

Therefore, my logic is: the economic growth rate is down, and the stock market has only structural opportunities.

There will still be downward pressure on the economy in 2017. Despite the downward pressure on the economy every year, the downward pressure in 2017 is even greater, as mentioned earlier.

2016 is the biggest year of fiscal expenditure, and its financial resources have been consumed too much.

In general, private investment accounts for about 2/3 of the total investment. The proportion of private investment in 2016 dropped to 61%, which means that the public sector of the economy will have to invest more in order to grow steadily. For example, from the end of 2015 to the end of 2016, the bond market in the interbank market has increased by 17 trillion to 60 trillion and 900 billion, and the main body of the public debt is the public sector.

Then, in 2017, China's economy could still maintain that high.

Some people estimate that 2016 is the year when the GDP increment (unchanged price) has reached a record high. The previous high is in 2010, that is, second years of four trillion years to stimulate the economy, reaching 6 trillion and 390 billion, and then China's economic growth has been declining year after year.

It is estimated that the trend of RMB depreciation will continue in 2017. Under the pressure of the Fed raising interest rates, interest rates will rise or the scale of issuance of bonds will not be as good as that of 2016, so the growth rate of wide fiscal expenditure will also be lower than this year's level.

If the growth rate of public sector investment can be compensated by the increase in private sector investment growth, economic growth can be maintained smoothly, but it is necessary to determine whether the growth rate of private investment will rise in 2017.

The growth rate of private investment in October has indeed picked up. This is also the result of continuous financial efforts, that is, PPI's recovery.

However, the rise of PPI mainly depends on the upstream. Private enterprises are mainly concentrated in the middle and lower reaches of the industry. The upstream industry is warming up by investment, and the middle and lower reaches of the industry mainly rely on consumption. If interest rates are high and residents' consumption is sluggish, the situation of upstream downstream squeezing profits will be difficult to change, and the growth of private investment will be difficult to pick up.

It is estimated that the recovery of the upstream industry will be short-lived. At most until next June, the demand for steel, cement and other industries in the upstream industry will also decline as the growth rate of real estate investment goes down in the second half of next year. The demand for upstream investment driven by infrastructure investment is also unsustainable. Moreover, infrastructure investment is dependent on government finance, and long-term overdraft is difficult to sustain in the future.

From the perspective of coping with devaluation, Hong Kong stocks should have greater opportunities. Although Hong Kong stocks can not be converted into Hong Kong dollars through Hong Kong and Shenzhen through Hong Kong and Shanghai, Hong Kong can at least hedge the risk of devaluation.

In addition, the valuation advantage of Hong Kong stocks is also very obvious, and there is an obvious "discount" for A shares.

More importantly, as the investment and Shanghai Hong Kong Tong and Shenzhen Hong Kong through the abolition of the quota limit, which may lead to a large number of hot money and institutional capital flows to the Hongkong stock market.

Then, with the continuous inflow of funds in the South after the opening of Shenzhen and Hong Kong, will it restart the quota control, which will lead to a shortage of Hong Kong stocks?

For the stock market, the negative factors are interest rate upward, inflation expectations and devaluation of the hot money flowing to the foreign exchange market. The favorable factor is that some of the funds will continue to flow into the stock market because of the discontinuation of the property market. In addition, the recovery of corporate profits will continue, especially due to the rise of some commodity prices, and the upstream industry profit growth rate will continue to rise.

The rising price of steel and non-ferrous metals will not only come from the devaluation factor, but also from the hype of traders, such as the scale of capital investment in the US and stockpile.

If the upstream price pressure can be pmitted to the downstream consumer side, inflation will turn from expectation to reality. The valuation level of the listed companies can be improved, but the possibility of China's economic stagnation will increase, which will still be bad for the stock market as a whole.

On the whole, the stock market in 2017 is hard to be optimistic. Whether it is the goddess of wealth or the God of wealth, the love for the stock market is also strong and insufficient. Although the partial opportunities always exist, the biggest advantage may be the hot money in the stock market looking for opportunities to preserve value.