Recently, the market is very lively, and all the great gods are scrambling to tell each other that "the big bull market is coming". The current uptrend is characterized by "mad cow", but the problem of "mad cow" is unsustainable and the risks behind it cannot be underestimated. The voice of market rationality is getting less and less, and more and more people can't see the underlying logic of its rise. They all compare it with 20 14, even with 2005. Is that really the case? It is necessary for us to start from the bottom logic and carefully examine the "ins and outs" and the coming "pulse" of this wave of "eating meat" market, so we can't look at the flowers in the fog, otherwise "meat" will go up in smoke.
What is the underlying logic of this market? Why is there a wave of excitement?
Many experts in the industry compare this index surge to 20 14. This "bull market theory" is actually exactly the same as the "bull market theory" at the beginning of 20 19, and it has been falling all the way since April of 20 19, so I won't mention it again.
Let's briefly review the market of 20 19:
In the whole year of 20 19, the Shanghai Composite Index rose by 22%, the Wonder A Index rose by 33%, and the Shanghai 50 Index and the Growth Enterprise Market Index rose by more than 40%. The first stage: from the beginning of the year to the middle of April, the market rose sharply in the "wide credit" environment with loose policies and social financing exceeding expectations. Big finance and financial technology continued to skyrocket, and most of them doubled. Policy tax reduction benefits further stimulate the market: deepen the reform of value-added tax, ensure that the tax burden of major industries is significantly reduced, ensure that the tax burden of all industries is only reduced, and continue to move in the direction of promoting the tax rate of third and second grades and simplifying the tax system. Subsequently, the Shanghai Composite Index fluctuated repeatedly and rose to the highest point of 3288 points in the year. The second stage: from mid-April to early June, the spirit of the Politburo meeting in April 19 changed the policy expectation from loose to neutral, and the market high began to adjust. In May, Sino-US trade frictions resumed and the market experienced deep adjustment. On Monday, May 6, 20 19, the Shanghai Composite Index fell by 5.6%.
The "bull market theory" in 2020 and 20 19 started because of the skyrocketing of "big finance", but the bull market in the semiconductor and pharmaceutical sectors never sounded like a big bull market, just like the artificial intelligence setting program. As long as brokers or financial technology continue to limit, there will be a "voice induction" that sounds like a "big bull market". The semiconductor sector began a structural bull market from 20 19. Up to now, many high-quality stocks (big fund investments) have doubled. This year, drugs and vaccines related to the epidemic have also stepped out of the structural bull market, and many stock prices have doubled, making investors profitable.
This wave of rising prices does not mean the beginning of a full-scale bull market. Judging from the current situation at home and abroad, this probability is very low. Bauhinia Jun's underlying logic gives three core reasons for reference only: First, China's epidemic prevention effect is remarkable, and the epidemic prevention in the United States has been losing ground, but its capital market has indeed rebounded strongly (taking the Dow Jones index as an example, the rebound rate is as high as 50%), so our A-shares have a strong demand for compensatory growth. Second, the global currency is loose, the printing press is wide open, and the money supply is rising rapidly. If capital wants to outperform CPI, it must actively embrace assets, which leads to the rise of asset prices. Therefore, we can see that regional housing prices are rising again, and the role of entering the capital market in China's economic recovery is definitely better than the inflow of real estate. This is obvious. Listed companies need direct financing and blood transfusion. Through the cold winter, the market value of lifting the ban in July and August will reach nearly 65438+.
From this perspective, it is also expected that the capital market will get the allocation of overflow funds and there will be a short-term stimulus market. Third, the situation at home and abroad is extremely complicated and there is great uncertainty. From the perspective of supervision, the capital market needs a high degree of security. Domestic: The economic recovery is full of twists and turns. During the flood season, some areas stopped production, roads and waterways were blocked, and logistics was blocked. International: 1) The black swan is flying in the American election; 2) The epidemic situation in America, Brazil and India is still spreading; 3) The game between China and the United States may enter a new round of upgrading. After the two sessions, the Shanghai Composite Index fluctuated around 2800 points. According to the above information, once there are so many unexpected black swan events that affect the global economic recovery, can the Shanghai Composite Index still stand at 2800 points? If it falls to around 2500 points, there will be a series of systemic risk problems such as equity pledge, so the market needs rain-free silk and needs to raise the height of the safety mat to cope with the foreseeable greater risks.
What is the "pulse" of this wave of market? These risks cannot be ignored.
Pulse 1: First of all, the market comes quickly, but the persistence is poor, and there is a risk of large fluctuations at low tide.
The A-share capital market is also liquid, and so is failure. Bauhinia Jun introduces the risk of liquidity from the following aspects.
First of all, in response to the COVID-19 epidemic, countries are loosening monetary policy, but the increased money has not actually entered the economic cycle. We should pay more attention to the debt and asset prices caused by the current sudden economic downturn, that is, to maintain the debt chain to the greatest extent. The scale of social financing in China increased by nearly 80% in the first and second quarters (as shown above). This is an unconventional measure to deal with the COVID-19 epidemic, not a normal measure, so in the near future, these unconventional measures will be gradually withdrawn (as in the United States). It can be predicted that when the Shanghai Composite Index reaches a certain critical value at a high level, the market will return to the normal state in the past from abnormal easing, and then it will be regarded as "tightening" in the short term, and the market may naturally fall sharply.
Second, it is not a full-scale bull market cycle. At present, the real economy is still very fragile and has just entered the repair stage. But the real recovery is still in its infancy, and many tertiary industries are still empty. In the superimposed flood, as many as 30 million people were affected, and the consumer demand of many industries was once again blocked. So at this time, capital must first enter the society and enter the real economy. When the economy really begins to fully recover and create wealth, the economy will begin to enter the stage of stimulating the economy from the recovery stage, interest rates will rise again, and capital will naturally start to overflow the real economy and enter the virtual economy such as the stock market (this is a healthy and normal investment cycle logic, and once it is abnormal, it will rise and fall, and the climate will not be formed). What will happen if it is not? If the capital market is over-hyped by malicious speculative funds when it does not conform to the economic recovery cycle, resulting in the illusion of a big bull market, the result will be that the funds that should have flowed to the entity enterprises will flood into the capital market in pursuit of profiteering, and even the property market funds, credit funds and ordinary people's savings deposits will enter the market crazily. In this way, the transition will be divorced from reality, which will make the hit real economy worse, the financial bubble will be too large, and the systemic risk will deteriorate sharply. Therefore, once the index reaches a critical point at a high level, it may introduce policy guidance, cool expectations, tighten liquidity, and step on the brakes to make it return to rationality;
Thirdly, the worsening debt situation caused by the third world epidemic (mainly in India and South America) will make the fund shares in emerging markets face huge redemption, leading to a large-scale increase in foreign capital allocated in the domestic market. At the same time, let's recall that on May 7, 20 19, Wei Zhen, research director of MSCI China, admitted in an interview with the media: In the last round of consultation held by MSCI, many international investors indicated that if the A-share inclusion factor is raised to more than 20% in the future, four major problems still need to be solved, including lack of hedging and derivatives, short settlement cycle of A-shares, different trading holidays of Shanghai, Shenzhen and Hong Kong Stock Connect and lack of a feasible and effective comprehensive trading mechanism. At present, the CSRC has not yet met the four requirements put forward by MSCI last year, and it is necessary to be cautious about the liquidity of funds in Beiwai. When the index and power increase significantly, the funds from Beiwai will start to flee in batches.
Pulse 2: the valuation is already too high, the bubble has appeared, and the repair market is about to open.
From the above analysis, we know that a small part of the current increase is benign, and both valuation and performance have improved, which belongs to Davis double click; However, there are still more stock price rises that fall into the second category, only raising the valuation expectation. Performance, assets, ROE and other conditions have not kept up with the pace of this year's stock price increase, indicating that there has been a bubble.
As shown in the above figure, we compare the overall P/E ratio of April 20 19 with June 2020 (the economic start this year is much lower than that of 20 19), and we can see that there has been a bubble. Industries with obvious bubble valuation will soon usher in the trend of valuation repair.
Pulse 3: the "black swan" incident at home and abroad may repeat the market of 20 19.
Looking back at the 20 19 market, we know that one of the main reasons for the sharp decline in the late 20 19 market is the escalation of the Sino-US trade war. Then by 2020, there will not only be a trade war between China and the United States, but also game upgrades in many fields. Institutional investors at home and abroad believe that Sino-US relations are bound to deteriorate: both sides are confronting each other in politics and culture (including studying abroad). In the past, our trading partners were the United States, the second European Union and the third ASEAN. Now, after the COVID-19 epidemic, the first is ASEAN, the second is the European Union, and the third is the United States. In other words, the developed countries are constantly decoupling from China, and it is impossible to judge what kind of friction will happen at present.
In addition, the risk of the US election is gradually emerging, and no matter who is elected, the corporate tax rate may be raised. This will have a serious negative impact on the earnings of US stocks from the end of the third quarter of 2020 to 202 1.
Biden made it clear in his campaign proposal that he would raise taxes with a total target of $3.2 trillion, and planned to raise corporate income tax from 2 1% to 28% and personal income tax from 37% to 39.6%. Biden's policy has bridged the contradiction between the rich and the poor in the United States to some extent and strengthened government functions. Trump's election will help stabilize the US stock market and economic expectations (Trump implements low-tax fiscal policy and expansionary monetary policy to stimulate the economy). Biden's election is likely to lead to another huge fluctuation in the US stock market. His ruling platform is generally to implement appropriate government intervention, increase taxes on large enterprises and the rich, and raise the minimum wage.
Finally, three months after the outbreak, the Fed expanded its balance sheet from $4.4 trillion to more than $7 trillion, which was an unprecedented rapid expansion. It is uncertain whether the rapid expansion can be maintained afterwards, which brings uncertainty to the fourth quarter. The possible sharp decline of the US dollar index has become the mainstream strategy of global investors, which also brings downward pressure on the US capital market.
To sum up, it is of little significance to discuss bull and bear markets. It is more important to analyze objectively and see the underlying core logic of its ups and downs, because it determines the pace of investment and risk control. Objectively speaking, A shares have been a structural bull market with the new economy as the main line since 20 19. If we look at it three or five years later, the low of 20 19 may be the lowest point of the next big bull market. Therefore, for investors, it is more important and meaningful to explore, study and investigate the direction and rhythm of the new economy and the structure of safe-haven income. In the eyes of investors who can grasp the leading industry growth and value stocks, the bull market will always exist. Tips: Be rational and keep a sense of risk control. When others are greedy, they are afraid.