Ren Zeping: The bull market launched in early 2019 is “Reform Bull 2.”
Ren Zeping: The bull market launched in early 2019 is “Reform Bull 2.”
0 ”Source: Zeping Macro In the long dark night of a five-year bear market, the market was in a tragic mood. In 2014, the author put forward“ 5000 points is not a dream ”and“ the last battle against the bear market.
In 2015, when the market was about to reach 5,000 points, it was in a state of extreme fanaticism. When the “selling house and stock market” became popular, the author proposed “I rationalized the market and became crazy”, “the altitude has been high and the wind has been walking slowly”, and predicted that “house prices doubled.”
At the end of 2018, when the “departure theory” and “washing and sleeping” ideas became popular and the market was extremely pessimistic, the author proposed that “A lot of A shares are now very cheap” and “the best investment opportunities are in China”.No, it’s Thai. ”
Is the future 杭州桑拿网 predictable?
This mysterious question has long been controversial, sometimes as if we were presupposing astrology.
But when we start to explore the world of the economic cycle and the nature of human nature, it can help us understand and even master the law of development of things, make decisions more correct, and be different.
Focusing on the analysis of macroeconomic indicators for 20 years, I deeply understand the nature of basic research and logical framework, and believe that independence and objectivity are the foundation of research.
He has participated in major debates in the macro field for many times. At first he was a minority, but it was widely accepted and verified by economic operations.
In 2010, he participated in the research and proposed the “speed-up shift”, 2015 forecast “economic L-type”, and 2017 forecast “new cycle”.
What is the main logic of the bull market that started in early 2019?
Where does the future go?
This is the most concerned issue in the current market.
In 2014, the author first proposed the “reform cow” and created the “buffalo” and “transition cow” analysis framework and logical system, which are widely spread in the market.
We believe that this is an upgraded version of the “Reform Bull”, namely “Reform Bull 2”.
First, this is an upgraded version of the “Reform Bull”: “Reform Bull 2.”
0 “According to international experience, the successful catch-up economies have shifted around the per capita GDP of 11,000 international dollars, with the average economic growth rate from 8.
3% dropped to 4.
5%, a decrease of about 50%.
With the demise of demographic dividends, rising labor costs, and technological progress from imitation to innovation, China’s economy has been facing growth shifts and structural changes in recent years.
At present, the main challenges facing the Chinese economy are structural and institutional issues, rather than externalities and problems. Therefore, reform and opening up is the only way out. Water stimulus will bring a brewing crisis. Germany, Japan, South Korea, Taiwan, China and other successful transformationsSimilar things have happened in all economies.
The author once proposed that “new 5% is better than old 8%”: the new 5% new growth platform built through reform in the future is better than the old 8% old growth platform that was barely maintained by stimulus in the past.The industrial structure has been upgraded, the growth momentum has been changed, the risk-free interest rate has fallen, corporate profits have improved, and the stock market has gone bullish.
According to the DDM model, reforms will reduce risk-free interest rates, increase risk appetite, and improve China’s long-term economic growth prospects.
In 2014, China started a magnificent round of “reform bulls”.
“0” is mainly driven by the reform’s expectations. Expectations are ahead, but the reforms have fallen short of expectations for various reasons.
Due to the impediment of reforms, the policy subsequently turned to water stimulus and resumed the old path.
“0” turned into a “buffalo”, which skyrocketed and eventually ended in the form of a stock market disaster.
”Reform Bull 2″ launched in early 2019.
0 “is” Reform Bull 1. ”
The upgraded version of “0” is mainly driven by the actual implementation of the reform and the release of dividends.
In December 2015, the Central Economic Work Conference proposed five major tasks of supply-side structural reforms: “de-capacity, de-stocking, deleveraging, cost reduction, and shortcomings”.””, Began to return to the right path, excess production capacity is cleared, real estate inventory is digested, and financial high leverage risks are resolved.
Although it experienced pain in 2016-2018, the old growth model was effectively cleared, and financial risks were controlled in a timely manner, which created the conditions for starting the “new cycle” of the Chinese economy.
In the first half of 2018, the Sino-US trade war broke out and became the best sober agent. The external situation forced the internal and internal development needs, and China’s new round of opening-up process accelerated.
In the Boao speech in April 2018, it announced significant reductions in tariffs, accelerated liberalization of investment restrictions in financial and auto industries, and strengthening of intellectual property protection.
In March 2019, Premier Boao gave a speech, announcing to speed up the revision of the Foreign Investment Law, and expanding the opening of value-added telecommunications, medical institutions, education services, transportation, infrastructure, energy resources and other fields.Positive progress has been made in the China-US trade negotiations, and a new round of vigorous opening-up has been implemented.
In March 2019, the “Government Work Report” announced a large-scale tax reduction plan. The private economy was highly valued, the multi-level capital market was raised to a new height, and the science and technology board and registration system were launched at a rapid pace.
Judging from the actual reform process, investor response and market trends, “Reform Bull 2.”
The theory of “0” is valid.
Why is this not a “buffalo” round?
Generally speaking, the monetary policy is structurally loose rather than flooded, the growth rate of M2 and social financing has rebounded moderately, shadow banking has been regulated, the real estate market has been operating steadily, and the stock market has been booming.
Why is this not a “performance cow”?
Because reform and transformation are halfway through, it will take time for corporate profits to improve.
There are also opinions in the market that put forward the “powerful bull” and “rejuvenation bull”. There is some truth, but the essence of the object has not been grasped, and the rejuvenation of a strong power depends on reform and opening up.
The author expressly opposes the “national bull” view, and opposes any policy or government endorsement of the bull market. It is necessary to respect the laws of the market. From domestic and foreign experience, violations of economic laws and regulations will be punished.
Second, the basic theory and experience of the “reform bull” growth shift and structural transformation period, “new 5% is better than the old 8%”, “reform is better than stimulus”, reform created a bull market, stimulated the brewing crisis.
1. From the experience of Germany, Japan, South Korea and Taiwan, during the period of speed-up and gear-up, reform and opening up are the catalysts for the bull market. This will inevitably accelerate the reform and opening up in real terms and clear the progress of deleveraging.
In the first half of the speed-up and gear-shift period, facing the huge challenges of structural change and deteriorating new ones, most economies initially refused to slow down and change. Inertia believes that economic growth is mainly a gradual or external issue, and attempts to stimulate the traditional heavy chemical industry through currency.Local infrastructure and real estate have returned to a high growth trajectory, maintaining the old growth model, which has led to increased leverage in finance, a sharp rise in debt risk, and the creation of a large number of ineffective capital requirements, forming zombies, black capital holes and huge debt vacancies, and brewing financial risks.
The risk-free interest rate is too high, the risk appetite is too low (investors are pessimistic about the prospect of economic transformation), the market is closed for a long bear market, or the short-term currency stimulus has plummeted.
In the second half of the speed-up and shift-down period, all sectors of society, especially the government, form a consensus on reform, speeding up the reform, Lewis turning point, real estate bubble, and the strengthening of the US dollar.
There are two ways to deleverage, one is to actively reform the old and establish the new (Taiwan, China), and the other is to force the crisis to clear the country (Japan and South Korea).
Once the process of reform and opening up and liquidation deleveraging is started, the demand for invalid financing shrinks, the risk-free interest rate decreases, the risk increases, and market confidence recovers, thus becoming a catalyst for a bull market.
2. German, Japanese, South Korean and Taiwanese macro-scale growth and shifting period and the bull and bear catalysts 1) Capital market performance during the Korean shifting period: the crisis was forced, the economy and the stock market took a deep dive.
South Korea refused to slow down in the first half of the 1992-1996 gear shift period, hoping to overcome the stimulus to maintain the old growth model, delay the clearance, increase the cycle of leverage and resistance, and raise the risk-free interest rate.
South Korea entered the second half of the speed-up shift period from 1997 to 2003. The 1997 financial crisis forced South Korea to clear its deleverage, and its risk-free rate of return declined.
The South Korean government was determined to push forward reforms, followed by industrial upgrading and rising corporate profits. Although Korea’s economic growth rate has not returned to the era of high growth since 2000, the stock market has gone badly.
2) The performance of the capital market during the period of Japan’s speed-up and gear-up: the crisis was forced, the economy and the stock market took a deep dive.
Japan refused to slow down in the first half of the 1969-1973 gear shift period. The island reforms and currency layout stimulated the economy, and a short-term bubble appeared in the housing market.
Around 1973, the oil crisis and the over-inflation of the currency earlier caused high inflation, monetary policy shifted to austerity, and excessive risk-free interest rates led to a bear market for the stock market.
Japan entered the second half of the speed-up shift period from 1973 to 1980. After reform and structural adjustment, Japan’s industry was upgraded after 1975. The speed-up shift has made positive progress, the risk-free returns have been lowered, and the stock market has experienced a big bull market.
3) The performance of the capital market during the gear shift period in Taiwan, China: The economy has transitioned smoothly, with stocks and bonds taking off directly.
The speed-up shifting of Taiwan, China occurred in the second half of the 1980s. However, as Jiang Jingguo advanced the reform ahead of the speed-up shifting in the early 1980s, the industry successfully upgraded to the electronic information industry.
Therefore, although the GDP growth rate has come down, but the risk-free coefficient has dropped sharply, coupled with the inflow of hot money from the trade surplus, the stock market has come out of a big bull market.
4) The performance of the capital market during the German gearshift period: controlled exchange rates, tight currency, 7% yield on government bonds, and double-hits on stock bonds.
In 1965-1975, Germany expanded its hot money scale and was forced to adopt a tight monetary policy during the gear shift period. The risk-free interest rate was as high as about 8%. The stock market was a bear market and did push-ups.
It wasn’t until the 1990s that German risk-free interest rates rose and there was a big bull market in German stocks.
3. Growth and shifting period, the reform creates a bull market, stimulating the brewing crisis. Gearing up, the economic slowdown is mainly due to structural and institutional reasons. Therefore, only reform can get out of the predicament, open a new future, and create a bull market.
Therefore, the key is to see the government’s determination to reform and open up and the beginning of clear deleveraging progress.
Stimulation is steady growth, the disadvantage is to maintain the old growth model, delay the clearing, increase leverage, and reform is steady growth. The advantage is to release new vitality, accelerate the clearing of leverage, and break the old.
International experience shows that the new 5% is better than the old 8%: during the gear shift period, the 5% new growth platform constructed through reform is better than the barely maintained 8% old platform. The excess capacity has been cleared and the micro-lives have been released.The industrial structure has been upgraded, the growth momentum has been changed, the risk-free interest rate has fallen, corporate profits have improved, and the stock market has gone bullish.
Third, start the new cycle of China’s economy and the “Reform 2”.
0 “After years of trial and error and macro debates, China’s macro-scale and reform and opening up are on the right path recently, corporate confidence has been restored, the economy is stabilizing, and investors are voting with their feet.
In the future, macro-budgeting policies should not only prevent untimely and insufficient hedging, but also prevent flooding and resuming the old path.
Talking about the wrong country and doing prosperity.
Only with a pragmatic and market-oriented push for a new round of reform and opening up will it be possible to start a new cycle of China’s economy, a “reform bull”.0 “can go higher and farther, don’t repeat the same mistakes.
It is recommended to use six major areas of reform and opening up as breakthroughs and mobilize the polarities at all levels: 1. Establish a breakthrough development assessment system, encourage local pilots, and mobilize the enthusiasm of local governments; 2. Fully liberalize automobiles, finance, petroleum, electricity, electricity, etc.Industry regulation, neutral competition, and mobilization of entrepreneurial enthusiasm.
The biggest reform is openness. Through openness, fair competition among market entities such as state-owned enterprises, private enterprises, and foreign enterprises, survival of the fittest, and improvement of efficiency will be achieved.
China has never been afraid of opening up. It is afraid that it will not open up. 3. Taking China-US trade negotiations as an opportunity to reduce tariffs, liberalize industry investment restrictions, strengthen intellectual property protection, actively promote the establishment of a China-US free trade zone, and mobilize rich enthusiasm; 4Large-scale tax and fee reductions, from fragmentation, preferential tax reduction to a package, inclusive tax reduction, comprehensive reduction of corporate income, manufacturing transformation, personal income tax rate, and improved corporate and residents’ sense of gain.
At the same time, through simplified administration and decentralization and institutional reforms, reduce redundant personnel and expenditures, and mobilize the enthusiasm of enterprises and residents; 5. Vigorously develop multi-level capital markets, reduce administrative intervention while strengthening legal supervision, encourage mergers and acquisitions and reorganization, and promote information disclosureThe registration system with the core of severe punishment and punishment, delisting system, etc., mobilize the enthusiasm of the new economy and PEVC venture capital; 6, the establishment of a housing-oriented housing system and long-term mechanism, the key is human-land linkage and financial stability.
Change the urbanization ideas of “control the population of large cities, actively develop small and medium-sized cities and small towns, and achieve balanced regional development” as soon as possible. The urban planning regional planning strategies for metropolitan agglomerations led by large cities will promote population and land.Free and full flow of technology and other factors, mobilizing enthusiasm in various regions.