Where Does The Money Come From? Financial Management Has Become The Biggest Investor.

At the very beginning, a famous big man said, "no matter interest rate has dropped or fallen, as long as the interest rate has been lowered in everyone's mind, everyone has heard it very well."

But then there was a big guy who was not convinced that the decline in interest rates was everyone's own YY. The real interest rate did not drop very much, including a lot of interest rates since last year and the rate cut.

So I wonder if the interest rate has dropped and the real interest rate has not yet dropped. Then, is the interest rate dropped or not? If interest rates have not yet fallen, is it not the same as fighting against the war? It is found that the backup troops are missing. Later, we started to find new logic, which is more popular, including the market value management of the country, which means that the new government should enlarge the capital market and develop the stock market as the best way to leverage.

There are also more popular aunt theories. Chinese mothers are too powerful, and bees swarm into the market to buy the stock market, so the wind is too big to blow up the pigs and elephants, so we need to study the wind.

The problem is that ordinary people are far away from the government. What leaders think we can not know for the first time, and the behavior of their mothers fluctuates greatly, and the wind is hard to predict.

So who bought the capital market? If we put aside the behavior of our mother and study only the financial institutions, we can see that this round of market has nothing to do with the traditional financial institutions.

Traditionally, there are three main types of financial institutions in the capital market: funds, brokerages and insurance, but we can see that these three groups have limited participation in the capital market.

First look at the fund, the current performance of the public fund is very good, and it is good for two consecutive years, because the 13 year gem has doubled, the motherboard has increased by 50% in 14 years, and the average increase of the 14 year bond fund has also exceeded 20%, but the scale of the stock base and debt base has not changed much in two consecutive years.

In the past several rounds of bull market, securities dealers have entered the market by means of entrustment and self financing. However, after all the bitter lessons of bear market, the current self financing business of brokerages is mainly based on bonds, while the main support for the vigorous development of asset management of securities companies is channel business, and the scale of real active management assets is very limited.

The insurance companies actually increased the allocation of non-standard assets, and the allocation of bonds and stocks did not significantly improve, except for a few individual insurance companies such as Ampang.

Therefore, in our view, the 14 year financial institution that really changes the capital market is bank financing.

As you recall, the rise of Internet financial management was in 13 years. At that time, the rise of all kinds of financial treasure posed a huge challenge to bank deposits, and overnight became the first largest fund overnight.

However, since the second half of 14 years, the size of the balance treasure has stopped growing, which stems from the bank's counterattack.

When you use the baby products base, you will find that there are various inconveniences. There is a limit from the bank pfer, there is a limit for redemption, and there are waiting periods for purchase and redemption.

All these details may not matter at ordinary times, but they are particularly influential when they are on holiday.

I first started buying money funds, and then I met with 10.1 holidays. We know that many companies usually send money before the last day of the holiday, and when the money arrives, they can hardly buy anything. I also subscribed to the money fund one day earlier, and I was told by telephone by the bank that the subscription failed because the monetary fund needed to subscribe two days in advance to earn interest.

Later, the bank staff told me not to worry about buying their wealth management products. I didn't believe at the beginning how they could buy financial products at any time. Later, they really bought them. They were called "one day" financial products. They could start at any time and redeem at any time, and there were no restrictions. They only asked for work during the working day, but this restriction could be ignored. This is not a demand deposit. The rate of return provided by it is almost the same as that of the IMF.

In the era of mobile Internet app popularization, basically, mobile phones can turn demand deposits into demand based financial products.

If you buy 1 months or 3 months of financial products, you can also see that the yield can almost be cashed, and much higher than the deposit interest rate of the same period. Under such a good user experience, what are the reasons for the deposit?

So we can see that in the 14 quarter of the 3 quarter, the banking system appeared the first net deposit reduction in history, while the deposits in the second half of 14 years had almost no increase. In the 14 year, the new 9 trillion deposits almost all in the first half of the year, and this figure is reduced by 3 trillion over last year.

A sharp contrast is that 14 years of bank financing has seen explosive growth, almost every quarter of the new volume is about 2 trillion of the scale, the beginning of 14 years, the bank financial balance at 10 trillion, the end of the year is almost 17 to 18 trillion.

We can regard bank financing as a new deposit, and its replacement of traditional deposits follows the life cycle theory of products.

We know that after the emergence of a new product, there are four development periods, namely, popularity, growth, maturity and recession.

At the end of 13, the total deposit size was 100 trillion, and the scale of financial management was 10 trillion. The ratio reached 10%, which means that the replacement of deposits by banks has been from the popularization period to the growth stage. Therefore, the explosive growth of 14 years is by no means accidental. As long as the return rate of bank financing is still far higher than the deposit interest rate of the same period, the scale of bank financing will continue to grow rapidly in the future, and financial management is destroying deposits.

The emergence of bank financing has historically changed the direction of household savings.

In the past, in the mode of saving money, residents' savings mainly invested in deposits, while banks invested about 90% of their deposits in loans, and about 10% bought bonds. Therefore, the impact of residents' savings on capital markets was very indirect in the past. They need to be pmitted through loans and economic channels, that is, large amounts of loans issued by banks, stimulating the recovery of economic and corporate profits, and then affecting the performance of interest rates and capital markets.

However, after the emergence of bank financing, the most important part of restricting the investment scope of banking investment is the most famous article No. 8, which stipulates that the proportion of financial investment in non-standard assets should not exceed 35%, and the so-called non-standard loans are all kinds of packaged loans. This also means that the allocation ratio of bank assets to loans is far below the 90% of deposit mode. In turn, banks must manage more than 65% of their assets in standardized assets, and whether they are bonds or stocks belong to standardized assets, while bank financing is usually used in the form of capital preservation strategy, that is, the allocation ratio of equity assets is controlled within 5%-10%, while 60% is allocated to bond assets.

This shows that bank financing has historically opened up household savings and capital markets, and its allocation ratio for bonds can reach as high as 50-60%, much higher than that of deposits under the mode of 10%.

And its allocation to the stock market is completely unblocked. It can be realized through entrusted management, leveraged allocation or fof. In the past, credit funds were prohibited from entering the market in the mode of deposit as king.

Therefore, as long as we simply estimate, we find that the emergence of stock debt double cow originates from the imbalance between supply and demand.

According to the current new scale of bank financing 10 trillion per year, and its proportion to the 60% of the bond assets and the 5-10% of equity assets, it means that 6 trillion of the bonds and 5000-10000 billion shares need to be allocated each year. However, the net issuance volume of all bonds in the 14 year is only 5 trillion, and the total size of the stock IPO plus refinancing is less than 500 billion, which means that the serious imbalance between supply and demand will inevitably lead to the emergence of the bull market.

Why did the stock index increase by 14 in the past 50% years, and the average yield of the bond fund was as high as 20%? We can give an explanation from the angle of bank financing.

At the beginning of 14, there were three choices for bank financing: buying non-standard, buying bonds or buying stocks.

But in the 14 year, after the regulation was strengthened, it was not possible to buy non-standard items, so bank financing first purchased bonds, and in the beginning of 14, the bull market began to appear. By the year October 14, there was a miracle that almost no more than 6% yield bonds were found in the market, including junk bonds.

It is also from October that we began to know that bank financing started to buy preferred shares, including Sinopec's mixed ownership, and the way of entrusting and distributing capital into the common stock market. At that time, many blue chips received more than 6% dividends.

After this wave of sweeping, almost all of the assets that yield more than 6% dividends, whether bonds or stocks, have been eliminated.

So we can understand this round of the market from the perspective of asset side: in early 14, the average return on assets was around 9%, and it dropped to 6% at the end of 14, with an average decline of 3%.

For bond assets, the average maturity of bonds issued in China is about 5 years, and that is 15% capital gains. After the coupon, the annual yield is about 20%.

For the stock market, this round of market and enterprise profits have nothing to do with it. In December, industrial enterprises' profits plunged 8% to a record low, so this round of market valuation is entirely a matter of value fixing, because the dividend yield has dropped from 9% to 6%, and the stock can be regarded as an unrestricted bond, so 9% divided by 6% is 50% of the valuation increase.

And according to the logic of bank financial expansion, we can find that the stock market will not end.

A lot of people said that during the 15 years of discussion, there will be big asset rotation, which will switch from bond bull market to stock bull market. In my view, there is no major asset rotation in this round, because the major asset rotation is due to economic recovery and rising interest rates, so debt securities go to bear and share cattle. The core of the current market is that the expansion of bank finance is destroying all high-yielding assets, and the logic of rising debt is the same.

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It is still willing to buy assets that currently yield around 6%, because after deducting costs, it can also provide customers with a 5% yield and attract deposits customers.

This means that the scale of bank financing will continue to expand, and it will continue to wipe out assets that currently yield around 6%.

Therefore, we believe that the era of high interest rates in China has ended. The annual interest rate strategy report is named "when high interest rates are in the past".

However, compared with the 14 years, the expected rate of return of the capital market in the 15 years will fall sharply, because the yield of the underlying assets has dropped sharply.

14 years

Behind the Daniu city is the underlying assets return rate from 9% to 6%. In the 15 years, we can expect the return on basic assets from 6% to 5%, because banks also need 5% to provide customers with more than 4% yield. This means that for bond assets, the downside range of interest rates for 15 years is 100bp at most, plus the duration of 5 years plus coupons.

As for equity assets, because no profits have risen, the dividend yield has dropped from 6% to 5%, which means that the most room for raising the valuation is 20%, which is totally unmatched by 50% in 14 years.

Therefore, we believe that the stock market will continue, but it will change from 14 years to a stock debt.

Many people have doubts about the development of bank financing, but it seems to us that this is the inevitable result of the marketization of interest rate in China.

In foreign countries, the marketization of interest rates is usually the marketization of stock interest rates and the direct release of deposits.