Debt Relief Promotes Stock Market Value Center

The economic data in the first two months were released this week. As we expected, the economy is very sluggish, and the rate of decline is faster than what the market had expected. In February, the industrial growth rate was 6.8%, a six year low, lower than the market expectation of 0.8 percentage points, and the total retail sales of consumer goods grew by 10.7%, a 11 year low, lower than the market expectation 0.8 percentage points, and fixed assets investment 13.9%, a new low of 14 years, a decrease of 1.8 percentage points from last year, which is lower than the market expectation of 0.4 percentage points, and only RMB yuan has a loan of 10200 billion yuan, which is higher than the market expectation of 10200 yuan. Generally speaking, the economy is obviously in the stage of rapid decline, and the business situation and profit trend can be imagined. The reason why the loan is higher than expected is not the demand of the real economy, but the worsening of the debt situation. The maturity loan can not be repaid, and the debt caused by the profit is expanding rapidly.

stay Economics The government has finally launched a debt replacement program in the face of rapid decline and debt pressure. This week, the Ministry of Finance announced the launch of an emergency 1 trillion local debt replacement local financing platform debt plan, which opened a prelude to large-scale debt relief. As we all know, in 2009~2010, the Chinese government started the 4 trillion financial rescue plan in response to the global financial crisis, and the financial sector started the credit investment big leap forward. In that round of action, the amount of government loans approved by local financing platform loans is about 18 trillion, while the real balance may reach 35 trillion, of which about 10 trillion become suspected non-performing loans, which has become the biggest hidden danger of China's financial system. In recent years, the stock market downturn and the soaring interest rate are mainly caused by the vicious loans of these 10 trillion bad loans. The disposal of these 10 trillion assets has always been the whole society. Investment The focus of attention of the community is that if it is mishandled, it will easily lead to financial crisis. Last year, the government issued Article 62, which restricted the further expansion of platform financing by local governments. The debt crisis was on the verge of detonation. By the 2 quarter of this year, the debt maturity has reached 1 trillion and 800 billion. If allowed to default, the bad assets of banks will increase sharply. Fortunately, the central government realized the seriousness of the problem and launched the rescue plan in time. I think this 1 trillion rescue plan is just the beginning, and there will be 3 trillion, 5 trillion and 10 trillion relief plans in the future. The local debt crisis is an important factor that we have been worried about the fall in the two quarter. The central rescue plan is undoubtedly using the credibility of the central government to endorse the local debt, extending the debt repayment period and greatly reducing the cost of financing.

The endorsement of the central government's reputation for local debts is essentially a way to increase the value of the currency by paying the whole nation's property for past policy mistakes. In this sense, this will lead to currency devaluation and stimulate asset prices, which will also lead to a rise in the value of the stock market. How much does this move lead to a rise in the market value center? Debt replacement The scale of the plan. If it is 1 trillion, it will increase by 2%, if it is 5 trillion, it will increase 10%~15%, so the rise of A share market this week is the correct interpretation of the debt relief plan.

Against this background, the upmarket space of the current market may increase to 3500~3600 point, and the market's rush to catch up may also be delayed for about 1 months. Perhaps a substantial adjustment will emerge at the end of April.