The Bull Market Is Based On Risk-Free Interest Rates.

The top of a bull market should not be judged by pure valuation or economic principles, but rather by behavioral finance. Perhaps the madness of Taiwan's stock market will not happen again in the Chinese stock market, but at the moment, most people predict that the bull market duration and the forecast for the top are likely to be lower than the actual value in the future.

There is a widely accepted view in the market that the current bull market can be formed in the context of economic downturn because of the expected downside or downside of the market risk-free interest rate. Indeed, both the economic downturn and the economic restructuring will bring the market interest rate down.

From the "shortage of money" in June 2013, the market interest rate has indeed dropped somewhat, which is also the result of increasing monetary policy easing. But the problem is that even after two times of interest rate cuts and a drop in accuracy since 2014, the phenomenon of difficulty in financing and financing has not been alleviated.

The current market risk free interest rate level remains high. Some say that the high interest rate is related to the prosperity of the stock market and the high return on the purchase of new shares. If such an explanation is established, it is contradictory to the fact that the interest rate downturns are leading to the bull market.

Whether it is a bull market or a new interest rate that arises from risk-free interest rates, the rise in market interest rates is a shallow explanation of the economic phenomenon. The fundamental reason for the rise of the stock market is the rise in the demand for asset allocation by Chinese households. That is, when the real asset allocation of real estate is almost the upper limit, the allocation of financial assets is strengthened, especially the allocation of equity assets. The market interest rate has not been significantly down in the process of economic growth, because the supply and demand relationship of social capital has not been reversed.

Why is social capital still not loose enough? Economics Not as "deleveraging" expected by some economists, and overall by the business sector. Leverage ratio The level is still rising. Although the social leverage ratio is too high and the problem of bubbles has become the consensus of last year's central economic work conference, steady growth is obviously more important than deleveraging, so the government, enterprises and residents departments actually continue to increase leverage in the past two years. It is estimated that the liabilities of these three sectors in 2014 will rise to 5%-10% between GDP.

Therefore, we see the infrastructure promoted by the government. Investment The growth rate is more than 20%, to make up for the slowdown in the growth rate of manufacturing and real estate investment. At the same time, the down payment ratio of residents is down, and the scale of stock financing is increasing. And the increase of leverage in the enterprise sector is more passive, that is, the growth rate of liabilities exceeds profit growth.

Reform and structural adjustment are long-term goals. Therefore, short-term choice and leverage are also helpless.