French Strategist: The Chinese Stock Market Is "Too Big To Be Ignored."

Vivek Misra, a securities strategist, said that the Shanghai Composite Index will rise by 40% before the end of 2016.

He predicted that the people's Bank of China will reduce the reserve requirement ratio from 18.5% to 10.5%.

On August 5th, Vivek Misra, an Asia Securities strategist at Societe Generale, believes that those who are empty bearer.

People are totally wrong.

Vivek Misra pointed out that pessimists always focus on soaring price earnings ratios, but the most significant thing in China's stock market is improving profits and long-term prospects of dividends.

He pointed out that the bears had doubts about the slowdown in economic growth, but even if the economy slowed down to 6% in the 15 year low.

It will continue to grow.

He stressed that mainland stock will be included in the MSCI index, even if some people are worried about the increase in government intervention.

Vivek Misra accurately predicted the surge of China's stock market in the second half of 2014, and was one of the international strategists who insisted on bullish the Chinese stock market. Even after the evaporation of the market volatility of US $4 trillion in the past period of time, it has not changed its position.

Vivek Misra said that the Shanghai Composite Index will rise by 40% before the end of 2016.

This coincides with Goldman Sachs Group and JP Morgan analysts. They also believe that the world's second largest stock market will recover.

Vivek Misra said in a telephone interview, "China's stock has the potential to undergo re evaluation."

He believes that investors who use price earnings ratios to judge Chinese stocks do not give enough weight to future profit growth and shareholder returns.

Although the P / E ratio of the mainland stock exchange has been 65 times higher than that of any of the world's ten largest stock markets, Societe Generale still believes that the profits of the listed companies on the Shanghai stock exchange will grow at least 10% annually before 2017. These enterprises will distribute about 29% of their profits in dividends. According to the statistics of the risk premium of the bank's Asian regional stock market, this makes the mainland listed company's stock cheaper than its competitors.

Vivek Misra believed that

The slowdown will push the authorities to increase monetary stimulus, which is positive for the stock market.

He predicted that the people's Bank of China will reduce the reserve requirement ratio from 18.5% to 10.5%.

Although China's economy grew by 7% in the second quarter in line with the government's annual target, there were signs of a deeper slowdown in July. The private sector's purchasing managers' index fell to a two-year low.

Vivek Misra said, "you can see that in the coming years, the powerful tool of deposit and loan deposit rate will be gradually reduced, which will lead to the upward trend of the whole market."

So far, for international investors, bearish seems to be more and more persuasive. They have sold nearly $8 billion worth of A shares through Shanghai and Hong Kong through the past four weeks.

They also increased the number of short listed bets listed in the US, which tracks the performance of A exchange trading funds.

For China, the number of new stock investors based on weekly statistics is the lowest level since the official announcement in May.

The scale of financing funds in the stock market has dropped to its lowest level in five months.

Wei Wei, an analyst at Huaxi Securities in Shanghai, said: "investors are still in the throes of the stock market crash.

At this stage, they are not yet willing to enter the market on a large scale. "

Although the bearer pointed out that China's attempt to raise share prices has hurt the promise of improving market power in the economy, Vivek Misra believes that some of the rescue measures are necessary to restore market stability, especially the injection of state funds.

China also prohibits major shareholders from holding stocks, limiting short selling and futures trading, and allowing hundreds of companies to suspend trading of shares to avoid falling share prices.

Vivek Misra wrote in the report that these interventions are unlikely to cause China's $6 trillion and 400 billion market to be rejected by MSCI's global indicators within two years. Becoming an integral part of these indicators will help attract 57 billion dollar inflows from passive allocation funds.

Vivek Misra stressed that China's stock market is too big to be ignored.