Financing Paction Itself Is Financial Innovation, Which Does Not Necessarily Bring Risks.

Over the past year, more and more ups and downs in the market, the index rose 150% in 10 months, 2 months plunged 45%, trading volume increased from 200 billion to 2 trillion, thousands of shares rose, thousands of shares fell, thousands of shares stopped, thousands of shares fell to the stop, thousands of shares fell to the rise and stop of the wonder, the state used millions of funds to save the market, all of which will be loaded into the history of securities.

The IPO restart marks the return of the market to normal. In the past, we still need to think deeply about why the market is going up and down, and what efforts we need to make the capital market mature and perfect.

Improve trading system to avoid market liquidity crisis.

After the 615 plunge, the market was once on the verge of a liquidity crisis in early July.

This liquidity crisis seems to be due to deleveraging, but if there is a more sophisticated trading and financing system, it may greatly reduce the probability of liquidity crisis.

China's market is limited by the rise and fall. Once the stock is down, it means that the function of the stock market has been suspended, and it can not provide investors with liquidity support.

On the contrary, in most developed countries, there is no limit of rise and fall, although there may be a single day huge fluctuation, but the probability of liquidity risk is much smaller.

From the international experience, T+0 can be more active in the market, improve liquidity, significantly improve the pricing efficiency of the market, and T+0 can make buyers stop in the process of falling down, and reduce the allocation of funds because of the failure to stop in time to cause mandatory liquidation.

Retail investors account for a high proportion, causing A shares to fluctuate.

In July 14, A shares went all the way, but after June 15th, they saw a catastrophic collapse.

In the 3 months, the Shanghai Composite Index and the growth enterprise market index reached the maximum decline of 45% and 57% respectively, while the 1755 companies fell more than 50%, accounting for 63%.

At present, the total market value of A shares is 54 trillion, the market value of circulation is 40 trillion, the market value of free circulation is 20 trillion, and the proportion of individuals holding free market value is 45%.

From the perspective of turnover volume, the distribution of A shares has been stable in the past 07 years. The proportion of individual investors is about 85%, institutional investors are 12%, and corporate legal persons are 3%.

Retail investors account for a high proportion, making the market turnover rate high.

In terms of market capitalization, the total turnover of A shares reached 600%, and the gem reached 1000%.

The US Nasdaq market is the most active stock market in the global mature market, and the annual turnover rate is only 250%.

The Taiwan stock market in 1980s and the US stock market before 1970 are similar to the current A shares.

During the 1985-1990 bull market in Taiwan, the trading volume of 90% of the stock market was completed by retail investors. The average annual turnover rate of the stock market was close to 6 times, while the stock exchange rate of the New York stock exchange was only 50% during the same period, which was an important background for the sharp rise and fall of the Taiwan stock market.

The proportion of institutional investors held by the United States before 1970 was only 20%. When the stock market crash of leveraged cattle broke out in the US in 1929, the market was dominated by retail investors.

This round of tragic decline has exceeded the stock market crash in history. After 96 years' twelve gold medals, the Shanghai Composite Index fell 32% in the two week, 530 in the 07 year and 22% in the largest. In 1987, the US stock market crash and the S & P 500 two months fell by 33.5%.

The fall is relatively close to the Taiwan stock market in September 1988. The Taiwan weighted index of the capital gains tax scheme slumped 44.6% in 2 months.

At that time, the Taiwan stock market was exactly the same as the A shares, and used leverage pactions on a large scale.

Before the market crash in June 15th, the A share market

In Volume 2 trillion and 260 billion, the amount of off site financing is about 1 trillion and 800 billion, the market value of circulation is 56 trillion and 200 billion, and the leverage ratio is as high as 7.2%.

Such a large scale of leverage, once the trend of deleveraging is bound to have a huge impact on the market.

After 1985, Taiwan's off-line financing leverage grew savagely. In 1988, the OTC financing scale amounted to NT $300 billion, accounting for 10% of the market value.

It is worth affirming that after the collapse of the market, the regulatory authorities are steadfast in deleveraging, so that the current A share leverage ratio has returned to a reasonable level.

In the past 20 years, the average leverage level of the US, Japan and Taiwan stock market is 1.5%, 0.57% and 2.3% respectively.

After the first round of the market crash in June, and the recent clearance of the umbrella trust by the SFC, the OTC capital allocation has been cleared up. The two balance has returned to 1 trillion. The structured products of banks are expected to be around 500 billion. Compared with the market capitalization of A shares, the leverage ratio of A shares has dropped to 3.7%. If the total market capitalization has dropped to 2.8%, it has gradually approached the central level of the US and Taiwan markets.

We should vigorously develop institutional investors and improve the structure of investors.

The sharp fluctuation of A share market and the prevalence of speculation are related to the retail structure of investors in China.

The development and growth of institutional investors need more policy support.

American institutional investors have entered a stage of rapid development after 1970, and the policy has played a very important role.

At the beginning of 1970s, the Federal Reserve Authority issued the federal Modernization Act (Q) to limit the deposit interest rates of commercial banks, which is conducive to the development of institutional investors such as funds and trusts.

In 1974, the United States Congress promulgated the ERISA, which is signed by Ford president, which has historically created the Individual Retirement Accounts (IRAs). The individual retirement account is a voluntary investment retirement account.

In 1978, the United States added 401st new K clauses in the domestic tax law, that is, the 401K plan of the United States, which stipulates a new type of old-age insurance system established by employees and employers. The private pension, represented by IRAs and 401K, has become the main source of funds for mutual funds and capital markets in the United States.

In 1970, the proportion of institutional investors in the United States accounted for only 21.1%, and the proportion rose to 61.6% in 2013.

Encourage the development of multi lever leverage and change the unilateral market situation.

Because China's capital market is still in the initial stage of development, and there is not enough short selling tools, China is still a unilateral market. The prevalence of leveraged pactions further aggravates this unilateral market, making it rise faster and worse.

In 2007, the total market capitalization of US stock was about US $19 trillion and 900 billion, while the total value of the unexpired contracts of its stock index options / futures amounted to US $8 trillion and 60 billion, accounting for 40.5% of the total market capitalization of the stock market, and played an obvious hedging role in the huge fluctuation of the stock market.

At present, the total contract value of A stock index futures contracts is less than 0.3% of the total market value.

In addition, the ratio of financing and margin trading in China is 560:1, and the ratio of financing and margin trading in Japan and Taiwan is 3:1 and 8:1 respectively.

To create a long-term healthy capital market development environment and reduce the probability of extreme risk, more financial products and institutional innovation are needed to establish bilateral checks and balances.

We should strengthen the supervision of leverage so as to realize the pparency of leverage.

After the collapse of A shares, supervision should strengthen supervision of bank capital and restrict OTC financing, so as to avoid the comeback of off site financing.

This is a lesson from the Taiwan stock market. In September 1988, Taiwan planned to levy capital gains tax, the market plummeted 44.6%, and the Taiwan weighted index fell from 8614 to 4873 in 4 months. After that, the policy saved the market but did not regulate the financing behavior. The market rose again after the crash. Taiwan's weighted index jumped to more than 12000 points in 1 years, which eventually led to a larger stock market crash and 8 months down 80%.