The Second Round Of China'S Stock Market Reversed.

The impetus to start the "cattle two" mainly comes from the rebound in the business cycle, thereby driving the prices of cyclical assets and plates. From the current conditions, cattle two does not exist Daniel market conditions, only the shock market. But speaking of a concussion market seems to be empty talk. Let's talk about this empty talk later.

Rivers and lakes are very small. History always carries similar rhymes. Arbitrage capital has been expanded by small and medium-sized businesses. After the stock market crash, a chicken feather has also disrupted the established deployment and shaken the interests of the entire financial group. In the case of the "ghost market", the Chai Xi system is a symbol. It is clear that more and more representative capital systems have been affected. After the current rally is over, A shares may start exploring the possibility of starting two from the end of the year.

According to our theory, A shares are still not divorced from its risk free preference in broad spectrum balance sheets. Its price is not determined by the pricing mechanism of commercial banks' assets, but more determined by the arbitrage mechanism of the liability side. Therefore, the classic capital asset pricing model, including the derived DDM and DCF models, is not applicable.

In our definition of the generalized bull market, since the Central Bank of China adjusted its balance sheet in 2012, the Chinese stock market has entered a long-term bull market, and the bull market first phase (from the end of 2012 to June 2015) has ended. The necessary condition for the opening of "cattle two" is that the risk free profit space embedded in the stock is reopened by the reform of state-owned assets securitization, and thus becomes the core collateral for credit expansion of commercial banks.

The authorities obviously expect a slow cow. However, if the authorities try to flatten their arbitrage space in order to avoid the moral dilemmas of cheap selling, they will inevitably be trapped in the prisoner's dilemma in general. The impact of the mobile environment on the stock market will continue to expand at the margin.

The national credit has been driven directly into an attempt to create a normal stock market with state-owned enterprises as the main body and cash reward type as the benefit to the people, but this is equivalent to sacrificing public finance to subsidize the private sector. For a year or so, it helps to absorb international long-term capital allocation.

But this design is hard to say that it is compatible with the goal of financial reform and the consumption of private sector savings. This contradiction will be exposed gradually with the advance of the reform experiment, and in the form of the double decline of the stock market and the stock market, the authorities will adopt a radical monetary policy in a long-term position.

We believe that China is still at the stage of the aftermath of the stock market crash, and the stock market is facing a systemic and ecological reconstruction. Include:

Governance of listed companies (dividend issue? Delisting system?)

Issuance System (audit system to registration system)

Trading rules (the solution of the asymmetrical structure of the spot T+1 and the derivative T+0)

Trading tools (quantification, derivatives and leverage)

Arbitrage mechanism (cross border arbitrage + cross market arbitrage + cross regulation arbitrage, how to rewrite?)

Participants: financial capital, international capital and national capital interest reconstruction?

Regulatory framework (one line, three separatist wars to integration)?

It can be seen that at present, there is still a difficult task of dredging, especially the intricate chain of insider trading.

Because of this, our previous definition of the rally is: Goodbye youth, the current stock market's Enrichment and farewell to the last bull market.

Older traders know very well after 2001. Chinese stock market What happened? After 1998, the authorities began to seek to tear up the nose of the package reform through the stock market, the local financial dilemma. From the failure of the reduction of state-owned shares, we promoted the capitalization of state-owned shares, that is, the split share structure reform, but it has gone through a seven year discount. Of course, because China's accession to the WTO has made great use of FDI, it has solved the capital accumulation gap, thus slowing the stock market reform. But in the early days, the rapid expansion of arbitrage capital has disrupted the established arrangements for reform. Since the collapse of the Department of science and technology in 2001, a series of stock market makers represented by the Department of science and technology and Delong were severely investigated and cleaned. As a result, China's stock market has entered the first round of reversion.

Since 2012, from the 183 resolution, the authorities once again began to seek to tear the new round of reform package through the stock market, which is also a local financial predicament, but this time is to promote the capitalization of state-owned assets, in essence, the overall reform of state-owned assets (market and market, table and off balance sheet, central and local). Similarly, in the early days, arbitrage capital was expanded by small and medium-sized businesses. After the stock market crash, a chicken feather also disrupted the established deployment and shook the interests of the entire financial group. Starting from the event of the rescue of the CITIC market, the Zai Xi system is a symbol. It can be clearly stated that more and more representative capital systems have been affected. They represent China after 2009. equity market The typical "three way superimposed arbitrage mechanism":

Cross border Arbitrage (for example, international or grey capital implicit in trading companies) + cross market arbitrage (the one or two tier market arbitrage centered on IPO rent seeking, and asymmetric arbitrage of spot and derivative markets) + cross regulatory arbitrage (regulatory arbitrage of leverage).

As a result, China's stock market has entered the second round of systemic reversion.

How do the authorities manage hedging?

Obviously, the long term position of China's economy and the macro playing environment are no longer the same as the previous major adjustment.

First, state capital directly intervened and even dominated the micro market.

If the last round of arbitrage expansion is the arbitrage of interest groups to local governments, then the current arbitrage is the credit arbitrage of the interest groups and technocrats (including the financial system) to the central government. The stock market has never been as far-reaching as it is today. From the start of the stock market crash, the shadow finance CDB fully bypassed the local governments and commercial banks in order to stimulate the point to point stimulus. We can infer that the central will and state capital will be more and more deeply involved in the management of the micro market, and even at some time will dominate the price generation mechanism, thus becoming the biggest game player in the market.

Second, we should use the incremental dividend to hedge the stock market structure.

The clearing has not yet been completed. supervise Hardening is still advancing. We believe that the way to hedge is to push the social security fund into the market in real terms, or to introduce policies such as taxation, planning and so on.

Thirdly, the valuation of the hedge stock is going down with the internationalization of RMB.

In the previous round, the authorities were forced to introduce foreign strategic investors at a more undervalued level, pushing the capitalization of state ownership and governance reform. As we all know, many criticisms have been launched in the future.

This round will not repeat the same mistakes. The state will not allow state-owned assets to be sold again. Promoting the inclusion of RMB into SDR and A shares in the MSCI index will theoretically bring incremental liquidity support for offshore RMB reflux and international hedge funds for RMB asset standard. This new mechanism of capital accumulation can moderate the reduction of FDI.

Therefore, the market share of Shanghai A shares is likely to be the core vane of the macro wind direction, thus becoming a feedback mechanism for future market micro game.