The Financial Market Is On The Rise But The Real Economy Is Listless.

The stock market is an exciting roller coaster, with money to go up, empty pockets down, South Ke dream.

The question is, besides the stock market, where is China's next bubble?

Since the beginning of this year, there has been a departure from the Chinese economy: the "uneven flood and drought" in the financial system and the real economy.

Compared with previous years, since 2015, more loans and more abundant liquidity have not been reflected in economic growth and price rise.

Its performance is "the false fire in the financial market rises, but the real economy is listless". Its hidden danger lies in the fact that the risk of the financial bubble is aggravated and the risk of entity instability is rising.

As of November 9th, the Shanghai Stock Exchange's financing balance was 678 billion 846 million yuan, an increase of 21 billion 491 million yuan compared with the previous trading day, an increase of 3.3%, the largest increase since December 2014; the balance of the Shenzhen Stock Exchange raised 435 billion 188 million yuan, an increase of 11 billion 701 million yuan; the two cities totaled 1 trillion and 114 billion 34 million yuan, an increase of 33 billion 192 million yuan, which is the rise of the financing balance for fifth consecutive trading days, the longest Lian Sheng record in nearly three weeks, and back to the highest level since August 25th this year.

Looking back on the stock market crash that began in June, when the two financial balance reached a historical peak of about 2200000000000 yuan, management realized the risk of leverage, and launched a drop lever operation.

And this action is precisely caught by the market sensitive institutions, and many agencies have adjusted all the long positions to start short positions.

Under the double pressure of policy and capital, share prices continued to fall.

The decline is not even expected by management.

Moreover, the drop in this round caused the forced liquidation of many leveraged funds due to the excessively large margin, and thus spread into the stock market stampede phenomenon.

In the face of desperation, management began to control short selling, and even by administrative means forced the short positions to prevent the stock market from falling.

However, due to the size of the OTC trust and the umbrella trust, the stampede has not been controlled, even after the national team pays trillions of bailout costs.

In the end, the situation was stabilized only when the central bank injected capital and the funds from all sides continued to take over.

Now, after clearing some of the leveraged funds and squeezing the bubble, management has started the two financial business to boost the stock market.

Moreover, it is reported that management is studying and formulating the "blacklist" for external access of brokerages.

This may mean that after the OTC capital and the umbrella trust will revive.

Under the impetus of the next multi wave Fund (pension, two expansion funds and foreign funds caused by financial reform), China's stock market will enter a new trend of inflation.

But in retrospect, the stock market is an exciting roller coaster, with money to go up, empty pockets down, South Ke dream.

The stock market bubble is always a disaster: the South Sea bubble is that the French Mississippi bubble will eventually be a disaster.

Which country bull market did not have a good ending in the end.

The question is, besides the stock market, where is China's next bubble?

First of all, it may be the property market.

Since the beginning of this year, the central government has made steady progress in stabilizing housing consumption, increasing the number of rounds of credit and financial policies, and a series of loose policies promulgated by various localities, thus facilitated the sustained release of demand for sexual property in the first half of the year, and supported the recovery of the property market.

It is accompanied by a series of "new high" data.

Albert I love my home market research institute data show that in the first half of 2015, Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Nanjing, Hangzhou, Chengdu, the 8 major cities of the volume of property pactions generally came out of the 2014 trough, and even many years of high turnover.

For example, the volume of second-hand housing in Beijing increased by 91% in the first half of the year, while the second-hand housing pactions in Hangzhou and Tianjin hit a new high in the past 9 years and 10 years respectively.

According to the National Bureau of statistics released in September 2015, 70 large and medium cities housing sales price changes report shows that the number of new commercial housing in September increased slightly, the number of cities increased slightly than the previous month, housing prices continued to rise, the northern Guangzhou Shenzhen four tier cities in the ring, year-on-year rise, Shenzhen is 38.3% year on year increase for five consecutive months led.

Nowadays, for the developers, the first tier cities have become "safe harbor".

On the one hand, the loosening of monetary policy has reduced the financing cost of Housing enterprises (the interest rate of debt issuance has dropped to 3%-4%), and developers are now "abundant in ammunition".

On the other hand, the land in the first tier cities is innate, which makes the land of the first tier cities as the focus of defensive investment.

At the same time, developers are reminded each other that "three or four tier cities can no longer build houses."

At present, the domestic stock market in the three or four tier cities is continuously high, and the trend of house price fall is obvious. Whoever builds houses in the three or four line cities will not only keep long-term inventory but also suffer heavy losses.

The situation in China's property market is: on the other hand, the prices of the first tier cities continue to rise unreasonably; on the other side, the prices of the three or four tier cities continue to fall, and the situation of going to stock is not optimistic.

Zhang Ting, a senior analyst at the China Index Research Institute, said that although prices have bottomed out as a whole, it is expected that prices will pick up in the future.

However, there will be significant differences between different cities.

The rise in housing prices in the first tier cities has further increased the bubble and deepened it.

On the face of it, although the three or four tier cities are in a sluggish real estate market, the rise in housing prices in the first tier cities is still a bit bright, but this is not a good omen. This is a speculative investment in the field that can not fully push up the prices of all cities.

Otherwise, in the very short term, Shenzhen's housing price increase will be close to 40%.

Before that, the price bubble of the first tier cities is much larger than other cities, and the leverage ratio is also high. Now it continues to be a speculation market, and it can only make more citizens "look at the house and sigh".

And this property market, which is far from the local people's purchasing power, can not last for a long time.

That is to say, the rise of housing prices in a second tier city is a poison to quench thirst, and the adjustment of house prices in the three or four tier cities is also difficult to change the color of the evening.

For the more than 400 three or four line cities currently concentrated in the northeast, northwest and southwest, because the industrial structure is single and backward, or mainly agricultural (such as northwest and southwest), or heavy manufacturing industries (such as northeast) are not attractive to the foreign population, plus the average household owns more than two properties, and the demand for housing has long been saturated, so these cities are out of the woods in the short term.

At the same time, we should also see that although the housing prices are constantly refreshing in the first tier cities, they have attracted many curious eyeballs. However, the prices of the first tier cities show a "price rise lag" phenomenon, because the rise in the price of the first tier cities is caused by the risk aversion of the hot money, and the impact of the government's rescue efforts. A large number of speculative investment demand has been released over a period of time. Obviously, such a good momentum is not sustainable. At most, there will be exhaustion and decline in the first half of next year.

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At present, the differentiation is more serious.

He Jun, senior research fellow of Ampang consulting, believes that the inventory pressure of the three or four tier cities will last for 10 years.

"As of November 2014, the clearing period of the first tier cities in China has dropped to 14.4 months, the land digesting time is 1.5 years, the second tier cities have a clearing period of 21.6 months, and the land digesting time is 3.3 years.

But in the three or four tier cities, the clearing cycle is still 47.8 months, and the land digesting time is still over 5 years.

He Jun also analyzed the clearing cycle. "Whether in the short term or in the medium to long term, the number of cities in the fourth and fourth tier cities has reached a record high level, and there will be significant pressure ahead.

In the case of sluggish demand, although the inventory pressure of the three or four tier cities is different, the government and enterprises need to be very vigilant against this pressure.

Second tier cities are highly sensitive to market resource concentration, land sales and high market activity, while the three or four line real estate market is losing its "attraction" despite frequent local market support policies.

Zhang Dawei, chief analyst of Zhongyuan Real estate, pointed out that this will aggravate the soaring property market of the second tier property market and the excess risk of the three or four line property market, both of which are hidden worries for both.

In the next ten years, the development background of China's property market is undergoing profound changes. "Structural surplus and structural shortage coexist" will replace the "total supply in short supply", becoming the background of the development of China's property market in the next ten years.

The era of "total supply in short supply" has already faded out, and the era of "structural surplus" has arrived.

Urbanization and industrialization, as the super engine of the development of housing market in the past ten years, are now in a state of deceleration.

Economic growth has entered the "new normal", and the urban economic structure is facing tremendous pressure of pformation and upgrading.

As income growth determines the direction of population flows, economic deceleration also means that the attractiveness of the city to the population is weakening.

While the total demand is down, housing in China has accumulated a huge amount of stock, and is still growing rapidly according to past inertia.

Especially in some three or four tier cities, the backlog of commercial housing has been very serious.

In 2014, although the government's policy on housing demand control has become more relaxed, the housing market is still being downgraded voluntarily.

This shows that the housing market is in short supply from the total volume to the structural surplus stage.

Zhu Min, vice president of the International Monetary Fund (IMF), said at the IMF2015 spring annual meeting that the most important problem in China's property market is that the vacancy rate is too high and the vacant area is 1 billion square meters.

Subsequently, the representative of IMF in China once again mentioned in his April 28th research report that "China's housing oversupply is all over the country, especially in smaller cities and Northeast China."

In fact, executives of large housing companies such as Vanke and Ya Ju Le confirmed that at present, the vacancy rate of the developed high-end property is relatively high, especially in the three or four line cities and some northern cities, and the new districts in three or four cities, such as Erdos, Huizhou and Changzhou, are sparsely populated.

It is an indisputable fact that many cities have built up the city movement in a large scale.

Even in the hot market of Shanghai, the high-end vacancy rate of Qingpu district has been delivered for 4 years, and its vacancy rate is as high as 20%.

According to data provided by Professor Chen Jie, director of the Institute of real estate research, Shanghai University of Finance and Economics, the US housing vacancy rate has remained at a low level for a long time.

Even in the worst 2007-2008 years of the US property market, the highest vacancy rate of rental housing is 10.7%, and the vacancy rate of its own housing is only 2.9%.

The vacancy rate of housing in European countries is also very low. In Holland and Sweden, the general housing vacancy rate is only 2%, France is about 6%, and Germany is about 8%.

Zhang Tingbin, founder of the China Yuan think tank, wrote that, or many years later, many people will talk about a landmark event: at the end of September 2015, the credibility of Vanke's corporate bonds was comparable to that of national credit.

According to Reuters reports, two industry sources revealed that the first five year corporate bond interest rate result of Vanke's September 24th bookkeeping filing in China, one of China's largest real estate companies, was 3.50%.

"The main funds are cheap and can be leveraged, and then they lower interest rates," Reuters quoted a broker dealer in Shanghai as saying, "the interest rate of the five year national debt is also around 3.5%. This interest rate is quite exaggerated, and it is almost equal to the national credit."

At present, the yield of the five - year treasury bond is about 3.13%, and the five - year national debt yield is about 3.54%.

This is the latest sign of China's bond bubble.

After the price of the property market in China has reached the height of the sky and the rigid demand is too low to lift, the property market, China's largest sponge that absorbs liquidity, has reached the limit.

Therefore, the stock market with relatively low valuation became a new sponge at the end of 2014.

However, the greed, madness and leverage of Chinese wealth, and the government's advocacy of "reforming cattle", have jointly released a mad cow from the magic bottle.

After being mad, it became a "crazy bear" because of the reverse violence of stock index futures, margin trading and securities lending.

In the face of this crazy bear, the SFC overcorrected and adopted the castration strategy, which greatly restricted the stock index futures and cleaned off the field financing. It completely destroyed the integrity of the Chinese government's rules on the stock market, and made a lot of capital exit from the stock market according to the rules game.

In this case, the bond market is bound to become the last big sponge that absorbs liquidity.

Zhang Tingbin believes that the last bubble of China's financial crisis must be the bubble of the debt market, because as the economic development continues to cool down, the effect of RMB's money making is disappearing, and the international hot money flows out of large numbers. Liquidity will flow into assets that are easily realizable from the hard cash assets, and flow into the low yield assets from the high yield assets.

In short, it is from the property market into the stock market, from the stock market into the bond market.

The biggest advantage of the bond market is that the scale is large, the paction is active, and it can be realized at any time. Under the condition that the internationalization of the RMB has basically been in place, it can exit quickly and convert it into dollars abroad.

According to Zhang Tingbin analysis, there are three trends in the future: 1, inflow of investment goods that can not hedge the risk of RMB depreciation to hedge against depreciation of the RMB; 2, investment products inflow from the national economy and the people's livelihood will not affect the investment of the national economy and the people's livelihood; 3, from the large scale investment products, they will enter small investment products (easy to warm up in winter).

According to the above three criteria, gold and silver are better choices.

Now, following the property market and stock market, the bond market is on the way to the last big bubble.

In addition to the pfer of the above major domestic liquidity, a large amount of surplus capital is crowded outside the bond market, which is also related to the financial sector's efforts to push the internationalization of the bond market.

The central bank has announced that central banks and sovereign funds can invest in the interbank bond market. Now, foreign capital agencies are issuing Renminbi Panda Bonds in domestic bond markets, and bond markets are opening up to foreign banks.

This gave the domestic bond market a final shot in mind. Of course, it's like laughing at the 5000 point of A shares, expecting foreign capital to come to the market. When MSCI announced that it postponed the accession of China's A shares to the index in June 9th, A's stock soon collapsed.

Because of sectoral division and bureaucratic arrogance, it is unlikely that anyone will copy the "mad cow bear" in the bond market.

Now, the leverage plus bond has already started, and will be even more crazy. The yield of treasury bonds will continue to decline. This will continue until the Federal Reserve raises interest rates, and yields on US Treasury bonds soared.

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By then, international hot money will lose its last interest in China. Chinese bond prices will plummet and interbank interest rates will rise.

At the same time, foreign exchange reserves will decrease rapidly, and the RMB against the US dollar will drop sharply shortly thereafter.

Related to the bond market, it is worth noting that asset securitization of China's financial industry is also expanding rapidly. In the context of policies encouraging the revitalize the stock assets and ease the pressure on bank balance sheets, although China's asset securitization (ABS) market started late, the scale has become the first in Asia, and even surpassed that of developed countries such as Korea and Japan.

According to data provider Dealogic, in the first 8 months of this year, China has already issued $26 billion 300 million of asset securitization products, a 25% increase from last year's $20 billion 800 million.

The data also showed that the total amount of credit assets backed securities (CLO) in the 1-8 months was $20 billion 900 million, up by more than 1/3 compared with $15 billion 900 million in the same period last year.

Therefore, Zhang judged that China's bond market and asset securitization are ushering in the final bubble climax. In other words, the window of shorting China's bond market is gradually approaching.

There is also a bubble, which seems to be far from the common people and is a local debt.

According to the data of the Audit Commission, as at the end of June 2013, the local government had a direct debt repayment liability of 10 trillion and 880 billion yuan, with a liability of 2 trillion and 660 billion yuan and a liability of 4 trillion and 340 billion yuan.

The total amount is about 18 trillion yuan.

According to the China business newspaper, officials from the Ministry of Finance in April 25th attended the Second Yangtze River Delta financial and taxation forum, revealing that the total debt reported to the Ministry of finance is about 16 trillion yuan.

According to the mainstream view of the experts, the total amount of local debt has been increasing rather than decreasing over the past two years. Therefore, the total amount of debt reported by the local government may not include its debt with certain liability for relief.

If it includes, it should exceed 18 trillion at the end of June 2013, which may exceed 20 trillion.

Most people feel that the local debt is too far away from us because it is government debt and has nothing to do with individuals, but in fact, the local government has not built a balance sheet. If so, many cities are already bankrupt.

A case of urban bankruptcy is referred to Detroit, USA.

Two or three years ago, foreign media shouted that China's local debt crisis had come to the brink of collapse.

But the total amount of local debt is not ignored, and continues to grow.

China's heavy fists avoided the stock market crisis, but the biggest corporate debt in the world poses a greater threat to China's slowing economy and is not so easy to solve.

At present, the scale of corporate bonds in China has reached 16 trillion and 100 billion US dollars, and is still rising.

Thomson Reuters's study of more than 1400 companies found that the scale of Chinese corporate debt is 160% of gross domestic product (GDP), two times that of the United States, and has seriously deteriorated in the past five years.

The rating agency's S & P estimates that in the next five years, Chinese corporate bonds will grow by 77% to $28 trillion and 800 billion.

The Chinese government's intervention policy on corporate credit is mainly to support economic growth. This year, China's economic growth is expected to fall to its lowest level in 25 years.

Since last November, the Central Bank of China has cut interest rates several times, lowered the reserve requirement ratio of banks, and cancelled the upper limit of loan to deposit ratio.

Although the government wants more credit flows to small businesses and innovative areas in the economy, these initiatives are not obvious.

The banking sector in China added 1 trillion and 280 billion yuan (US $26 billion) in June, which is much higher than the 900 billion 800 million yuan in May.

The effect of policy easing has been to reduce short-term interest costs, so loans for stock market speculation have increased significantly. But there are few signs that loans are used in profitable investments in the real economy. The cost of long-term loans remains high and banks are reluctant to take risks.

The debt of manufacturing enterprises is higher and higher than that of debt.

Thomson Reuters study found that in 2010, the ratio between material enterprises and core profits was 2.8 times, reaching 5.3 times by the end of 2014.

The ratio of liabilities to core profits of energy companies increased from 1.1 times to 4.4 times.

Industrial enterprises increased from 2.5 times to 4.2 times.

GaoHong, head of investor relations at Jinxi axletree, a railway equipment manufacturer, said it was difficult for companies to find profitable investment projects, so they put money in short-term bank products that could ensure profitability.

Over the past 2010-2014 years, the company's debt to core profit ratio expanded three to 10.25.

Therefore, the replacement of local debt is more of an expedient measure to relieve the pressure of local finance by exchanging debts in time with space, that is, the replacement of local debt will not substantially change the level of local governments' assets and liabilities.

Nor will it effectively relieve the pressure on the increasingly prominent local government debt tightening and credit crunch. Naturally, it should not be expected that local government debt replacement will enhance and enhance the local government's new investment capability.

On the contrary, if the marginal growth rate of local fiscal revenue is not higher than the marginal yield of local replacement bonds, it is easy for local governments to fall into the negative cycle of debt deflation, which deserves warning from all walks of life.

Although corporate bond defaults frequently occur, bond markets are still hot.

Owing to the contraction of bank loans and the impact of "stock market crash", financing in the bond market has become the mainstream financing mode of many enterprises. Corporate bonds, corporate bonds, "medium ticket (medium-term notes)", "short Finance (short term financing bonds)" and "PPN (non-public directional debt financing instruments, mainly referred to as interbank markets") are becoming more active.

However, some analysts believe that today's bond market has become the stock market at 5000 o'clock, and the bubble may break at any time.

Since 2015, the issue amount of bonds has exceeded 15 trillion and 400 billion yuan, while the total annual distribution in 2014 is nearly 12 trillion and 200 billion yuan.

It is worth noting that the issuance of corporate bonds issued by the exchange has increased rapidly since June: 26 billion 334 million yuan in June, 94 billion 821 million yuan in July, 119 billion 320 million yuan in August, and 95 billion 710 million yuan in September as of 28.

Prior to that, the monthly issuance of corporate bonds was around 10 billion yuan.

A broker believes that the current corporate debt bubble is almost equivalent to the "5000 point stock market". The current bond market, especially corporate bonds, has already had bubbles and prices have been seriously overestimated.

Gao Shanwen, chief analyst at Anxin securities, believes that China's domestic bond market bubble began to take shape after the financial crisis. Now it is firmly established. No matter when the bubble of the debt market is bursting, it is not surprising.

The key is that the collapse of the debt market bubble is not only a far greater blow to China than the stock market crash, but also a far greater impact on China than the financial crisis of 2008.

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But optimistic voices still exist.

The risk is small, and there is still a good allocation value, especially in the medium and short term credit varieties.

Although the scale of China's corporate debt has reached the top of the world, the Chinese bond market is not mature, and there are many defects in the issue level, paction level or regulatory level, which is far from the developed markets such as the United States.

"The immature and imperfect state of China's bond market has also increased the risk of enterprise debt default to a certain extent.

Conversely, if the construction and development of China's bond market can be improved, it will help to curb the risk of the bond market.

Industry insiders believe that.

"Some corporate bonds issue is not based on the cash flow of enterprises to design products, but according to the amount of fixed assets, which leads to a large number of corporate debt repayment pressure is too large, and ultimately breach of contract."

Tang Honghui Thai president Shi Yang said.

Insiders said that with the acceleration of interest rate liberalization and the weakening of the lending ability of banks, the demand for bond financing will grow rapidly.

It is understood that since the beginning of the year, a series of new regulations on the expansion of corporate bonds issued by the Securities Regulatory Commission and the stock exchange have triggered an exchange bond market.

At the same time, the NDRC also started opening the debt financing path of corporate bonds which had been tightened since May, and put forward a scientific and rational setting of the issuing conditions, giving full play to the supporting role of bond financing to the real economy.

Moreover, not only the bond market regulators gradually relaxed the threshold, but also the local government took the initiative to encourage enterprises to use the bond market to raise funds.

Recently, Shandong, Sichuan and other places are clear, through financial subsidies, interest discount and other measures to encourage enterprises to raise funds through the bond market.

In October 16th, the general office of the Shandong provincial government issued a policy to encourage enterprises to make full use of the corporate bonds, corporate bonds, China tickets, and short bonds.

Around major infrastructure construction, support for railway, highway, airport, urban rail pit, water conservancy and other major projects to issue bond financing.

It is necessary to support eligible cities and counties to improve their solvency and reduce the cost of issuing bonds by subsidizing, discount, financial incentives, and establishing bond risk mitigation fund.

However, according to the sources in Hebei, at present, there are still few channels for enterprises to issue bonds in our province. Besides a small number of state-owned enterprises, there are more hairpin bonds, and more enterprises choose banks and private channels.

One is the higher threshold of issuing bonds for some bonds, the other is related to the conservative concept of collation of Hebei enterprises. "Some private debt companies specializing in small and medium-sized enterprises, Hebei enterprises are not too keen."

Under the government's fiscal stimulus measures, most of the new loans go to well-known inefficient state-owned enterprises.

"More new loans are being used to finance infrastructure projects, some of which may be undertaken by state-owned enterprises, and their leverage levels are higher and higher," said Wang Tao, head of China's economic research at UBS.

"

In decline, revenue is slowing down in this environment.

We must not be too hasty, or it will lead to a hard landing, "Wang Tao said.

Standard & Poor's predicts that by 2019, China's corporate debt will account for 40% of the global corporate debt.

On the issue of local debt replacement, Premier Li Keqiang of the State Council said at the forum held at the economic situation experts and business leaders at Zhongnanhai that "we must intensify our efforts now, and this is also a credit to our country."

At the same time, it is reported that the third batch of local government debt replacement of about 1 trillion is also actively brewing.

At the same time of the replacement of local government debt, the Ministry of Finance issued a notice in July 14th, explicitly putting local government bonds into the central treasury cash and local treasury cash management pledge. The rate of pledge is 115% of the deposit amount (the rate of hypothecation of treasury bonds is reduced from 120% to 105%), so as to stimulate the enthusiasm of banks to buy replacement bonds.

Although the budget law has not yet been amended to allow local borrowing, the most obvious advantages of local government debt replacement are two:

One is to clarify the local debt burden and government credit in the name of genuine local government bonds. The two is the form of debt renewal which is replaced by local debts, which not only postpones the immediate pressure of local governments' repayment, but also directly reduces the cost of local government debt extension by directly using government credit.

However, due to the fact that there is no authoritative statistical data on the local debt situation after June 2013, and in the process of implementing the local debt replacement process, the local governments have not carried out a round of effective capital verification, and at the present time, the slowdown in the government revenue growth trend has not changed. For banks and other investors, the local replacement bonds are easy to be regarded as a variety of bonds that do not match the risk return.

To this end, the Ministry of Finance issued the article to replace the bonds into the Treasury pledge category, which can objectively increase the liquidity and liquidity of local debt, and hedge against the profits and losses brought by the risk and income mismatch of the replacement bonds to banks and other investors.

Of course, whether it is the local debt issued by the former Ministry of Finance on behalf of the local government and the local debt issued by the Ministry of finance, or the current local replacement bonds, the solvency responsibility is the local government finance, which is only the central government's debt, rather than the central government's fiscal deficit.