Capital Market Boom In 2016

The importance of capital market in China's economy has been increasing.

In the first three quarters of the whole GDP increment, the financial added value accounted for 20%.

Why should we look at the financial industry and the capital market? From the two sides of the supply side and the demand side, the logic should be very clear.

The capital market is not short-term, but long-term.

China is now the second largest economy in the world, but our economic growth is the largest. Therefore, China's finance plays a decisive role in the global capital market.

Why the Central Bank of China moves a little bit, the major capital markets of the world will fluctuate, because China's financial volume is large.

Why is the proportion of Finance in GDP increasing? The proportion of real economy is decreasing and the proportion of finance is rising.

Real economy investment downward, money will enter.

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From the perspective of big finance, there is more opportunity for capital market. The main logic is that where money flows to, where residents' savings are flowing out. As investment, it is very important to find the direction of flow.

Over the past thirty years, China's population has been flowing south-east, which has brought prosperity to the Yangtze River Delta and the Pearl River Delta.

A good economy is able to bring employment and bring about real growth. No increase in employment is a false growth.

So we must see the direction of flow.

As long as we follow the mainstream, we must be right.

From resident

Look, it has gone through three times: the first is the deposit era, which means that the growth of wealth in 1980 and 1990s mainly comes from bank deposits; after 2000, it enters the real estate market; after 2014, it is the era of financial products.

A large amount of money has gone to the financial field, especially to the capital market, which has led to a significant increase in the scale of bank financing and trust products.

Future residents' assets will continue to flow out of the real estate sector.

From the perspective of supply, the original banks put money to large enterprises, because at that time it was heavy chemical industrialization, you could take factories and land as collateral, resulting in a very high proportion of indirect financing in China.

Most of the new industries are light assets.

Ask banks to borrow money, such as IT, cultural media, you have no assets, only through the capital market financing, let PE and VC participate in financing, so that the proportion of direct financing in the capital market will rise.

Coupled with the development of Internet finance, the information is adequate and the cost of financing is reduced.

The wide application of information technology, such as Internet technology, is very beneficial to the development of capital market.

The increase in the allocation of financial products can be understood from the perspective of demand side, because the original financial products of residents are low matching, and there will be a process from low allocation to standard allocation.

Real estate was originally highly matched, and the future is back to standard.

Therefore, due to the mismatch of assets, the demand for financial products increased significantly.

The second demand is demand caused by demographic changes.

Due to the aging of the population, the economic downturn will lead to lower interest rates for banks, so residents' deposits will be reduced, and the aging of the population will lead to a decrease in demand for real estate, so it is necessary to add financial products.