Hong Kong Stocks Have Always Followed The US Stock Market But Not With A Shares.

When China's A shares go through a crazy bull market in just 11 months, the 7 year long bull market is still endless. How does this make the A investors feel good? If the bull market is crazy, the US shares can not compete with A shares. But if the bull market is patient and level of peace, A shares are too impatient, impetuous, eager for quick success and instant benefits. The bull market road that has been rising for several years is quite different from this: the bull market is coming, rushing headlong into mass action, and all the people are buying stocks. Mad cow, fast bull and short bull seem to cater to the speculative mentality of people making quick money and frying the bull market in the morning. Of course, this is a joke!

At the end of July 2014, A shares successfully went out of the bottom of the 2000 bear markets and opened a round of momentum like the big crazy bull market. After 11 months, the short life bull market of A shares ended. In June 12, 2015, the Shanghai Composite Index reached 5178 points in the current bull market terminal, and the total sales rose 11 or more in 150% months.

On the contrary, the US stock market came out from the bottom of the March 2009, and then no longer turned back and walked slowly. It used enough patience and peace of mind to make this bull market go for 7 years. The DJIA has been refreshing its record in the near future after its record high of 18500 points this month. In the past 7 years, a total of 88 months, the Dow Jones index has risen by 180%! How calm and decent is this bull market? It has made investors really feel the calm, happy and decent value investment and long-term investment.

As the largest stock market in the world, the US stock market is a typical "institutional city". More than 75% of its volume is completed by institutional investors. On the contrary, China's A share market is the second largest stock market in the world, but it is a typical "retail market". Almost 90% of the volume is completed by individual investors (retail investors).

The largest institutional investors in the US stock market are public offering funds and private pension funds. By the end of 2015, the total market capitalization of the US stock market was US $26 trillion, and the US private pension (equivalent to China's occupational pension and occupational annuity) assets was US $24 trillion, which was close to the total market capitalization of the stock market, much larger than that of the US GDP. The US public fund has a net assets of about $15 trillion.

If the public fund is the most important force to support the "institutional market" of the United States, private pension is the biggest hero to support the development of the US public fund, because half of the public fund assets in the United States are held by private pension funds. Private pension in the US is also an important investor in bonds and stocks. Therefore, public funds and private pension are the mainstay and super stabilizer of the US stock market and even the whole capital market. All these are the solid market foundation of the US stock "slow bull and short bear".

By the end of 2015, the total market capitalization of A shares in China was about 53 trillion yuan, but the net assets of public funds in China were only 7 trillion and 200 billion yuan, and the total assets of enterprise annuity were very poor, only 950 billion yuan. The public offering fund only had 1/8 of the stock market value, and the total assets of enterprise annuity accounted for only 1/53 of the stock market capitalization. In contrast, public funds and private pensions are still very weak as representatives of our institutional investors. Therefore, the A share market can only be a "retail market" pattern at present.

The main feature of the "institutional market" is that the bilateral bilateral game players always take the institutional investors as the main body, and the bilateral equivalence game under the operation of large funds, large combinations and specialized teams. The market valuation is more rational and more balanced, which is conducive to smoothing the market fluctuation and conducive to the steady operation of the market. Its bear and bear alternation often appears as a healthy pattern of "slow cow and short bear".

Correspondingly, the "retail market" is dominated by individual investors. Most of the players are mostly retail investors. Sometimes they may be interpreted as institutional investors. Basically, there will be no equilibrium game between institutions and institutions. Under the "retail market" pattern, the bull market rushing headlong into the herd, the fast bull, the mad cow, the one step in place, the bear market is dispersed, the bear journey is endless, and the declining trend is endless. The law of ox bear alternates mostly in the non healthy pattern of "short cattle and slow bear".

Take the bull market in the US stock market as an example. From the end of 1980s to the end of 1999, the NASDAQ bubble burst, and this bull market lasted for more than ten years. This is a long cycle bull market. In January 3, 2000, the DJIA recorded a record high of 11750, followed by a bull market and a bear market. In 2001, the "911 incident" broke out, when the Dow Jones index fell to 8062 at the lowest point and dropped to the lowest point in the current bear market in October 2002 by 7197. This round of "slow cow" for more than 10 years, and the corresponding "short bear" has only two years.

The first bull market of US stock in the new century started at the end of 2002, and lasted until October 2007. This bull market lasted for nearly 5 years, and it continued steadily upward. In October 2007, the Dow Jones index hit a record high of 14198 points, marking the end of this bull market. Then the US shares entered a bear market. In March 2009, the Dow Jones index fell to the 6469 lowest point in the current bear market. This round of 5 years of "slow cow" corresponds to the "short bear", only a year and a half.

The second big bull market experienced by US stock in the new century has continued since March 2009. In May 2013, the Dow Jones index stood on 15000 points for the first time, 16000 points in November 2013 for the first time, 17000 points in July 2014 for the first time, and 18622 highest points in July 2016. The bull market has lasted for more than 7 years, with the largest increase of only 180%. But the bull market in the US capital market also seems to be nearing its end.

Under such a market structure of "slow bull and short bear", buying stocks is like buying bonds. It can form a true sense of long-term investment and value investment concept. It not only has a large number of listed companies "quarterly dividends", but also will continue to rise as the slow growth of "slow bull". Such investment behavior is more rational, more relaxed, more relaxed and happier.

On the contrary, every bull market of A shares in China is very short, and the average duration is over a year or so. However, our bear market is very slow and generally needs to last five to seven years. For example, in June 14, 2001, when the Shanghai Composite Index hit a record high of 2245, it entered a long bear road until the Shanghai Composite Index fell below 1000 points in June 6, 2005, marking the end of the 4 year bear market. Since the second half of 2005, A shares have entered a new bull market. After the Shanghai Composite Index hit a record high of 6124 points in October 16, 2007, the bull market, which lasted only two years, ended again in a slow bear market that lasted for seven years. The lowest point was 1664 points, and the bear market ended at the end of July 2014.

Subsequently, A shares In a big bull market again, the Shanghai Composite Index hit the 5178 highest point in the current bull market in June 12, 2015, resulting in a shorter bull market, ending in 11 months. Since then, the Shanghai Composite Index has been down to 2638 points and is still stuck at 3000 points. The current A bear market has lasted for 13 months. According to the previous "Slow Bear" rule, it will last at least three or five years. Therefore, investors must grasp the rhythm of the A share market macroscopically, and not gamble with the long-term trend.

If we want to change the bad situation of A shares "short cattle and slow bear", we must carry out reform in three aspects: first, enlarge and strengthen the public fund, expand the public fund in ten times in the next ten years; two, expand the coverage of enterprise annuity and occupational annuity, increase employee participation rate and pay rate; three, intensify the reform of marketization and rule by law, and accelerate it. IPO Registration system reform. This is the only way for China's A share market to move toward "slow bull and short bear". Investor Value investment, rational investment, happy investment habits and ideas.

Finally, it shows that the trend of Hong Kong stocks has always followed the US stock market, because the two are developed, mature and open international markets, so they share the same breath and common fate. This is why the trend of Hong Kong stocks is often the opposite of A shares. The A share market is still the 1.5 closed domestic market, and the degree of marketization and rule of law is relatively low. The reason why the stock market should withdraw from the developed market and return to the relatively backward A share market is because the Chinese stock market wants to seek the opportunity of institutional arbitrage. On the one hand, the developed market is highly regulated and unaffordable. On the other hand, the A share market has a high degree of bubble and speculation. And the valuation premium is very attractive. Therefore, the stock market which was originally listed in the developed market would rather quit the developed market and return to a relatively closed and backward market. This is the secret of it. For this reason, we do not have to sing praises for the "return" of China's stock market, nor do we regard them as alien monsters.