The Function Of Finance Has Been Overestimated Or Passed.

For emerging markets, strengthening financial regulation is undisputed. But the most obvious phenomenon in the financial industry since the beginning of this year is that the regulation is more stringent. Not only is the regulatory side expanding, but the regulatory depth is also improving.

If we can understand that the strengthening of foreign exchange control at the beginning of the year is understandable, that is, in order to prevent a large amount of foreign exchange from flowing out, then, even if the stock market has been very depressed, even the daily limit of stocks must be managed.

Recent exchanges with many financial practitioners and investors are basically more complaints than support.

However, I understand this way:

The function of finance has been overestimated or passed.

In the 80s of last century, at the beginning of China's reform and opening up, both industries attached importance to industry from top to bottom because China needed to pform from a big agricultural country to a modern one.

By 90s, the development of industry was increasingly facing the bottleneck of shortage of funds. This prompted the country to actively introduce foreign capital and vigorously develop the financial industry, such as banks, trusts, credit cooperatives and securities, which have entered the boom period from that era.

Especially when Comrade Xiaoping inspected Shanghai in 1991, he pointed out: "finance is very important and is the core of modern economy.

The finance has been done well, playing chess, living, and living. "

After that, it was repeatedly quoted by the financial industry as the most powerful reason for the development of the financial industry. Finance has been given too many functions so that China's currency expansion is not acceptable.

The function of the capital market has also been overstated. For example, raising the proportion of direct financing can not only reduce the debt ratio of enterprises, improve the corporate governance structure, disperse the risks of banks, but also adjust the regional industrial structure and help state-owned enterprises to overcome difficulties.

However, the stock market crash that occurred in 2015 has made the ups and down sober. In order to raise direct financing, it is a bad idea to pick up the consequences of losing the watermelon.

The stock market was once dangerous, and the rigid payment of the bond market had to be broken. The hole in the private financial market was much more terrible. This shows that the development of direct financing is also a double-edged sword, which has both advantages and disadvantages.

Compared with direct financing, indirect financing seems to have more disadvantages and is more influenced by institutional factors, especially China's financial market is still mainly indirect financing.

For example, in the credit balance of banks, the proportion of state-owned enterprises far exceeds that of private enterprises, but the total profit of state-owned enterprises is far lower than that of private enterprises, which means the obvious mismatch of credit resources.

This mismatch not only leads to the waste of resources, but also implies the increase of banking risks.

That is to say, the risk of direct financing can be dispersed, but the risk of indirect financing is ultimately concentrated on banks.

It has been 26 years since 1990. In the past 26 years, the problem of China's economic structure seems to be more prominent, and the contribution of finance to improving the economic structure is not obvious.

In addition, the debt ratio of state-owned enterprises is also higher and higher. The development of direct financing has not played a fundamental role in reducing the debt rate of state-owned enterprises.

It is because the financial industry itself has become a great beneficiary of direct financing, especially banks and brokerages. Through their own direct financing, they have expanded the scale of capital, and at the same time have increased their balance sheets. Therefore, too much emphasis on the development of the financial industry, the function, function and role of deification of finance has great drawbacks in the future.

Investment choices will be more rational.

More stringent financial regulation, the main purpose is to squeeze the bubble, to drive away too much speculative capital in the financial market.

Such an intention is more accurate than ever before.

Although this is a non marketable approach, it is easy to cause controversy, but in a market dominated by such a retail trader, it may be more effective, because it is still a long process to expect the self-improvement of "learning error correction capability" of retail investors.

For example, in the first half of this year, investors accounted for 500 thousand of the total stock market capitalization, with a total ratio of more than 95%, of which less than 10 thousand of the market capitalization share was around 27%, 1-10 of the market capitalization investors were 49%, and 10-50 of the market capitalization investors were about 19%.

The total market capitalization of more than 1 million of the total proportion of less than 2.5%, small and medium capitalization retail investors are still the main force in the stock market.

By increasing the intervention and supervision of financial market, we can drive speculative capital out of the market, which, on the surface, will lead to a further slack in the stock market. The liquidity premium will increase, but from the perspective of the whole economy, the opportunity cost of speculative capital will decrease, the idle capital will increase and the capital side will be more relaxed, which will further reduce the market interest rate. This will be beneficial to the valuation level of interest sensitive financial assets, such as bonds and other fixed income products, such as the low price earnings ratio, the market rate or the high dividend rate.

Finance accounts for more than GDP in Britain and America.

In the past, many scholars mentioned the existence of "financial restraint" in China, so they proposed to further deregulate and increase openness.

But from the data of two years, the development speed of China's financial industry is beyond expectation.

In the first half of this year, the added value of the financial sector was 3 trillion and 120 billion, accounting for 9.16% of GDP.

I remember that in the UK, about 8% last year, about 7% in the US, and only about 5% in Japan. In China, the proportion of the third industries in GDP is far lower than that in the western developed countries.

The first half of last year was due to the hot stock market.

The growth rate of value added has exceeded 17%, and the proportion of Finance in GDP has increased from 6.86% in the first half of 2014 to 9.34%.

However, in the first half of this year, the decline of the A share market ranked the top of the global stock market, and the paction scale was reduced to half of that of the same period last year. It was thought that the GDP created by the financial industry this year would be substantially reduced than that of last year. It still did not expect to grow by 6.7%. This shows that the banking sector, which is the main bank in China, is still developing rapidly.

In the government work report at the beginning of this year, the goal of M2 was raised to 13%, which is still beyond my expectation, because it is obviously against the common sense to lower the GDP target and raise M2 at the same time.

Although many scholars saw the high growth of M1 in the first quarter, they believed that the Chinese economy was going to be a new round.

It has already started, but later facts have proved that most enterprises only take the money borrowed from the bank in hand and become a demand deposit, so they are not eager to invest in industry.

This obviously broke the general law that M1 high growth will bring the prosperity of the real economy.

Speaking of this, we must be clear about the strict logic of current financial supervision. The false prosperity of Finance in the economic downturn will not only help to stop the real economy, but also bring more financial bubbles and induce systemic financial risks.

Recently, the central bank has just released the two quarter of China.

In the executive report, many references were made to guard against systemic financial risks, but no mention was made of "regional financial risks".

In the early May, authoritative figures pointed out that the marginal effect of monetary expansion on economic growth diminishing, which is also a question of the M2 growth rate over the years far exceeding the GDP growth rate.

From the data in the first half of this year, the growth rate of bank credit is still higher than that of the same period last year. The debt rate of state-owned enterprises is still rising, and the rate of housing purchase plus leverage has increased. The number of new loans has doubled over the past year, and the GDP created by real estate has increased by 9%. Even so, the economic growth rate is still downward.

Not only the financial support for the real economy is limited, but also a large number of currencies are circulating inside the financial system, and they are making bubbles, which further threaten the healthy development of the economy.

If a large number of banks and non-governmental financial products are issued, it will further lead to asset shortage. The supply channel business of non banking financial institutions is nothing but avoiding regulation and obtaining price differentials. The creation of financial GDP is actually caused by the paction process of financial products.

Once a group of financial institutions fail to pay on time, the systemic risk will erupt.