Stock Market Investment: The Story Of "Cyclical Recovery" Is Still Not Clear Next Year.

We are in awe of a "money rich" market, not against it, but if it is a purely capital driven market, it will be very unstable.

Since the strong market since October, the capital market, bond market funds and insurance funds seem to flow to the stock market. The logic of "more money" and "asset shortage" prevails again.

Since October, the stock market has been strong, and even a lot of characteristics are very similar to that of the bull market in the second half of 2014. Is this the beginning of a new bull market? It happened in the fourth quarter of last year and in 7 and August this year. At that time, we felt that it was very painful to fight against this logic of "money more", so we must be in awe of such a rising market.

But once the market becomes pure capital driven, the overall trend and structure will be very unstable. First of all, in the overall trend, the first two times were in the environment of "money more" logic still established, and in January and September, the market would go up and down.

Many investors feel that it is very much like the second half of 2014: first, the liquidity of the stock market has changed from tight to loose, and now the stock market liquidity has improved.

The improvement of liquidity was followed by the opening of Shanghai and Hong Kong links at the time, and now the opening of Shenzhen Hong Kong link. Finally, the financial and traditional cyclical stocks were stronger, and now the financial and traditional cyclical stocks are stronger.

由于2014年下半年是一個大牛市的開端，因此大家現(xiàn)在也開始幻想是否一個新牛市的開端就在眼前了呢?但我們認為目前和2014年下半年的區(qū)別在于：2014年下半年是“錢多故事也多”，而現(xiàn)在是“錢多故事少”——2014年下半年“看長做短”的特征明顯，一些長期的“大故事”在引導著資金的方向(比如自貿區(qū)、國企改革、一帶一路這種與改革轉型相關的“大故事”，還有券商加杠桿提升ROE這種與長期盈利改善相關的“大故事”);而現(xiàn)在感覺是在資金橫沖直撞下形成了一些熱點，在熱點形成之后大家事后再來“編故事”，但這些故事的長期邏輯其實都有瑕疵，比如現(xiàn)在最熱的兩個故事是“周期復蘇”和“保險舉牌”，以下我們談談這兩個故事可能存在的問題：

The problem with the "cycle recovery" story is that if we do not rely on the real estate market, the sustainability of the cyclical industry's earnings recovery will be called a question mark.

Recently, the performance of the traditional cyclical stocks has been strong, resulting in the long-term optimism that "next year's cycle recovery may be further strengthened" and "next year's A share earnings will further accelerate".

But in our previous report, we have come to the conclusion that the A - share profit improvement cycle is hard to exceed one year (that is, the fourth quarter may be the highest peak in this year's earnings improvement, and the earnings will fall by season next year).

Many investors are asking us why this profit improvement cycle is only one year? What is the logic behind it? We think this is closely related to the cyclical nature of the real estate market. A shares are mostly traditional cyclical industries, and many of these traditional industries are in the real estate industry chain.

As can be seen from the chart below, every cycle of earnings recovery in the past coincides with the real estate cycle in time.

But with the constant increase of real estate regulation in recent years, the real estate cycle has begun to fall.

In the past, there has not been a sustained profit recovery that does not depend on the real estate market, so next year

The possibility of a return to profitability is very great. The story of "cyclical recovery" is not clear next year.

About "

"The problem of the story is a good" free riding "short term theme, but in the long run, there is a fundamental difference between insurance funds and other investment funds in the market.

Since October, insurance funds have significantly increased the "lifting of the cards". Many investors believe that relying on insurance funds "raise the cards", one is to bring sustained incremental funding to the market, and the two is to change the investment preferences of other participating funds in the market, so that funds can be concentrated on blue chips for a long time.

We think that the reason behind this is that there is a fundamental difference between the insurance funds and other investment purposes in the market. The insurance funds want to calculate the rights and interests of the invested companies through the "placards", so that if the investment companies achieve profits, the investors can make investment returns according to the proportion of their rights and interests.

However, the rest of the market's participation is still the main purpose of obtaining capital gains from stock price fluctuations, so they have a high interest in short-term participation in the issue of "placards". But for long-term investment, these companies are not interested in the "placards" company. Most of the A shares prefer the main line of growth, but it is hard to find a long-term growth story in insurance companies.

To sum up, the logic of "money more" may keep the market strong in the short term, but because there is no long-term "story" that can really attract capital, it is still an unstable market that "looks short and short". The main risk point of the future market is the continuing interest rate.

In an environment of "less money and less stories", the rampage of capital may create another short-term hot spot, and the market will look very lively.

However, due to the lack of long-term stories to attract funds continuously, the hot wheels are fast moving and the money making effect is not strong enough.

If the rate of domestic interest rate accelerates upward in the future, it may constitute a risk of ending the rebound. First, if the interest rate rises above the magnitude of the profit improvement, the negative impact of the valuation side of the stock market will inhibit the positive promotion of earnings to the stock market; secondly, if interest rates continue to rise, then for the insurance funds, the assets will become rich again, and the power of "placards" will also decline.