How Long Can A Share Market Continue To Grow?

On Monday, the A share market showed a trend of general inflation, especially the Shanghai Stock Exchange 50 continued to create a new high rebound. It is noteworthy that Thursday's small and medium board index hit a new high in the year. This shows that in addition to the leading industry in the big industry, the Shanghai Stock exchange 50 has hit a new high.

The trend of the market in the past year shows that this A share market bottomed out order is the market, the middle and small plates, and the blue chip stocks represented by the above 50 cards have come out of the slow bull market, and even a lot of stock prices have reached a new high, and many of the central shares have also gone up against the trend, showing a substantial increase.

Small cap stocks have split up, and some really growing high-quality growth stocks have begun to walk out of the market.

In the second half of last year, when I first proposed the slow bull market, there was a lot of disagreement among many people. Many people questioned, but in the past year, many stocks have gone out of the slow market. Of course, the slow bull market does not mean that all stocks will come out. Some high valuation stocks, subject shares and performance shares may still have the space for valuation compression. Real stocks are all good stocks, either good performance or growth certainty.

Why are the industry leading and stable stocks behaved so well? In fact, they enjoy the deterministic premium of performance, because investors' risk preference is lower after the stock market crash. When they choose stocks, they are more willing to choose some stocks with strong performance and less risk.

For the stocks with strong performance, a higher premium will be given, which is called the performance certainty premium.

Some of the overvalued shares are subject to the discount of performance uncertainty, for example, some subject stocks and performance shares have a relatively large discount in the past year, while leading shares enjoy the highest premium. Leading industries in the general industry are the highest in the industry, and their valuation will enjoy premium of leading shares.

From this point of view, it is obvious that many stocks have been at the bottom of the stock market at the beginning of last year, and the market has been gradually improving.

Of course, some people tit for tat to put forward the slow bear market, but this is ridiculous, because many stocks have already stepped out of the bottom, and have begun to attack upside down gradually. This is obviously not a bear market characteristic.

What is a bear market? We see that in 2008 and the second half of 2015, the sharp fall is fast bear. In the first half of 2010 to the first half of 2013, the three and a half years are slow bears. Most stocks are down, there is no hot spot in the market, and no stock has created a new high stock price.

Small cap stocks started in May of 2013 and then went out of the bull market.

And the big blue chips came out of the bull market in July 2014.

So I think it is unreasonable and wrong thinking logic to define the present market as a slow bear.

If the bear market thinking is used to consider the problem now, it may have missed many stocks and may lose the next bull market.

Last week, Ming Sheng announced that it would be a landmark event to include 222 blue chips in A shares into the MSCI index.

In the past three years, A shares failed in the three rush to MSCI, and this time joined MSCI through the way of narrowing the version. I think it has great historic significance.

Although not all A shares were included in the MSCI index this time, only 222 large blue chips were included, but this indicates that the internationalization of A shares has gone one step.

Of course, A share is not an end to MSCI, but a beginning. It is the beginning of the A share market becoming mature. It is the beginning of the A share market recognized by international investors, and also the beginning of the reform of the A share market. Only by constantly improving the A share market system, constantly cracking down on internal pactions, and continuously guiding investors to invest in value, can A shares become a member of the international market in the future.

Some people call the MSCI emerging market index the index of the United Nations.

A shares as the world's second largest market capitalization market, has long been excluded from the index of the United Nations, I think it is very unreasonable, so A shares into MSCI is only a matter of time. Now through three years of efforts, through the narrowed version of the plan, finally put A shares into the MSCI emerging market index, I think this is a great achievement.

Of course, the impact of A shares in MSCI on the short-term market is limited. According to the statement, the first batch of funds will come in May next year.

In the early days, due to the lower weights, it may be only $12 billion. But in the future, with the development of the A share market, the head of Ming Sheng company has made it clear that the proportion of A shares may increase year by year. Once A shares are allocated to MSCI according to their normal market capitalization according to their current total market capitalization, they may eventually bring in 300 billion US dollars.

After the A share is incorporated into MSCI, it will not only allow many index funds to configure A shares passively, but also introduce more foreign capital.

On May 1, I visited several foreign investment institutions in the US Wall Street. Their investment in A shares largely depends on whether A shares have been added to MSCI, and the other is to see the value of A shares. Obviously, A shares have now been incorporated into the MSCI index, and the blue chips of A shares have also fallen out of value. So this time, the willingness of foreign investors to invest in A shares is relatively strong. In the past, 90% of foreign investment in Chinese stocks invested in Hong Kong stocks, and only 10% invested in A shares.

After the A share is included in the MSCI nascent market index, the proportion of foreign investment A shares will increase.

After the announcement, South Korea issued a report that A shares are included in the MSCI emerging market index, which may squeeze capital inflows into the Korean stock market.

From a static point of view, after the A share is included in the MSCI nascent market index, it will inevitably reduce the allocation ratio to other emerging markets. However, since China's economy is a relatively high growth economy in the world, A shares may be included in the MSCI emerging market index, which may attract more funds to subscribe for investment.

The index funds of the emerging market index, that is to say, the total cake may be bigger, so that it does not necessarily reduce the stock market allocation ratio to countries such as Korea and Taiwan.

Foreign investment A shares are mainly investment in some high-quality blue chips, which will further boost the blue chip market.

There are only two channels for foreign investment in A shares, the first is through QFII channels, and the second is through Shanghai Hong Kong Tong and Shenzhen Hong Kong through channels.

Shanghai and Hong Kong Tong, Shenzhen and Hong Kong through two years of opening, it can be said that the A shares have joined MSCI.

For the first time this time, MSCI shares are the underlying stocks of Shanghai Hong Kong Tong and Shenzhen Hong Kong Tong. These foreign capital to be allocated A shares may be configured through Shanghai Hong Kong Tong and Shenzhen Hong Kong through channels.

Why do not those foreign investment MSCI emerging market indexes allocate A shares through QFII? Because Shanghai Hong Kong Tong and Shenzhen Hong Kong pain funds are very convenient to enter and exit, and are not subject to foreign exchange control. Apart from the trading ceiling of 13 billion yuan a day, there is no limit in the whole year.

When foreign capital makes investment decisions, the general concern is not so large. They will focus on tracking more than ten stocks that are relatively familiar to them. When these stock performance results have inflection points or the valuation is more attractive, they will buy, and pay too much attention to the wave of the market at that time; and when these stocks are not valued at high valuations and bubbles appear, they will also sell firmly.

These foreign investment in A shares, their stock selection ideas and operation methods are relatively simple, but it is also more effective.

Over the past few years, foreign investment in A shares

The overall level is very high.

In May 2015, the Qianhai open source fund took the initiative to reduce the stock position fund to less than 10% in order to avoid the risk of market peaking. At that time, many foreign investors withdrew from the A shares at that time. After that, it was the best time to withdraw.

After two years, some foreign capital began to copy A shares through Shanghai Hong Kong Tong and Shenzhen Hong Kong through channels.

They can do so precisely, mainly because they have a thorough study of individual stocks, and watch the investment value of some stocks to operate.

The big bands that mark some high-quality stocks can avoid being confused by short-term fluctuations in the market, and can really grasp the investment opportunities of stocks in the market.

Learning foreign capital stock selection ideas, this time there are 222 large cap stocks in the A shares, we should seriously study the 222 stocks, remove some stocks that have already been high in the stock market, and select some good industry leaders to configure them.

The 222 companies can choose at least 20 comparable investment value, that is, the potential stock in the coming year should be no problem.

These 222 stocks must be filtered again. This is an important reference stock selection scope. Although it can not be said that all 222 are good stocks, at least most of them have investment value, most of which are in line with the standard of foreign stock selection.

After announcing that the 222 stocks of A share are included in the MSCI index, the performance of these stocks is obvious to all, and most of the stocks have a good rise. This shows that everyone's idea of stock selection for foreign capital is relatively acceptable.

It is noteworthy that in addition to the recent increase in the proportion of foreign capital allocated to A shares, some institutional investors have gradually increased to the proportion of investment allocation to A shares, including insurance, brokerages, information management and funds, which generally increase the proportion of A shares allocation in the near future.

The value of investment has been recognized by more and more institutional investors, which is very gratifying.

A recent popular phrase can be used to describe A shares. "Now you ignore me, and I will let you down tomorrow."

I think this is normal for describing A shares, and it is also very appropriate.

Because many shares of A share have fallen out of value, many stocks already have investment value.

When we allocate the bottom A shares, we should grasp the idea of selecting the leading industry, try to avoid the poor performance stocks and small cap stocks, try to select some blue chip stocks with outstanding performance and excellent performance, so that we can get better returns in the second half of the year.

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