Category: Money Tips Date: 2006-04-08
1, the stock market is over the worst case
In 2005, the Chinese A-share market closed at the bottom of the fourth consecutive year. We have summarized the market decline in the two main factors, and to determine the changes in these factors.
(1) suspicion of split share structure
"Split share structure reform will be subject to different interest groups from all sides of the interference and game, the final difficult to enforce, A shareholder in the loss of pricing power at the same time not given due compensation."
In fact, despite the more than 300 have been completed share reform of listed companies where there is not satisfactory, but whether it is the majority shareholder, corporate shareholders or the shareholders of tradable shares have taken a compromise approach, under the auspices of the government's stake in advancing the sub-set of reform progress. With the split share structure reform, further deepening, A share market systemic risk is gradually reduced.
(2) Hard with the road to economic concerns
"China's economy has experienced 20 years of rapid development, economic growth, the model still remain in the extensive development of the state, GDP is the main source of growth in fixed asset investment, excessive investment in the next few years will bring about serious the consequences of excess capacity, the financial system are affected, and could make China's economic hard landing. "
In fact, how to understand China's economic growth in short-term factors and long-term factors, is how to share the premise of China's economic growth. 20 years of rapid economic growth appears to be "the myth of Chinese characteristics," However, we carefully compared the process of Asian economic development can receive, China's development is not out of the Asian model of economic growth. With Japan, South Korea and Singapore, the country's economic take-off, as China's economic development dependent on the demographic dividend of the strengths and external financial and technical support. High savings rate and investment rates in all countries there have been varying degrees, the demographic dividend has been fully utilized in many countries has created a miracle of economic growth. South Korea, Malaysia and Singapore achieved more than 40 years of rapid growth.
Indeed, it is difficult to draw a very positive response, the Chinese economy will not experience a hard landing in 2008. "The economic crisis is like a cold, there is no way to eliminate, do not know when it will fall on your body, the only thing we can do is to enhance their resistance to prevent its occurrence." After 20 years of economic development and change, the Chinese economy's capacity to resist risks gradually increase.
By historical comparison, we find that, and 1992-1995, "there is no profit growth," is different from the economic growth accompanied by an overall increase in the profits of industrial enterprises; Although the increase in the prices of upstream products greatly reduces the profits of the middle and downstream businesses, the impact profitability in the distribution pattern among different industries, but as a whole did not change the fact that corporate earnings growth.
Meanwhile, the 90's continued investment in the latter half of the industry downturn led to a lot less than the total investment, the elimination of bottlenecks in the industry can only be resolved through a large number of investments. As this upsurge of investment in the diversification of funding sources, we think that banks will not be a sharp increase in bad loans. The next few years, social investment funds will be with the return on investment from high-point is reduced, tend to take a low investment, income distribution to the residents tilt mode. In the next few years, domestic price stability and consumer strength.
We are judged in 2006: The stock market will become more active
Reversal of the stock market must be based on the fundamentals of listed companies, the performance improvements and substantial growth in the premise, A-share market to large-scale development, it must thoroughly address the following three issues: equity split, distribution system, the complete market-oriented, and listing of the improvement of corporate governance structure. Tradable shares next year, is still in progress, after 2:00, only through the polarization of the stock price and market Daobi be a quick fix.
(1) or the supply of equity issues
A-share market lies in the supply side of the stock, namely, to provide investors with the listed company's own institutional arrangements. More than 10 years under the government-led packaging market, has led to more than 75% of the listed companies is not attractive to investors; first two years of strict control over the issue of IPO, resulting in A-share market marginalization; stock can be changed after the circulation of shares, will be No need to increase supply, as long as the original "non-tradable shareholders," there is room for arbitrage, the majority of stocks are down space.
Complete distribution system to solve the stock market the only way to supply problems. Although it will bring a large expansion of the short-term market panic, but as long as there is a good investment targets, that is, an attractive stock market. A supply of the market share is worth the market expected.
(2) a new game, new problems
Institutional Change of the game to change the institutional environment, two-thirds of non-tradable shares has been around the A-share market viability. Paid the right price, access to the circulation is still the majority shareholder after the power to guide the changes in stock prices. In 2006 the diversification of the different interests of shareholders, interests of the main face of their pursuit of specific goals and incentive constraints determine the A-share market's direction.
Although the introduction of split share structure reform, a considerable period of time reduces the systemic risk, but the shortcomings in corporate governance will increase the stock of non-systemic risk. The market game opponent has changed. As opposed to a better understanding of the company's major shareholders and related insider shareholders, the existing legal means of implementation difficult to ensure the circulation of shareholders. Asymmetric information, financial system is not perfect and false low cost, makes the flow of the shareholders face more pitfalls.
Need to improve the legal environment, market environment, a considerable number of companies will choose to change before the stock down profits, the profit lock-term overdraft. In order to obtain the best realization of assets or the executive incentive method of number of listed companies will make use of the financial rules of the loopholes in profits on the increase in the number. With equity shares commitment to reform the end of the lock-up period, the original shareholders to withdraw, there will be no appeal to a faster decline in stock price, the market will be further intensified polarization. In the differentiation process, good corporate governance of listed companies will increase the premium.
Next year's market is the multi-power contest. Only the market Daobi give rise to legal enforcement, improvements in corporate governance improved in order to have a better investment environment. From this point of view, next year, employment opportunities and pitfalls abound.
(3) Our strategy
We believe that, despite the performance of listed companies are likely to fall in 2005, but the current valuation of most stocks, compared with the surrounding markets, has been the safety of low-risk investment in inter-regional. "Walk Down Wall Street" Malkiel, author has mentioned that decided a stock rise 4 driven by the expected growth rate of enterprises; dividend dividends; risk; the cost of capital. In this four momentum, in addition to the expected growth rate of business decline in the other three will become next year's market of rising power. The government is expected to clear the capital market situation, next year is the best time for long-term capital market. In addition, in the context of structural adjustment, macroeconomic next year, will continue to be high. In the money supply is relatively relaxed circumstances, there is an attractive investment target will gradually increase.
(1) growth investment: In addition to corporate profit growth to benefit from macroeconomic growth, from the individual concerned, mainly from two aspects: to obtain a competitive advantage through the opponent's market share; different enterprise life cycle, leading to profits of an enterprise growth at different stages. For the growth of investment, it is important to grasp the texture of listed companies, as well as growth expectations management. Avoided simply because of capacity expansion leading to rising profit shares; right share commitment to reform has increased the stock performance of careful selection. We are concerned about real core competencies and be able to ensure the performance of sustained and stable growth stocks.
(2) the value of investment: long-term investors choice. Although the domestic environment of restructuring and mergers and acquisitions to be improved, but after the split share structure reform comparison of the total market value and replacement cost will change the long-term capital flows. In energy, raw materials, transportation, public utilities and other industries, there have been a static valuation of stocks lower than the Hong Kong market. Investing in these stocks, there are two points worthy of our attention. First of all, these industries are in 2003 and 2004 and investment in big big profits. We believe that the inside in some industries 05-07 years of performance decline are not fully recognized by the market, the dynamic valuation may not be so attractive; Second, in these industries, the relatively stable performance of the enterprise may be in the next 2 years dividends taken measures to make investment value of the show, such stocks are the focus of our attention.
(3) to avoid short-term hot spots, concerns product innovation: the financing of the bull market driven by more than a trap for a bear market. We are not concerned about short-term market hot spots, especially the conceptual, short-term investment opportunities. Investment theme, we also believe that due to demographic changes and technological advances of the industry and listed companies, the impact of these effects will be reflected in the operation and performance of the enterprise. The product innovation will provide a hedging tool, to change the trading rules, and thus by changing the expectations of investors influence the market.
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