Category: Money tips Release Date: 2006-07-29
A wave of global interest rates, we can feel the world's central banks inflation and concerns about the investment market's reactions were also more cautious. In contrast A-share market, investment sentiment seems much better than the external market, the Shanghai Composite hit a new high, driven by the Bank of China, Shen Chengzhi has been largely returned to the previous high point, in the meantime there are many individual stocks to new highs. In the current A-share market, what are we at what stage? How will the future market evolve? A-share market and how many value-driven? The number of funds to promote?
Let's look at the U.S. market, with the Fed's raising interest rates, investors demand a return on investment is also a corresponding increase in the stock prices of the assets of adjustment is expected in the matter, but not since then the stock of assets will lose their appeal? Funds would favor other types of assets?
From the U.S. market, the level of stocks and bonds, the proceeds of view, stocks are still attractive. By observing the 10-year U.S. bond yields than the rate of return on equity (E / P ratio) of historical data, you can clearly see that bond yields and stock returns are still at historically at the bottom of the ratio. It can be a preliminary judge in the current interest rate levels, stocks are still attractive than bonds.
That we do not the Chinese market, the corresponding data, but the situation is more similar to the estimate. At present the market-weighted PE of about 28 times the level of inspection if the static level of A-share market valuation, then the valuation is not cheap; but if we take into account China's economic growth rate and market reforms brought about by the institutionalization exogenous growth momentum, the market dynamics may be more reasonable valuation levels, while the valuation of some stocks may still be underestimated.
But the difference with the first half, the index rose sharply after, the market has clearly underestimated the level of out of China's capital market development, and once again faced with the problem of rising, history tells us that the market can be resolved only in the development of problems left by history. We visited the end of 2005, A shares, H shares and B shares of the total market capitalization, as well as other countries and regions of the total market value of the stock market and found that, if we put the ratio of the total market capitalization and GDP capitalization rate as a state indicator then China's current total market value of the stock market is undoubtedly a very low level.
This low level of capitalization rate indicates possible future direction of change, a situation because the stock price was seriously undervalued, suggesting the stock market as a whole have great upside potential, it is clear that, according to our earlier analysis, after rehabilitation rise beyond China's capital market should not belong to this column. Another situation is that the stock price is relatively reasonable, but the level of the whole economy capitalization rate is not enough, the future increase in capitalization rate more dependent on more and more enterprises listing and financing.
Study from another aspect, the yuan revaluation process, the central bank are subject to exchange rate stability and prevent external speculative hot money demand can not be a substantial increase in interest rates, and therefore can not effectively control the domestic economies continue to accumulate liquidity. Therefore, to increase the supply of the stock of assets to absorb excess liquidity is the Government of a possible mitigation measures. And appropriate increase in supply can also suppress the stock price bubble, at the same time will increase the proportion of direct financing and reduce financial risk throughout the economy, for the Government, a good way to serve multiple purposes. Therefore, we expect the next period of time, without prejudice to market development, or in the premise of maintaining market stability, the supply of the stock of assets will be more rapid pace of increase, investors faced with a relatively balanced supply and demand market.
Of course, the markets are always put to the pessimism from optimism, and then swing from pessimism to optimism, government regulation is difficult to completely out of step with the market pace, the market in the future may also be subject to further adjustment pressures. We generally believe that in a balanced supply and demand market environment, the index performance will be stabilized, and the corresponding large capitalization stocks and strong substitutability of shares of listed companies will be difficult to have excess income, performance will be a good number of unique, high - growth of small and medium market capitalization companies, whose valuations have the ability to obtain funds from the market, while the favor of gravity.
(Cross-Select Equity Fund Schroder Bank Manager)
