Why didn't the bull market end so soon?

An article pushed by King's Landing last week: When will the bull market end? , well received by readers, reading volume broke the recent record!

The reader's reaction is also polarized and the debate is fierce.

One view is that the market is over and there is no bull market at all, such as the following-

But king's landing does not recognize this view.

King's Landing believes that the first chapter of the bull market, that is, the mad cow-financial cow, may have ended, but the slow cow with a longer span may be slowly unfolding.

Because this is the need of the decision-making level.

0 1

Why did the 20 19 spring market end?

Let's start with the picture below.

Many investors will still remember the market at the beginning of last year.

At the beginning of last year, the Shanghai Composite Index rose from 2,440 points to 3,288 points, an increase of nearly 35% in three months. The concept of various technology stocks has been hyped in turn, which is quite bullish.

But I didn't expect that after April, the market plummeted and the market soon ended.

This round of market in 2020, at present, is so similar to the curve of this wave last year!

Is this a perfect copy?

Then, let's see why the market at the beginning of last year suddenly ended.

On the whole, last year's market can be divided into three stages:

The first stage, 65438+ 10 month, 2440-2600.

At this time, A shares experienced a long bear market of 20 18, and the valuation was extremely underestimated, and foreign capital began to buy quietly.

Yes, only foreign investors are buying, while domestic investors are staying put.

The second stage, February, 2600-3 100.

Domestic funds have increased their positions on a large scale, buying about 200-300 billion yuan, and the positions have increased by about 10%. It has promoted the rapid rise of the stock index and the popularity of the market.

The third stage, from March to mid-April, 3 100-3300.

The lack of incremental funds led to market hesitation, and then domestic and foreign capital retreated one after another, and the management of the company set off a wave of reduction, and the market ended.

As we analyzed in the last article, there are four forces in the A-share market: foreign capital, domestic capital, legal persons and retail investors.

In the bull market, it is usually foreign investors who predict the duck eggs heated in Chunjiang.

They are good at finding opportunities in the global market and going to places where they are undervalued.

Therefore, foreign capital usually enters first and lurks.

Domestic investors are trend investors, with high vigilance and timely follow-up, and usually can eat big meat.

Legal persons are usually rational investors, because they hold the first-hand dynamics of enterprise management and need a lot of funds to go in and out, so they are also a group of people who are extremely sensitive to funds.

More importantly, the funds they hold account for half of A shares, which is enough to influence the changes in the market.

Although retail investors have a large transaction volume, they are usually a group of conscious people.

Under normal circumstances, the bull market has entered the middle and late stage, and after the stock index hits a new high, retail investors will enter the market in large numbers and become the trading subject of the junk stock market.

Let's look at the market last year.

First, the Federal Reserve contracted its balance sheet, and the interest rate of US debt rose, which led to the return of funds from emerging market countries to the United States. After March 6, foreign capital began to retreat.

Then there were the two sessions in mid-March, and the signal released by the decision-making level was loose and tight, with stability as the mainstay.

On the one hand, the GDP target is 6-6.5%, which is lower than 6.6% in 20 18. If the goal is not high, the motivation to release water will be insufficient.

On the other hand, the core policy is to reduce taxes and fees and rest for health.

In other words, once the lever is removed, you can rebound. Don't dream of releasing water.

As a result, after the two sessions, domestic capital also retreated.

Foreign capital and domestic capital have retreated successively, and legal persons and retail investors have not increased their positions, so the market is naturally unsustainable.

02

Why didn't the spring market last for nearly ten years?

The market of 20 19 is essentially a routine deduction of the spring market over the years.

Experienced investors know that in the spring of many years, A shares will have a round of "spring market".

Let's take the past ten years as an example:

20 10, from early February to mid-April, the Shanghai Stock Exchange was 2900-3200, up10%;

20 1 1 year, 65438+1from the end of October to the middle of April, Shanghai Stock Exchange 2650-3050, up15%;

2012,65438+1early October-mid-March, SSE 2 100-2500, up19%;

20 13-20 15, the performance is not obvious.

2016,65438+1from the end of October to the middle of April, Shanghai Stock Exchange 2600-3 100, up19%;

2017,65438+1from mid-October to mid-April, the Shanghai Stock Exchange was 3050-3300, up 8%;

20 18, the bear market all year round, the performance is not obvious.

2019,65438+1from early October to mid-April, the Shanghai Stock Exchange was 2440-3300, up 35%.

On the whole, there has been an obvious spring market in six years in the past decade, with an increase of about 10-20%.

Most of the time occurred in 65438+1October-mid-April.

Why are there such regular market opportunities?

King's Landing believes that this is mainly due to the expectation of market funds for the policies of the two sessions, which leads to an expected ambush.

King's Landing has analyzed in the past articles that the two sessions are the biggest policy windows for A-shares.

For example, in the two bull markets of 2009 and 20 15, the main line of market development was fermented around the policy theme of the two sessions that year.

The theme of the two sessions in 2009 was 4 trillion infrastructure investment, so the main line of the bull market in that year was cyclical stocks such as steel and cement.

On 20 15, the themes of the two sessions were Made in China 2025 and internet plus, and the main lines became industrial robots, new energy vehicles and network technology stocks.

However, market funds are also very clear.

The bet of the two sessions depends on whether the news has landed.

If the policy is unconventional, then the market will continue and become a bull market.

But if not, then the speculated valuation will lack support, and everyone can only settle for the next opportunity.

This is the case with the spring market of 20 19.

03

This round of market is not a spring market.

Obviously, this round of market is not a spring market.

It happened in July of the second half of the year 1.

Generally speaking, A shares look at policies in the first half of the year and performance in the second half.

The disclosure time of the semi-annual report is mostly concentrated from the end of July to the end of August, especially in the middle and late August.

Therefore, the A-share market in the second half of the year often occurs in August-165438+ 10 in the autumn season.

But obviously, this round of market is not driven by performance.

In fact, looking back at history, the three major buffaloes of A shares all happened after the second quarter.

Once in May,165438+1twice in October.

The main reason is the sudden change of economic fundamentals after the two sessions, which exceeded expectations-

There is a major adjustment in the policy!

For example, 20 14, in the first half of the year, the tone set by the above meeting was still cautiously optimistic;

However, from the middle of the year, oil prices suddenly began to dive, from 1 15 to 30-40 dollars, and quickly transmitted to the consumer side, forming deflation expectations.

In this case, in the fourth quarter, the decision-making level made a decisive move in policy.

So what happened this year?

04

What are the considerations of the decision-making level?

There are two main lines of economic fundamentals in 2020: anti-epidemic and anti-American.

The focus of the first half of the year is undoubtedly anti-epidemic.

Let's take a look at what the NPC and CPPCC said about the epidemic.

The first is to set the tone:

"A proactive fiscal policy should be more proactive and a prudent monetary policy should be more flexible and moderate."

In a relaxed tone, four countermeasures:

First, the fiscal deficit increased by 1 trillion yuan compared with last year, and special anti-epidemic treasury bonds of 1 trillion yuan were issued;

The second is to reduce taxes and fees, which is expected to reduce the burden on enterprises by more than 2.5 trillion yuan throughout the year;

Third, it is planned to arrange local government special bonds of 3.75 trillion yuan, and the central budget will invest 600 billion yuan;

Fourth, the growth rate of inclusive small and micro enterprise loans of large commercial banks is higher than 40%.

King's landing will explain it to you one by one.

The first is that "fiscal policy should be more active and promising". How can it be regarded as "more active and promising"?

The last time a similar formulation appeared at the two sessions of 20 17, it was said at that time:

"The fiscal policy in 20 17 years should be more active and effective. In 20 17, the deficit ratio is planned to be 3%, and the fiscal deficit is 2.38 trillion yuan, an increase of 200 billion yuan over last year. "

Note that under the active and effective fiscal policy, A-shares in 20 17 are a slow bull market, with an annual increase of about 15%.

This year, a proactive fiscal policy should be more positive and promising.

On the one hand, the deficit has expanded by 1 trillion;

On the other hand, deficit ratio has greatly increased from 2.8% to over 3.6%.

In China's financial system, 3% fiscal deficit ratio is a warning line. In this special internal and external environment, the fiscal deficit ratio increased by 0.80 percentage points to over 3.60% for the first time.

This is the first time in the history of our country that deficit ratio has exceeded 3%, and the deficit scale has also expanded from 2.76 trillion in 20 19 to 3.76 trillion in 2020.

It can be said that this is quite positive.

There are also 1 trillion special anti-epidemic treasury bonds, increasing10.6 trillion local special bonds and increasing tax reduction and fee reduction by 500 billion yuan.

Tax reduction and fee reduction was actually a policy set last year, and it has been further increased this year.

Directional loans for small and micro enterprises are also an important means to protect people's livelihood and activate economic microcirculation.

On the whole, these measures are much stronger than 20 17. It can be said that the word "positive and promising" contains a lot of gold.

This year's two sessions were postponed to the middle and late May due to the epidemic.

It will be held on May 22nd and will end on 28th.

Look at the A shares at that time:

On May 22nd, the market dived, indicating that the funds were not expected, and hedging was the best.

Later, after the two sessions, the market began to start gradually and made small steps forward until it began to run in big strides in July.

There is no doubt that more than a month later, with the implementation of the policy, "Spring River Plumbing Duck Prophet".

05

The main line in the second half of the year is anti-American.

The main policy line of 20 19 is to reduce taxes and fees, which brings about the structural market of consumer stocks;

In the first half of this year, under the pressure of anti-epidemic, tax reduction and fee reduction continued, which brought the continuation of consumer stocks. Maotai ranked first in the market value of A shares.

But in the second half of the year, King's Landing thinks that the main line of the market will change.

The main reason is that internal risks have been gradually resolved, but external risks are on the rise.

At present, the epidemic in the United States has become more and more serious. The number of newly confirmed cases in July has reached 60,000-70,000, which is several times higher than the 20,000 cases in June.

As the epidemic enters an uncontrollable state, the unemployment rate continues to rise.

According to the latest statistics of Goldman Sachs, about 80% of the state's population has suspended economic restart or taken targeted measures to slow down the pace of restart.

In this case, voters' disappointment with the president can be imagined.

A poll conducted by ABC News/Washington Post shows that 60% of people are dissatisfied with Trump's handling of the epidemic, which is significantly higher than that at the beginning of the epidemic.

Based on a number of poll data, Biden's support rate for Trump is about 10- 15 percentage points ahead.

Biden doesn't have to do anything. As long as the voters are angry enough, he can almost win.

There are still about three months before the American election in early 165438+ 10. Industry analysts predict that Trump is very likely to make a dangerous move in the last fight.

Look at the latest news:

First, on July 6th, US Secretary of State Pompeo said that for security reasons, the United States is considering banning social applications such as tiktok and WeChat.

In the same period, US military planes conducted close-range reconnaissance operations on the southern coast of China for three consecutive days, and the nearest distance was only 95 kilometers from Guangdong. This is a very dangerous move.

Third, in July 14, Britain announced that it would stop using Huawei equipment in the construction of 5G. This is obviously because of the pressure exerted by the United States behind it.

Fourth, on July 15, US Secretary of State Pompeo said that the United States would impose sanctions on some employees of Huawei.

Fifth, on July 16, The New York Times reported that the Trump administration was considering a total ban on party member from China and his family from going to the United States. The proposed presidential proclamation may also authorize the US government to revoke the Chinese visas of party member and his family.

Sixth, on July 17, two carrier battle groups of the US Navy, Nimitz and Reagan, held a "double carrier" exercise in the South China Sea, which was the second time that the US military held a "double carrier" exercise in the South China Sea this month.

……

The pressure from the other side of the Pacific can be described as pressing.

How should China respond?

In the final analysis, it is still necessary to build a globally competitive science and technology industry chain.

How to achieve this goal?

Empowering the technology industry by financial means.

As we know, in China's financial market, banks are the main debt financing channels.

This channel attaches great importance to the borrower's credit and collateral. Therefore, large state-owned enterprises with government guarantees and resources often gain advantages, while private enterprises, start-ups and high-risk technology enterprises are left out in the cold.

To reverse this situation, we can only hope for our big A shares!

This is a three-step strategy.

The first step is to lower the threshold for the issuance of technology stocks.

Means include:

A, the establishment of a registered science and technology innovation board, so that unprofitable technology enterprises can come to the A-share market;

B. Turn the relatively mature GEM into a registration system to encourage more technology companies to go public;

C. The New Third Board launched a selection layer to lower the trading threshold of investors and enhance the activity.

According to Wind statistics, as of June 30th, the number of A-share start-ups reached 1 19 in 2020, an increase of 80% year-on-year;

The total scale of IPO fundraising has reached 65.438+03.927 billion yuan, with a year-on-year increase of over 654.38+030%, the highest in the past five years, second only to the big bull market of 2065.438+05.

This is still in the absence of a large-scale roll-out of the GEM registration system and selection layer. In the second half of the year, it will undoubtedly be more popular.

The second step is to loosen the refinancing.

Technology stocks are listed, but they can't grow up in one financing, and they need continuous financing investment to thrive.

Therefore, the new refinancing regulations were introduced in February this year, which greatly loosened the fixed financing for technology stocks.

According to the statistics of Choice, as of July 6, the refinancing scale of A shares reached 487.432 billion yuan.

At present, there are 232 enterprises in the main board and small and medium-sized board waiting in line for refinancing, of which 2 1 enterprise passed the audit meeting. On GEM, Shenzhen Stock Exchange has accepted 93 refinancing applications. The total refinancing scale of the above 325 enterprises is 642.382 billion yuan.

The market predicts that in the next year or two, the scale of fixed increase will be expanded to more than one trillion yuan again, even exceeding the peak state of 20 16 and 20 17.

The third step is to guide the valuation of leading technology stocks to improve.

A country's science and technology industry is not driven by small enterprises and junk stocks, but by competitive leading enterprises.

Just as there is only one apple in the United States and only one Samsung in South Korea, it is enough to support its strong position in the mobile phone industry chain.

As long as large enterprises are established, the surrounding areas will naturally form upstream and downstream industrial chains and develop into market-oriented ecological clusters.

Therefore, the key point is how to improve the valuation level of leading technology stocks, so that they can obtain low-cost financing ability and accelerate the pace of development.

The reasonable way is to set a benchmark and create a money-making effect!

Therefore, China set up a large-scale integrated circuit fund, the first phase and the second phase, to focus on investment in leading technology stocks, and promote the improvement of valuation!

Since the beginning of this year, a number of chip stocks represented by Zhongwei Company and Shanghai Silicon Industry have soared. In July, SMIC rushed through customs clearance and went public under the escort of all parties, which is obviously what the decision-makers are happy to see.

Some conservative investors will say that the current chip stocks are not all market dream interest rates?

Can it continue to rise?

I can't believe it. You will fall in the future, depending on how miserable you die. ...

King's Landing believes you are right. Chip stocks are expensive and will return to value in the future. These are all high probability things.

But not now.

Because the revolution has not yet succeeded, comrades still need to work hard.

In the blueprint of decision makers, it is necessary to have a suitable bubble capital market to serve the expensive capital expenditure of science and technology enterprises.

This is a long-term strategy, starting from 20 13.

Unfortunately, the implementation level was not done well at that time, and a mad cow interrupted the beautiful blueprint for several years.

Now, the decision-making layer is carefully restarting the blueprint.

It is absolutely not advisable for policy makers to create mad cows and self-destruct the Great Wall again before the economy is obviously improving and the emerging industry leaders are really growing.

Therefore, this time, we will be more cautious and avoid repeating the same mistakes.

You can also be more confident and expect the A-share bull market to develop steadily.