Today's point of view: China's stock market should go out of its own market

Abstract Yesterday, the Shanghai and Shenzhen stock markets were tenacious in the early session and fell in the afternoon. At the close, the Shanghai Composite Index fell 0.93%, the Shenzhen Component Index fell 1.06%, the Shanghai and Shenzhen 300 Index fell 1.03%, and the GEM index was slightly stronger, down 0.17%. And the three major stock indexes of the United States the day before...

Yesterday, the Shanghai and Shenzhen stock markets were tenacious in the early session and fell in the afternoon. At the close, the Shanghai Composite Index fell 0.93%, the Shenzhen Component Index fell 1.06%, the Shanghai and Shenzhen 300 Index fell 1.03%, and the GEM index was slightly stronger, down 0.17%. The previous day's three major US stock indexes also closed with a negative line, the Dow Jones index fell 0.68%, the S&P index fell 0.86%, and the Nasdaq index fell 1.54%. For this "resonance market" of the Chinese and American stock markets, people can find out the rhetoric of a train, but careful analysis can be found, most of which are far-fetched.

The author believes that China's stock market has been running at a low level for three years, and the overall valuation is favorable. This is completely different from the fact that US stocks have continued to rise for up to ten years and are generally at high valuation and high risk. With the gradual deepening of the supply-side structural reforms, a series of measures to adjust the structure and stabilize the financial resources have taken root, and the environment in which the Chinese stock market operates stably is more favorable. In response to the short-term structural shortfall of liquidity, the People's Bank of China and the China Banking Regulatory Commission made timely arrangements to convey a strong signal for jointly maintaining the stable operation of the capital market. Investors should maintain their strength and confidence in the recent stock market and next development. After all, the baton of the Chinese stock market is the Chinese economy, not the US stock market.

Since June, China's stock market has continued to fluctuate at a low level, mainly due to short-term factors such as trade wars and liquidity pressures, which have a psychological impact on investors. The author believes that this psychological fluctuation is short-lived, and the fundamental factor determining the stock market trend is the quality of economic operations. From a variety of perspectives, it can confirm the trend of China's economic stability. The financial data of industrial enterprises released by the National Bureau of Statistics on June 27 showed that the profits of industrial enterprises above designated size increased by 16.5% year-on-year in the first five months of this year, and the growth rate was 1.5 percentage points faster than that from January to April. According to data released by the Ministry of Finance, the total operating income of state-owned enterprises in the first five months was 2,229.97 billion yuan, a year-on-year increase of 10.2%, and the total profit was 1,290.13 billion yuan, a year-on-year increase of 20.9%. It should be said that this good trend is the "development resource" that many countries can't ask for, and it is of course the source of investor confidence.

The good news is that good economic performance data is fully reflected in the performance of listed companies. As of June 26, a total of 1,170 A-share listed companies issued semi-annual results announcements. Among them, 843 companies were listed as pre-history (reducing losses, turning losses, slightly increasing, continuing profits, and pre-increasing), accounting for 72%, and 458 net profit doubled year-on-year, accounting for nearly 40%.

At present, China's economy is at an important stage of climbing up the slope and improving quality. It is normal and inevitable to encounter some internal and external difficulties. It is also necessary to clean up some historical accumulations within the capital market. However, with such a sound economic foundation, we are more confident in dealing with short-term internal and external difficulties and improving market quality. The basis for the high-quality operation of China's stock market is not weak, but is generally enhanced.

From the perspective of recent financial policies, the central bank and the China Insurance Regulatory Commission have all taken strong measures to stabilize expectations and boost confidence. On July 5, the targeted RRR cut will be implemented, and 700 billion yuan of funds will be released. The large amount of MLF funds in June will also have a bottoming and stable effect on the funds in July. From July 1st, the liquidity risk management measures of commercial banks will be officially implemented. Its important role is to confirm the central bank's funds as a source of stable funds, reduce the assessment pressure of banks, especially large commercial banks, and help to improve the short-term funds of commercial banks. Willingness to disassemble. These measures will significantly improve the structural imbalances and local tensions of market funds to meet the operational needs of the real economy and financial markets. At the same time, the Shanghai and Shenzhen Stock Exchanges, the China Securities Industry Association, and the China Banking Association jointly explained the issue of equity pledge on the 26th, disclosed all the data, and clarified the guidance plan, which fundamentally lifted public concerns.

The 2nd quarterly meeting of the Monetary Policy Committee of the People's Bank of China held on June 27 emphasized that “continue to use multiple monetary policy tools, grasp the strength and rhythm of structural de-leverage, promote stable and healthy economic development, and stabilize market expectations. We will lay a good job in preventing and defusing financial risks and defending the bottom line of systemic financial risks. This statement further clarifies the central policy stance on structural deleveraging and helps to eliminate excessive doubts about the deleveraging problem in the market.

Finance is the service of the real economy, and the capital market is an important platform for serving the real economy. When external pressure comes, we must mobilize internal resources and insist on doing our own thing. Judging from a series of measures taken in various aspects in the near future, the Party Central Committee’s judgment on the economic and financial situation is correct, and the stock market has initially reacted positively, but it still needs to consolidate the results. In the next step, positive measures will be taken according to the actual situation, and the relevant policy reserves are sufficient.

Yesterday, the US stock market fluctuated again and again, and the US media generally believed that the Trump administration’s erratic trade policy. In the context of the upcoming mid-term elections in the United States and the continued fermentation of trade protectionism, US trade policy will continue to be an important factor in disrupting international financial markets. We can't ignore this problem, but we can't be led by this factor. A large and solid economic volume, a broad internal development space, and a diversified world economic structure constitute our “strong combination of powerful energy and powerful mechanisms” in response to the impact of trade protectionism. The continued steady operation of the Chinese economy and the move towards high quality development are fundamental determinants of the booming Chinese stock market. China's stock market should go out of its own market.


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