Ren Zeping: The stock market rally more reflects the 11 recommendations made by loose liquidity
Potential momentum of the current epidemic in China’s economy, policy and capital market outlook Source: Zeping Macro was invited by the China Fortune 50 Forum.Define the internal theme: I will open my door and talk about the main judgments, as well as logic and evidence.
First, the overall judgment is that the impact of the new crown epidemic on China’s economy will be greater than that of SARS, and the time may be shorter. New cases outside Hubei Province continue to decline. Seeing that compared to SARS, the dawn of the government is gradually and more severe.
At present, new cases outside Hubei Province continue to decline.
We judge that around March, the epidemic situation except Hubei Province is expected to be basically over.
The impact on China’s economy in a quarter, February was negative growth, GDP growth in the first quarter was about 4%, 4% in the fourth quarter of 2019, about 2 decline, which is a basic judgment.
Compared with SARS, it can be seen that the new crown epidemic is more contagious and the case fatality rate has decreased.
SARS is the cause of more than 8,000 infections worldwide. China has diagnosed more than 7,000, with deaths of 685 and deaths of 9.
There are currently more than 70,000 new crown epidemics, with more than 1,800 deaths and a case fatality rate of 2.
From the perspective of the trend, around February 3 was the peak of increasing confirmed cases outside Hubei Province, and then it fell for two weeks. The trend is still relatively obvious, and the epidemic situation outside Hubei Province was gradually stopped.
The situation in Hubei has been an upward trend from January to early February. However, it has recently entered a platform period and is now slightly offset.
In the early days of the epidemic, it can be said that the army was defeated and the front line was chaotic.
But at the back, the central government went to war and quickly controlled the disease outside Hubei Province, and the epidemic situation in Hubei Province was gradually contained, and a good possibility appeared, dawn.
Tribute to frontline staff!
Second, the impact on the economy should not be underestimated. The return to work in the city is obviously repeated. Obviously, it resumes work one week after the Spring Festival.
The power generation data is relatively obvious. In the history, one week after the Spring Festival, there was a climax of resumption of work, but at present, after two weeks of the Spring Festival, the power generation is still at the bottom, indicating that our resumption of work is obviously prominent.
We look at the sales of real estate. Generally speaking, according to the past, there was a peak of returning home purchases after the Spring Festival. A large number of people returned from the first and second-tier cities to the third and fourth lines, and there was a peak of returning home purchases.
At present, the return to home ownership has basically failed. According to data released by Kerui, sales have plummeted by about 90%.
Judging by the volume of passengers sent by railway, civil aviation, waterways, and highways, it is clear that the return to the city and return to work are obvious locations.
Compared with SARS, the impact of the new crown epidemic on China’s economy is now somewhat divided, but everyone generally feels that the impact on the economy will exceed SARS.
The reasons are not complicated. The first is that the environment inside and outside the Chinese economy is different, and the pressure on the Chinese economy continues to decline.
Moreover, everyone knows that the epidemic mainly impacts consumption and has a certain impact on investment. We will see later that the impact on investment and production is relatively small compared to consumption.
Compared with 2003, China’s tertiary industry now accounts for 53% in 2019.
9%, an increase of 12 mergers over 17 years ago.
In 2003, we can see China’s economic growth rate, which fell by two probabilities in the second quarter, and rebounded quickly.
The trend of China’s economy is declining for ten consecutive years, and the downward pressure on the economy continues to be relatively large.
The impact in 2003 was mainly on transportation, accommodation, catering, etc. This time the situation was similar.
We can now see that the economic structure has undergone relatively great changes.
Because it mainly impacts the tertiary industry, it will be dominated by the secondary industry in 2003, and the tertiary industry will transform in 2019. Therefore, the impact of this epidemic on the economy will be greater than that of SARS, and of course it may be shorter.
We did three scenario analyses.
The first scenario is relatively optimistic. The peak appears in mid-February and basically ends outside Hubei in March, which mainly affects China’s economic GDP for a quarter.
The GDP forecast for the four quarters of each year is 4%, 6%, and 5.
8% and 5.
6%, 5 per year.
4%, this is the first scene.
The second scenario is to affect the Chinese economy for half a year, which is the end of June. The more pessimistic scenario is to affect the Chinese economy for three quarters. Currently we ignore the first scenario.
Third, from the perspective of the industry, the agglomeration service industry has suffered large losses. In trillions, employment is severe and severe. Agglomeration industries such as tourism, catering, hotels, transportation, and real estate have suffered a lot.
A rough estimate has been made that these severely affected industries accounted for 30% of GDP and employment.
Of course, there are some industries that benefit, some say medicine, online entertainment and online office, but the proportion is relatively low overall.
We simply calculated one by one, and we can see that some film, catering, and delivery, according to the available data, the three industries lost 1 trillion yuan in 7 days.
After the Spring Festival, according to big data, the employment situation is also relatively poor, and the employment trend will be severe this year.
Fourth, the impact on consumption is greater than investment, and investment recovery will be faster. Residents have a lingering heart about consumption. SARS is similar to this time in that it has a greater impact on consumption than investment.
The outbreak of the Spring Festival during the Spring Festival itself is the peak season for consumption and the low season for investment, so the impact on consumption may be somewhat.
We judge that the recovery of investment and production in the future will also be faster than consumption.
Residents will have time to gather consumption.
It can be seen that in the second quarter of 2003, consumption fell by a big pit, and investment was OK, but investment and production soon recovered, and the magnitude of the shift was not so great.
After the SARS epidemic in 2003, the recovery of investment, the recovery of production in the secondary industry is faster than that in the secondary industry, and the recovery of consumer products will be slower.
Fifth, the impact on prices will gradually ebb, but only in the short term at a relatively high interval just announced the January CPI data has increased significantly.
4%, mainly due to the surge in pig prices, the Spring Festival factors, and the epidemic situation.
We judge that the gradual recovery of shifting production and the ebb of residents’ panic, and the expected drop in prices may still be in a higher range, but it does not mean that it is gradual.
We still maintain our original point of view, and deflation is all we get out of pigs.
It can be seen that the core CPI without food and energy is only 1.
A 5% increase is in a reasonable range.
From July last year to December last year, our PPI has been in a negative growth deflation range for half a year.
Sixth, the large increase in the stock market more reflects the loose liquidity, rather than the deterioration of economic fundamentals. The meaning of the stock market comparison is because of the recent epidemic, the economy is not good, and all industries are affected.
However, the stock market rose sharply, and the GEM also hit a new high.
Our understanding, including the communication with the market, the large increase in the stock market more reflects the loose liquidity than the deterioration of economic fundamentals.
Especially in the context of low expectations of financial institutions for lending to enterprises and real estate restructuring, liquidity is chasing equity assets.
We have invested a lot of currencies, and put out 1.700 billion liquidity in the open market on February 3-4.
There are two facts that can be proved: one is that the growth rate of the GEM has exceeded that of the main board, and even some analysts say that stocks with fundamentals are afraid to push them; the second fact is that stocks and bonds have doubled, and generally, stock market debtThe market changes in the opposite direction, only in the same direction when the margin of flow is abundant.
These two facts indicate that the current market is driven primarily by liquidity and risk appetite, not fundamentals.
Therefore, we suggest that the function of the stock market to support the real economy should be brought into play in the future to prevent concept speculation and capital idling.
In my personal opinion, the recent two-council shooting is still more timely and professional, especially the normal market opening. I think that the rules of the market still need courage.
It can be seen that the latest liquidity situation was launched on February 3-4, two days after the launch.
7 trillion, of course, is short-term.
In terms of quantity, it is equivalent to 1.
On January 1st, there was a RRR cut, and the base currency was invested 800 billion yuan, which is equivalent to two months from January to February.Recently, interest rates were cut through LPR and other methods. Today’s LPR is reduced by 10 BP, and the market is relatively liquid.
The yield on 10-year Treasury notes fell by 30 BP, and inter-bank market interest rates fell by 49 BP.
Seventh, the epidemic situation is entering the second half. The focus is on both the prevention and control of the epidemic and the restoration of production. We judged that the epidemic is entering the second half.Bail out businesses.
Currency cuts in interest rates and standards, short-term liquidity support, tax cuts, increased deficit rates, deferred payment of social security, etc.
It should be said that some recent policies of the central government are relatively timely and effective.
The next step should be to prevent and control by districts and levels, to prevent local governments from increasing the size of the market, exempting local responsibilities, and paying the bills.
This situation still exists to varying degrees.
We made a rough calculation, and you can see that the data is relatively clear. The number of confirmed diagnoses per 10,000 people in 20 provincial administrative regions of the country is less than 0.
1, that is, one in 100,000 can be clearly diagnosed as a low epidemic area, there are 20 provincial units, should be able to resume work in an orderly manner.
Eighth, orderly return to work, prevent the second spread of epidemic situation, the area of population migration must not be taken lightly in the future, the evolution of the resumption of rework and rework, Beijing, Shanghai, Shandong, Jiangsu, Zhejiang, Fujian, Guangdong and other regional central cities, theseAreas where the population has flowed in must focus on prevention and control to prevent secondary spread.
Recently, everyone in Beijing has seen that some sudden situations have occurred, all related to this thing.
Explore flexible office work, shift to and from work, and work online to avoid cross-contamination of people.
Before the Spring Festival, 5 million people flowed out of Wuhan, mainly to places where it seemed that the epidemic situation was severe.
Years later, places like Beijing, Chengdu, Shanghai, Guangzhou, Shenzhen, Dongguan, etc. are all a large influx of people, so in the next half to one month, these places cannot be taken lightly.
Nine, what we should do in response to the epidemic: reserve the project in advance, and vigorously reduce the tax on infrastructure after the epidemic. We recommend that you reserve the project in advance. After the epidemic, large-scale infrastructure and tax reductions should be made to fill the smashed economy caused by the epidemic.In particular, it is necessary to carry out large-scale infrastructure construction that is appropriately advanced in urban agglomerations and regional central cities.
Large-scale infrastructure can hedge the downward pressure on the economy, help stabilize growth, stabilize employment, and currently have low commodity prices and financing costs.
Historically, China issued special treasury bonds to strengthen infrastructure during the Asian financial crisis in 1998, and launched a 4 trillion investment with infrastructure as the core during the global financial crisis in 2008. Although it was very controversial and criticized at the time, it now looks significant.Significantly reduced transportation costs and enhanced the global competitiveness of Chinese manufacturing. It is necessary to look at the issue from the perspective of development.
China’s urbanization reform in 201960.
6%, and it is estimated that on average about 80%, China still has a lot of room, but the urbanized population will gather more in urban agglomerations.
We predict that when China ‘s urbanization rate reaches 71% by 2030, 80% of the 200 million new urban population will be concentrated in 19 urban agglomerations, and 60% will be in 7 urban agglomerations including the Yangtze River Delta, Guangdong, Hong Kong, Macao, Beijing, Tianjin and Hebei.In the future, the rail transit, intercity railways, education, and medical infrastructure in the above areas will face severe shortages.
In areas with population migration, it is necessary to appropriately relax local debt requirements and not engage in a lifelong accountability system to promote large-scale infrastructure; however, in areas with population migration, we must treat them differently to avoid significant waste caused by large-scale infrastructure.
We now think that it may be unscientific to pursue debt for life, including a “one-size-fits-all” approach that prevents places from engaging in relatively advanced infrastructure.
It should be treated differently according to the inflow of the population and the occurrence of the situation.
X. In recent years, there have been frequent “epidemics” in the economic and social fields, and the urgency of reforming the deep-seated institutional mechanisms has risen. Some suggestions have been made in recent years. China has made outstanding achievements in the areas of government governance, haze control, deleveraging, precision poverty alleviation, and opening up.
However, we must reflect on it and see clearly that in recent years, we have experienced frequent outbreaks in the economic and social fields, and the economy has continued to decline. We have suffered stock disasters in 2015, Sino-US trade frictions in 2018, andThe private economy’s “departure theory”, the abnormally large increase in pig prices, this pig price has risen more than previous pig cycles, as well as major challenges such as the new crown epidemic in 2020, exposing problems in our policies and institutions.
For example, some policies are “one size fits all” and they are overweight, and private and SMEs are injured by mistake. Some reforms are progressing slowly, people ‘s livelihood expenditure is insufficient, scientific and technological innovation shortcomings, the lack of public opinion supervision, and disorderly social governance. These issues are worthy of us.Thinking deeply, the urgency of deep-level institutional reforms must be avoided, and fires must be avoided everywhere.
The last few suggestions: 1. From the aspect of the system and mechanism, the problems of the new coronary disease exposure, and many issues in the areas of open and transparent information, public opinion supervision, social governance, emergency management, medical technology, and people’s livelihood substitution, make us more sober, ChinaThe real gap between the governance systems and capabilities of advanced countries.
In the future, economic construction should be the focus, and more attention should be paid to people’s livelihood and people’s happiness.
2. Strengthen the openness and transparency of information, strengthen the supervision of public opinion, attach importance to the news media and the public, and the right to know major public events.
Establish the Whistleblower Protection Act as soon as possible to protect citizens from breaking news in order to maintain social justice and the public interest. Whistlers should not be charged with leaking or spreading rumors as long as he has factual basis.
3. Strengthen the construction of social governance system and local governance capacity, from “blocking” to “sparse”.
4. Vigorously supplement the medical shortcomings, increase the cost of medical staff, and increase the proportion of people’s livelihood expenditure in public health care.
5. Strengthen the construction of emergency medical system.
6. Optimize the way to reduce taxes and fees.
In the past, we also made a lot of tax and fee reductions, but the company’s gain was not strong.
The study found that it is mainly related to the way of reducing taxes and fees. In the future, it should mainly change from alternative reductions and exemptions to reducing social security contribution rates, corporate income and personal income.
7. Regarding the registration system as the starting point, improve the multi-level capital market and fundamentally solve the problem of financing of private SMEs.
8. In order to cope with the continued decline of the economy, use the reform method to steadily 厦门夜网 grow, and liberalize the basic industries such as automobiles, finance, energy, telecommunications, and electricity. Medical education should appropriately compete with new investment forces or foster a new economygrowth point.
Deepen the reform of state-owned enterprises, break through the neutrality of competition and the neutrality of ownership.
9. Reform of the housing system.
We have recently spent a lot of time studying the housing system and its housing market performance in typical international economies, such as the case of the United States, Britain, Hong Kong, Japan, Singapore, Germany, and Germany.
The more we study, the more we find out that the key point we have now is that there are differences on the issues recognized by the housing system reform, and the fundamental problems cannot be solved within a few limits.
We summarize it as the word “Balman-land link, financial stability”, where people are demand, land is supply, and finance is leverage.
Real estate looks at population in the long term, land in the medium term, and finance in the short term. These international positive and negative experiences and lessons tell us that people-land relations and financial stability are the keys to the reform of the housing system.
10. Mobilize the enthusiasm of local governments and entrepreneurs, give local officials a new incentive mechanism, and give private entrepreneurs a peace of mind.
11. To fully estimate the severity of the current economic indicators, the current price index is “deflation after removing pigs.”
The basis for short-term economic stabilization since the end of 2019 is not very consistent, so we recommend a prudent monetary policy, a proactive fiscal policy and vigorous reform and opening up.
If China can promote a new round of reform and opening up, with great potential, the best investment opportunities will be in China.
For example, our per capita GDP is now just around $ 10,000, which is only 1/6 of that of the United States.
Our urbanization rate is 60%, and there are still 20 years.
China has 1.4 billion people and is the world’s largest unified market.
China is still very active in innovation and entrepreneurship.
Therefore, after the Sino-US trade friction and experiencing the new crown epidemic, we should be more sober. The crisis is not terrible. The key depends on how we respond and whether we can turn the crisis into an opportunity.