Author: Haitong macro-bond team
The vulgar cloud pigs come to the poor, the dogs come to the rich! Pigs know how to eat, eat more, and will not work for the family, eating and eating at home is poor. The dogs are different, they don't eat much, and they can watch the door, catch the thief, and help the family to work. When they are doing the work, they are rich.
When Hong Kong filmed in the sky, Zhou Xingchi had a movie "Tang Bohu Point Qiuxiang", in which Gong Li played Qiu Xiang, and Xing Ge played Tang Bohu. In order to enter the current residence of the government, Tang Bohu was worse than the one at the gate of Washington. Just another dog’s dog died and immediately began to cry: “Wang Cai... Wang Cai... You can’t die, Wang Cai, you I have been so loyal to me for so many years, and I am so daring, but now I have not even eaten a meal, I am sorry for you, Wang Cai!"
Tang Bohu just saw a cockroach, and the cocker screamed, "Be careful!" As a result, the pomegranate sister retired and trampled to death. Tang Bohu immediately grieves: "Xiaoqiang! Xiaoqiang, how are you Xiaoqiang? Xiaoqiang, you can't die! I am living with you, I have been suffering for so many years, I have been teaching you as a biological flesh, I can't think of today, white hair Send a brunette!"
Since then, for our generation, the only name is Xiaoqiang, but for a dog, the name is Wang Cai.
In summary, the dog can prosper, the dog year is prosperous.
But the Year of the Dog is not without risk. The Year of the Dog coincides with 2018, and in the history of the year, it is easy to have black swan, such as the Asian financial crisis of 1998 and the global financial crisis of 2008. Will there be a crisis in 18 years? No one knows this, but from the shock of the global stock market at the beginning of the year, there may be a lot of black swan this year. How to hold on to wealth, we have several suggestions this year:
First, attach importance to the market opportunities of the Hong Kong stock market.
What is the future? When the 19th National Congress raised it, Chinese residents will pursue a better life in the future. What is a better life?
Thirty years ago, Chinese residents were surrounded by four walls and had nothing. A good life is to seek a warm and full-fledged life. To buy electricity, buy a car, buy a house, and buy everything, the more the better, this is the era of industrialization, and it can be made by simple imitation. The era.
But 30 years later, everyone has not seen the color TV, cars and houses are also there, the goal of a better life is not everything, but what should be used well, academic point is consumption upgrade, The popular point is that it is "high-end, atmospheric, high-grade", and if you want to be tall, you can't do it by simple imitation. You have to upgrade from Santana to BMW to improve quality, and the core of improving quality is innovation.
Therefore, facing the future, the foundation of a better life is innovation. From the earliest electric lights, televisions, telephones, to cars, computers, and mobile phones, innovation has already made our generation live a better life than the ancient emperors, and has created countless wealth. All of the US stock market's continued highs depend on Google, Facebook, Amazon and other innovative and great companies, while another legend, Elon Musk, not only pioneered the era of electric cars, but also recently successfully launched his Telsa sports car. The super rocket was sent to the orbit of Mars.
We also have innovations. There are four inventions in the new era: “online shopping, shared bicycles, mobile payments and high-speed railâ€. We use Taobao to shop every day, use WeChat communication, Baidu search, Alipay or WeChat payment, but most innovative companies Not listed in China, but listed overseas, especially in the US, why do you like to go to the US?
There is a special institutional arrangement in the US stock market, which means that the shares have different rights. Many technology companies, including Facebook, Google, Baidu, Alibaba, etc., have adopted a system of different rights. Because in the early stage of entrepreneurship, technology companies need funds to develop, they must sacrifice equity for financing, but at the same time they are not willing to lose control. Therefore, the system of different rights of the same shares helps to stimulate the development of innovative enterprises, and the United States is attracted by virtue of this system. A large number of companies around the world.
For the Hong Kong market, the biggest regret in recent years is to miss the listing of Alibaba. The core is that Hong Kong was not willing to amend the institutional arrangements for the same shares.
All of this is going to change dramatically this year. The Hong Kong Stock Exchange will completely reflect on it and will officially allow the same shares to have different rights. This will be a great boon for China's innovative enterprises, such as Xiaomi and Ant Financial. In fact, going to Hong Kong for listing will be an important choice.
This means that the future of the Hong Kong market is no longer a cyclical stock market dominated by real estate and banks. It is hopeful that the market will be led by Tencent, and a large number of emerging innovative companies will become markets that represent growth and innovation. .
Therefore, if you believe in China's future and believe that the future hope lies in technology and innovation, you must pay attention to the investment opportunities of Hong Kong stocks.
Second, attach importance to China's national debt and gold opportunities
In Taleb's famous "Black Swan", he said that most people's asset allocation is wrong.
First of all, the world is uncertain. In order to find India, Columbus discovered the Americas. The Titanic is said to be a ship that never sinks. Japan claimed to buy the world in the 1980s, and did not expect to lose 30 years later. The global economy was thriving in 2007, and no one thought of a global financial crisis in 2008. Depicting Hillary’s biography, "Give for the President," I certainly did not expect Trump to be elected president.
Since the world is full of uncertainty, the principle of investment is either a super-high return, or absolute security, and it must not be moderate.
Many people's asset allocation is olive-type, that is, the asset allocation is concentrated in the middle of the assets, such as the combination of ordinary real estate, common stocks, etc., the risk is not particularly large, and the return will not be particularly bad. As everyone knows, once the Black Swan incident occurs, there is no difference in the performance of medium-risk and high-risk assets, and they all fall sharply.
For example, many people bought a holiday property before the subprime mortgage crisis. The result was not much higher, but it fell faster than anyone else, because all of these assets were bought for speculation, and when they think about it, they also sell it. When everyone wants to sell, it is definitely not a time to sell. For example, it is now popular to buy bank stocks as value investments, but in the 1970s, Citibank was once a star in the beautiful 50, but fell below 1 dollar in the 2007-08 financial crisis. The money earned by the bank is often the book value, because the loan has not expired, but no one can tell how the loan will expire. If it encounters a financial crisis, it may be completely lost.
Therefore, the real asset allocation should be dumbbell type. One is a high-risk asset, such as an asset that represents innovation, and high-risk and high-return. In the past few years, if you hold Tencent, Google, these technology stocks are multiple returns. The other side should be low-risk assets, including national debt and gold. Even if there is such a big thing, these two types of assets can still protect your wealth.
And since 18 years, there have been many unexpected incidents. For example, US stocks suddenly fell sharply, and even the global stock market fell. The digital currency has fallen by half in two months, and the sharp fall in the dollar is also surprising.
First, gold has tremendous value as uncertainty increases. Over the past decade, through the long-term release of water by global central banks, the prices of various risk assets have risen sharply. With the gradual tightening of the global central bank's monetary policy, the price of risky assets is also high, and everyone suddenly finds that sometimes the price of assets does not fall is also a kind of happiness. The world urgently needs safe-haven assets, but the real safe-haven assets are extremely extreme. lack of. Overseas European and Japanese national debts are still zero interest rates, and US Treasury interest rates are also going up, and it seems that they are not safe. In the past, we talked about the logic of many digital currencies, and there are all kinds of scarce stories. But the biggest flaw of digital currency is that it can be copied infinitely. You invented bitcoin. I invented Litecoin. In essence, the supply is infinite. In fact, in history, There is no difference in the biggest tulip foam, so this year it has also begun to be returned to its original shape. From the perspective of human history, the real long-term scarcity is gold. Because of the limited reserves and the rising mining costs, we believe that the value of gold is worthy of attention in this year's global risk.
Second, Chinese government bonds have great value. We have been recommending the opportunity of China's bond market since the beginning of the 18th year. We have been watching jokes by many people. We feel that the stock market in January is so good. We recommend the bond market to be very funny. But so far, the growth rate of China's stock market is all negative, and all the maturity rates of Chinese government bonds are lower than the beginning of the year. That is to say, if you buy Chinese government bonds, you are making money now. It is a huge difference to make money without making money!
Why is Chinese national debt valuable? Because China's national debt rate is too high. At present, China’s 10-year government bond interest rate is close to 4%. Since institutions can buy government bonds without income tax, which is equivalent to 5% pre-tax risk-free interest rate, and then consider credit risk, the financing cost of enterprises is 6-7%, and now China’s The growth rate of money is only 8%, and the financing growth rate is also within 10%. This means that China's new monetary financing is only enough for enterprises to pay interest, which in turn indicates that China's interest rate is too high, and enterprises can't afford it. .
Another value of national debt is related to deleveraging. Everyone knows that deleveraging is an important goal of the future government, but who will benefit from deleveraging?
First, we need to know what de-leveraging is doing. Leverage is actually a liability. In the past, our economic development relied on leverage, which is the model of debt development. It is reflected in the long-term high growth of money growth. The growth rate of M2 is over 15% for a long time, far exceeding the economic growth rate. The currency is over-represented, and the renminbi is depreciating both internally and externally. There is no way to buy treasury bonds. However, according to the central bank, in the future, in order to de-leverage, the currency will become the new normal. If the currency is no longer over-extended, it can understand the appreciation of the renminbi since last year, and this provides a good reason for buying Chinese treasury bonds. Because you get not only 4% interest, but also money that is no longer depreciating.
Third, beware of the real estate bubble, beware of falling commodities
The above two are all reminding us of opportunities, and in this part we are going to start showing the risks.
The first is the risk of real estate. Friends who are familiar with our views know that we have been very cautious about the real estate market. We are very worried about the real estate bubble. Although we used to be beaten in the past, our views remain unchanged and we must be alert to the real estate bubble.
From the history of countries around the world, there has never been an asset that has never risen or fallen, especially real estate. It is because the real estate cycle is too long, the benefits involved are too many, and there are many experts and people, so it is difficult to see in the short term. Clear direction. But if you look longer, the direction is actually self-evident.
We believe that the factors that determine the trend of the real estate market are not supply, but demand!
But some people disagree, saying that you look at the statistics of the Bureau of Statistics, is the real estate inventory now not a historical low? Doesn't this mean that the supply of the house is small? Some experts even judged that the biggest risk of China's economy in 18 years was the rise in housing prices. I heard that it was speechless. I would like to ask: "Do you know what the real estate inventory of the Bureau of Statistics is?"
The real estate inventory of our Bureau of Statistics refers to the inventory of new homes, not the inventory of all houses. Because the house is not fast-moving consumer goods, it is not used up, but it is transferred from the hands of the enterprise to the residents. In the process, the house has not disappeared, but the ownership has changed. Isn’t the house in the hands of the residents is not in stock? Yet?
Since the house is not a consumer product, it involves another property and investment product of the house. I believe that in the past two years, a large proportion of those who bought a house must have investment demand. The reason is very simple. If it is just needed, why not buy it when the house price is cheap in 15 years, and wait until the price rises in 16 and 17 years and then rush in. buy? Buying up, not buying, isn’t it an investment and a beggar?
As for investment products, what I want to say is that the logic of determining prices with new supply is absolutely wrong. We can simply take the stock market as an analogy. If someone tells you that the IPO of A shares has been suspended, the stock market will rise sharply. Do you think that he is right and still feels speechless. If it is the latter, then it is right! Because stocks are investment products, not consumer goods, all stock stocks are potential supply, and stock prices will rise if there is no fundamental support, and stock stocks will be given to you.
Therefore, with the logic of low inventory, everyone can buy industrial products, buy Maotai, but can not buy a house! Because the inventory of industrial products and consumer goods is low, it is really low, because they are all used up. The real estate inventory is low, it is all flickering people, the house sold nearly 20 million sets last year, how can inventory become lower and lower? Only everyone believes that house prices will always rise and are not willing to sell, but when the house prices really fall, the inventory will come out.
Therefore, the price of consumer goods can be determined by supply, but the price of investment products is definitely determined by demand. Because the price rises, the supply is small, not the other way around. Conversely, if the house price falls, then there will be more supply.
The most fundamental factor in determining demand is the demographic structure and urbanization. This is the eternal logic in the medium and long term. From the perspective of the birth rate, our high housing prices are the best contraceptives, so that the fertility rate after the second child is not significantly increased, which means that the reduction in the number of young people will not change in the future. From the perspective of urbanization, it is now close to 60%, and 70% is recognized as the peak of urbanization rate. This also shows that the current urbanization process is coming to an end. The main reason for staying in rural areas is the elderly and children. The urbanization is mainly based on government shacking, and it is urbanization that is bought for money and is not sustainable.
The booming real estate market in China over the past 20 years is based on demographic dividends and urbanization, which provide new demand for 10 million and 20 million people each year, totaling an additional demand of 30 million people, assuming a set of 2 people. The house, together with the renovation and demolition, is not an exaggeration to sell 20 million suites a year. However, the latest data in 2017 is that the number of young people in China has decreased by 5 million. Even if the urbanization dividend of 20 million people enters the city every year, there is only a new demand for 15 million people. In fact, 10 million houses are built. Absolutely enough, but we sold nearly 20 million houses in 2017, so in the long run, the house is definitely more.
In the short term, the core indicator for determining real estate demand is interest rates. According to the latest data from the central bank, the mortgage interest rate at the end of 17 years is 5.26%, which is equivalent to an average interest rate increase of about 10%, which is equivalent to three interest rate hikes in early 1997. And the current upward trend in mortgage interest rates is not over.
From the growth of loans in the residential sector, in the 15 years, the Chinese residential sector has less than 300 billion commercial loans per month, and in 17 years it has reached 600 billion. The annual commercial loan of 7 trillion, plus 1 trillion of provident fund loans. That is equivalent to 10% of GDP per year being borrowed by residents.
But now that the loan interest rate goes up every day, and the CBRC has clearly stated that it is necessary to curb the residents’ leverage, how long will the residents’ mad debts last? If the loan interest rate returns to the 15-year level, will the debt return to the 15-year level?
In the latest monetary policy report, the central bank specifically mentioned the need to curb asset bubbles. I believe this definitely refers to the real estate bubble, not other bubbles.
And looking at the changes in the price of all domestic assets, the last of the increase in leverage is a local feather, such as 14/15 years of stock market plus leverage, 15/16 years of bond market plus leverage, no one can retreat. Now the leverage of the stock market and the bond market has all been removed. Only the real estate is still adding leverage. Why can it be safe?
If there is a problem with real estate, then commodity prices will also be implicated. After all, Chinese industry consumes half of the world's goods, and the source of industry lies in real estate demand.
Fourth, do not over-borrow, work hard to have happiness.
Tell us a lot that happiness is fighting. Conversely, happiness is not borrowed, not by speculation!
Bridgewater's Dario has a famous book "Principles", which tells his understanding of the operation of the economic system. In fact, the depiction of the real economy is three points.
First of all, he said that the long-term development of the economy is the progress of production. In the individual, it is your labor that has created economic growth, how much value you have created, and how much consumption you can control.
However, he also said that the people are not satisfied with the consumption of their own creations, so they invented the debt. By borrowing, everyone can consume more than the production. This is debt and leverage. In this process, the economy will grow even more. Fast, asset prices will rise even more, everyone will be very happy.
The problem is that borrowing is to pay back the money. When the debt is de-lost, everyone is forced to cut back on food, compress consumption, and consume less than production. In this process, economic growth will decline and asset prices will fall. Individuals will not be happy.
The most frightening thing is that because of the fear of the delevering economy and the fall in asset prices, everyone has been borrowing and leveraging, and is not willing to leverage. Until everyone’s debt is added to the limit, they have to go to leverage. There will be a decade of loss, such as after the 1990s in Japan, after 2008 in the United States, and so on.
If we use the debt ratio indicator to observe our economy, we can see that we have increased leverage from 2008 onwards, from companies, governments to residents, and added our macro leverage to historical highs. Now the government has clearly proposed to win the battle against financial risks and reduce the macro leverage ratio. In fact, it means that the model of borrowing and leverage development has come to an end, and it is time to pay off debts.
Therefore, for the safety of wealth and assets, it is recommended that you must be cautious in debt speculation in the future. Only by working hard can you be truly happy.
Finally, I wish you all a good year, prosperous, prosperous, and prosperous!
Source: Jiang Chao Macro Bond Research
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