All Is Well: People's Daily Supports the Bull Market

The People's Daily published two articles in one day encouraging Chinese people to dive into the market and grab a share of the profits.

Message one: sure, stocks are trading at 96 times earnings, but there's still plenty of room to go up thanks to government support.

From a valuation perspective, the SFC data show that as of March 19, the Shanghai and Shenzhen A-share average of all the static price-earnings ratio of 25 times, including 21 times price-earnings ratio mother board, 64 times the SME board, the GEM 96 times. SSE 50 Index and the CSI 300 Index constituent stocks of the average price-earnings ratio of 12 times and 16 times, and the mature market valuation levels roughly equivalent, but the GEM and small plates are high.

Qun think, still watching, GEM price-earnings ratio is indeed high, but if the dynamic look at valuation, performance reference 2015's forecast, a lot of companies with good growth, its high valuation is supported by performance. At the same time, taking into account the country to promote the "Internet +" action plan to encourage the public entrepreneurship, Peoples innovation, entrepreneurship, small plates and therefore there will be more companies benefit from the high valuation also reflects the market for emerging industries and long-term policy oriented expectations.

...Policy in the face of the stock market also cozy warmth. Qun said, from the monetary policy perspective, to begin at the end of the two cuts, one RRR, indicating a robust and yet flexible monetary policy, is expected to improve, boost confidence and a positive impact. Fiscal policy, this year's "Government Work Report" in fiscal spending and the deficit project have increased compared with last year, with a lot of inventory of the stock of capital, which is very important for underpinning economic role. In addition, major initiatives "along the way" and other major strategic, state-owned enterprises to promote reform, both for the stock market to bring positive energy.

Message two: watch out for differentiation.
After rising continuously, part of the stock of short-term gains have been greater, especially in the high valuation of the plate, the risk gradually accumulated. Recently, a high index fluctuated, have reminded investors blindly chasing high risk to be faced. Qun think, for those who want to invest directly into the market but no retail experience, the blind market is very risky. Especially in the short-term cash in the stock market have idea who follow the trend of speculation is not rational behavior. If the long-term investment approach investors are holding, you can wait for the right time to enter the market with caution.

Done enough homework before going to the market is also indispensable. In recent years, characterized by significant structural bull market, the future of differentiation between individual stocks may still continue further. Many investors believe that the bull market to grab a random stock we will be able to make money, it is not. Investors need to affordability and according to their level of investment risk, select the appropriate investment strategy.

People's Daily: grab the bull market "dividend"

The bull market can become an tpp; for economic transformation. Ultimately the stock market is a place for the allocation of resources, and its important function is to transport funds to the most efficient, the most promising fields. Contemplation round of the bull market, although the overall market valuation levels are on the rise, but most investors still sought after sectors involved in deepening of reform, as well as emerging growth sectors, indicating that investors have good expectations related to listed companies, will also be bring more capital into these areas, thus promoting the transformation and upgrading of a strong economic structure. Can be expected, with the gradual improvement of the system to the stock market as represented by multi-level capital market for innovative coverage of growth companies will continue to expand and become one of the main force in the promotion of technological innovation finance. In addition, the bull market will promote a higher level of direct financing for the transformation of the financial industry itself is also important.

Bull can become defuse resistance to reform. "Lubricants." Into the "deep water zone" reform, its effect is more complex. For the urgent need to accelerate the reform of the capital market, the same is true. Some of these changes in the long-term benefit, but it can not help but have a short-term pains; some reforms benefit the whole, there is likely to touch local "cheese." If some of the reform initiatives in the weak market in advance, its negative effects tend to be magnified, and the reform of the formation of resistance. Stock issuance registration system reform, for example, is mentioned in a bear market, often linked to the stock market expansion. In a bull market, the market put eyes more on the positive aspects of the reforms hold highly anticipated gesture. Under such an atmosphere, the reform process will undoubtedly be more smoothly.

iFeng: 人民日报一天两文论股:牛市含金量在提高 把握股市红利

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