Why Is The Stock Market Going Up?

From a Galaxy Securities report:

"Fact is stranger than fiction (reality than fiction also sly song)", with the phrase in English proverb to describe the current economic and financial operation, it is more relevant. More surprising is that people become accustomed to the anomaly but feel that few people noticed, since 2015, the world economy is experiencing a significant run diametrically opposite visions: the economy down, the stock market up, spring, people think up.

The economic side, the sea ice, the global economy in the new normal in a weak recovery and the line and difficult global economic data, as well as most major economies are weaker than the trend performance; while the stock market side, hot flame, Zhangshengyipian global capital markets, the stock market money effect fully apparent. US S & P 500 Index, the NASDAQ and the Dow Jones Industrial Average were up 2.39 percent over year, 6.13% and 1.71%; STOXX Europe 50 index, the German DAX index, the UK FTSE 100 index rose 16.68%, respectively, 21.62% and 6.77%; Russia's RTS index rose 9.03%; the Nikkei 225 index, the Korea Composite Index rose 13.2% over year and 6.32%, respectively; Chinese Shanghai Composite Index, Shenzhen Component Index rose 14.01 percent respectively over the beginning of the year, 16.03%, 12.4%.

So, how to understand the "weak economy, a strong stock market," the anomaly? I think that there is reasonable, an anomaly not inherently anti-intellectualism, the key is to choose what perspective to look at. The so-called "economy is the stock market barometer," which is actually a long-term perspective, the economic base determines the long-term rise and fall of the stock market; and short-term, a "self-fulfilling expectations will always be" the absolute level of bad economic fundamentals are good actually down in the second decided to short-term ups and downs of the stock market, and it is relatively expected level, that is, in the short term, better-than-expected to boost the stock market, it will lead to weaker than expected market sell-off. And since 2015, the broad based global stock markets, not because of how much better fundamentals, but mainly due to the fundamentals and should not become worse.

First, the economy is not weaker than expected. Specifically, there are four important factors to the global real economy is expected to run at the top provides the underpinning effect: First, the strong performance of the US economy has played a pillar effect. Second, the economic operation mechanism endogenous formation of a "stall suppression" effect [plunge protection]. Third TFP quietly played a catfish effect. Fourth, macroeconomic policy adjustment actively play a counter-cyclical effect. Because of the early performance of the economy is worrying governments within its capacity started to increase economic stimulus, with the "visible hand" on the real economy underpinning. Second, the policy even looser than expected. Short-term impact of macroeconomic policy is particularly evident on the stock market, especially over the expected policy change, the stock market will have a huge boost short-term strength.

US policy tone is showing the expected surplus liberal tendencies. Yellen step back a "loose preference" highlight undoubtedly, the market generally believes that even if the Fed no longer stand out loose hold "patience", but still will think twice and amble on raising interest rates. The United States is experiencing a key period in the political cycle before the Obama administration for political demands while maintaining policy relaxation potential need to constantly improves.

Securities industry

Accelerate the issuance of new shares registered preheat system

Summary: The Commission approved 30 companies IPO applications. So far this year, to get IPO approval of enterprises reached 98. As can be seen, the IPO significantly speed. In recent years, the IPO is often accompanied by the index fell. However, nearly twice the IPO, the stock did not fall but rise. Why this upheaval? On the one hand is the "IPO stock market decline" and "stereotypical judgment" has been left behind; In addition, the IPO registration system speed is a precursor to the launch, but also proved that the sound development of the capital market entry stage.

A healthy mature market is no reason to fear IPO. US stocks bull market has lasted six or seven years, last year, the Dow is not even a new high, while last year the total amount of IPO stocks also reached record highs. A shares are also now beginning this scenery, the Shanghai and Shenzhen stock index rose continuously new shares issued under acceleration. After the round of 30 approved the information disclosure issue new shares, A shares rise not fall. Market to demonstrate: IPO, but increased money targets.

In the current hot stock market, the Commission accelerate the approval of new shares for the stock market short-term intent is obvious cool. Currently, there are indications that in a strong stimulus money effect, the market sentiment began to enter the non-rational state, the Commission move right time. Of course, this also shows that management considers IPO speed will not cause significant negative impact on the market. And this is bull disproof. In addition to these short-term intentions, the Commission speed IPO is launched during the year IPO registration system of the precursor. Latest news shows, the Shanghai and Shenzhen Stock Exchange's investigators have been gradually taken over the audit team reviewed IPO shares, depending on the listing, the respective took over the charge of the project. This is considered a registration system for training exchanges. Increase the number of new shares issued, the transition from the audit system to registration system, the gradual integration in mature markets, this may be the management's long-term intentions. A share significantly accelerate the process of internationalization.