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Economic transformation and capital market adjustment: opportunities outweigh challenges

after the subprime mortgage crisis in the United States, governments of various countries quickly launched a series of market rescue policies, effectively preventing the rapid downward trend of the economy. At present, in view of the "exit strategy" concerned by the market, we believe that we need to firmly grasp the four conditions for the exit time point of the economic stimulus policy: we need to correctly judge whether the economy is really continuing to improve; Whether the investment in social capital construction has returned to the normal level before the crisis; Whether export demand really recovers; And the financial stimulus policies of developed countries such as the United States, Europe and Japan showed signs of withdrawal

from a macro perspective, by studying the economic environment and policy consequences of the annual credit crunch cycle from 2003 to 2004, we found that the market has exaggerated the negative impact of the 2010 credit crunch. The main policy objective of the government this year is to achieve a balance between maintaining economic growth, optimizing the industrial structure and managing inflation expectations. Whether the government will adopt stricter tightening measures for the flexible packaging market of consumer goods in the Asia Pacific region, which will become the fastest-growing market in the future, largely depends on the stability and sustainability of the external economic recovery

in addition, we expect the central bank to raise interest rates by 27 basis points when CPI reaches its annual high at the end of the second quarter and the beginning of the third quarter of this year. However, if the major economic indicators of Western economies, especially the United States, deteriorate in the second and third quarters of this year, the possibility of China raising interest rates in 2010 will be reduced

the impact of the international financial crisis has not completely subsided, but the pace of financial innovation in China's capital market has not slowed down. The introduction of margin trading and stock index futures will have a certain impact on the market operation trend. Margin trading promotes the dissemination of market information and reduces the sharp fluctuation of stock prices; It also strengthens the connection between the capital market and the money market, and promotes the coordinated development of the two markets; The investment opportunities brought by margin trading are reflected in the realization of intra day trading to a certain extent, as well as the reduction of the holding cost of institutional investors. While stock index futures have the function of price discovery and smoothing market fluctuations; At the same time, it can also enhance the liquidity and trading activity of the stock market; Promote the development of institutional investors and optimize the market structure

another important aspect is that the acceleration of urbanization brings opportunities and C) during normal production, it should be carried out once every six months; Challenge. We believe that the central provinces of China will greatly benefit from increasing infrastructure/transportation investment, industrial transfer from coastal provinces, and adequate labor supply, which will stimulate real estate investment, consumption upgrading, and urbanization in these regions. The main challenges of urbanization include the increasing shortage of labor and the rising costs caused by it, which will urge China to accelerate the transformation of manufacturing industry and policy adjustment. The government may continue its support for consumption and encourage Chinese enterprises and citizens to invest overseas, which is very similar to Japan in the 1980s

at the same time, we can see that in the next three to five years, several regional economies have great growth potential, including Shanghai, Yangtze River Delta, Anhui economic zone and Chengdu Chongqing Economic Zone. The growth drivers of these economic zones are mainly regional infrastructure construction, manufacturing integration, cross regional transfer and government support policies in rural development, land use and fiscal taxation

therefore, we estimate that China's A-share market will show a pattern of first growth and then decline in 2010. In the first half of the year, the market will fluctuate by 10% around 2800-3500 points. In terms of industries, there are great opportunities for restructuring and mergers, such as the integration of steel, cement, coal and other industries, with the purpose of eliminating excess capacity and reducing energy consumption in these industries, which is conducive to business transformation in their own fields or upgrading to leading enterprises in these industries

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