Special Invitation |Darkiron
Why are the bulls short and the bears long in A shares?If we look at the trend of the ratio of M2 GDP to **market capitalization GDP, the marginal utility of over-issuing money to drive economic growth and economic growth has been greatly reduced, which may be the biggest macro factor that is easy to fall and difficult to rise since mid-2007.
Looking at China and the United States from the Buffett indicator**
As of December 21, the Shanghai Composite Index and the Dow Jones have risen by -5 respectively for the year25% and +119%, the seesaw effect of the two is exacerbated. Goldman Sachs raised the S&P target for next year to 5,100 points, which is 8 points higher than the 20th56%。However, Buffett seems to be more cautious. Its Berkshire third quarter report shows that the company's total cash reached 1572$400 million, another record high.
Why are the performances of China and the United States so different?Take advantage of Warren Buffett's indicator. Warren Buffett once said that total market capitalization as a percentage of GDP "is probably the best single metric for assessing valuations at any given moment." According to the estimation of the value master**, as of the 19th of this month, the market value of the Wilson 5000, known as the "total market index", is calculated with the total GDP of the United States last year, and the ratio is 1746%, up from 51 in February 20098%。
Similarly, the ratio of the total market capitalization of Chinese mainland** to the total GDP of the previous year was 55 on December 213%, % in December 2005, % in October 2007 and 92 in May 20151%。If the annualized rate of return over the next 8 years is calculated, China and the United States** are 1059% and 11%, China** is grossly undervalued, and U.S. stocks are grossly overvalued.
Increasing the proportion of buybacks and cancellations is expected to boost growth
The disparity between the indicators of Warren Buffett in China and the United States is such a huge disparity in terms of revenue, and the alternative explanation is that Chinese companies focus on revenue and ignore profits. New energy vehicles, lithium batteries and photovoltaic sectors for foreign trade "new three", at the beginning of the year for institutions to increase positions and heavy positions, the first three quarters of this year, a total of exports increased by 417%, and the corresponding sector indices fell during the year. 6% and 106%。
A few days ago, the high-level set the macro strategy for next year: "It is necessary to promote the high-quality development of the manufacturing industry as an important support for stable growth." "Further, even the new three industries should not be over-invested, otherwise they will face a situation of increasing production but not increasing profits. From the perspective of macro indicators, the ratio of M2 GDP is 081 times, 143 times and 22 times, the marginal utility of over-issued money to drive economic growth has dropped sharply.
When QE failed to stimulate the economy, the Bank of Japan opted for a move to blue-chip stocks, which the Nikkei 225 index has jumped 2 percent in the past 12 years92 times the main reason. The Fed's response is to lower real interest rates and provide a low-cost financing environment for U.S. companies to buy back. According to Bloomberg data, last year, the scale of A-share buybacks was equivalent to 120$600 million, dividend of 3029$600 million;The scale of U.S. stock buybacks was $1.16 trillion and dividends were $710.8 billion, and buybacks became the biggest driving force for the U.S. stock bull market. According to S&P Dow Jones Indices, the S&P 500 rose 83% and -365%, the total repurchase in the quarter was 174.9 billion and 185.6 billion US dollars, respectively, and there is a tendency to buy more and more.
If A-share blue chips want to emulate U.S. stocks**, the simplest strategy is to increase the repurchase and cancellation ratio. The current situation is that the scale of buybacks is not only much lower than cash dividends, but more than 90% of them are used for equity incentives, which does not increase the return on net assets per share. According to the statistics of China Securities Construction Investment, in 2022, the proportion of A-shares, Hong Kong stocks and U.S. stock repurchases to the net profit attributable to the parent company in that year will be respectively. 69% and 643%。
From the perspective of the history of A-shares, 2005-2007 was a bull market for share reform, and 2014-2015 was a bull market for leverage, and some people began to expect a write-off repurchase bull market in the future. From the perspective of feasibility, the blue-chip state-owned enterprises of central enterprises and state-owned enterprises with a high degree of control by the State-owned Assets Supervision and Administration Commission (SASAC) may become long-term, or there are two ways: first, the major shareholders implement a dividend reinvestment strategy. Second, the company repurchases and cancels ** to replace part of the cash dividends.
In 2007, PetroChina sold at 16The ** of 7 yuan issued 4 billion A shares (no share capital expansion has been carried out since then), and now the stock price is 1063 yuan, is still the concept of breaking. PetroChina has paid out about 78.7 billion yuan (including tax) this year, and if more than half of the dividend is used for repurchase and cancellation, the doubling of the stock price is not a dream. Once a similar situation is extended to the Chinese prefix sector, A-shares can be expected to grow bullish.
Judging from the characteristics of the blue-chip bull market in U.S. stocks, the scale of canceled buybacks of heavyweight stocks is much larger than the net selling amount of institutions and even shareholders. According to statistics, in the week of December 8, the net outflow of funds from Bank of America customers** was $1 billion, the first time since October, and the outflow of institutional investors and hedgers was prominent. At the same time, corporate customer buybacks accelerated that week, the second largest inflow in 14 years.
From this point of view, the reason why A-share investors have changed color when they hear the difference is that after the company is listed, it has no intention of canceling the repurchase, but instead withdrawing from the high-selling. This week, some experts and scholars suggested suspending IPOs. In the author's view, the problem of A-share IPOs is not that there is too much supply, but that the pricing is too expensive and the buyer's fault tolerance rate is low. For example, the Buffett indicator of U.S. stocks is 316 times, which indicates that there is great room for improvement in a** value and financing scale.
At present, the phenomenon of "high issuance valuation + high fundraising excess + high initial increase in listing" of new shares is frequent, which has become the main culprit of hitting market sentiment. According to Choice data, as of December 19, a total of 304 IPOs have landed on A-shares this year, a decrease of 121 from last yearThe total amount of initial fundraising was 349.6 billion yuan, down 40 percent from last year42%。In the second half of the year, only 11 IPOs were accepted in September, and none were accepted in the rest of the months. This indicates that the "phased acceptance of IPOs" has been implemented. **Still not rising, or looking forward to the new IPO pricing policy that the primary market will yield profits to the secondary market.
(This article was published in the December 23 issue of Market Weekly.) The article only represents the author's personal views and does not represent the position of this journal. The ** mentioned in the article is for example only and does not make a recommendation for buying and selling. ）