Inlet When will the reservoir at the outlet rise?

Mondo Home Updated on 2024-02-01

Assuming that A-shares are a reservoir, then the truth is very simple: it is the water level that determines the asset**.

The water inflow and outflow of the A-share reservoir in the past few years is shown in the figure below.

The red pillar is the water inlet, and the blue pillar is the water outlet.

One of the most important things to pay attention to is the black pillar that represents the annual cash flow gap of A-shares.

At a glance, A-shares are in a state of blood loss all year round, which means:

Water outlet" water inlet.

There is more money out of ** than money flowing into **!

In fact, the uncles and aunts have long seen it clearly, and people have long reminded that A-shares are a financing market.

It's a pity that we haven't thought about it in detail, so let's make some inferences

The stock price is determined by the water level, and the water level can only rise if the water inlet and the water outlet.

It is difficult to show a large outflow of years.

Some people say it's wrong! The total market value of A-shares is constantly **!

Yes. Total market capitalization = share price * total share capital

A very important driver of the total market capitalization of A-shares is the expansion of total share capital, because a large number of new shares are listed every year.

But from a cash flow perspective, IPOs are pumping.

The delisting of U.S. stocks and the steady wave of buybacks are destroying the total share capital.

Going back to the above formula, the total market capitalization remains the same, the total equity decreases, and the stock price will naturally increase.

Similarly, India**, which has long bulls, also has a strict delisting system.

The above chart can also explain the root cause of the short bull and bear long bear of A shares

Cattle shortOriginated from short-term hot money inflows, such as 2007, 2014, 2020.

Note! In 2020, the cash flow gap of A-shares is rarely positive!

Bear longOriginated from long-term blood loss of A-share cash flow.

Pay attention again! In 2023, the new 827 regulations will play a set of combination punches to fully restrict the water outlet.

The cash flow gap of A-shares in 2023 is already very small! Only mere ones1.9 billion

I really don'tYin and Yang weirdnessCompared to previous years, the water outlets in 2023 have indeed been significantly reduced!
"How the World of Money Works" This water plant diagram is really a masterpiece!

It reveals the fundamental difference between the two water plants in China and the United States

The U.S. pumped water from the real economy pyramid and poured into the financial markets, pulling up the water mark.

China pumped water from the financial market and poured it into the real economy pyramid to expand reproduction.

The core is the difference in values:

Financial Markets vsThe real economy, who serves whom?

China gave a clear answer last year, and the United States has always been clear.

It must be said that the answer in the United States is good for shareholders, and it is really shareholder value that takes precedence.

China's answer is good for the real economy, and social value is the priority, which is also the root cause of the poor performance of many China Special Valuation for many years - sales are not worried, but the price cannot be raised, and profits must be made.

The financing market is also conducive to serving the real economy, shareholders are here to make money, and corporate IPOs + convertible bonds are to borrow money(and don't want to pay it back).

If the water inlet and outlet are only temporary, then the mystery of A shares does have to be sold.

The majority shareholder has demonstrated it himself many times, and the important thing is **.

Running fast is a technical job.

If the outlet is long-term, then this major contradiction can decide a lot of things.

For example, value investment is difficult to engage in, because the value is right, but the liquidity is not supported, and the effect is difficult to be good(Similar to Hong Kong stocks that have been trapped in liquidity traps all year round).

Another example: capital is a very important one(short to medium term).Tongs.

From this point of view, there is reason to be optimistic about A-shares in 2024, because the faucet at the outlet has been greatly tightened.

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