Wang: photovoltaic and wind turbine to lower risk

Polaris solar PV net news: November 1, 2014, by the Beijing Municipal Bureau of financial work, the Beijing Xicheng District people’s Government, the China Institute of finance, the Bank of China (quotes, appointments) industry association, the Securities Association of China, hosted by the Insurance Association of China “2014 annual China financial Forum and the eighth Summit in China’s capital market” held in Beijing Exhibition Hall. Finance site on the Summit broadcast live.

The meeting, the CICC’s wealth, Wang, Deputy General Manager of Research Department in the long-term trends and short-term waves gave theme speech under the title, he said, long-term trends have thought very clearly, short-term disturbance, such disturbances monthly or quarterly level. So we say, in this case for the market to see how? Adjustable positions more important than lighten up, lighten up, we think there is no need, because chronically is promising. Problem is configuration adjustments must be made, it is for the market to determine. Solar and wind power, up badly this year, next year could risk a downward adjustment, this is what we need to avoid risks.

CICC’s Deputy General Manager of the Research Department of wealth, Wang

Wang: thanks, I am glad to have this opportunity to share with you a communication.

Honourable ladies and gentlemen have said a lot of data, and also talked about economic and market changes, here I want to focus on the analysis of changes in economic, market and data behind the above.

A very big changes this year include the presenter also said the long-term and short-term issues, long-term and short-term impact is reflected in the asset auction what? If we see long-term logic can’t see clearly the short-term logic, you’ll find that at this time, all adjustments are limited, generally comes down hard up, we saw a performance of the stock market this year. If you see the long-term, see short-what is affected? Is the performance of banks and real estate stocks in the past three years, you will find all the bounce is an opportunity to ship, valuations will be adjusted downwards. So we said, short and long term, on the asset side, more important is to look at the long-term, short-term disturbance, but it will be quarterly or monthly on your configured policy.

At the heart of my opinion, we are in fact core two points, one is a long-term trend, we say that is for the better, and we feel these waves, such disturbances exist, is unavoidable. Prior to this, I want to focus on two pictures, these two pictures is very important, is telling the 3-5 asset allocation in the first PIC, the second picture is a month, or about a quarter of the direction of asset allocation.

This is the general direction of the 3-5 asset allocation, asset vary widely, but if we do categorize words, is actually two types. One is the hard assets, such as houses, gold and real estate, the other is soft assets, securities assets, called us. These two types of assets depends on what? Depending on which place money. If funds find not to a reasonable of export, so it must will ran to hard assets inside, buy of is House, and merchandise and gold, this is past three years we in domestic see of a situation, if began found a capital investment of direction, so you will see addition a cycle, is money began to enterprise level to ran, some emerging field of investment will constantly of expansion, brings of is securities of assets, soft assets began performance. This statistic is very clear, this is the United States an asset over the past 30 years, you will see very clearly, basically the flow of hard and soft assets is based on 5-year cycle late 70 was when Carter, when basically the United States is also heavy and chemical industries, so there’s no new industries rise, so everybody hyped commodities, gold and the House. By Ronald Reagan’s time, probably early 80 ‘s, it was called Star Wars, doesn’t matter whether there is a performance, we saw that Reagan’s star wars, aerospace, military, computer, expansion of investment in these areas, leading to directly influence the outcome was the Dow, has experienced one of the largest annual gain. After Reagan became President Bush, Bush’s direction was not found at that time, that is, goods, houses and gold. After the end of the Bush Clinton, competing again after Clinton’s direction cannot be found, then called tech-stock frenzy, money piled into the field of science and technology, we were able to see soft assets and back again.

Bush came after Clinton, followed by Barack Obama and United States stock markets begin to show, in fact, we said this year’s rise in the a-share market, including a two-year United States tech stocks were rising, United States also found a new direction. So we say, hard and soft assets, what kind of assets you buy, what is the most important? Money did not find a suitable investment. If we recognize the direction of investment, in theory, it is a matter of the great cycle of 3-5. Has been on this issue reflects China’s assets now know what to invest, in theory, is to increase the soft assets, reducing the problem of hard assets.

A month, or about a quarter of our problem, which is a stock price chart. Finance talk about stock price, not just the performance, according to stock performance, must have lost money in turn less is in fact a fulcrum in the stock model, is the fulcrum of our left corner, real rate of return. These two years are two of the biggest fulcrum of change, and a denominator that is what we said, is the risk-free interest rate and the risk premium. The risk-free rate is a fixed interest rate, are considered risk-free return. If we say a share with our investment with stocks what’s the difference? Why Wall Street is a value investment? While the a-share the world this is a trading market? The opportunity cost of buying stocks because everyone is different. In the United States you buy stocks, you can get what is the rate of return? 3%, is the United States the yield on long-term Treasury bonds. Not buying stocks in China can get a yield of 10%, trust product yields. We see a lot of blue-chip stocks have risen this year, like everyone at the Bank to avoid, we’d prefer to buy the trust and, more generally, because of the rigid payment. This year because of the trust we have started to have a problem, because it appeared some release of credit risk, the risk-free interest rate fell to 6% to the 7% of the city municipal bond. All yields higher than 6% stock has risen, such as railway, including the industrial and commercial bank (quotes, appointments) is 20% of the rose, is the risk-free rate on the decline, will affect the opportunity cost of buying stock, so would affect our investment behavior.

Risk premium may seem academic, but we said if the reduction is called uncertainties. A stock implied high uncertainty, it estimates will be lower than usual. The simplest example, the performance of a-shares and Hong Kong stocks over the past month, as the theory itself is the same company, but why not? Hong Kong stocks dropped shares were rising, now implies too high a premium, is street politics, a schizophrenic market, in theory, uncertainty must be very high, so should be lower than the normal healthy market valuations. Past 3 years: why shares less expensive than h shares? The reason is simple, we did not know where China’s economy around. So a share is a schizophrenic, we implied higher uncertainty than the Hong Kong market. Now, in turn, so we say, this uncertainty will affect share prices. There is a fulcrum is also very important, this is the year we have seen a very clear, this figure we’re talking about, because now everyone a call overseas micro-market structure theory, in fact, changing structure of core is telling investors, would affect share prices. The traditional left, the a-share market players, public offerings, private placements and individual investors. Over the years why everyone agreed to play the stocks? The logic is simple, public funds get smaller. In 2007, when the average size of public funds to 3 billion, then 40 billion for a Fund, now the average size is 500 million. 500 million Fund and 10 billion Fund could not do the same thing, 500 million of funds may be stock picks from top to bottom, it selected a stock, 1 time times the NET can outperform the market. But the Fund of 10 billion, he selected a stock or two doesn’t make any sense. The miniaturization of public fund, leading fund managers increasingly speculative, which is determined by the size, rather than his own decision.

Just gold in our data, the average size of individual accounts of individual investors is rising, more and more concentrated, concentrated before the possibility of holding focus. Is what we say over the past few years why people with surprising unanimity of FRY’s junior gem? This is determined by the traditional players gradually changes. Why is there some new changes this year? Why did we see some blue-chip stocks rose? Due to a number of new players, including the capital, Beijing, ban is one aspect of business reorganization of listed companies is very much, is that when the economy is in transition, such as Dow stocks and Hong Kong, which have been rising, with the Hang Seng index has risen, but looking at the composition of the index is actually great changes have taken place. We said China and United States of market, now we traditional industry of market accounted for than too high, emerging industry of accounted for than too small, but this changes, absolute impossible through traditional industry of fell, emerging industry of rose to completed, but with a new of channel, is traditional industry inside will appeared many of changes, a began is sold shoes industry, again clothing of, later on began do real estate has. It’s also a big change this year, is the industrial capital of operation will lead to price changes in the market as a whole.

We talked about foreign investment funds, insurance and futures, and traditions are not the same. It is a cross-market arbitrageurs and cross comparison between market arbitrage is talking about interest rates. Logic of why interest rates are very important today? Trust products will find that the whole market of new money will come in, such as why the insurance fund will get the banks? For now, other than banks, can be non-standard assets last year, out of the reach of non-standard assets this year, do not pick banking stocks and other yields in the 4% to 5%, this change in market structures will also have a share structure changes. So we were looking at a quarter or a month at, only instead of staring at statistical reports and statistical data, no use, because it was only three points there is one thing in the world, important is the risk of interest rate and the risk premium, we basically say, 3-5, and 1-3 months, this logic we see very clearly.

Tell us something about the market’s judgment. We have a word called the long trend suffered short-term disturbances. We said good market in the second half than in the first half, three quarters of the market must be better than the four-quarter, both logic and we still maintain. Reason is that the long term trend will never change, and this was the turning point from Five in June started to appear clear, we’ll talk about the specific reasons. But four quarters of disturbances will be far better than the third quarter, this is telling us in front. First of all tell us about long term logic, speculation in the stock market to political, not to say that you read the newspaper every day, read statistical reports, you need to analyze the logic behind political game. Shares in the long run the logic has a very important, in fact, is what we call the logic of the next 5 years, the global backdrop of, called Sino-US game. Sino-US game just like gambling, funding must be betting on either side, global capital now bet on both sides of the situation is obvious, the dollar was strengthening the Yuan at a time when the dollar depreciated, it is appreciated, which means that for other currencies rose more, fund a full range of value-added in China and the United States in both countries. This trend in the short term is irreversible, and talked about China-us game now with former US-Soviet Union what’s the difference? US-Soviet Union only fist, than political and military. But the two countries than what? Than attract money, attracting investments, who attracted money will win. The Fed has said raising interest rates, but all talk and no action, and it has also continually causing trouble all over the world, reduce the risk appetite of global capital, capital back into the United States, which is essentially a money game. What are we doing? We’re going to have Asian Investment Bank, we went to do currency swaps with other people, this is what we say behind the logic will not be changed in the future.

Residents sector, this with we told of first Zhang figure related, China residents sector of total liabilities rate is 10%, financial assets of liabilities rate is 25%, which has 90% is House, mortgage loan, that is China actually implied of is, China residents sector of liabilities rate very low, even is House, put first suite and improved sex housing put in together, you will found first fucai 20%-30%, mass of bad account does not appeared, does not like United States subprime crisis and Japan 90 generation as crash of fell. Annual growth in debt is 25%, this picture tells us is that, departments can leverage residents, plus leverage the emphasis must be on real estate because real estate without leverage, were already overweight.

On September 30 of a concept is the offshore market. Just talking about Singapore than Hong Kong’s problems, in fact, China’s offshore renminbi market is about 1.5 trillion. Part of the shunt to Singapore, part of the shunt to the shallow seas of the free trade zone, Shanghai or Shenzhen, is the reallocation of offshore funds. United States in training, we have come to Shenzhen in shallow water in the front, last year’s free trade zone, Shanghai, this year we will do free trade expansion, we have figured out a way out all funding, this time wenzuodiaoyutai, behind was American, but offshore markets itself to the domestic market may be beneficial.

Risk premium decline background, are generally from politics to economy, every government leadership has this problem, is to unify thinking, understanding, we basically do not work at this time. Seeking unity of thinking, understanding have been finished, we began to act together. This time we said, in fact, to the third quarter of the year, State-owned enterprises reform we desperately, almost foregone conclusion when, next year and the year after that will be seen more and more economic reforms, this is a long-term trend, the long-term trend is not to reform, why are we looking at the October market ups and downs? Some short-term volatility. Sniper global allocation of funds to China, this is the United States doing things, he made all kinds of disturbances, is of a global nature Fund’s risk appetite declined, returning to the United States, this is after a lengthy tug-of-war. Short-term interest rates down, this one is short, not long term. Some people want to buy stocks, you might want to want to buy a House, because policy is loose, although it is short, but we would also like to say something about the real estate cycle and small cycle of problem determination.

Many people in Shanghai and Hong Kong make sense now, Shanghai-Hong Kong Tong is the nature of flow in both directions, but the problem is that in today’s market, in the present cases open in Shanghai and Hong Kong must be unilateral flows from Hong Kong back to China. This situation Xia, apparently is against it of original of, so said in Shanghai and Hong Kong pass future must will pushed, behind of causes is we Yuan to lock died dollars, because through HK and dollars, currency system is early contact in together has, we through domestic of assets channel to for Hong Kong of assets, HK of assets also on means with we disguised of to lock dollars of assets, this is must to to do of, just short-term some delay, this is short-term of disturbance. Today, we look at all the indices have gone up a lot, only 5 plates in the fall. So at the end, you will find it is clear that a lot of money, for example, why there is so much volatility in late October, in December there is another phenomenon, private Sun to lock, this is a short-term disturbance.

To sum up, the long-term trend has thought very clearly, short-term disturbance, such disturbances monthly or quarterly level. So we say, in this case for the market to see how? Adjustable positions more important than lighten up, lighten up, we think there is no need, because chronically is promising. Problem is configuration adjustments must be made, it is for the market to determine.

This is we this year early do of a figure, we feel index interval should in high, this is we from valuations and profit is out of, simple of technology analysis, see months line, months line if not climbed 2,450 points, theory cannot determines revenue analysis of inflection point, we feel market years also has little of space, but up zhihou, more long of time will in this place fluctuations, this is a big of judge.

We talk about logical configuration, now’s time to layout depressions, focus on two targets, one we think market capitalisation and valuation of a match “. This year, you buy shares in a logical, next year there may be some changes, and now the whole valuation deviation from a very large, and we now look at the small cap and growth enterprise Board has not changed since the second quarter, essentially flat. This shows that in fact funding the future, we think it’s going to change, it is the compatibility of valuations and earnings, in particular, is now valued at less than the growth in the next two years, there is an opportunity to fix it. Addition is the theme, traditional industries turn to emerging industries, another thing is the strategic security, strategic security is that we stand under the background of Sino-US, for example energy, chip and military scrambled this year, which is not related to strategic security? Future strategic security and related what? Next year might want to explore a lot of themes, is Asia’s infrastructure investment bank started, $ 50 billion in capital, through leveraged sovereign debt issue, can be up to $ 500 billion, will lead to a great deal of infrastructure investment, so this one, we thought it might be a very important investment for next year’s main line.

State-owned enterprise reform, our focus is to find there is room for improvement, if a company wants to sell for a good price there is no chance to find competitive industries, as well as areas where there is room for improvement. Subject matter we have just said, look for traditional industry may transition, either through mergers and restructuring some of the subject matter of these burdens may be our one area of concern.

Finally we talk about real estate, we are not as pessimistic as the mainstream market judgment, great cycle may be bottoming out, this is confirmed for a long time. A picture on it is clear that 31 square meters per capita of urban residents now, and achieved an average level of developed countries. Now that demand is falling, supply increasing, in theory does have some pressure, logic I think of now 2009 is valid, 2009 real estate we feel that the ends of the push now, this more than 4 years we have built more than 100 square meters of houses, this is not a deficiency. But in the short term, 2015, 2016 than we expected stronger prices. We counted a very interesting data, 20-35 is the first rung of the needs of the population, 35-45 ratio is to improve the housing needs. From 2009 to 2012, we can see that real estate is a very large Bull, the reason is simple, the first suite of population and the improvement of housing than of the population are on the rise. Although no decline of 2014 to improve housing, but is limited by modern policy and taxation, but the first is a sharp drop in demand. Baby boomers who begin to buy houses, and will form a relatively significant increase. At the worst time in real estate should be in 2017 to 2019 at that time. So in 2015, 2016 may be the last gasps of time periods. We said long-term market logic is clear, should do a share is a big trend. Short-term if there are one or two months more volatile, fluctuations in strategy is to look for depression, looking for those who have not risen, as well as themes.

The story in which areas? For example include electrical equipment, machinery, plus medicine bidding to start next year, we thought this might be cause for concern, because there will be plenty of opportunity from the bottom up. Real estate industry chain in fact there may be opportunities for a short period, greater risk is the energy industry, said oil prices when oil is $ 80 is that we are willing to accept the results, whether it is Saudi Arabia, China, the United States and Russia, we are able to accept. But do not rule out short-term down such a possibility. Down what is the impact? Oil had fallen below oilfield equipment, oil companies listed in Hong Kong fell very ill, the cut in the price of natural gas, the gas industry will also be at risk. There is the photovoltaic and wind, up badly this year, next year could risk a downward adjustment, this is what we need to avoid risks.

I will say this, thank you!

Original title: Wang: photovoltaic and wind turbine to lower risk

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