Is China Stock Market Marginalizing? This is the focus of people's special attention and debate at present. One of the arguments is the separation and deviation between China's economic growth and stock market performance. It is true that the stock market is a barometer of the economy, which is a long-standing simple cognition and popular saying in the investment community. But in real life, can the rise and fall of the stock market really faithfully and accurately reflect the rise and fall of the economy? This is not only a big puzzle and myth for investors, but also has profound practical significance for the discussion on whether the China stock market is marginalized. This paper will scan the international market based on China stock market, and make a brief analysis and discussion.
The Barometer of Lagging and Distortion of China Stock Market
Since its birth, China's stock market has been vigorous, muddled, vigorous and boundless. So does the pace of China stock market reflect the magic charm of its rapid economic growth? The answer is not covered by a simple "yes" or "no".
First of all, China's economy has been in a state of high-speed and steady growth, but the stock market has shown an almost regular wave-like movement, although the amplitude is far less intense and the frequency is much more remarkable. Secondly, the periodic wave of the stock market is getting higher and higher, which shows the regular changes of prosperity and decline, and also confirms the overall upward trend of the stock market. Finally, the rise of the stock market has never reached the level of economic growth, although it used to be very close. In other words, the lag of China's stock market does not really reflect the proud achievements of the national economy, at least in the past few years.
The American stock market has changed from a sunny and rainy performance to a lone ranger.
So, is the phenomenon of "deviating from stocks" unique to China? We can look at the American market in the same way. It has a stock market culture of more than 200 years. In the past few years, the American stock market has obviously deviated from the economic trend. Although the economy still shows a moderate growth rate of 7.7%. In contrast, the US stock market suffered a fiasco in the same period. Instead of enjoying the happiness brought by economic growth, investors are trapped in the quagmire of the stock market, which can be described as "bad weather" and "worrying about the country and the people". Shareholders who have been infatuated with the stock market for many years have to say goodbye with tears.
Throughout the American market since 1990, the stock market has experienced ups and downs. Shareholders have joys and sorrows, and they are well aware of it. Described in the fashionable language of Wall Street, it is "irrational collapse" after "irrational prosperity". In the enlightenment of securities investment, investors experienced a spiritual purgatory and a baptism of soul. This decade's vigorous, ups and downs, as if it were just a chic walk in a dream.
Therefore, the phenomenon of "deviating from stocks" can also be confirmed in the United States. Although the stock market has indeed played the role of an economic barometer for more than 60 years, it is more often alone and goes its own way.
A barometer of the Asia-Pacific region
If someone thinks that the American stock market is too far away and too huge to compare properly, it may be more enlightening to explore some developed markets around us.
Once upon a time, the Japanese stock market showed its majestic momentum and fatal temptation, and it soared more than three times in seven years. However, the stock market crashed amid people's bad singing. For more than a decade, thousands of investors have only lost their hearts and dreams. What the stock market left them seems to be only the sadness and tragedy of "watching history with tears".
Similar to the situation in the early years of the United States, Hong Kong's economy and stock market went hand in hand in the 1970s. With the super-high-speed economic growth in 1980s, the stock market is also booming, but it always lags behind the pace of economic progress. In the 1990s, the stock market experienced three ups and downs around economic growth. Outbreaks again and again have brought investors a period of passionate years, but they have returned to silence again and again, leaving investors with beautiful misunderstandings and pieces of incomplete memories. Therefore, as far as the Hong Kong calendar is concerned, it seems that the statement that the stock market is an economic barometer is not unreasonable, but far-fetched.
The turmoil of the past few years has made the global stock market prosperous. After understanding the true meaning of financial investment, many people began to suspect that the stock market is an economic barometer. Yes, why does the stock market tend to run counter to economic growth? If not, how to explain the capital market theory and common sense of financial investment? This "specious" or "specious" proposition has puzzled many investors in China and even the world. The barometer relationship between the stock market and the economy is so hazy and illusory!
Five Roots of "Deviation from the Stock Market"
In the long run, economic development is the basis for the survival and development of the stock market. Without the support of the national economy and corporate profits, although the stock market can be brave for a while, it is also difficult to publicize the power of the world. However, in this case, why does the stock market deviate again and again, and the strange phenomenon of "deviating from stocks" frequently appears? There are five main reasons.
First, a rational and controllable economy and an emotional and impulsive stock market.
Economic growth is reasonable, controllable and predictable. First of all, the government's fiscal policy and monetary policy can usually effectively stimulate and inhibit economic growth, so that it has rules to follow. Secondly, the national economy is not easily disturbed by human factors, and it is difficult for any individual or investor group to directly manipulate the pace and rhythm of economic growth. In addition, there are few drastic fluctuations and shocks in economic growth. The growth curve of the economy is much smoother and more balanced than the trajectory of the stock market, and there have never been those thrilling moments.
But the stock market is more emotional and impulsive. First, the stock market movement is the result of the participation of many investors, which is driven by the invisible hand of the market, and it is difficult for the government to effectively intervene. Second, the stock market is influenced by many factors, from the political and economic situation to the interest rate level, from corporate marketing to market rumors, from the adjustment of forecast value to analyst rating. Moreover, many variables cannot be quantified, such as investment psychology and market behavior. This makes the market operation both scientific and artistic, and the same factor will bring different effects or even opposite consequences in different environments. Third, the stock market may suddenly fluctuate violently, and its fluctuation curve is not as pleasant as the economic operation. When the investing public goes astray, the magnificent mass movement will purify the normal stock market ecology and let the market bubble brew in it. Fourth, economic data comes out once a month, but stock market transactions may have to race against time, which has implanted deep genes into the instantaneous changes of the stock market, making it difficult for anyone to tell the trend of the stock market, especially the recent trend.
When the stock market is immersed in passion and excitement, its inertia and impulse are irresistible. After losing restraint and resistance, the stock market will run to the extreme edge in the imagination of investors, which will make the stock market more prone to bubbles than the economy. The same is true of global stock markets. What the market lacks is not a sober and calm brain, but courage and courage. No matter when and where, there are only a few people who can't sing well, and they will feel struggling and tired. Its "nonsense" will make the company's income plummet because of the calm transaction, and it will also make the wealth in the hands of millions of investors plummet. Just like the modern version of The Emperor's New Clothes. Dare to stand up as the spokesman of the bear market, need amazing courage and psychological quality, not afraid of causing public outrage, do not hesitate to become a public enemy, ready to bear great mental pressure. Although "the truth is often in the hands of a few people", the future of the stock market always depends on the collective behavior of the majority. This determines that the emotional and turbulent stock market will inevitably fluctuate up and down with the rational and controllable economy as the central axis.
Second, corporate profits are the link between the economy and the stock market.
The stock market reflects economic growth indirectly rather than directly. The required media are the sales profit and financial status of listed companies. In other words, the stock market indirectly describes the operation of the national economy through the level of corporate profits. However, economic cycle, business cycle, industry cycle and even the company's life cycle do not always overlap, and their intersection will lead to a short-term deviation between the company's profitability and economic growth. When this connection between the stock market and the economy is broken, the stock market movement will part ways with economic growth.
If economic growth is dominated by market consumption, then the performance of the stock market depends on the profitability of listed companies. The excessive expansion of many enterprises in the past has made them earn profits several years ahead of schedule, exceeding the future market demand. Therefore, although the economy is still growing moderately at present, the overstock and overcapacity have exhausted the profit sources of these companies, and it does not take about a year to digest the excess capacity. Therefore, when market consumption and commercial investment go their own way, the national economy dominated by market consumption can still maintain growth, but the stock market that relies on corporate profits and commercial investment will be hit hard, leading to a break and mutual treasure between the economy and the stock market.
The securities market is only a part of the whole national economic system and cannot be independent of the company's profit. If the operating and financial conditions of listed companies are not good, although factors such as policy orientation, speculative atmosphere and speculative mentality may stimulate the stock market to jump up and down in the short term, it is impossible to expect the stock market to be brilliant for a long time and have an extraordinary future. The stock market is not a cornucopia, it is not only a means of enterprise financing, but also a channel of wealth distribution. Investors obtain shareholder status by paying fees, only to share the company's profit income in the future. If the company is unprofitable and hopeless, it will lose the trust and care of shareholders. If this atypical plague spreads from individual companies, it may cause great losses to the whole industry and even the whole stock market. This is not the fault of the stock market itself, but the fault of the supervision system, the fault of the operation mechanism, and the fault of the millions of investors in Qian Qian. The focus is on the foundation on which the stock market depends.
If you have a keen insight into the stock market, you will see that the company's profit is the invisible hand behind the stock market, silently leading the ups and downs of the stock market, the rise and fall of honor and disgrace. Without the necessary supply for the company's profit growth, the stock market will be in danger of air-drying and brittle. Just as a healthy body is not maintained by antibiotics every day, a healthy stock market cannot rely solely on the short-term effects of fiscal and monetary policies.
Third, the current economic situation and the expected company prospects.
The economic situation is mostly based on the status quo. According to the data released by the government, the fluctuation of the stock market is more a reflection of the company's future earnings, and analysts' predictions can last for three to five years. In some specific market environment, the current economic situation is not always consistent with the expected corporate profits, which will lead to the disconnection between the economy and the stock market. People may be too optimistic or too pessimistic about the company's prospects. As legendary investment guru Peter Lynch said, the mistake of many fund managers is to focus too much energy on the macroeconomic level. The relationship between enterprise profitability and economic growth is not only an intuitive linear relationship or a simple causal relationship, but also different enterprises have different sensitivities to economic conditions. Whether we can successfully separate the subtle clues between individual companies and the economic situation is a test and challenge to investors' eyesight, skills and endurance!
The stock market bubble in the late 1990 s made the best footnote for this. People are full of expectations and superstitions about the Internet, a new thing, which makes it a hotbed of bubbles. Coupled with "popularization effect", "lock-in theory" and "new economic theory", people have illusions and illusions about the company's future profit prospects, and even have illusions. But as everyone knows, this unrealistic market expectation is just a dazzling mirage, lacking both market, technology and capital. No wonder its bubble burst will lead to a global stock market crash, and investors will suddenly wake up from Conan's dream.
Coincidentally, this phenomenon that the economy runs counter to the stock market is not the first time in American history, nor will it be the last time. From 1973 to 1974, there are similar results, and the degree of dispersion is not lower than this one. The Dow Jones Industrial Average plunged by 45% in less than two years, although the economy grew by 15% in the same period, which greatly exceeded the 7.7% this time (admittedly, the inflation rate in that year was not comparable to today). Fortunately, this kind of pain lasted less than two years and then quietly disappeared in history, which was half a year shorter than the stock market crash.
The reason why the stock market was quite different from the economic trend at that time was because the oil crisis in the Middle East at that time made people look forward to the future and shudder. The immediate economic growth can't resolve and cover up people's worries about the company's future prospects. In particular, the average inflation rate at that time was as high as 10.5%, which greatly weakened the purchasing power of the people and the profit rate of the company. Many people have begun to feel uneasy that the oil price may soar to $65,438+000 per barrel. Sure enough, the global vicious economic recession came quietly in the second half of 1974.
Fourth, the whole national economy and some listed companies.
The asymmetry between the economy and the stock market will also lead to the deviation between the two. For example, the economic structure of the United States includes two categories: the private sector and the public sector. The former accounts for about 70% of the total economy, that is, listed companies only create two-thirds of GDP, and the rest comes from government agencies. As a result, only two-thirds of listed companies may not accurately reflect the whole national economy. When the behavior of enterprises and the government tends to be consistent, the stock market and economic development go hand in hand; When the two are discrete, the difference between them is inevitable.
The changes in recent years are one of the proofs. On the one hand, a large number of companies and enterprises are in trouble because of excess inventory and overcapacity. On the other hand, the financial expenditure of the federal government and governments at all levels is expanding rapidly to combat terrorism and stimulate economic growth. As a result, government investment has become the main supporting force of the economy, which is reflected in the sharp turning point of the federal government from huge surplus to huge deficit. The sharp increase of government expenditure is in sharp contrast with the decline of private enterprises, and it also causes a strong contrast between the economy and the stock market. Moderate economic growth mainly comes from 30% of GDP created by government investment, which cannot be represented by listed companies. Therefore, the economic growth in the past three years is just an illusory illusion, covering up the plight and sorrow of many listed companies under siege.
This asymmetry between economy and stock market is more obvious in China. The proactive fiscal policy made government investment dominate the past and medium-term rapid economic growth, but many listed companies may not directly benefit from it. It is estimated that at present, non-state-owned holding enterprises have created 50% of the gross national product, and this proportion is still rising. However, their share in the stock market is less than 10% of the total value of the stock market. In other words, economic growth depends more on government expenditure and unlisted non-state-owned enterprises than listed companies. Therefore, listed companies and the stock market lack sufficient coverage and representativeness relative to the national economy, and it is naturally difficult for the stock market to fully and accurately reflect the economic operation.
In recent years, the economic downturn in the United States has prompted manufacturing and service industries to adopt two different means to promote income growth: service industries raise prices, while manufacturing industries rely on reducing costs. This leads to price differentiation: car prices fall and insurance costs rise; Furniture prices fall and maintenance costs increase; The price of shoes and hats fell, and tickets for football matches rose; The price of toys has dropped, and the cost of child care has increased; The price of tableware has dropped and the price of catering has risen; All these, to name a few. The decline in manufacturing prices offset the increase in service costs, which not only increased the profits of the two types of companies, but also solved the hidden worry of inflation, which can be described as "wonderful harmony." So why should the manufacturing industry increase its income by reducing costs? One of the answers is to transfer the production of products to the mainland of China with low cost, many talents and good conditions. Therefore, China saved many American companies in the economic crisis, completed the transformation and reorganization of American manufacturing industry, and played an important role in the current good pattern of American economy. In addition, the more depressed the economy is, the greater the pressure on enterprises to cut costs, and the more enterprises move to China. This is why the shadow of the global economic downturn in recent years has not enveloped Chinese mainland, but has accelerated the transfer of foreign capital to China and indirectly promoted the economic development of China.
This business strategy of reducing costs through capital transfer has saved many American companies from the whirlpool of economic depression, and also given their stocks some comfort and vitality in the American stock market. However, for most domestic listed companies, the arrival of these uninvited guests may only add a more competitive and deterrent behemoth around them, and they may not be able to covet the capital, technology or market advantages they bring. Therefore, with the transfer of capital technology and product manufacturing to China, the reduction of production costs will make the income of foreign companies in the domestic stock market far exceed that of listed companies in China. In other words, the part of economic growth driven by foreign capital may not directly benefit the listed companies in China or even the stock market in China, and there is no equal sign or equal sign relationship between them.
Therefore, the driving forces of China's economic growth, such as government investment and foreign investment, may not necessarily promote the China stock market to rise. If it is described in statistical language, it is that "economic growth is a necessary condition for the stock market to rise, not a sufficient condition". The key lies in whether listed companies fully represent the national economy and whether the transmission mechanism they construct can operate normally. This is the subtle relationship between the national economy, corporate profits and the stock market.
Fifth, boring economic data and sensitive investment psychology.
Economic data are usually only concerned by economists and government officials, and ordinary people do not understand or care about the real meaning behind the data. And even if the economy grows by one percentage point, people often don't notice it. However, the stock market is closely related to their wealth and life, which makes them very sensitive to changes in the stock market. Since the birth of 1790 Philadelphia Stock Exchange, securities culture and stock market tradition have a long history and deep roots in the United States. Coupled with the socialization and popularization of Datong Fund today, it is not surprising that the stock market crash has brought unforgettable pain to investors.
In a bull market, investors usually forget economic data and ignore investment risks. Strange theories will also emerge as the times require, providing theoretical basis for the rationality of the stock market bubble. But once the bear market comes, people will be deeply touched by the contrast between the stock market and the economy. When people complain that the stock market has failed to truly reflect economic growth in the past few years, they seem to forget how many warm memories and infinite expectations the stock market has brought them. Looking back at the end of 1990s, who paid attention to or even cared about the speed of economic growth? Investors hold their heads high like the stock market. Excuse me, when the Nasdaq index 1999, did the American economy ever have an annual growth rate of 86%? Did China's economy grow more than 100% in 2007? Therefore, investors are intoxicated when the stock market surpasses the economy and sober when the stock market falls behind.
As far as investment psychology is concerned, memory solidification is one of the most common epidemics in financial investment. It solidified and hardened the memory of investors, forever engraved the historical peak of the stock market in the depths of the cerebral cortex and cast it into an unchanging coordinate axis and reference system. After the bursting of the stock market bubble, investors usually experience the edification and refinement of the investment concept, and have a feeling of awakening from the bottom of their hearts. However, the solidification of memory blocks people's thinking channels of reflection and recourse. In fact, the solidification of memory is nothing new. As early as 1200 years ago, Yuan Zhen, a poet in the Tang Dynasty, left an immortal quatrain of "Once the sea was difficult for water, it was amber forever". Whether or not to deal with feelings should be like this, let alone, but as far as investment is concerned, this is one of the taboos.
First of all, memory solidification mercilessly distorts investors' logical thinking and market discrimination. If you focus your thoughts and vision on the historical peak of the stock market and always use it as a measure to judge the stock market price, then you will be condensed by the cover-up method and lose your objective and accurate judgment ability. As we all know, the stock market in the peak period may be just a morbid and illusory phenomenon in the bubble period, and proper limit in the plunge is the beginning of its return to basics. Only through vicissitudes can we return to its true colors and return to its reasonable price. I would like to ask, as far as the Shanghai Composite Index is concerned, is the 6000 points at that time too high, or today's less than 3000 points too low?
Secondly, the solidification of memory will make it impossible for investors to assess the situation, adjust their concerns and control their expectations at any time according to the economic situation, company profits, investment atmosphere and market environment. Therefore, they will make a "waiting for the rabbit" investment decision according to the historical imprint of the stock market. Just imagine, if the Shanghai Composite Index came slowly from 2007 and never experienced the historical peak of 5000 points, who would miss its footsteps two years ago today? Who will pay homage to its dazzling glory in the past? People will rejoice at its average annual growth rate of 9.42% in the past 30 years.
The stock market and economy must be combined and separated for a long time.
After analyzing the contradiction between rational economy and perceptual stock market, some people will ask, is the stock market a barometer of economy after all? The answer is simple, yes or no, in theory, not necessarily in reality; In the long run, it may not be in the short term; Sometimes it is, sometimes it may not be. And yes or no, there is no direct or inevitable connection with the development of the economy itself. The relationship between the stock market and the economy is so intermittent and vague, both bright and dark, trying to break and connect.
Our country is no exception. The dispersion of economy and stock market has left the imprint of the above five causes everywhere. While the economy is growing steadily and rapidly, many factors make the stock market show violent fluctuations and strong emotional colors. The profit growth of many listed companies is seriously out of touch with economic growth or obviously lags behind. This makes people's optimism and confidence in the company's future profit prospects less than their optimism and confidence in the macroeconomic prospects. At the same time, the contribution of listed companies to the gross national product is extremely limited and lacks sufficient representativeness. Therefore, although "deviating from stocks" exists in China, it is not a characteristic of our country. At the same time, the American stock market has lagged behind the economic growth for 23 consecutive years, while the China stock market has a history of less than 20 years. Therefore, any conclusion or guess must pass the test of time.
This paper is not to point out the maze for the discussion of the marginalization of China stock market, nor to clarify some misunderstandings, but only to reveal some universal laws in the operation of the stock market that are not subject to the subjective will of investors and are universally applicable. The relationship between the stock market and the economy is not inseparable, nor does it go its own way, but it is looming and illusory. The feud between economic growth and stock market provides us with two inspirations, namely, the short-term behavior and long-term trend of stock market.
First, in a certain period, the stock market may appear manic and restless, sometimes charming and sometimes unhappy, because the market atmosphere and investment sentiment have a decisive impact on the operation of the stock market. Therefore, investors can't judge or predict the short-term behavior of the stock market according to the level of economic indicators, otherwise they will fall into the trap of the stock market, whether you are a stock market spectator or a stock market trend leader. From this perspective, the stock market is not so much a barometer of the economy as a barometer of the investment atmosphere and investors' mood. This also helps to explain why the theory of "behavioral finance" has been surging in American financial academia in recent years, keeping pace with the traditional mainstream theory of "market efficiency".
Second, as far as the long-term trend is concerned, although the stock market movement will deviate from economic growth for a while, it cannot surpass economic growth forever. Economic growth is consistent with the stock market movement, that is, the so-called "identity of stocks" The stock market will be misled by irrational factors in the short term, but it will eventually be restricted by economic growth. If "fallen leaves return to their roots", then economic growth is the foundation of the stock market. Without the support of economic growth, the stock market will become water without resources and a tree without roots. Temporary enthusiasm and action will only disappear with the bursting of the bubble. It can be said that the Yangtze River is rolling eastward, and the waves are scouring heroes. Success or failure lies here. Of course, no one knows how long it will be. Poets and poets were reciting San Mao's long poem quatrain yesterday: "How far is it, please tell me", and investors are eagerly asking Tian Chang today: "How far is it, who can tell me"?
The contradiction between economy and stock market is not only a unique phenomenon in China or the past few years, but also ubiquitous in the long history of global stock market. The chart above vividly depicts the vivid and detached interaction between the two! From this perspective, there is no difference between developed countries and emerging markets. Irrational investors always try to figure out irrational stock market with irrational psychology, which leads them to wander endlessly between greed and panic. Even if these lessons are submerged in the dust of history, they will still shine. Rational economy and emotional stock market seem to be an eternal theme in financial life. They "will be combined for a long time and will be separated for a long time". The inherent structure and trading characteristics of the stock market itself determine the objectivity and inevitability of this strange phenomenon. This was the case in the past, today and in the future. China, the United States, Japanese and Hongkong, as well as all the stock markets.