概要 -
救市措施在一个技术性超卖的市场里提振了情绪。然而，股票质押的规模其实自2015年以来不断扩大。很难相信，在过去两年市场回暖和影子银行盛行的背景下，如此大规模的质押完全是出于民企的融资需求。尽管公司法关于回购的规定得到了迅速的修改和通过，上市公司净现金只占总市值不到1%。同时，坐拥净现金的企业应该也是健康的企业。因此，它们通过公开市场回购去支持股价的需求应该不那么迫切。这些短期的救市应对策略并没有改变中国股市长期的结构性问题。我们在《
救市会成功吗
？
》一文中对此一系列问题进行了详细的论述。
这是我们20181029的盘前报告《
救市会成功吗？
》的英文原版。感谢阅读。
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Shanghai reeks of calls to “bailout”, and is attempting to stage a technical rebound. The series of speeches by top policy makers, the accompanying array of new policies to stem the hemorrhage, and more importantly, the swiftness of the rollout of these policies all suggest the resolve to “rescue” the market. For instance, it only took four days for the People’s Congress to change the corporate law to make ways for stock repurchase by listed companies. Brokers are disallowed from forced selling those shares pledged but cannot meet margin calls, and they are readying funds to relieve those “worthwhile” companies of which shares are heavily pledged.
Will it work?
Our quantitative analysis shows that the amount of shares pledged and the percentage of total market capitalization pledged have been rising since early 2015, even though the stock market bubble burst only managed to put a fleeting dent in the share-pledge practice. The percentage of the market pledged rose until March 2018, and then began to fall sharply (
Figure 1
). It appears that as the market plunge accelerated, margin calls on shares pledged increased – it was like stepping on the gas pedal.
Figur
e 1: China’s shares-
pledge problem
.
Source: Wind, BOCOM Int'l
That said, given that the entire emerging market has been under pressure since late January, and that the percentage of market pledged has been rising in tandem as the market recovered from the 2015 crash, it is unlikely that these share-pledged loans are the reason for the bear market, although it must have aggravated it. Meanwhile, the surging volatility in the US market has not helped – the consequence of the colliding economic down cycle in China and the peaking cycle in the US (
“
The
Colliding Cycles of the US and China
”,
20180902).
Will the swift changes of corporate law to allow easier share repurchase work? Our analysis suggests the answer is unclear. We compare listed companies’ net cash on balance sheet with their current liabilities. If net cash is positive, the companies will have the ability to buy back shares in the open market. We find that the listed companies only have 325 billion yuan of net cash, or 12.3% of the corresponding companies’ free-float market cap, but less than 1% of the entire market’s capitalization of over 40 trillion yuan. This figure has fallen from just over 400 billion yuan, but the percentage remains stable – a result of a falling market (
Figure 2
). As such, the net cash that can be deployed for share buyback is limited, despite the change of law. It could help those companies with some excess cash, but these companies are strong in their own right, and thus probably less prone to support their own shares.
Figure 2: Listed
companies have
limited net cash for share repurchase.
Source: Wind, BOCOM Int'l
In sum, these tactics are likely to support the subdued market sentiment. But they have not touched the essence of the issue that the China’s stock market has been confronted with – the stock market has not always been an inclusive pursuit to give the hoi polloi the opportunity to participate in wealth creation via the growth of listed companies. Instead, it has been a game of “rip-off”, of the rich over the poor, the haves over the have-nots, the insiders over the outsiders. And the Chinese retail investors, often in good spirit, nickname such a game “harvesting chives” (because chives grow fast and can be harvested over and over).
In recent history, there have been two great bull runs in the Chinese stock markets – one from mid-2005 to late-2007, and another from mid-2014 to mid-2015. The fundamental reason for these bull markets is that there was structural change prior to the inception of these bull markets - to include retail investors in the pursuit of wealth creation: in 2005, it is the stock ownership reform to resolve the status of the restricted shares held by the state; and in 2014, the significant growth of margin lending, rightly or wrongly, let a great many soar from rags to riches, and then back to earth.
The reason why the Chinese favors property as an asset class over stocks, and property has done exceedingly well is not just because property is the most legitimate way to take on leverage, even for a working class. It is because property is probably the only fair game that has been consistently letting the most number of people participate in wealth creation. It started from the housing reform in 1998, when the state transferred significant wealth to the masses through selling state-owned property titles at a token price.
In our report titled “
the Market Bottom: When and Where
” more than two years ago (20160604), we re-defined the market bottom as relative to a long-term economic growth rate. We showed that a log-linear relationship between the Shanghai Composite and the implicit GDP growth target implied by China’s Five-Year-Plan since 1986 (
Figure 3
). Interestingly, the time when Shanghai touched its bottom twice in the past, 2005 and 2014, coincided with the structural changes we discussed above. In this report two years ago, we wrote that the theoretical market bottom should be around 2,450, should the historical relationship persist.
Figure 3: Shanghai is at
its long
-term
trend line. The ann. compound rate of the rising trend = GDP target.
