- Preface -

"2018 for the Global EconomicsIt is very extraordinary for Ji, which is a difficult year for many people. The global economic situation is not enough, the international situation is confusing, the geopolitical situation is complicated, the global deleveraging process is in full swing, and trade negotiations are faltering... 2019 has arrived, and many of the difficulties we faced in 2018 have not been resolved. How should we adapt to the new year? How to find new growth and direction in the confusing economic environment? The financial community invited 10 economists to explore the road with you 2019 and ask the future! ”

Guest introduction
Guest in this issue: Yang Delong

Executive General Manager of Qianhai Open Source Fund Management Company

The main points

High-quality growth and favorable policies help A-shares usher in the "Golden Decade"

Investors should build confidence and actively embrace high-quality white horse stocks

Loose monetary policy promotes real economic growth and strong capital market

The possibility of consolidating economic growth results through RRR cuts still exists

A shares should learn from American experience and promote share repurchase of listed companies

Sino-US economic and trade talks boost the performance of global capital markets

High quality growth and favorable policiesHelping A-shares usher in the "Golden Decade"

financial:You have suggested that A shares will usher in the "Golden Decade" and the next three years will be the stage of China's asset offense and global asset defense. What is the reason behind this assertion?

Yang Delong:At the beginning of this year, I proposed that the A-share market will usher in the "Golden Decade". Now I don't buy high-quality stocks, which is equivalent to not buying a house ten years ago. The reference to the "Golden Decade" has now been recognized by more and more investors. The "Golden Decade" proposal has profound logic.

First, China's current economic growth has entered the stage of high-speed growth from the high-speed growth stage, which is more conducive to improving the profitability of leading stocks in the industry. In the stage of high-quality growth, the leading stocks in the industry have increased their technological level by increasing R&D investment. China's economic growth has also moved from the stage of relying on cheap labor and capital expansion to the stage of improving the efficiency of all-factor production. The improvement of production efficiency will help stimulate the economic growth of China's economy, which is undoubtedly beneficial to the development of China's capital market.

Second, the past ten years have been the "golden decade" of the property market, which has made many property market investors full of money. The next decade will be the "golden decade" of high-quality equity, whether it is the high-quality equity of the primary market. , or high-quality stocks in the secondary market, will bring huge returns to investors. The future house positioning is to live, not to speculate, so the wealth of the residents will be greatly transferred, from the property market to the stock market, the A-share market will usher in a "golden decade."

Third, the central government proposes that A-shares are an important part of the country's core competitiveness, and this national strategy is very crucial. After the financial crisis in 2008, the United States led the recovery of the stock market through three rounds of quantitative easing, which also brought huge wealth effects. Investors' confidence in consumption has increased, and they have money and mortgages. The US subprime mortgage crisis has been solved. Listed companies can also directly finance through the market, solving the problem of financing difficulties and expensive financing. In the next decade, A-shares will usher in the "Golden Decade" and the role of the stock market in the economy will be further enhanced.

Investors must build confidenceActively embrace high quality white horse stocks

financial:The current stock market is in full swing, investors are accelerating the pace of entering the market. Is this practice rational, what advice do you have for investors' asset allocation and risk aversion?

Yang Delong:Since the beginning of this year, the performance of the A-share market has exceeded the expectations of most investors, and the market volume has been continuously enlarged. After the Spring Festival, the market entered the market and it was forced to rise. The market quickly recovered the 3000, 3,100 and 3,200-point integers and realized the "Top Ten Predictions of 2019" that I proposed on January 2. The turnover of the two cities broke through the level of trillions, and there was a strong effect of making money, attracting extra-currency funds to accelerate the admission, and many investors ran into the market.

The current A-share market has formed a bull market trend, and the Shanghai Composite Index also stands at the 3200-point integer mark. Although the long-term differences between 3000 points have increased, the upward trend in the market will not change. Therefore, investors are advised to establish confidence, actively embrace high-quality white horse stocks, and stay away from poor stocks and theme stocks. The main investment risk in the future is the operating and performance risks of listed companies.

Loose monetary policyReal economic growth and strong capital market

financial:You have said that medium-speed high-quality growth is more conducive to the profitability of leading stocks in the industry. What are the current good news in the domestic production sector? What do you think about the interrelationship between the real economy and the capital market?

Yang Delong:In 2018, China's total economic output exceeded 90 trillion yuan, an increase of 6.6% over the previous year. The growth rate ranked first among the top five economies in the world. The contribution of the Chinese economy to world economic growth has once again reached 30%. When the market was most pessimistic at the end of last year, I proposed that the Chinese economy is expected to continue to grow in the next decade. The next three years will be the stage of China's asset offense and global asset defense. Since the beginning of this year, the performance of A-shares has proved my judgment and is unique in the world's major capital markets. From an economic perspective, the IMF has lowered the global economic growth rate and raised the forecast for China's economic growth rate, that is, the Chinese economy has better growth under the stimulus of favorable policies, and the global economic growth rate will decline. This shows that the Chinese economy has stronger resilience and flexibility.

In the first year of this year, the central government and various ministries and commissions have successively issued a series of bailout policies, and the policy has been introduced more intensively than ever before. Including the full-scale RRR cut at the beginning of January, the implementation of loose monetary policy to maintain a reasonable and sufficient liquidity, and the increase in credit support for private enterprises. In his government work report, Premier Li said that the total amount of tax cuts and tax reductions this year may reach more than two trillion yuan.

Although the performance of the capital market is not a simple linear relationship with the real economy, the growth rate and quality of the real economy are the basis for the strength of the capital market, while the loose monetary policy provides more liquidity, which promotes the valuation of the stock market.

The possibility of consolidating economic growth results through RRR cuts still exists

financial:You mentioned in the "Ten Major Prophecies" at the beginning of the year that monetary policy will be loose this year and maintain a reasonable liquidity. Recently, the issue of the central bank's RRR cut has sparked heated discussions. Do you think it is necessary to continue to lower the standard in view of the current market conditions and expectations? What factors should be considered for reasonable RRR reduction?

Yang Delong:Recently, the central bank has suspended the reverse repurchase operation for 14 consecutive days. In the first quarter of this year, the monetary policy was generally loose. In the second quarter, although the economic situation has improved, the PMI in March has returned to the 50-point watershed and the economy has contracted. The period entered the expansion period, but in order to consolidate the results of economic growth, the central bank's monetary policy will not be much adjusted, and the second quarter is still dominated by easing. The current real economy is still relatively fragile as a whole. To maintain the momentum of rising, it is bound to require a loose monetary policy and a proactive fiscal policy to escort. I think the possibility of a RRR cut in the second quarter is still relatively large.

A shares should learn from American experiencePromote share repurchase of listed companies

financial:You have pointed out that share repurchase can highlight the long-term value of the company and boost investor confidence. Will it be unfavorable for listed companies to increase their share repurchase? How to achieve a balance between the two?

Yang Delong:The share repurchase reflects the firm confidence of the company's major shareholders in the long-term intrinsic value, allowing investors to have a clearer understanding of the company's long-term intrinsic value and enhance investor confidence in the company's investment. In the United States in the past ten years, the repurchase of listed companies plays an important role. By repurchasing shares, it shows that the major shareholders of listed companies are optimistic about the future of the company, and it is also conducive to reducing the company's circulating shares and improving the company's earnings per share, thus contributing to the company's long-term development. Berkshire Hathaway, a subsidiary of Warren Buffett, rarely pays dividends, often resorting to share buybacks to give back to investors. This is a strong support for Berkshire Hathaway's long-term share price.

The repurchase of domestic listed companies has also gradually increased in recent years, especially for the outstanding stocks. Companies with capital strength for repurchase, through share buybacks to boost investor confidence is a very good way, and it is also worthy of recognition and encouragement.

Of course, the listed company's increase in share repurchase will occupy the company's funds, but it will not adversely affect the R&D expenditure, because the companies that make large repurchases are often companies with strong financial strength and focus on R&D investment. If the company does not have the funds to make a large-scale repurchase, or if the repurchase will affect the company's R&D spending, then it will not be able to make a large-scale repurchase

Sino-US economic and trade talks boost the performance of global capital markets

financial:The Fed meeting on interest rates verified your judgment at the beginning of the year regarding the end of the rate hike cycle. In view of the current economic situation in the United States, what are your views on the direction of Sino-US economic and trade relations?

Yang Delong:The Fed’s March meeting on interest rates released a positive signal that the Fed may stop raising interest rates this year, validating the view that I proposed at the end of last year that the Fed will end this round of interest rate hikes in 2019. The latest non-agricultural population announced by the US Department of Labor also exceeded expectations. The number of non-agricultural people in the United States increased by 196,000 in March, higher than the 179,000 people widely predicted by economists. Although Trump criticized the Fed for dragging down the US economy, it even suggested restarting unconventional quantitative easing measures. However, the Fed’s current decision is to suspend interest rate hikes and will not cut interest rates, because the US economy has not seen a significant slowdown and will not change the Fed’s decision.

Globally, the recently released global economic data continues to improve, while the Sino-US trade dispute is optimistic. After nine rounds of consultations, the possibility of a framework agreement between China and the United States is increasing, which undoubtedly boosts the performance of the global capital market. Agreements on trade negotiations are a triumph of the global economy, and dark clouds that plague the global economic development will dissipate.

Past review
Column introduction

“Financial Street Living Room” is an interview section created by the financial community website. The main interviewees are government officials, economists, listed company executives, and senior market participants who are closely related to the capital market, and strive to expand information, convey value, and feel. Wisdom, the most realistic and vivid image of the frontier of the capital.

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