February 27, 2009 Daily News
yesterday, JP Morgan economist Frank Gong, chief China was held in Chengdu, meet the media. At the meeting, Frank Gong, the domestic macroeconomic situation, A-share market trend of the future outlook for Eastern Europe the impact of financial crisis, hot issues such as answering the How?
Frank Gong: We agreed that China's economic cycle bottom in this round in the fourth quarter of 2008, when the ring than the calculated 1.5% GDP growth in the number out of the past, we estimate is around 1.2%. calculated using the chain to better reflect the latest economic trends, from this perspective, the economy has bottomed out, and we also believe that the trend of A-share market are consistent with the fundamentals.
NBD: you have the next 6 to 9 months how to look?
Frank Gong: the next 6 to 9 months, the economy will not be a second round of the downlink, we see what the main risk factors, what are the things that we can track each month to track these factors to see the economy after the second round of the bottom will not fall. From this perspective, the rally this time is actually very fragile recovery, although there is a rebound of recovery, but there are many, many risks, may all died halfway to rebound.
NBD: two of the country soon to be opened, you two have any expectations?
Frank Gong: We estimate that will be introduced in a number of long-term policies, such as social security law, health care reform, etc. and so on. we should not expect to have very specific, short-term policies, because the two once a year, only a framework to solve some problems.
NBD: Do you think most need to focus on the economic side what is the problem?
Frank Gong: It is now expected of concern is deflation, the destruction of the economy particularly. deflation and deflation expectations are two different concepts, the next few months, CPI and PPI are likely to be negative, and that our country may deflation. But deflation is expected to be another concept, the trend of the market that prices will continue. Now we have this year's economy is expected before the low-high attitude, still worried about future inflation, not deflation expectations, it is good thing; but on the other hand, is a price to someone who has bought the house, indicating the market has not produced the expected deflation, which is a good thing, because once the expected deflation, prices fall no matter how, no one will buy.
A concerned about the defensive stock market sectors
NBD: the possibility of GEM was launched during the year how much? If the launch is on Main Board How?
Frank Gong: We did not predict this, I hope as much as possible as soon as push, this is for one of the main channel for SME financing. the one hand, to see if there is the market, market liquidity and the overall market environment is able to accommodate such an innovative market? I think it is there, China's mobile of many, and some of the money people are willing to take the risk. But the risk monitoring and testing of the problem is on the other hand, the introduction of the GEM requires government have the ability to monitor, access design is to do well.
If overall macroeconomic growth would continue to restore and maintain stability, I think this year, pushing the market is a good time. because you really want to resolve this matter, the SME financing difficulties do now, not a Loan, the market also can not go in the secondary market they did not finance the door. and a lot of SMEs are the largest market for solving the employment problem is to solve the fundamental sources of employment.
NBD: GEM was launched during the year since the idea that you think that this year the liquidity of the market will be good?
Frank Gong: H shares now one to three times the price-earnings ratio, many are no buyers, because we fear the risk. A-share market is different, the subject matter turns speculation is the fear of the degree of risk far no other market high. we are very much like to take risks, this market phenomenon itself to what? that there is no financial crisis, China has sufficient liquidity, many investors have got a lot of money, courage to take that risk, so why did I say that GEM was launched this year is a good time should be concerned, or else we fried on the motherboard concept, the money did not really need venture capital to flow to the hands of people.
NBD: the domestic inter-bank market that is awash with liquidity phenomenon, do you think the future will be the main flow of liquidity that market? stocks, bonds, property market, which market opportunity even bigger?
Frank Gong: the stock market are more likely. In addition to the recent market rally awash with liquidity, the main also reflects improving fundamentals .1 month of retail sales, car sales, real estate sales better than imagined. from many companies from production, and increase inventory this perspective, the increased demand for short-term notes it is reasonable . the property market has just said, there is the possibility of continuing price relatively large. the bond market is already very low interest rates, zero interest rates in China will not happen, if bond prices do not rise, then you took a 1% annual return, So this is not much chance.
NBD: the recent sharp rise in the stock market, is not concerned with the bill financing the stock market?
Frank Gong: a period of time before such a large increase in loans, I think there is definitely a part of the money flow to stock the , but some are difficult to investigate. about three months short-term notes will expire a month, because you take it out in January to repay the money in April, you should put the money in March to lock in profits from the market. So I think A shares may also be in a range of short-term consolidation trend, short-term growth momentum should not be too much, not too much space down, because the fall has the support of valuation and fundamental level. And Another part of the stock market funds, belonging to their own money, not caused by the three-month bills.
NBD: What other funds coming into the stock market?
Frank Gong: the short term, some short-term in January Loans now to leave. long-term, then, to attract funds, investors still need to have confidence in the basic level to continue to improve and so on. the specific sources of funding, is not convenient to say. now, this year's A-share market performance is the world's best Many people think that this is a capital city. We believe that two factors are: first, funding was fairly good, basic-level factors have been bottoming out, and now the market has shifted bifurcation point rebound for how long? will not is only a more than can measure very low. if we talked about the fourth quarter of this year, next year what happens, no matter what kind of point of view, in all likelihood there may be wrong, now can the next 6 to 9 months see the good.
NBD: Thursday, an hour before the close of A shares plunge, stock index fell 85 points, Shenzhen Component Index also hit the biggest decline since the current rally, do you think the main reason for drop what?
Frank Gong: may be profit-taking it! market rally may have been worried about the end of this round, many profit taking to come out. the market will shock some time, the mobility of this part of the move up to digest, and now to improve the basic level, the external environment is still deteriorating. or to rely on policy, policy does not come out, especially in the real estate policy interval is difficult to say, I generally do not speak, if non-oscillation interval talk about it, I personally think it will be 2000 points to 2400 points in between the oscillation.
NBD: What now more optimistic about your industry?
Frank Gong : now more optimistic about the industry is relatively conservative, mainly consumer industry, power industry is still relatively optimistic.
housing market, a sale it continues
NBD: how the current real estate market see?
Frank Gong: In accordance with the current daily trading volume, the inventory of real estate market needs to digest about 23 months, while the United States in such a downturn, real estate stocks, but also 13 months. Therefore, the domestic real estate developers need to the reality of the situation of supply exceeding demand housing market has a relatively clear understanding. I think the sale price trend will continue, many developers hope the introduction of government policies to stimulate the housing prices, it is unrealistic The Government's policy will only stimulate the real estate turnover and increase people's confidence in the developers to cut prices, you go to buy a house, and nothing more.
the same time, the government needs to make plans, and now the economy is indeed in the process of improving , but it is very fragile recovery, the Government at any time be prepared to continue to stimulate the economy. If the real estate market personal income tax deduction, which is a practice in many countries, the stimulating effect of the real estate market is also very effective.
overseas markets
hard foam blowing up of new energy
NBD: We have a problem very concerned, if the future of overseas market has been deteriorating, no signs of improvement, will a new round of deleveraging?
Frank Gong: not a big problem, because China does not have foreign financial institutions to leverage technology, and from deleveraging in global terms has little room.
NBD: Eastern Europe's financial crisis have any effect on China?
Frank Gong: Eastern Europe on China's influence is indirect, not direct. If problems in Eastern Europe, Western Europe, the economic damage to some of the great influence, especially in Europe, many banks are large proportion of investment in Eastern Europe. China's export this year is the most critical exports to Europe, because Europe is the last year, China's largest export market, weakness of the euro this year, the economy is weakening, and on the Chinese economy is a double blow. From this perspective, the biggest downside risk to China's exports is exports to Europe. I just speak rebound in China's economy bottomed out, is subject to 4 trillion in investments that could be more powerful rebound, take this part of the outer will continue to worsen.
NBD: Do you think the U.S. economy of the future growth will occur in what? Do you agree that the Chinese century, or so, and it has high unemployment and huge budget deficit.
new U.S. energy is difficult to blowing up the bubble, energy prices are so low, many renewable energy sources rely on government subsidies, because a lot of new energy technology to be a breakthrough, the development cost is very high. So under what circumstances these companies to make money, only to wait for oil prices, coal prices are high, we have the incentive to use renewable energy, then renewable energy prices only cost-effective.'re doing all renewable energy loss-making enterprises do not spend their own money, only the government money. If there is no economic support, you developed this thing that no one use, this thing could become a bubble. in the A share market, the new energy is hot speculation is the role of capital, we have A shares as part of the stock market is driven by the basic level, some level of funds in the pull, the concept of money driving to speculation, speculation theme, this class is very dangerous. You may make a lot of money, may also lose a lot of money.
NBD: how do you see gold and oil price trends?
Frank Gong: I think gold can also outperformed the stock market short term. In this case, global markets have alternative needs alternative is gold. But I am not optimistic about the medium-term gold, medium-term I mean the next 6 to 18 months. because if successful global stock markets hit new lows began to rebound, then gold is likely to be dropped. because now you not to buy gold In order to avoid the risk of inflation, but to avoid stock market risk. in a deflation, gold investment value is not high. gold investment value is to avoid the risk of inflation, as real estate as a long-term trend of gold depends on inflation. I just do not worry about inflation in the world for two years, to worry about deflation, but after two or three years if global economic recovery, liquidity and return, then inflation will not occur, then could States the central bank will act now. the future is not inflation uncertainty. So the long-term trend of gold is uncertain, so short-term good, is not optimistic about the medium-term and long-term uncertainty.
Frank Gong About
Frank Gong, JP Morgan China Managing Director, Head of Research and chief China economist. Since 2008, Frank Gong several times to domestic macroeconomic policies and express their personal views on A-share market, most of them point in the near future have been fulfilled. < br> 2008 年 3 28, Frank Gong, the Sino-US dialogue on financial summit speech, saying that A shares are not a liquidity problem is a confidence issue, stamp duty must be reduced. but not published in The comments month, April 23 evening, the State Council, Ministry of Finance, State Administration of Taxation has decided April 24 onwards, the securities (stocks) from the current stamp duty rate reduced to 3p 1p.
2008 年 8 19, Frank Gong said in a report to clients said: The Chinese Government is seriously considering a leadership totaling at least 2000 to 4000 billion yuan economic stimulus package, and may ease monetary policy before the end of the year. The program will including tax cuts, stabilizing the domestic capital market and support the healthy development of the real estate market, a number of measures. The report disclosed the next day, August 20, stock index rose 179 points to, though later Frank Gong claims that this is just personal advice, not government policy. But in September, has been the end of 2008, Frank Gong, the disclosure of the report reduced deposit and lending rates, a trillion economic stimulus package, relaxing and so the real estate macro control policies introduced by the government policies are confirmed.
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