Two key problems in macro economy and asset allocation
——Wang Pei, Founder of Horizon Insights

2016-11-03 12:06:25
Mr. Wang's report mainly deals with two issues, first the “ternary structure” of liquidity in China, and second, the “time mismatch” of inflation expectation from overseas market and turning point of interest rate. 

He starts the report and points out that the tendency of this round of housing price in short had been established, and the structural division stands out in this round of housing price surge. Housing price surge is based on a leverage force, and price may fall after panic mood and capital force fizzle out. The report predicts that housing price growth rate may touch a ceiling in the fourth quarter of 2016, and the absolute price may touch a ceiling in H1 2017. 

Second, the report points out the correlativity between real estate market and stock market, which decides whether there is increasing capital in A stock. 

Third, there is a logic that a stock value may increase in medium term under “asset deficiency ”. Asset deficiency may not vanish in China’s real economy in medium-to-long term. The improvement in expectation may be more credited to re-stocking cycle. Hence, funds may flow into virtual economy again to gain excess return after the adjustment. 

Fourth, the impact of exchange rate in risk appetite changes. Capital preference in A stock market weakens, but the sell-out is still ongoing. The Central Bank is the “bear” for stabilizing RMB, mid-term depreciation logic has not appeared. 

Fifth, he says the vicious circle between emerging economies and world deflationary cycle has ended and oil price trend may return to the domination of fundamentals. 

Sixth, “periodic turning point of interest rate” of global central banks have not come. Japan is still in de-capacity period and easing policy will continue. Necessity of negative interest rate in the?euro zone has lowered in short. If the real interest rates of other countries have not reversed, independent economic cycle may not appear in U.S. 

Senventh, world economy may support the increasing risk seeking in the short term. Stock markets in emerging countries may rebound, increasing risk seeking in China. American economy in short cycle regains positive signal. Fluctuation risk of financial market declines, and risk-off is less likely to happen.